Saudi in 10 GW renewables plan but oil and gas ‘needed for decades’
By Paul Homewood
The Saudis inject a bit of honesty into the debate:
Saudi Arabia’s first round of renewable energy tenders are expected to deliver up $50bn by 2032 to bankroll 10 GW of clean energy, the country’s energy minister announced yesterday.
However, Khaled Al-Falih also used the stage at Abu Dhabi Sustainability Week to stress that oil and gas had a role to play in the global clean energy narrative.
And he was adamant that without oil and gas being utilised alongside renewables, “we will have a shock to the global economy”.
Afterwards, some in the audience felt his speech was decidedly off-message for a sustainability conference. Others took a ‘well he would say that’ view. But some believed he had added a dose of realism to the clean energy debate.
Al-Falih, who is also the chairman of Saudi Aramco, said: “Sustainability needs to take advantage of all energy sources. Technology is a clear enabler for sustainability and there is substantial room still to be made to make oil and gas more sustainable.”
He told the audience: “I am a realist. As much as we hope for renewables, they will not penetrate fast enough – they will not bring the standards of living that people aspire to fast enough.”
And he maintained that “we are going to need cleaner oil and gas for decades to come”.
“If the oil and gas industry stops investing [in the power sector], we are going to have a shock to the global economy and people will then revert to less sustainable sources of energy.
"By constraining fossil fuels we are going to be a less sustainable global economy." He said that many people believe that bad news for fossil fuels is good news for renewables, "but we have found the opposite".
I have been arguing for a long time that it would be a disaster for the global economy if the oil and gas industry just switched and wound down, as people like Mark Carney seem to want.
We only have to look back to the 1970s to see the economic dislocation which followed the 1973 oil crisis.
But let’s also look at the Saudi plan to build 10GW of “clean energy” by 2032. I would guess most would be solar.
If we assume a generous capacity loading of 20%, this would be enough to generate 18 TWh a year. Saudi total generation in 2015 was 328 TWh in 2015, according to BP, and has been growing rapidly in recent years, up from 181 TWh ten years ago.
Therefore the new capacity will only contribute 5% of current electricity output, and almost certainly much less by 2032, when total demand is likely to have risen much more.
In terms of primary energy, electricity only accounts for 28% of total energy consumption. Therefore the contribution of the extra 10GW of renewable energy will actually be tiny.
Of course, it is in Saudi interests to argue for the continuation of oil production and export. But if solar power was so cheap and efficient, particularly in the Arabian Desert, surely Saudi Arabia would be keeping back all of its oil for export, and relying on solar for most of its energy?