Saudi Arabia Scales Back Renewable Energy Goal to Favor Gasby and
Kingdom cuts renewables target to 10% of energy mix from 50%
Gas and renewables to free up more Saudi crude for export
Saudi Arabia is curtailing renewable-power targets as the world’s biggest oil exporter plans to use more natural gas, backing away from goals set when crude prices were about triple their current level, according to Energy Minister Khalid Al-Falih.
The kingdom aims to have power generation from renewable resources like the sun make up 10 percent of the energy mix, a reduction from an earlier target of 50 percent, Al-Falih said in Jeddah, Saudi Arabia. Al-Falih provided new details of the country’s solar power program as he joined other ministers to announce parts of a plan adopted by the cabinet on Monday to overhaul the country’s economy.
“Our energy mix has shifted more toward gas, so the need for high targets from renewable sources isn’t there any more,” Al-Falih said. “The previous target of 50 percent from renewable sources was an initial target and it was built on high oil prices” near $150 a barrel, he said.
Saudi Arabia, which holds the world’s second-largest crude reserves, will double natural gas production, according to Al-Falih, and the government will expand the distribution network to the western part of the nation. Generating more power from gas and renewables should make more crude available for export, which would otherwise be burned for electricity for domestic use.
Saudi Arabia has for years sought to develop gas resources to provide fuel for power plants and industries and to free up more oil to sell overseas. Saudi Arabian Oil Co., the state-run producer, set up several ventures with international partners to explore for gas, but results were disappointing and most of the companies withdrew from their ventures. Production of dry gas, or fuel for use in power plants or factories, will rise to 17.8 billion cubic feet per day from 12 billion, according to the plan.
“Gas currently makes up around 50 percent of the energy mix in Saudi Arabia, and we have an ambition to see this grow to 70 percent in the future, either from local sources or from abroad,” Al-Falih said.
Achieving the targets will be a challenge, said Robin Mills, chief executive officer at consultant Qamar Energy in Dubai. Gas projects usually require a lead time of at least three to four years before production begins, said Mills, a fellow at the Brookings Institution in Doha.
“Anything that’s going to produce that much gas by 2020, you’ve got to be doing it today,” Mills said.
Solar-power should be the main renewable-energy option for the nation, Ibrahim Babelli, the country’s deputy minister for economy and planning, said last month in Dubai. Babelli directed strategy at the government agency previously responsible for renewables policy. The cost of building solar power plants is declining globally as Chinese panel makers boost manufacturing capacity and slash costs.
Saudi Arabia is seeking to increase renewable-energy production to 9.5 gigawatts, according to a plan announced in April. Saudi Aramco has a 10-megawatt solar installation on the roof of a parking lot at its headquarters in Dhahran.
The Persian Gulf nation has previously scaled back its ambitions for renewables. In January 2015, it delayed by nearly a decade the deadline for meeting its solar-capacity goal, saying it needed more time to assess technologies. The kingdom’s earlier solar program forecast more than $100 billion of investment in projects aimed at generating 41 gigawatts of power by 2040.