Saudi Arabia's determination to develop alternative forms of energy moved forward last week with the launch of the country's very first solar energy plant.
If that sounds like a joke coming from the world's largest producer of crude oil, think again. Solar power has the attention of the country's Oil Minister Ali I. Al-Naimi, and he sees a highly profitable future.
"For a country like Saudi Arabia…one of the most important sources of energy to look at and to develop is solar energy," Al-Naimi recently said.
"One of the research efforts that we are going to undertake is to see how we make Saudi Arabia a center for solar energy research, and hopefully over the next 30-50 years we will be a major megawatt exporter," he said.
If any doubt lingers, consider the fact that Saudi Aramco Pres. Khalid Al-Fallih was present last week when the state-owned Saudi Electricity Co. established the solar plant on Farasan Island.
The launch of the plant, which is expected to reduce diesel burning for the island's electric power generation, is in line with Saudi efforts to reduce the domestic consumption of fossil fuels better used for export revenues.
According to Ziyad Al-Shia, the executive director of Saudi Aramco Power Systems, the kingdom may need to burn as much as 3 million b/d of oil by 2020 if it doesn't improve efficiency. That's up nearly four times from the 800,000 b/d used now.
Backers say that the demand for electricity in the kingdom is increasing significantly in line with population growth, meaning that solar energy has the potential to provide much of the additional electricity required to meet this demand.
A new solar frontier
The project, which will save some 28,000 bbl of diesel over its lifetime, is very much an experiment for its backers. Solar Frontier is the name of the company that has built the site, and it is wholly owned by Showa Shell Sekiyu KK.
However, Showa Shell's solar business is not faring well. Recent reports say that the firm expects to post a loss with its solar cell operations roughly two times bigger than its original forecast for the current fiscal year.
"It needs to adjust its solar business strategy in response to the increasingly tougher market environment," the Nikkei business daily said in a recent report, noting that "a strategic rethink is in order."
In line with Al-Naimi's thinking, the paper says that tapping into Saudi Arabia, "which is flush with oil money to invest, the firm could build a solar cell plant and make it a major hub for exports to Europe."