NEWS / EVENTS ENERGY SOLAR
05/ 2012
Saudi Arabia Launches Massive Renewable Program with Hybrid FITs
While North America continues to dawdle on the road to the renewable revolution, the conservative, oil-rich Kingdom of Saudi Arabia has proposed one of the most sweeping and massive moves to renewable energy on the planet.
In typical Saudi fashion, where everything from oil fields to opulence is done on a colossal scale, the proposed renewable program is gargantuan.
Starting from zero, the Kingdom plans to install a staggering 54,000 MW of renewable-generating capacity during the next two decades.
For comparison, the United States, with more than ten times the population of Saudi Arabia's 27 million inhabitants, operates about 50,000 MW of solar panels and wind turbines.
The proposal for the King Abdullah City for Atomic and Renewable Energy (KA-CARE) procurement program was announced at a conference in Saudi Arabia earlier this month. KA-CARE's board has yet to approve the proposal but is expected to do so shortly.
The objective is to generate one-quarter of the Kingdom's electricity from solar energy alone, while developing a domestic renewable energy industry. The latter is a key part of the program.
While much of the renewable energy trade press has focused on the amount of solar photovoltaic (solar PV) capacity proposed, an even larger amount of Concentrating Solar Power (CSP) is anticipated. The program's initial targets are:
CSP: 25,000 MW,
Solar PV: 16,000 MW, and
Wind: 9,000 MW.
Interestingly, the amount of electricity generated by 9,000 MW of wind at moderately windy sites is of the same order of magnitude as the 16,000 MW of solar PV — even in sunny Saudi Arabia.
Feed-in Tariffs to Build Out Program
The Kindgom's conservative world view is revealed in the hybrid nature of their proposal. The KA-CARE program will begin with two rounds of bidding for solar PV, CSP, wind, geothermal and waste-to-energy capacity.
The first round of bidding will take place in 2013.
Solar PV: 1,100 MW
CSP: 900 MW
Wind: 650 MW
Geothermal & Waste-to-Energy: 200 MW
The second round of bidding will take place in 2014.
Solar PV: 1,300 MW
CSP: 1,200 MW
Wind: 1,050 MW
Geothermal & Waste-to-Energy: 250 MW
But unlike other jurisdictions that have recently opted for renewable auctions, Saudi Arabia plans to move quickly to feed-in tariffs to build out the program, because of their simpler administration. This may occur as early as 2015.
Of the 54,000 MW in the proposed program, nearly 90 percent of the capacity will be assigned through the application of technology-differentiated feed-in tariffs.
Here are some of the program's key elements.
Maximum project size: No limit
Minimum project size: 5 MW
Technology specific targets: Flexible
Term: 20 years
Evaluation: Price and non-price factors
Feed-in tariff launch: After second auction
Review: Every three years
Localization: Domestic content requirements
The Saudi proposal makes it clear that this program is as much about industrial policy as it is energy policy. The Saudis want to be as influential internationally in renewable energy as they are now in oil exports. Toward that end, the Saudis emphasize that price is a factor, but only one factor, determining how much of which technology is developed and — equally as important — who gets to participate in the program.
The Saudi announcement could well send such powerful shock waves through the world's oil industry that they reach the highest levels of policy makers in Canada and the USA, leading them to reconsider their recalcitrance toward the renewable revolution sweeping the globe.
