Mon, Apr 09, 2018 - Page 8 News List

Oil to solar: Saudis push to be renewable energy powerhouse

By Anuj CHOPRA  /  AFP, AL UYAYNA, Saudi Arabia

Lucarelli said Saudi Arabia instead “needs a balance” between renewables and fossil fuels — and pointed out that the solar memorandum is non-binding for now. To handle the amount of power the project envisions, experts say the kingdom would require huge investments to upgrade its grid and set up large-scale battery storage facilities.

‘GIGA PROJECTS’

The solar push appears to be driven by geopolitics as much as economics.

“Saudia Arabia’s problem is that (rivals) Iran and Qatar have the gas reserves it does not,” said James Dorsey, a Middle East expert at the S. Rajaratnam School of International Studies in Singapore.

“That is one reason why renewables figure prominently in Prince Mohammed’s reform program, not only to prepare Saudi Arabia economically for a post-oil future but also to secure its continued geopolitical significance.”

Saudi Arabia also harbors atomic ambitions, with plans to build 16 reactors over the next two decades for US$80 billion, despite concerns over nuclear proliferation in the Middle East.

But the economics favor solar power. Electricity from solar sources costs less than half that of nuclear power.

SoftBank’s Vision Fund would invest US$1 billion for the first phase of the deal, but it is unclear where the rest of the investment will come from. Saudi Arabia has dazzled investors with several plans for hi-tech “giga projects,” funded in part by its sovereign wealth fund, but skeptics question their viability in an era of cheap oil. The kingdom has unveiled blueprints to build NEOM, a mega project billed as a regional Silicon Valley, in addition to the Red Sea project, a reef-fringed resort destination — both worth hundreds of billions of dollars.

“Throwing money at a project, be it a solar project or a tech city, won’t make it work unless it’s accompanied by technology that works and effective project management,” said Wald.

“Most likely, the end result of mega projects will be markedly different than the vision expressed today. That is not to say worse, but different,” she said.

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