The sun instead of oil prices, OPEC members are invested in new energy

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Large-scale development of solar generation in the countries — exporters of oil will accelerate the cost reduction of solar energy production worldwide

We often hear that the decline in prices of raw materials should slow the development of renewable energy. Paradoxically, we observe the opposite. For example, in the world of solar energy in 2016 were built 76 GWh and a half times more than the year before (for comparison, the installed capacity of the Russian nuclear industry built half a century — 26 GW).

Moreover, the OPEC countries that literally sit on cheap fossil resources, began to radically transform their energy system.

Oil — exports, renewable energy — for themselves

Saudi Arabia ranks first in the world in the use of oil for electricity production. Approximately half of the generation — at the expense of oil, the second source is natural gas. Up to 1 million barrels. a day — almost a third of domestic consumption are burned at power plants. At the current growth rate of energy consumption and the outdated structure of generation, Saudi Arabia will become an oil importer by 2038, according to experts Chatham House.

This is a daunting prospect, and the country is trying to diversify its economy, rational use of energy and in the framework of the development strategy, Vision 2030 plans to create from scratch the renewable energy sector.

The Saudis want to ensure your solar power local components to form a complete value chain in the renewable energy sector and a “regional hub” for export of products of the solar industry. Energy Minister Khalid al-falih have suggested that Saudi Arabia will become a “major exporter” of renewable energy and “solar energy produced in the country can be exported to Europe.”

State oil company Saudi Aramco plans to invest $5 billion in technology companies clean energy sector in order to diversify its business and transfer of modern technologies of renewable energy sources in Saudi Arabia.

National programme for the development of renewable energy (National Renewable Energy Programme) involves the construction of 9.5 GW of solar and wind energy by 2023 as a “primary purpose.” This value is almost two times exceeds the planned volume of input of capacities of RES in Russia (by 2024), while relatively small by the standards of Saudi Arabia.

The United Arab Emirates. But this is only the beginning. As the experience of the United Arab Emirates, solar power in the climatic conditions of the Middle East are already able to produce the cheapest on earth electricity.

$0,0242 (1,4 rubles) per 1 kWh — a very aggressive price, but it is a fact, fixed in the agreement for a period of 25 years for the supply of solar electricity for Water and electricity company Abu Dhabi (ADWEC). None of the new generation facilities in other energy sectors in other countries are not able to provide return of investment and acceptable returns at this price.

UAE plan to 2050 to invest 600 billion dirham ($163 billion) in clean energy projects. Target structure of electric generation in accordance with the energy strategy of the country in 2050 should look like the following: 44% — renewable energy, 38% natural gas, 12% — “clean” coal, 6% nuclear energy. Currently, the main source of electricity in the UAE is natural gas (more than 90% of generation).

Algeria, the large North African oil and gas supplier to Europe, has embarked on a mega project — the construction of solar power plants with a total capacity of over 4 GW. The country is also not going to be a passive recipient of technology. In the framework of the development of renewable energy is expected to create the industrial foundations for national solar energy construction of plants producing equipment and components for photovoltaic installations.

The main role in the implementation of the Algiers project play local oil and gas company Sonatrach and Sonelgaz (although it is expected to attract large amounts of foreign investment). The project is aimed at reduction of natural gas consumption in the power sector.

By 2030, Algeria needs to act 22 GW capacity of renewable energy, which will cover 27% of the local demand for electricity and gas savings should amount to 300 billion cubic meters.

Qatar, which has the largest reserves of natural gas, now wants to become a champion in solar energy. A country with a population of 2 million plans to build by 2030 10 GW of solar power plants (which roughly corresponds to the current installed capacity of the country’s power grid).

The impact on the market

The development of solar energy in the Middle East and North Africa rational and justified not only in connection with suitable climatic conditions, but also characteristics energy consumption. In these Sunny countries, the main volume of energy is spent on ventilation and air-conditioning of buildings during the daytime when running photovoltaic generation. That is, production schedules and energy consumption largely coincide.

In addition, the emergence of a new source of energy will contribute to the transformation of the water industry in the region, more efficient use of both the water and energy resources in this area. Only UAE spending on desalination 15-16 billion cubic meters of natural gas per year. While scarce water resources are partly used in the production process of energy. Use to produce cheap solar electricity will lead to savings for both hydrocarbons and water.

Based on historical dynamics of the reduction of capital costs in photovoltaic energy, as well as the obvious increase of competitiveness of technologies of solar thermal energy (CSP) able to work around the clock, we assume that these targets for development of RES in the countries — exporters of oil and gas will be revised upward.

Will the OPEC countries to diversify their energy import and to sell not only oil but also electricity?

In the first decade of this century was developed a large-scale Desertec project for the construction of 100 GW of solar generation in the Sahara desert and the transfer of electricity to Europe. Its obvious disadvantage: the need to manage huge investment in politically unstable regions. In addition, the project was started in the years when technology costs were radically higher, and today its calculations are largely irrelevant.

In the future can be implemented similar projects but on a smaller scale. The EU does not lack energy and certainly doesn’t want a new dependence on middle Eastern and African suppliers. At the same time to perform the task of decarbonization of the economy, buying a share of clean electricity in the same Algeria is possible.

Large-scale development of solar generation in the countries — exporters of oil will certainly have an impact on world commodity markets, as it will free up additional volumes of gas and oil for export. However, in the short term this impact will be minimal — most of the released raw materials will be used to supply the growing domestic consumption of OPEC members.

At the same time, their huge investments in renewable energy will affect the rate of transformation of the global energy sector in General. The fact is that falling prices for solar electricity encourages business and governments to invest more in generation based on renewable energy sources, and increasing the volume enhance the effects of scale, pushing capital costs and, accordingly, the cost of 1 kW•h down. Thus, we will see exponential growth of solar energy in the middle East and North Africa, which will affect other sectors of the global energy industry.

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.

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