|11 September, 2016

Electricity production to cost Saudi Arabia 3.2 million barrels of oil per day

Study calls for Saudi Arabia to utilise alternative and renewable energy to meet electricity needs

Image used for illustrative purpose. A vehicle drives past workers near power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh.

Image used for illustrative purpose. A vehicle drives past workers near power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh.

REUTERS/Fahad Shadeed
11 September 2016
Riyadh - A new study about the future of energy in Saudi Arabia is calling for taking advantage of the Kingdom's capabilities in the field of alternative and renewable energy so as to ensure the continuity and security of energy supplies over the long term, according to a report published in a newspaper. 

With a continued rise in global energy demands due to economic growth, the growth of electricity consumption in 2020 will cost the Kingdom around 3.2 million barrels of oil per day, the study revealed. 

During its seventh session, the Riyadh Economic Forum initiated the preparation of a study titled, "Alternative and renewable energy economics in the Kingdom: Challenges and prospects for the future."

The study framed recommendations in a way that considers the prospective future and taking advantage of available resources for the development of the alternative and renewable energy sector, especially as an important strategic dimension in Vision 2030 is aimed at adding 9.5 gigawatts of renewable energy to domestic production by 2023 (phase 1), and nationalizing a large proportion of the value chain of renewable energy. 

What distinguishes the study is its interest and attention to providing solutions to the issue of sustainability of the energy sector, as well as the role that could be played by alternative and renewable energy sector in this aspect.

Based on economic and population growth, expectations are that consumption energy will grow 4.4 percent annually until 2035, or the equivalent of 350 million tons of oil year.

The study suggests this imposes great pressure on the Kingdom's export revenues.

To meet the high demand in the electricity and water sectors, in particular, this will require large investment commitments to expand and modernize the infrastructure for the electricity and water sector, the study stated.

A survey of energy used to produce electricity in the Kingdom reveals the equivalent of 1.6 million barrels of oil was consumed daily to produce 60,000 megawatts of electricity in 2012.

If demand for electricity doubles to 120,000 megawatts by 2020, this means consumption up to about 3.2 million barrels of oil per day for production, a significant growth that requires searching for economic alternatives.

The study concluded that there is an urgent need for the Kingdom to resolve the issue of sustainability in the energy sector, indicating that the development of the alternative and renewable energy sectors is a strategic objective to do so and contribute significantly to the creation of opportunities for economic development.

The move will also help provide job opportunities for young men and women throughout the Kingdom. 

According to the study, the development of alternative and renewable energy sources to meet the growing demand for energy is no longer a mere suggestion, but rather has become a strategic priority for the Kingdom.

The study did not ignore global trends used in alternative and renewable energy technologies, noting that solar, thermal, and wind energy are easy and simple options to apply this in the Kingdom and reliable sources of energy with relatively low risk.

Such technologies should be developed in the short term within a targeted economic framework, while alternative sources like biomass energy and geothermal energy should be considered longer-term opportunities due to lack of technical maturity, potential resources, and understanding of their potential in the Kingdom at this time. 

The Kingdom, the study suggested, is also in need of adopting better and more integrated resource planning practices as systems of energy will become more complex through alternative and renewable energy adoption.

An advisory committee should work on gathering input from relevant business sectors and evaluating options and techniques, as well as bilateral electricity trade options on the regional level.

The study shows smart grid technologies will help in alternative energy integration and renewable efficiency. 

As for the private sector participation, the study points to barriers to participation in the alternative and renewable energy sector, which requires formulation of strong and well-designed economic frameworks to stimulate the participation of the private sector.

It also recommends the adoption of the competition system, allowing for a competitive bidding in the initial phase followed by a preferential tariff for power supply system to ensure the best quality and price of the product for end users.

© Arab News 2016