Saudi Arabia 2016 | ENERGY | FOCUS: SOLAR ENERGY

Saudi Arabia's levels of energy consumption per capita are among the highest in the world. With an increasing population and an expanding economy, the current consumption rate is unsustainable. Moreover, electricity is generated with oil, with consequent impacts on the country's exports. To address this issue, the government has plans to turn the Kingdom into the world's largest producer of solar energy.

Demand for electricity in Saudi Arabia has more than doubled since 2000, rising at an alarming 7% per year. Although the country's population has trebled since 1980 to reach about 30 million, a possible indicator for this trend, it does not justify the Kingdom's enormous energy consumption rate, which is nearly three times higher than its population growth.

Due to the fact that Saudi Arabia is one of the few countries in the world that uses crude oil to generate power, the Kingdom takes the title as the world's sixth-largest consumer of oil. According to the World Bank, Saudi Arabia is also one of the world's largest carbon emitters per capita, burning nearly a third of its oil production to meet domestic high energy consumes. With a population forecasted to grow paired with an expanding economy is likely to cause these figures to increase even further.

A report published in 2011 by the British independent policy institute Chatham House revealed the possibility that Saudi Arabia could consume its entire oil production by 2021 and, if the trend continues, could become a net oil importer by 2038.

In order to avoid an economically catastrophic scenario, the Kingdom is keen to start its yellow oil revolution by increasing the share of solar power in its energy mix. Speaking at a UN climate change conference in Paris on May 21, 2015, Minister of Oil and Mineral Resources Ali Al-Naimi said one day the country will no longer need fossil fuels and the government had embarked on a program to develop solar energy.
In July 2015, the King Abdulaziz City for Science and Technology (KACST) unveiled a plan for a 50-MW solar project to be developed in Al-Aflaj. A few months later, the Saudi Electricity Company (SEC) contracted two companies to build and operate Saudi Arabia's first fossil-fuel and solar powered power plant to incorporate solar energy production. The Green Duba Integrated Solar Combined Cycle Plant will be built on the Red Sea coast in Tabuk Province with a capacity to generate up to 600 MW, 10% of which will come from solar, enough to power 600,000 houses. The plant will reduce carbon emissions by saving the equivalent of 3-4 million barrels of fuel over its lifetime.

The game changer for the sector, however, will be the solar cell and silicon panels manufacturing factory, to be built in Yanbu. It will produce 450,000 panels each year with a generating capacity of 120 MW of solar energy, although energy production is expected to reach 1 GW when the factory can operate at its full potential. At an investment of $90 million, the Afandi Solar Panel facility is anticipated to be the largest fully integrated solar panel factory in the region. It will begin operating in early 2017 and will provide 263 jobs. The project is considered to be a strategic leap in nationalizing industries in accordance with the recently announced Vision 2030.

Saudi Arabia—which today has a solar power capacity of 50 MW compared to Germany, the world leader, which has 38 GW—announced back in 2012 its intention to generate 41 GW of solar energy by 2032, enough to meet 20% of the country's projected power needs. In January last year, King Abdullah City for Atomic and Renewable Energy said the goal will be reached by 2040 with an investment of $109 billion.

Solar today supplies 1% of the world's energy, but, according to the International Energy Agency (IEA), solar power will become the world's biggest energy source by 2050.

New technologies, large investments, and more factories in China cranking out solar panels have led to an 80% drop in solar energy prices. Saudi Arabia, with its sunny climate and desert providing plenty of space to produce the panels, represents two lucrative reasons to move into the business.