Saudi Arabia Plans To Invest $7 Billion In Green Energy To Cut Oil Use
Saudi Arabia's government is going to invest in eight solar and wind farm projects in 2018. The capacity is going to reach over 4 gigawatts with most of it allocated to solar energy and it's aimed to decrease the country's consumption of oil.
Updated May 25 2019, 9:59 p.m. ET
Saudi Arabia is going to add over four gigawatts worth of renewable projects in 2018. The Middle Eastern country’s goal is to export more crude oil than consume and transition their population to renewable sources. Most of the sustainable energy will be given to solar photovoltaic farms and investments are expected to reach up to $7 billion.
Turki Mohammed Al Shehri, head of Saudi Arabia’s Renewable Energy Project Development Office, announced that eight projects would be starting up this year. Around 3.3 gigawatts represent solar PV panels while another 800 megawatts would be toward wind farms. In all, 4.13 gigawatts of capacity are going to be tendered.
The government will be looking for bidders to cover the financing needed to create these projects. After they’re completed, they’ll be buying power generated from these sources over the next 25 years. Companies that build these projects will retain ownership for 20 years on solar farms and 25 years on wind sources.
Saudi Arabia wants to have 3.45 gigawatts of renewable power online by 2020 and nearly triple that amount (9.5 gigawatts) by 2023. Over 50 different companies will be looked at for solar and wind energy projects. Ultimately, they’ll be spending anywhere from $30 to $50 billion on renewable investments.
“The energy mix to produce electricity will change, today the kingdom uses large quantities of oil liquids, including crude, fuel oil and diesel,” Saudi Arabia Energy Minister Khalid al-Falih told Reuters. “So the percentage of renewable energy by 2023 (will be) 10 percent of total installed capacity in the kingdom.”
By adding billions of dollars in renewable generation, this gives one of the world’s biggest oil exporters even more of the product to sell. Saudi Arabia saw a decline of 120,000 barrels per day in December, but they’ve generally seen a lower amount exported at this time every year since 2009, according to Bloomberg.
Saudi Aramco, a natural gas and oil company that was valued at $10 trillion back in 2010, is going to be investing in future projects. They’ve created a department that focuses on the development of these projects, likely increasing the value of their oil being exported at the same time. They burned 700 barrels per day between May and August, the hottest months of the year.
Aramco will likely invest in the second bidding round for renewable projects. 400 megawatts of wind power will be offered in the fourth quarter of 2018, with multiple stages of 620-megawatt solar project coming after that. The first rounds of investments include a 300-megawatt solar farm in Sakaka and a 400-megawatt wind farm in Midyan.
