Saudi delegation reports on solar opportunities
With the hype surrounding the Saudi solar power market lately, a rational view has become much needed to put things back into perspective. How ready is the Saudi market for investment, which solar technology will lead the way, and how different will solar power purchase agreements be from the existing ones?
"Saudi Arabia is going to start with the renewables program in the short term, sometime between 12 and 18 months, because the main drivers here are economics," says Miguel Arraras, Director of Solar Business Development at Acciona Energia and one of the 20 delegates who participated in the recent Solar PV Trade Mission in Saudi Arabia, which included the Desert Solar Conference.
Hosting representatives from pioneering companies such as Jinko Solar, E.ON, and Acciona Energia, the Saudi mission was held over five days, taking international delegates on an intensive tour to meet with leading stakeholders in the local solar industry, which included K.A.CARE, Saudi Aramco, and Advanced Electronics Company (AEC). In addition to the site visits, each day concluded with a networking dinner.
"Overall, the Saudi trade mission from E.ON's perspective was a huge success. Before arriving, E.ON believed in the potential for renewables in the kingdom. Information gained from the meetings and presentations during our time there has given us confidence that it is not a matter of 'if' but 'when'," says Ahmed Mulla, Project Development Director of Renewables Middle East and North Africa at E.ON Climate & Renewables.
The first Annual Solar PV Trade Mission and Desert Solar Conference were jointly organized and hosted by the Saudi Arabia Solar Industry Association (SASIA) and Netherlands-based Solarplaza.
E.ON's team in the trade mission was led by the company's managing director, Amaan Lafayette, as well as Ahmed Mulla, who believe that renewable applications in Saudi Arabia are not limited to supplying electricity to the grid, but can also be used in seawater desalination; which would bring about both environmental and economic benefits.
"There are challenges, of course, pertaining to operating in the harsh desert environment, which we were glad to hear are being proactively investigated by K.A.CARE and KAUST, such as the impact on electricity output due to dust accumulation on solar panels. These research and development activities will pave the way for an indigenous industry, creating jobs throughout the value chain and knowledge export," notes Mulla.
An important take-away from the mission, according to delegates, was that solar projects in Saudi Arabia are currently based on the construction model and not the solar business model. This is evident from the fact that most solar projects in the kingdom have so far been built with assistance from international companies, such as Belectric, Conergy, Phoenix Solar, among others.
"The cross-over vision about the different actors and organizations related to the program has been the most valuable item from the Saudi Solar PV Trade Mission and Desert Solar conference," says Arraras,
Delegates also came to the conclusion that Saudi companies want to partner with international companies, and that early stage foreign manufacturing investments are already taking place, for example by KACO New Energy, Ingeteam, AEC, Polysilicon Technology Company, and Shoals Technologies.
Product and system design in Saudi Arabia, however, will require a more specific approach, especially when it comes to operations and maintenance, and the control of dust, humidity and temperature.
"The Saudi Solar Trade Mission allowed meeting with several of the leading solar entities in Saudi Arabia, such as K.A.CARE and Saudi Aramco. I got the insights we were looking for to assess Saudi Arabia's solar market and to support the business planning of our customers," says Dr. Henning Wicht, Director and Principal Analyst of Photovoltaics at market research firm IHS, who detailed the impact that technology costs can have on the Saudi PV market during his speech at the Desert Solar conference.
Although no legal framework has been established yet for solar energy in Saudi Arabia, the country is already energy advantaged, which is why it can evaluate renewable energy in a unique economic model. And while many provisions within existing Saudi Power Purchase Agreements (PPAs) are expected to be similar to solar PPAs, for example in their fixed terms and completion dates, they will also differ in several factors such as their despatch and tariffs.
The visiting delegates also observed a lack of knowledge in the local solar market and the presence of urban myths regarding the viability of solar energy. But one thing remained evident "“ there was a surge in interest from Saudi companies in the solar market.
Perhaps the most important observation made during the solar trade mission is that PV is now more attractive than CSP in Saudi Arabia, and that electricity generated by solar PV in the kingdom is already less expensive than the incremental cost of oil being burnt at their utility plants. Certainly, with such strategic findings, there will be weighty implications to be considered prior to entering the Saudi solar power market.
