The growing concern over depleting hydrocarbon resources is forcing oil-dependent nations to rethink their economic policies and diversify into other sources of income, and that includes renewables. Bloomberg has the full report:
Solar power is getting so cheap that even Gulf Arab states awash in crude oil are embracing the renewable resource. Their motive is as much to keep selling fossil fuels as it is to rein in their carbon emissions.
With almost 30 percent of the world’s oil reserves and some of the lowest costs of production, Arab countries in the Persian Gulf will probably rely for years to come on crude exports as a pillar of their prosperity. But improvements in solar technology mean it will be cost effective to exploit the region’s abundant sunshine instead of burning their oil and natural gas to run power plants. That could allow them to export more and boost their haul of petrodollars.
Why would oil-rich countries shift to renewables?
Electricity use in Gulf Arab nations has surged by 6 percent a year on average since 2000, driven by expanding populations and growth in energy-intensive industries, Ada Perniceni, a Dubai-based partner at consultant A.T. Kearney, said in a May report. Governments are seeking more efficient ways of satisfying this rising demand, and the increasing afford ability of renewables is making solar and wind power a bigger part of the region’s energy mix.
By the end of 2020, the Middle East and North Africa are forecast to have 24.1 gigawatts of wind and solar capacity –- almost six times the 4.2 gigawatts installed as of last year, according to Bloomberg New Energy Finance. The additions will require $27.4 billion of investment, BNEF said in May.
The risk that oil prices may fall adds to the pressure on Gulf Arab producers to maximize their earnings by exporting more of their crude instead of burning it. Saudi Arabia’s use of electricity and desalinated water is so high that the country burns crude to meet half of its domestic power and water demand, according to A.T. Kearney’s Perniceni. If the kingdom doesn’t curb demand or invest in alternative energy sources, local needs could absorb most of its hydrocarbon production within 10 to 20 years, she said.
The shift toward renewables by the six member states of the Gulf Cooperation Council would also help diversify their economies. Saudi Arabia is seeking to curb its reliance on crude exports under its Vision 2030 strategic plan, on which Crown Prince Mohammed bin Salman has staked his personal prestige.
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