As part of a wide-ranging economic and social policy vision for the Kingdom of Saudi Arabia, deputy crown prince Mohammed bin Salman, son of King Salman bin Abdulaziz al Saud, announced the first cornerstones today for the deployment of renewable energy in the country.
The “Saudi Arabia Vision 2030” paper states an “initial” target of 9.5 gigawatts (GW) of renewable energy. While no timeline has been set, it is safe to assume that this target applies for 2030 in the most conservative scenario, possibly even before. No specific quotas for solar and wind are mentioned.
The policy paper also speaks of localizing manufacturing and R&D in renewable energy.
The program will be implemented under the umbrella of a new “King Salman Renewable Energy Initiative”. Legal and regulatory frameworks for the deployment of renewable energy and the involvement of the private sector are to be put in place.
This announcement marks the first official statement from the Saudi government on renewable energy after the King Abdullah City for Atomic and Renewable Energy (K.A.CARE), founded by the late King Abdullah in 2010, famously announced ambitious renewable-energy plans in 2012. These activities cumulated in a detailed whitepaper for the tendering of renewable-energy plants in 2013, which was never followed up on with an actual program. The death of King Abdullah in early 2015 cast further shadows on the organization bearing his name.
The new vision paper likely means that K.A.CARE will be finally sidelined as the King Salman Renewable Energy Initiative is rolled out, although the new initiative does not appear dissimilar in spirit to the earlier one. The planned R&D activities would build on existing programs at King Abdullah University of Science and Technology (KAUST) and King Abdulaziz City for Science and Technology (KACST), which have been undertaking renewable energy R&D for several years.
It is noteworthy that the vision paper does not talk about nuclear energy for the Kingdom at all, contrary to earlier plans to build 17 GW of nuclear reactors.
The paper also hints at encouraging distributed renewable energy deployment encouraged through “the gradual liberalization of the fuels market”. If fuel and electricity subsidies continue to be reduced, there will be a strong case for distributed solar energy in Saudi Arabia. A first step into this direction has already been taken with the steep increase in electricity tariffs at the beginning of 2016.
Further details are scant at this time, and it remains to be seen what specific policy details for renewable energy will be announced and how they will be implemented. Given the broad scope of Vision 2030, the implementation of a renewable energy program will be a formidable challenge as the overall Vision 2030 strategy will certainly preoccupy all levels of Saudi Arabia’s administration for the years to come.
In any case, a 9.5 GW target makes Saudi Arabia a sizable market in the renewable energy industry. If the country deploys new power plants at a constant rate through 2030, that implies an average of about 700 MW of new renewable energy capacity per year to be built in Saudi Arabia. Also, Apricum expects a renewed interest in manufacturing of components for renewable energy in Saudi Arabia, if and when a sustained local demand becomes visible.