Policy Uncertainty Poses Risk for Renewables Investment in Saudi Arabia

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Industry observers are asking how it is that Saudi Arabia, which is so dependent on hydrocarbon-sourced power, can achieve a massive transformation of its energy sector to renewables-sourced power. A total of 24 gigawatts (GW) in renewables-sourced power is anticipated by 2020, and more than 50 GW by 2032. Establishing a time line with long-term policies is at the top of the list of priorities.

In addition to the 41 gigawatts (GW) of solar energy by 2031, which includes 25 GW of concentrated solar power (CSP) and 16 GW of photovoltaic (PV), the target is to generate 1 GW of geothermal and 9 GW of wind power.

For related information see October 10, 2014, article - Saudi Arabia Opens Bids for 41 Gigawatts of Solar Projects through 2032

But other experts say that with the decreasing cost of utility scale solar installations, solar power in Saudi Arabia has achieved grid parity, and can produce electricity at costs comparable to conventional hydrocarbon sources.

Earlier, King Abdullah City for Atomic and Renewable Energy (KACARE) said that as more than 50% of electricity was sourced from oil, it had drawn up plans to shift to renewable energy. At that time, Saudi Arabia had only three megawatts (MW) of installed solar capacity.

"One of the key messages from the medium term renewable energy market report 2013 is that policy uncertainty is the largest risk for renewable investment," said Keisuke Sadamori, director of energy markets and security directorate at the International Energy Agency (IEA). "Policy uncertainty is the largest risk for renewable investment," he said.

Every country, including Saudi Arabia, should introduce long-term policies to provide a predictable and reliable framework to support renewable deployment, said Sadamori.

"High level plans are already in place, but the major challenge in the Kingdom lies in the absence of a detailed timeline for a clear and gradual shift to renewable energy in the country and the slow adoption and advancement in renewable energy initiatives," said Rasheed M Alzarani, chief executive officer of Riyadh Valley Company.

For related information, see August 26, 2014, article -- Saudi Arabia Aims to Offer World's Lowest Solar Power Costs

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