With a combination of scale, a growing population, outstanding irradiation, and available capital, solar PV should be a ‘no brainer’ for the Kingdom of Saudi Arabia. But early explorations of the technology have soured expectations, and progress has come in fits and starts.
Saudi Arabia’s renewable energy sector over the years can be best described as a roller coaster. Just when momentum seemed to be building, the ride came to a halt. Then it began to move, but never really gave potential investors the confidence needed for serious acceleration. Progress started to take shape in 2016 and has continued, showing that this time is different.
Yet, to understand how the country got to where it is today, it’s important to know where Saudi Arabia has been, and that stems all the way back to 1977.
Much like the creation of the national oil company Saudi Aramco — formed between the United States and Saudi Arabia — solar power has been explored as part of a bilateral partnership between the two countries. Saudi Arabia’s National Center for Science and Technology (now known as the King Abdulaziz City for Science and Technology or KACST) and the United States Department of Energy (DOE) struck a deal four decades ago for the Saudi Solar Village Project. The five-year agreement included $50 million from both countries and was extended for three more years. What resulted was a 350 kW solar PV system located 50 kilometers from Riyadh, as well as an additional 350 kW solar hydrogen demonstration plant.
The system operated well for its time, but the technology was nowhere near where it is today, which resulted in panel degradation of 20%. Operating temperatures were much higher than originally specified, and the heat sink insufficient for cooling.
From there continued a list of projects, including solar-powered water desalination, solar hydrogen utilization, solar water heating, and other PV research projects.
In 1990, the Persian Gulf War erupted and once again, Saudi Arabia saw solar power come via the United States. Solar panels were used to power GPS satellites, but just like the problem seen in the solar village, modules again quickly deteriorated in the harsh desert conditions.
There is little doubt that these observations helped shape the kingdom’s solar PV sector — and industry in general — but it would still take many years before substantial movement could be seen.
In April 2010, the King Abdullah City for Atomic and Renewable Energy (K.A.CARE) was established to be the “driving force for making atomic and renewable energy an integral part of a national sustainable energy mix.”
K.A.CARE’s target was to have 41 GW of renewable energy by 2032, with 16 GW of solar PV. In 2011, a contract was signed to establish a polysilicon plant in Jubail, which would begin the production of solar cell materials. Polysilicon Technology, alongside Hyundai Engineering and KCC Engineering and Construction, announced that it would build a $380 million plant to produce 3,350 metric tons of solar-grade polysilicon, with future expansion plans. This was one of many announcements that failed to materialize, as developer Polysilicon Technology later went bankrupt, according to local sources.
K.A.CARE went a step further in February 2013, when it published a white paper that announced a new renewable energy target of 54 GW by 2032 (41 GW was to be solar). And in the first five years, it planned for 5.1 GW to be installed, with 23.9 GW by 2020. The white paper has since been removed from the organization’s website, and K.A.CARE’s renewable energy ambitions disappeared along with it, as it began to focus more on nuclear power.
The new crown prince
Volatility in oil prices began in 2014, and it forced the country to broadly rethink its economic policies.
As Saudi Arabia grappled with the new normal of low oil prices, then deputy crown prince, Mohammed bin Salman, released a new economic vision for the country. The National Transformation Plan, part of the wider Vision 2030 agenda, was launched in 2016. It included a target to have 9.5 GW of solar and wind power feeding electricity into the national grid by 2023. It was understandable that the plan was met with leeriness, considering previous attempts to jump-start a renewable energy market in the country, but this time was different. This was the first time that Saudi Arabia had a government mandate to incorporate renewable energy into its overall energy mix.
In 2017, the Renewable Energy Project Development Office (REPDO) was created, featuring members from K.A.CARE, Saudi Aramco, Saudi Electricity Company, and the Electricity and Cogeneration Regulatory Authority. The new unit fell under the energy ministry’s oversight, and immediately began accepting applications from companies that were looking to participate in the development of 700 MW of solar and wind capacity projects.
Local company ACWA Power came in with the winning bid for the first utility-scale solar PV plant, Sakaka, at $0.0234/kWh. “PV is a no-brainer in our part of the world [to supply] a significant source of load,” said ACWA chief executive officer Paddy Padmanathan.
Yet what was also significant was how REPDO announced the winning bids, which was done via live stream. This showed a level of transparency that isn’t seen anywhere else in the region’s renewable energy sector.
In November 2018, Saudi Arabia’s first utility-scale solar PV project began construction, with more than 1.18 million modules and 1,200 new jobs. The Sakaka solar power plant began a new era in the kingdom, heralding a “more to come” drive with at least seven projects to be tendered in this year alone. And people started to believe it. In fact, Padmanathan said that throughout the region, more companies are jumping into the market — and they’re looking at Saudi Arabia. He estimates that over the past five years, there has been growth of 20% of new market players trying to get into the Middle East’s solar sector.
“Within the next five years, there will be a real race to deploy as much PV as possible throughout the region,” Padmanathan added.
And Saudi Arabia is a market mover for any sector, given its size and population of almost 33 million. So much so that many companies separate Saudi Arabia from their regional reports so that its size doesn’t skew results. The potential for the kingdom’s solar industry, coupled with its goal of creating a manufacturing hub, is enough to once again entice investors.
“We’ve been pushing anyone we’ve worked with for many years saying, ‘If you want to work with us and want to capture meaningful volumes — industrialize inside the kingdom,’” said Padmanathan.
Earlier this year, a Saudi consortium made up of the National Industrial Clusters Development Program and petrochemical giant SABIC, signed a memorandum of understanding with Longi Group and OCI for the development of a fully integrated solar manufacturing facility in the country. And such decisions may create momentum for others to move, particularly considering a potentially more favorable policy framework.
Gus Schellekens, a partner at the clean energy division of the consultancy EY, said that Saudi Arabia today is very different than pre-Vision 2030.
“New businesses are being set up that are very different to the old world that delivered success for the past 40 years,” Schellekens explained. Yet Saudi Arabia is still finding its footing. The head of REPDO, Turki Al Shehri, recently left the organization to join France’s Engie as the chief executive of Saudi Arabia. There has so far been no announcement about a replacement and sources have said that the energy ministry is instead looking to create a more centralized system.
It’s never an easy road when introducing a new model or system on a large scale, especially if people continue to focus on previous mistakes. “In the long run, there remains huge potential for Saudi Arabia, but it’s important to acknowledge practical challenges, and build on a robust plan that is integrated with other initiatives,” Schellekens concluded.
The global energy economy is undergoing a rapid transition from ‘hydrocarbon molecules to electrons’: in other words, from fossil fuels to renewables and low-carbon electricity. Leading energy industry players and analysts – the energy-forecasting ‘establishment’ – are seriously underestimating the speed and depth of this transition. This in part reflects the vested interests that dominate that establishment. By contrast, the financial sector – which has little or no vested interest in fossil fuels – understands what is going on and is taking the transition on board.
The history of past energy transitions – including the US’s shift from wood to coal in the late 19th and early 20th centuries, and the French adoption of nuclear power on a wide scale in the 1980s – provides useful context for analysis of this trend. Such transitions have been triggered by factors ranging from market upheaval to technological change, with the technological element typically reinforcing the transition.
A similar dynamic, involving triggers and reinforcing factors, is in evidence today. The current transition in the global energy system has been triggered, in the first instance, by concerns over climate change and recognition of the imperative of shifting to a lower-carbon economy. In some places, growing concerns over urban air quality have overtaken climate change as a driver of government policy in support of the transition. The reinforcing factors include the falling costs of renewables and the rapid market penetration of electric vehicles (EVs). To these factors can be added ongoing uncertainty over the possibility of another oil price shock; and rises in oil product prices that are independent of movements in crude oil prices – a phenomenon sometimes known as ‘OECD disease’.
If the transition to renewables and low-carbon electricity happens faster than the energy establishment anticipates, the implications for exporters of oil and for the geopolitics of oil will be very serious. For example, the failure of many oil-exporting countries to reduce their dependence on hydrocarbon revenues and diversify their economies will leave them extremely vulnerable to reduced oil and gas demand in their main markets. The countries of the Middle East and North Africa (MENA) region will be particularly exposed, with the possible consequences including an increase in the incidence of state failure in a region already suffering the fallout from having signally failed to address the causes of the Arab uprisings since 2011. Increased political and economic turbulence in the MENA region would also have the potential to create serious migration problems for Europe.
The geopolitics of oil over the past 120 years have played a central role in international relations. Indeed some would argue that geopolitical rivalry over access to, and control of, oil supplies has been the source of much of the conflict witnessed in the 20th century (Yergin, 1991). The rise of renewables implicit in the current energy transition could well change this status quo. Renewables are widely used and widely produced. Currently, their availability is constrained neither by the agendas of dominant fuel suppliers nor by the threat of physical disruption to the strategic transit routes along which traded resources are typically shipped. There are certainly supply constraints associated with some minerals required for renewable energy technologies, but these hardly compare with the conflicts around oil supply, and most such constraints, in any case, are easily managed. Thus, as this energy transition proceeds, oil geopolitics will begin to fade away as an issue of concern.
A recent survey suggests that almost seven out of 10 employees want to start their own companies despite concerns over procuring finances.
The pull of self-employment is as strong as ever in the region, according to a recent report by Middle East jobs site Bayt.com and global research firm YouGov.
In Bayt.com’s survey, Entrepreneurship in the Middle East and North Africa 2019, in the UAE some 69 per cent of respondents said they want to quit their current job and be their own boss instead. 54 per cent cited freedom over their work-life balance as the reason behind their thinking, while 42 per cent of them said they aimed to find personal fulfilment.
What’s more, some 73 per cent admitted that they are currently thinking of starting a business, while only 7 per cent say they have never thought of starting their own business.
Looking at the wider MENA region, for those who had already made the leap into entrepreneurship, 33 per cent said they left their previous jobs in order to increase their income, while 27 per cent said they wanted to do something they loved, and 25 per cent said they had a great business idea or concept.
The most appealing industries for prospective entrepreneurs were found to be IT / internet / e-commerce (10 per cent), commerce / trade / retail (9 per cent), consumer goods / FMCG (8 per cent), and real estate/ construction/ property development (8 per cent).
The report was published shortly after recruitment firm Robert Walters shared their own new research, which showed 73 per cent of professionals in the Middle East have left a job because they disliked the company’s culture. Some 82 per cent said they have previously worked for a company where they disliked the company culture. Both statistics suggest a further reason the number of would-be entrepreneurs is so high.
Bayt.com’s report also shows that the main concern of respondents while setting up their own business would be procuring finances to start (61 per cent), and the uncertainty of profit or income (41 per cent).
These concerns haven’t stopped increased numbers of people opening businesses – at least in Dubai, where the number of new business licenses in the first four months of 2019 grew by 35 per cent compared to the same period in 2018. The emirate’s Department of Economic Development issued 9,489 new licenses between January and April.
Start-ups and SMEs have long been the backbone of GCC economies, with SMEs making up around 98 per cent of business in the UAE, contributing approximately 53 per cent of gross domestic product (GFP). Under the country’s Vision 2021 plans, the government is seeking to increase this contribution to 60 per cent by 2021.
Earlier this year, as part of the UAE’s bid to improve ease of doing business, the Federal Authority for Identity and Citizenship started issuing five-year residency visas to entrepreneurs – a move that drew more than 6,000 applications. It’s one of a series of moves that aim to improve opportunities for the wider SME community.
Another is Dubai’s recent package of initiatives by the emirate’s Department of Finance, announced in March. These initiatives include paying the dues of SMEs that supply services and goods to government agencies sooner, reducing the value of primary insurance for SMEs, cutting ‘performance insurance’ rates, calling for 5 per cent of government capital projects to be allocated to SMEs, and seeing projects worth Dhs1bn allocated to public-private partnerships.
Saudi Arabia has also striven to lay more accommodating foundations for entrepreneurs, such as 2018’s launch of an entrepreneur license that allows new companies to benefit from a range of SME services and incentives. At April’s World Economic Forum, the kingdom’s energy minister Khalid Al Falih told delegates that Saudi’s start-up scene is “moving faster than anyone can imagine” and will create hundreds of thousands of jobs in the coming years.
“I predict that by 2030, companies that we don’t know today will be among the top 20 or 30 companies in Saudi Arabia. They will be driven by innovation, they will be driven by young people, they will be driven by women,” he added.
Backed by public sector support, those 69 per cent of people cited by Bayt.com’s survey are surely in as strong a position as ever to realize success should they take the step into the world of entrepreneurship.
Egypt Today.com posted an article dated August 7, 2019, that brings to light an unusual construction project concept. It combines building towers with an agricultural development project. The project concept if multiplied in numbers will certainly be increasing Egypt’s limited area of farm land that is confined to the Nile Valley and Delta, with a few oases and some arable land in the Sinai peninsula.
CAIRO – 7 August 2019: Italian Architect Stefano Boeri spoke to CNN about Africa’s first vertical forests that will be built in Egypt’s New Administrative Capital (NAC), which is still under construction and is 30 miles east of Cairo.
Each of the three cube-shaped blocks will be 30 meters high and will house seven floors, 350 trees, and 14,000 shrubs of over 100 species. “Each tower of trees aims to provide its human residents with an average of two trees, eight shrubs and 40 bushes each,” as reported by CNN.
Boeri has been designing the blocks in collaboration with Egyptian designer Shimaa Shalash and Italian landscape architect Laura Gatti. Shalash told CNN that execution of the project is set to start in 2020 and finish in 2 years. One of the three buildings will be an energy self-sufficient hotel, while the other two will contain residential apartments.
“Each apartment will have its own balcony with a range of plant species suited to the local climate, planted at various heights and to bloom at different times to provide a lush appearance year round. Plants at every level will provide natural shading and improve the surrounding air quality by absorbing an estimated 7 tons of carbon dioxide and producing 8 tons of oxygen per year,” CNN reported.
Shalash and colleagues explained to CNN that the project – owned by a private real estate developer – is part of a bigger plan to introduce “thousands of green flat roofs and a system of “green corridors” in the city.”
It is by Jessica Corbett, staff writer who adds that “A new generation of solutions is emerging, but nowhere near fast enough.” Much has been written about water scarcity in certain countries of the MENA region and this article would certainly not be the last.
An analysis released Tuesday warns that 17 countries which are collectively home to a quarter of the global population face “extremely high water stress” that is on track to get worse—particularly because of the human-caused climate emergency.
The data is part of the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas, a publicly available database and interactive tool designed to enhance global understanding of water scarcity, which WRI calls “one of the defining issues of the 21st century.”
“The newly updated Aqueduct tools allow users to better see and understand water risks and make smart decisions to manage them,” WRI president and CEO Andrew Steer said in a statement. “A new generation of solutions is emerging, but nowhere near fast enough. Failure to act will be massively expensive in human lives and livelihoods.”
“Water stress is the biggest crisis no one is talking about,” said Steer. “Its consequences are in plain sight in the form of food insecurity, conflict and migration, and financial instability.”
The WRI statement noted that “the world has seen a string of water crises in recent years, as what’s now known as ‘Day Zero’—the day when the taps run dry—has threatened major cities from Cape Town to São Paolo to Chennai.”
Betsy Otto, who directs WRI’s global water program, toldThe New York Times that “we’re likely to see more of these Day Zeros in the future.”
Otto, speaking to The Guardian, added that “our populations and economies are growing and demanding more water. But our supply is threatened by climate change, water waste, and pollution.”
In a blog post announcing the new data, WRI outlined three ways that communities and countries around the world can reduce water stress, regardless of where they rank on the group’s list:
Increase agricultural efficiency by using seeds and irrigation techniques that require less water, investing in developing technology that improves farming, and cutting back on food loss and waste;
Invest in “grey”and “green” infrasturcture, improving everything from pipes and treatment plants to wetlands and watersheds.
Treat, reuse, and recycle “wastewater.”
The blog explained that countries rank at WRI’s highest level for water stress if their “irrigated agriculture, industries, and municipalities withdraw more than 80 percent of their available supply on average every year.”
A dozen of the top-ranked countries are located in the Middle East and North Africa. “The region is hot and dry, so water supply is low to begin with,” wrote WRI, “but growing demands have pushed countries further into extreme stress.”
India, which has a population exceeding 1.3 billion, also ranks among the most water-stressed nations.
Shashi Shekhar—former secretary of India’s Ministry of Water Resources and a senior fellow at WRI India—noted that “the recent water crisis in Chennai gained global attention, but various areas in India are experiencing chronic water stress as well.”
“India can manage its water risk with the help of reliable and robust data pertaining to rainfall, surface, and groundwater to develop strategies that strengthen resilience,” Shekhar said. “Aqueduct can help identify and prioritize water risks in India and around the world.”
Behind the 17 nations at WRI’s top level are 44 countries—collectively home to another third of the world’s population—that face “high” water stress, withdrawing on average more than 40 percent of their available supply annually.
However, as WRI’s blog post pointed out, “pockets of extreme water stress exist even in countries with low overall water stress.”
“For example, South Africa and the United States rank #48 and #71 on WRI’s list, respectively, yet the Western Cape (the state home to Cape Town) and New Mexico experience extremely high stress levels,” the group explained. “The populations in these two states rival those of entire nations on the list of most water-stressed countries.”
“The data is clear: There are undeniably worrying trends in water,” WRI concluded. “But by taking action now and investing in better management, we can solve water issues for the good of people, economies and the planet.”
See the group’s full ranking—which is based on United Nations member countries and does not include some small island nations due to model limitations—below:
The Rockfeller Foundation supported Cities‘ Ruth Michaelson wrote from Riyadh, Saudi Arabia on Tue 6 Aug 2019 the following article that elaborates on water increasing scarcity in Saudi Arabia and how despite that, life carries on somehow unaffected.
As Riyadh continues to build skyscrapers at a dizzying rate, an invisible emergency threatens the desert kingdom’s existence
Bottles of water twirl on the conveyor belts of the Berain water factory in Riyadh, as a puddle of water collects on the concrete floor. In a second warehouse, tanks emit a low hum as water brought in from precious underground aquifers passes through a six-stage purification process before bottling.
“In Saudi Arabia, there are only two sources of water: the sea and deep wells,” says Ahmed Safar Al Asmari, who manages one of Berain’s two factories in Riyadh. “We’re in the central region, so there are only deep wells here.”
Most water withdrawn comes from fossil deep aquifers and predictions suggest these may not last more than 25 years: UN
Perhaps not surprising for someone who makes a living selling water, Asmari professes to be untroubled about the future of Saudi Arabia’s water supply. “Studies show water in some reserves can stand consumption for another 150 years,” he says. “In Saudi Arabia, we have many reserves – we have no problems in this area.”
His confident predictions are out of sync with the facts. One Saudi groundwater expert at King Faisal University predicted in 2016 that the kingdom only had another 13 years’ worth of groundwater reserves left.
“Groundwater resources of Saudi Arabia are being depleted at a very fast rate,” declared the UN Food and Agriculture Organisation as far back as 2008. “Most water withdrawn comes from fossil deep aquifers, and some predictions suggest that these resources may not last more than about 25 years.”
In a country that rarely sees rain, the habit of draining groundwater, like the Berain factory does, could prove perilous: groundwater makes up an estimated 98% of naturally occurring fresh water in Saudi Arabia.
Indeed, oil may have built the modern Saudi state, but a lack of water could destroy it if drastic solutions aren’t found soon.
The emergency seems invisible in Riyadh, which is undergoing a construction boom as more buildings creep upwards to join a collection of towering skyscrapers.
It’s the desert. Obviously, water is a natural constraint by Dr Rebecca Keller
Although everyone knows this city in the desert owes its existence to the discovery of oil in 1938, fewer realise water was just as important. Decades of efforts to make the desert bloom to feed the city’s population have resulted in agricultural projects to grow water-intensive crops such as wheat, on farmland meted out to figures favoured by the royal family.
While many questions the accuracy of the kingdom’s optimistic estimates of its own oil reserves, the looming threat of a lack of water could prove to be an even bigger problem. Saudi Arabia consumes double the world average of water per person, 263 litres per capita each day and rising, amid a changing climate that will strain water reserves.
In March, the Kingdom launched the Qatrah programme to demand citizens drastically cut their water use. Its aim is to ration water to 200 litres per person per day by 2020 and 150 litres by 2030.
It has also tried to reform the water-hungry agriculture industry, reducing government incentives for cereal production. The overall amount of irrigated farmland still hasn’t declined, though, as producers switch to more profitable crops that still require large amounts of water. Almarai, a major food producer, has begun buying up deserted land in the US, on plots near Los Angeles and in Arizona, and in Argentina, in order to grow water-rich alfalfa to feed its dairy cows.
The Saudi Arabian National Transformation Plan, also known as Vision 2020 – a subset of the Vision 2030 initiative intended to diversify the Kingdom’s economy away from oil – aims to reduce the amount of water pulled from underground aquifers for use in agriculture. It seeks to employ 191% of these water resources for farming, down from the current estimates of 416% of water available.
“This means that Saudi Arabia is using more than four times the water that renews on average – and that’s in Vision 2020,” says Dr Rebecca Keller from Stratfor – a private intelligence and geopolitical analysis firm – who says she was shocked after learning about the country’s water use. “Technically they’re using fossil water, which renews at a really, really slow rate. The sheer volume of overuse stood out to me.”
Desalinating sea water has long been seen as a silver bullet against the growing threat of water shortages across the Middle East. Saudi Arabia leads the world in the volume of desalinated water it produces and now operates 31 desalination plants. Desalinated water, as distinct from naturally occurring fresh water, makes up 50% of water consumed in Saudi Arabia. The remaining 50% is pulled from groundwater.
It comes as at a high-energy cost, however. According to the International Energy Agency, in 2016 desalination accounted for 3% of the Middle East’s water supply but 5% of its overall energy cost. Researchers at King Abdelaziz University in Jeddah estimate that the demand for desalinated water increases by roughly 14% each year, but add that “desalination is a very costly process and is not sustainable”. Desalination plants also harm the surrounding environment, pumping pollutants into the air and endangering marine ecosystems with their run-off.
A recent push towards using solar power rather than fossil fuels to desalinate means that the first commercial plant is expected to be up and running at 2021 at the earliest, although it reportedly remains behind schedule.
Keller says Saudi Arabia’s evolving use of desalination technology could also alter their relationship with other countries in the region, in particular, Israel. “They’re producing the most cutting-edge technology for desalination, especially at scale,” she said. “As we see [both countries] having more geopolitical things in common in terms of their attitude to Iran, there’s more room for this relationship to grow, and the Saudi water sector is something that could benefit from this cooperation.”
The toughest challenge of all remains switching consumption habits to avoid an impending water emergency. The kingdom is pressing ahead with its Red Sea Project, a tourism haven the size of Belgium that aims to attract a million visitors annually to its unspoiled beaches and 50 new hotels. Such mammoth construction means growing water use, with current estimates that the string of resorts will use 56,000 cubic metres of water per day.
“It’s the desert,” said Keller. “Obviously water is a natural constraint.”