Spotlight Activity: Renewables Still Make Up A Negligible Part Of Saudi Arabia’s Energy Mix
The main sources of renewables in Saudi Arabia are solar and wind energy. Currently, renewables are not being fully utilized, but there have been ambitious plans to develop solar and wind projects in order to diversify the country’s energy mix.
The share of renewables in Saudi Arabia represents a negligible amount of the energy it uses. Although the Saudi government has been hiking energy prices, they are still subsidized and much lower than the cost of renewables. In 2018, the cost of electricity consumption for Saudi residents ranged from Riyal 0.18 – 0.30/kWh (US$ 0.048-0.071/kWh). In comparison, Saudi Arabia national procurement program for solar secured a price of around U.S. cents 2.3417/1 kWh.
Saudi Arabia has contradictory renewable energy policies. It has enacted several policies to support the use of renewable energy. It established the National Renewable Energy Program (NREP) to substantially increase the share of renewable energy in the total energy mix. It issued a regulatory framework for electricity consumers to operate their own, small-scale solar power generating systems. This creates a significant financial incentive and accelerates private sector investment in small-scale renewable energy applications. At the same time, the government has increased the electricity tariffs three times to discourage energy use and implemented Time-of-Use tariff policy where higher tariffs are applied for peak times, during the day which coincides with peak solar PV output. The Vision 2030 targets for Saudi Arabia contain an obligation to renewables for 9.5 GW by 2030, which represents 11% of the total power consumption of the kingdom.
Status: Standing Still
There has been a big push to build mega-renewable projects in Saudi Arabia, such as the large 200 GW solar project announced last year. However, this project has since been cancelled, and the future of other renewable energy projects is still in question. What is known now is that renewables still make up a negligible part of Saudi Arabia’s energy mix, and the goal of procuring 11% of Saudi Arabia’s energy from renewables by 2030 is quite below what one would expect of a country like Saudi Arabia, a country ripe with potential for renewables. Saudi Arabia has great potential to move the world’s energy usage away from fossil fuels, particularly oil, but it seems that it has been slow to fulfill this potential.
We recommend that the Ministry of Energy, Industry, and Mineral Resources to follow in the steps of other developed countries that have switched to a mostly renewable energy mix. These countries have done their part to reduce carbon emissions, without sacrificing economic output. Saudi Arabia is in a position to be a world renewable energy leader, seeing that it has great potential to produce energy from renewables, and it possesses the technical ability to integrate renewable energy grids into its mix.
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Minister of Energy, Industry, and Mineral Resources