Saudi Arabia is heading towards privatizing the electricity sector and “shifting towards solar and alternative energy in the framework of its efforts to reduce the use of fossil fuels in production rates,” according to a report in Asharq Al-Awsat citing “informed sources.”
The Saudi Electricity Company plans to “split into four units with local and international companies able to take stakes in the new firms,” with a targeted completion date before the end of this year, according to reports. The plans must still be approved by a ministerial committee.
Saudi Arabia’s surging power demand is a pressing issue for the government, as population rates and electricity consumption continue to rise and strain current capacity.
Saudi Arabia’s water and electricity minister, Abdullah al-Hussayen, said last month that Saudi Arabia will need to invest $133 billion in electricity projects over the next ten years to cope with rising power demand. Saudi Arabia expects peak electricity to hit 90,000 megawatts (MW) in 2022. Installed capacity is around 70,000 MW now, the Minister said.
Al-Hussayen hinted at a conference last month that participation by the private sector in this expansion was in the works.
“The expansion plan in the sector…requires the execution of electricity projects for the next ten years whose costs will exceed 500 billion riyals and in which the private sector is expected to take part,” Hussayen said, according to Reuters.
Even with low oil prices, the need for Saudi Arabia to move beyond oil for domestic energy consumption is essential. 38 percent of total oil and gas resources produced in the kingdom are used for domestic energy consumption, and thus, not available for sale on international markets.
To move beyond oil and gas as the primary source for domestic energy use, solar power is the natural choice. Saudi Arabia gets 3,000 – 3,500 hours of sunshine a year.
“In fact, energy conservation policies for sustainable development could result in reducing the electricity forecast demand by 5–10%, equivalent to 3–6GW of additional capacity,” according to the Asharq Al-Awsat report, which could total a savings of $1.5–$3 billion over the next 20 years.
