As oil supplies decline, Saudi Arabia’s own electricity is becoming expensive. By one estimate, it’s as much as 25 cents a kilowatt-hour, at wholesale. Saudi Arabia gets all of its electricity from the oil field. Flared gas provides 45%, heavy fuel oil provides 13%, diesel; 22% and crude provides the remaining 20%. So as oil prices rise, its domestic desalination and electricity costs rise too.
But the kingdom has solar insolation that is the envy of the world. So the Governor of the state power company ECRA (Saudi Electricity and Cogeneration Regulatory Authority) is hoping to get state approval for incentives to help solar begin to power some of the kingdom’s 50,000 megawatt electricity needs, according to ArabNews.
Abdullah Al-Shehri of ECRA says that with renewable energy incentives to spur development, as much as 10% of the kingdom’s electricity could be supplied by solar energy and other renewable sources by 2020.
“I think any number can be achieved, provided there is enough support for it from studies, analysis,” he told the Reuters Middle East Summit in Riyadh. Earlier this month, the director of new business evaluation of state-owned Aramco suggested that the kingdom is capable of growing a solar industry. But it depends on how high oil prices go, triggering price signals.
As head of ECRA he sees a demand that is rising at 8% a year. The kingdom uses one tenth of its oil for its own electricity use. If he is successful in his mission, incentives like state funding and a Feed-in Tariff would start as soon as next year.
Considering that Saudi Arabia is the Saudi Arabia of oil, the kingdom pays an extraordinarily high price for this oil-based electricity. But when oil is $80 a barrel, it can’t be wasted at home. So state electricity there now costs the equivalent of paying 25 cents a kilowatt-hour, making its wholesale price higher than retail electricity costs in most places.
At least that is the estimate of Vahid Fotuhi, director of BP Solar for the Middle East.
At prices like that, plus an electricity demand that rises 8% a year – and a complete dependence on a dwindling oil supply – more solar companies like BP Solar should be eyeing the vast reaches of prime solar land in the desert.
Even my solar power off my own roof in California, with far less insolation than the Arabian desert, is only 12 cents a kilowatt-hour, and that’s at retail.
I’m thinking the sun in the Saudi Arabia of solar is going to be able to produce power for the Saudis for less than 25 cents a kilowatt-hour!
Image: Donna Corless