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Abu Dhabi, UAESunday 24 February 2019

Saudi energy minister: Renewables unlikely to displace global demand for oil

Riyadh will look to 'virtually eliminate' burning of liquids for power by 2030

Khalid Al Falih said renewables will not conflict with oil's role in the energy mix. Victor Besa / The National
Khalid Al Falih said renewables will not conflict with oil's role in the energy mix. Victor Besa / The National

Renewables are unlikely to displace global demand for oil, with crude continuing to play a critical role in the regional pivot towards refined products and chemicals, according to the Saudi energy minister.

"I’m not concerned about the role of renewables. Renewables are going to primarily displace sources like coal,” Khalid Al Falih speaking at Abu Dhabi Sustainability Week.

"Oil has never, or at least for the last 30 to 40 years, been a significant contributor to power generation, so renewables come in at a large scale - which will take time by the way - into utilities and stationary applications of energy, [but] does not conflict with the role of oil in the energy mix, [which is] primarily to transform into chemicals."

Saudi Arabia, the world’s largest crude exporting nation, is developing large-scale multi-billion dollar downstream complexes adjacent to industrial hubs along its eastern and western coastlines.

The kingdom, which is moving away from burning crude for electricity generation to gas-fired power plants, is also advancing an ambitious renewable energy strategy.

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Saudi Arabia’s sovereign wealth fund will develop 70 per cent of the kingdom’s renewable energy capacity amid plans to install 60 GW of cleaner sources over ten years as the kingdom looks to free up more crude for export.

"The PIF [Public Investment Fund] and its selected partners will develop 70 per of the total renewable energy capacity with the objective of accelerating localisation of our manufacturing capability,” said Mr Al Falih.

"While the ministry through the Repdo [Renewable Energy Project Development Office] will continue to drive breakthrough prices through the kingdom by competitively tendering the remaining 30 per cent."

Saudi Arabia last year announced it was adding substantial renewable capacity to grid through its newly established Repdo within the kingdom’s energy ministry. Around 9.5GW of solar and wind capacities will be tendered for development by 2023, as Saudi Arabia’s moves its power generation away from fossil fuels.

The kingdom has already begun switching from burning of crude to gas-fired power plants.

"Over the coming decades liquids burning in our utilities which takes over 50 per cent of our power generation and a significant proportion of our water distillation will be virtually eliminated,” said Mr Al Falih.

The share of gas in the power generation mix will the grow from 50 per cent at present to 70 per cent over the next 12 years.

"Therefore the share of gas in the utilities in the kingdom of Saudi Arabia will be the largest among the major G20 economies,” he said.

"In fact over the next 10 years, we will develop domestically close to 60GW of renewable energy capacity of which 40GW will be photovoltaic cells, 3GW will be concentrated solar power and 16GW will be wind."

Riyadh will tender at least 12 projects across the renewable value chain in 2019 alone.

The kingdom would also look to introduce nuclear energy into the mix with two reactors with a combined capacity of 3.2GW set to come online within the next decade.

Mr Al Falih said plans were also underway to restructure the kingdom’s electricity industry.

"Over the next decade, we’ll create in the kingdom a global hub of renewable agency,” he added.

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Updated: January 15, 2019 06:11 PM

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