How solar can save Gulf oil exports
Published 9:45 AM, 27 Oct 2011 Updated 8:22 AM, 28 Oct 2011
Giles Parkinson
Something rather unexpected is happening in the Middle East. The oil-rich Gulf states, which have earned trillions of dollars in the past few decades exporting crude to the east and west, find they can no longer afford to consume their own oil. They are consuming ever increasing amounts at home, at a huge cost to exports, and are being forced to turn to renewables as a cheaper source of energy.
The Gulf state of Kuwait, the fifth biggest producer in OPEC, has announced it aims to supply 10 per cent of its electricity supply with renewables by 2020 – double what it contemplated less than a year ago. It may not seem a high percentage, but considering that the entirety of its renewable energy generation consists of a single 50kW turbine operated by an environmentally-minded former army engineer, and its energy demands will more than double over the period, this would be quite a feat.
It is a decision driven by necessity. Kuwait's domestic energy consumption has already more than doubled in the past 10 years – compared to a mere 14 per cent growth in production over the same period. It now consumes nearly one fifth of its production and, with consumption predicted to continue at 10 per cent a year, it could be consuming nearly half its production by the end of the decade. The increased domestic consumption has already cut its export income by around $4 billion a year, and that could rise to $20 billion by the end of the decade – at current prices – unless action is taken.
Kuwait is not the only OPEC nation in the Gulf region thinking along these lines: The figures on consumption growth and production growth are nearly the same for Saudi Arabia, which is estimated to be losing more than $7 billion a year in lost export income due to increased domestic consumption. It has announced its intention to spend big on both solar and nuclear for the same reason, to protect its export income, and has set a 10 per cent renewable energy target by 2020, or around 20 gigawatts of installed capacity.
Abu Dhabi has set a 7 per cent target and hosts the low-carbon, experimental Masdar City, and has implemented plans for a series of utility scale solar projects; Qatar has said it could construct up to 5GW of solar by the end of the decade, while Oman has established a tender for a 250MW solar plant, and Dubai is about to do the same.
The Gulf is shaping up to become one of the biggest growth areas for solar in the coming decade, driven not so much by its concern about climate change, by a fundamental economic rationale that the states will no longer be able to afford to subsidise oil-based consumption and will want to use cheaper renewables to free up more oil production for export. Gas is also proving hard to come by and more energy is needed to desalinate water and meet soaring peak demand. Nuclear is another option, considered by Saudi Arabia in particular.
Kuwait, like the other states, heavily subsidises its domestic oil consumption. According to Eyad Ali al-Falah, an undersecretary at the Ministry of Electricity and Water in charge of the renewables program, consumers pay around 7c/KWh for electricity from oil-based generation, a fraction of its cost of production. “Renewable energy is a new subject for Kuwait,” he told Bloomberg in an interview. “I think of solar as fuel saving, not as an alternative.”
Kuwait, which has only a smattering of rooftop panels for solar hot water and electricity, is about to build its first utility-scale wind plant, a relatively small installation of 10MW, this year, and also proposes to build a hybrid gas/solar plant with 220MW of base-load gas supplemented by 60MW of solar. A separate 50MW solar PV plant is also proposed, and solar is also being considered for enhanced oil recovery.
Its grandest solar vision could be a massive solar-powered international airport that has been designed by Foster & Partners. The sweeping roof, extending over three separate wings that will each extend 1.2 kilometres out from a 30 metre tall central dome, will be covered in enough photovoltaic panels to provide for the airport’s entire energy needs.
“We definitely see solar potential in Kuwait,” said Rajit Nanda, chief financial officer for ACWA Power International, a Saudi Arabia-based company that develops electricity and water projects. “There’s a lot of peak demand when solar resources are at their best,” he told Bloomberg.
The Gulf states have been slower to awaken to solar opportunities than their fellow Arab oil producers across north Africa, where numerous solar and solar/gas hybrid plants have been or are being installed. This development, however, has been largely driven by European interest, particularly the ambitious Desertec initiative that would have European countries source as much as 20 per cent of their future energy needs from the north African sun.
But the Gulf states own needs may drive an even greater ambition. According to the renewable energy advisory firm GreenGulf, Saudi Arabia, although only just this month opening its first utility scale solar plant, is looking at building three poly-silicon factories, and is considering lifting its renewable energy target to 15 per cent by 2020. Growing population, soaring energy needs and water scarcity, and the need for desalinated water, will be the driving forces, notwithstanding the desire to free up as much oil as possible for export.
climatespectator.com.au |
