Tuesday, November 20, 2012

Saudi Arabia must turn to solar to save its oil

Saudi Arabia must start to plan the life after the oil because country's oil reserves won't last for eternity. Saudi Arabia is still the world's largest oil exporting country and oil still plays the most important economic role in the country. But for how long?

In this sense, it is no surprise that Saudi Arabia is already looking at other alternatives to oil. And the choice of going full speed ahead with solar energy development is really a logical one because Saudi Arabia has plenty of sunshine throughout the entire year. 

In 2011 Saudi Arabia announced plans to invest more than $100 billion into clean energy technologies within the next ten years with the lion share of this investment going to solar energy sector as Saudis plan to install 5 gigawatts of solar power capacity by 2020.

The country does not plan this huge solar power expansion because Saudis have suddenly become extremely concerned about the environmental damage done by oil but mostly because they fear that they might lose out their top position in exporting oil if they fail to develop strong solar energy sector.

Saudi Arabia belongs to the countries with the fastest growing energy consumption rates in the world and Saudi Arabian demand for electricity is growing at a rapid rate of 5 % per year. What this means is that Saudi Arabia needs more than 20% of its total oil production just to satisfy its current energy demand, and if domestic oil consumption continues to grow at such high rate Saudi Arabia could soon run out of oil, even by the year 2030 as Abdul Salam Al Yamani, head of the Saudi Electricity Company, recently pointed out.

The rapid solar energy development is therefore mainly done to prolong Saudi Arabia's dominant position on global oil market, maintaining is major source of wealth, for as long as possible. On the long term basis Saudi Arabia hopes to export solar generated electricity to neighboring countries as a new source of income, once current levels of oil production start to significantly decline.

So the money from the oil production will be used to develop strong solar market, which will then help prolong oil production for as many years as possible. Turning to solar really looks like the only logical option for Saudis to save their position as the world’s largest oil exporter.