One of the world's biggest oil producers and consumers has launched a renewable energy programme that may make Riyadh the new global hub for clean power, Vahid Fotuhi writes
In 2010, Saudi Arabia made a huge splash on the international stage when Ali Al Naimi, the oil minister, announced that "Saudi Arabia aspires to export as much solar energy in the future as it exports oil now".
Observers were not impressed. They claimed it was simply not realistic. To achieve this, Saudi Arabia would need to produce and export as much as half the world's total annual installed capacity of solar energy. It could never happen. Or could it?
Less than two years later, the kingdom has hit back at its critics by launching the most ambitious solar program the world has ever seen.
Under the stewardship of the King Abdullah City for Atomic and Renewable Energy (Ka-care), it has unveiled a detailed program that will see it generate 41 gigawatts of solar energy over the next 20 years.
Assuming that the policy-makers in Riyadh are able to stick to their timetable, by 2032 about a quarter of the country's electricity will be produced using solar energy.
Ka-care has also set bold plans to build wind, geothermal, waste-to-energy and nuclear energy plants. This huge undertaking, worth hundreds of billions of dollars, is set to make Riyadh a global hub for clean energy investments. It would be a huge leap forward for Saudi Arabia, given that today it is among the world's top five biggest polluters on a per capita basis.
The immediate benefit of this new policy is oil savings. Saudi Arabia currently burns almost 1 million barrels of hydrocarbons each day for domestic power generation. This includes some 600,000 barrels per day of its coveted crude oil. Alarmingly, this flow is expected to rise by about 10 per cent annually.
Oil supplied to power plants domestically at the subsidised price of US$4 per barrel is oil that could otherwise have been sold on international markets at a much higher price. The Saudi Electricity and Co-Generation Regulatory Agency estimates the country loses at least Dh50 billion ($13.61bn) annually by selling oil domestically compared to what it would fetch internationally.
With its renewable energy policy now in place, the kingdom will be able to start satisfying its unparalleled thirst for power through solar-generated rather than oil-generated electricity.
Concentrated solar power plants will be installed to meet winter demand while photovoltaic power plants will be erected to crunch peak-time usage during the summer months. Each megawatt of solar power installed will be able to meet the annual electricity needs of some 50 single-family homes.
Another major benefit is job creation. Today, some 60 per cent of Saudi nationals are under 25. These youths will be looking for jobs soon. By building a world-class clean energy sector, the kingdom will ensure a steady supply of new jobs.
According to the European Photovoltaic Technology Platform, every megawatt of solar power installed creates about 50 jobs in research, manufacturing, installation, and distribution activities.
In other words, by rolling out 41 gigawatts, the kingdom will help to create, both directly and indirectly, some 2 million new jobs.
There are also important environmental benefits. Burning crude oil and derivatives thereof such as fuel oil releases harmful gases such as carbon dioxide, which is bad news not only for the citizens of Saudi Arabia but for the planet as a whole.
By adopting this ambitious program, Saudi Arabia has set in motion steps that will see it offset approximately 44 million tonnes of carbon dioxide, equivalent to taking some 10 million cars off the road.
This will have considerable environmental and health benefits. At the same time, some 5 billion gallons of petrol would be saved, which would carry additional financial benefits.
Along the way, Saudi Arabia's clean energy investment will give life to powerful innovations such as new and more effective ways of capturing the sun's energy, as well as ways of storing that energy so that it can be consumed during periods when it's needed most.
These innovations would gradually transform Saudi Arabia from the kingpin of "dirty" energy to a global leader in sustainable energy.
The oil minister's solar aspirations might not be so unrealistic after all.