Energy industry: Saudi Arabia is making a big renewable energy move
Renewable energy and Saudi Arabia are two phrases that do not generally occupy the same sentence or even paragraph. But, according to the Financial Times, the Kingdom is making a big push for solar, wind, and nuclear energy, to the tune of $30-$50 billion.
A couple of reasons exist for this new direction.
First, while Saudi Arabia is awash in oil and gas, these products are the commodities that it depends on for export. Every barrel of oil and cubic foot of natural gas that is used for domestic consumption in the Kingdom is less that can be sold overseas.
Second, the rulers of the oil-rich country have seen the writing on the wall insofar as the changing energy markets are concerned. As the cost of solar and wind power continues to decline, they are becoming more competitive with fossil fuels. Saudi Arabia would like to get into this new energy frontier before it gets left behind. Indeed, it hopes to export electricity derived from solar and wind eventually.
One thing that Saudi Arabia has in abundance besides oil and gas is the sun. It beats down on the desert kingdom relentlessly. It therefore behooves Saudi Arabia to take advantage of this untapped resource, and start covering its deserts and root-tops with solar panels.
Saudi Arabia has cut subsidies for domestic gasoline and fossil-fueled utilities, much to the consternation of its population used to cheap energy. But the savings have amounted to about $55 billion a year that can now be plowed into renewables, broadening and diversifying Saudi Arabia’s energy production.