Saudi Arabia has launched a $50 billion clean energy campaign to divert fossil fuel consumption while offering the cheapest solar power in modern history. On October 3, corporations began bidding for the lowest electricity supply price, reaching a $1.79 per-kilowatt-hour rate and competing with the United Arab Emirates’ record-setting $2.42 price from September 2016. Recent developments suggest, however, that a UAE-based corporation is the leading bidder for the Saudi project.
As the world’s top oil-exporter, Saudi Arabia has received global criticism for its reliance on fossil fuels. Newly-crowned Prince Mohammed bin Salman, known colloquially as MBS, has introduced measures to reduce the monarchy’s oil use within the next decade by investing in renewable energy. To protect the state’s oil monopoly, MBS has resisted interference with Saudi Arabia’s natural gas operations by outside governments. However, in June 2017, his father planned a 5 percent sale of Saudi Aramco, a state-owned oil giant and likely the world’s largest firm, in an effort to decentralize control over the country’s oil-production amid international concerns. Aramco’s planned sale, paralleled by the solar campaign, shows that the young prince will not oppose his father’s suggestions. Instead, he is diversifying the Saudi economy and gradually working to break the nation’s dependence on natural gas.
The estimated $50 billion solar panel project has significant implications for regional relations in the Middle East. Though the campaign is momentous, it hardly fulfills Saudi Arabia’s decade-long promises for more renewable energy, according to critics. The Saudi government originally aimed to produce 41 gigawatts (GW) of renewable electricity by 2030; deadlines were delayed, however, and the production target has been reduced to 9.5 GW. Saudi Arabia uses 900,000 barrels of oil per day to power homes, produce electricity, and run utilities nationwide, ranking second, behind only the United States. With the transition to renewable energy, Khalid Al-Falih, MBS’s minister of energy, predicts that 30 percent of Saudi Arabia’s energy will come from renewable sources like solar and nuclear energy by the original 2030 deadline. Despite this improvement, daily oil-barrel consumption will remain in the hundreds of thousands.
Saudi Arabia announced its final sustainable energy campaign in February 2017. Now that bidding has started, the prince’s ability to negotiate with foreign governments and international corporations will be tested. Though Saudi Arabia deals with foreign investments through its oil market, the growing demand for renewable resources will push more multinational business into the Middle East. Designs for replenishable power will influence the trajectory of oil-based power in the Middle East—a factor that has made Saudi Arabia one of the most natural-resource rich economies in history.