Chinese solar materials manufacturer GCL Technology Holdings said earlier this month it is in discussions with Saudi Arabia to build its first overseas factory in the Gulf kingdom to produce 120,000 tons of polysilicon annually, an essential material in the solar photovoltaic supply chain.
The polysilicon manufacturer eyes the country's substantial solar market potential. Saudi Arabia plans to get 50% of its electricity from renewable sources by 2030. But although the share of renewables in the kingdom’s installed electricity generation capacities has jumped more than twelvefold since 2020, it currently accounts for just 1.3%.
The largest Arab economy is in a race against time. It needs to bring online 50 times more renewable power‑generating capacity over the next seven years to meet its ambition of 58.7 gigawatts (GW) of clean electricity generation by 2030, compared to only 1.2 GW as of now. Global Energy Monitor, a US-based nonprofit, estimated that there are plans for 19.3 GW of solar and wind projects in Saudi Arabia as of August, but only 45% of that is under construction.
Kasandra O'Malia, solar project manager at Global Energy Monitor, told Al-Monitor, “We are still short of the 2030 goal, but I think it is doable. One thing to keep in mind is that these projects can be built pretty quickly. But they would have to really put some effort into it,” The nonprofit does not include projects below a capacity of 10 megawatts, like decentralized solar on the rooftop of individual homes or companies, which is still in its infancy in the Gulf region.
Saudi Arabia also hopes to build its first nuclear power plant, in part to feed its grid with low-carbon power when renewable resources are not available. Amnah Ibraheem, a Gulf energy analyst at the International Institute for Strategic Studies in Bahrain, said that adding nuclear power to the Saudi energy mix would be a “game changer.” But getting nuclear power online by 2030 "would be very difficult,” Ibraheem told Al-Monitor. "There are a lot of discussions, but technically, very little is happening."
Saudi Arabia is reportedly conditioning a normalization deal with Israel on US approval for a civil nuclear program.
How much new renewable energy will be required to meet the 2030 goal will eventually depend on the trajectory of electricity consumption. A phase of low growth like 2015-2020, when Saudi Arabia’s consumption grew by a total of 7%, could allow the kingdom to retire power plants that burn oil and replace them with renewable projects already in the pipeline. Conversely, an expansion phase like 2010-2015, when electricity consumption soared by 53%, will leave the kingdom with no choice but to invest simultaneously in new capacity.
If plans are any indication, the latter scenario is more likely. The kingdom aims to grow its gross domestic product by 54% by 2030 to $1.7 trillion, while seeking to “phase out all power stations that use petroleum and diesel,” the US Department of Commerce’s International Trade Administration noted in a report. But plans to build new gas power plants, however, contradicts the renewables goal, O'Malia said. Saudi Arabia’s main electricity producer, the Saudi Electricity Company, its Ministry of Energy and Saudi utility developer ACWA Power did not reply to requests for comment.
Qatar has set an example for other Gulf countries on how to scale up renewables in a short time frame. The emirate inaugurated its first large-scale solar power plant a month before the 2022 World Cup kicked off, pushing its share of renewable electricity to 7.2% in 2022, from 0.2% a year earlier. But the scale of investment in Saudi Arabia is of a different magnitude. Al Kharsaah solar plant’s electricity output can meet the energy consumption of only 55,000 Qatari households, while a 2022 government census puts Saudi Arabia’s population at 32.2 million.
However, Saudi Arabia and Qatar do share a similarity. Electricity is heavily subsidized in both countries as part of a social contract that redistributes fossil fuel wealth to citizens. Saudi Arabia spent $14 billion in 2021 to supply below-cost electricity, the IEA estimated. That means that the cost of decarbonizing Saudi Arabia’s grid is left to state entities, not consumers — and it is one reason why investments in solar have “stagnated until recently,” the World Bank concluded in a 2020 report. Another reason is that power plants burning local fossil fuels were more economical than renewables until recently, if the cost of environmental damages is excluded.
Like most Vision 2030 projects, the Public Investment Fund (PIF) will pay for the lion’s share of funding. The sovereign wealth fund said it will develop 70% of Saudi Arabia’s renewable energy by 2030, mainly through its subsidiary ACWA Power. The PIF did not reply to requests for comment.
Saudi Arabia did not disclose exact capital expenditures required to reach its renewables goal. However, the Ministry of Energy said during a budget forum in 2021 that it expects the kingdom to invest $293 billion on power and renewable energy projects by 2030, including large investments to upgrade its transport lines and distribution networks.
Carbon intensity, the moment of truth
Saudi Arabia pledged in 2021 to eliminate or offset all its emissions of planet-warming gas by 2060. But the kingdom’s electricity still ranks among the most carbon-intensive globally, at 571 grams of carbon dioxide equivalents emitted per kilowatt-hour of electricity in 2021, according to the Our World in Data publication. That is twice as much as the European Union, where the carbon intensity of electricity has dropped by about 32% over the past two decades. In Saudi Arabia, it only decreased by 5.3% over the same time frame.
The carbon intensity of the Saudi economy has moved in the opposite direction of the rest of the world. It has surged by 43% since 1990 to reach 0.37 tons of CO2 per $1,000 of gross domestic product in 2021. Meanwhile, the global economy’s CO2 intensity dropped by 36%, the European Union’s Emissions Database for Global Atmospheric Research showed.
“The biggest roadblock is probably going to be overcoming internal pushbacks and inertia,” O'Malia said. "You have a lot of companies and people in Saudi Arabia that are wealthy from oil and gas, and so there is just going to be resistance to change, like there is in the United States."