The Arab States of the Persian Gulf have long been known as some of the most dependent regions on oil worldwide, with their rich availability of natural resources allowing them to develop significant financial influence.
However, as the world warms up to the idea that it will need to phase out fossil fuels eventually to appropriately deal with the changing climate, such a path cannot continue forever.
The news that Saudi Arabia is about to take huge steps in solar power and encourage greater use of the waste products in the oil industry is one of the biggest regional developments in terms of a landscape shift in quite some time.
The country confirmed that world power supplies will eventually have to change by announcing that it is putting billions of dollars into renewable sources, which is likely to send strong market signals.
Saudi Arabia has recognized that it may lack the level of expertise needed to accomplish its goals on its own. While it has begun a feasibility study, it has also initiated a Memorandum of Understanding (MoU) with companies from South Korea and China.
One reason for such an agreement is to research ‘an integrated complex that would make polysilicon available, which is basic raw material for the solar panels,’ according to Tariq Baksh, Vice President of Chemicals and Renewables for Saudi Arabia’s National Industrial Clusters Program.
He also referenced carbon black, a byproduct material from oil production more typically known as a filler in rubber products, as being ‘a sort of integration in connection with energy production.’ Baksh confirmed the news at the World Future Energy Summit in Abu Dhabi.
Saudi Arabia is looking to implement 58 gigawatts of renewable energy by 2030, and the public sector is providing support to help make this viable. One such source is Japan’s Softbank, which recently announced its intention to build $200bn worth of solar capacity worldwide.
Such a feat will likely require the involvement of many global players, including Saudi Arabia’s ACWA Power. The Riyadh-based company will be expanding its current level of solar panel output to help meet demand. Given that it has backing from Saudi Arabia’s Public Investment Fund (PIF), there is likely to be scope for production to start fairly quickly.
Softbank CEO Masayoshi Son has been looking to extend the company’s ties to Saudi Arabia over the last year, with ambitions of unveiling a 200-gigawatt solar power project in the country. This plant would be the largest of its kind in the world.
Saudi Arabia has said in the last few years that it plans to diversify from oil companies, including publicly listed state-owned ones, as it reduces its reliance on a volatile resource. As part of its 2030 vision, it aims to create thousands of jobs, new skillsets and manufacturing lines to help cope with the expected demand needed to replace oil in such a large capacity.
If the country can become as big a player in other sectors as it currently is in oil, then this may well lead to a dynamic shift in the Gulf.