Why Saudi Arabia Is Building The LARGEST Solar Energy Park | That Changes The Entire Energy Industry

Why Saudi Arabia Is Building The LARGEST Solar Energy Park | That Changes The Entire Energy Industry

#saudiarabia #energy #solar

Saudi Arabia is building a huge solar power plant in the Al Shuaibah region that will provide electricity to around 350,000 homes in the Middle East.

The Saudi utility company ACWA Power and the Water and Electricity Holding Company are developing the project. What's more, power purchase agreements have already been signed.

It's expected to start operating in the fourth quarter of 2025 and will have a capacity of 2,060 megawatts.

The Water and Electricity Holding Company and ACWA Power will jointly own the project. Then, a new entity called Shuaibah Two Electrical Energy Co. will oversee its construction.

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When we think of Saudi Arabia, the first thing that comes to mind is its huge oil reserves. But the world is changing, and the future of oil is becoming less certain.

There’s been a rise of electric vehicles and a shift towards sustainable alternatives in shipping and aviation. So, it's clear that Saudi Arabia needs to adapt to this new energy landscape.

In the first half of 2021 alone, electric vehicle sales increased by 168% compared to the same period in 2020.

This indicates that the world is still moving toward a cleaner and more sustainable future despite the challenges of the Covid-19 pandemic.

In addition, major oil companies and the International Energy Agency predicted that global oil demand would peak sometime after 2030.

This means that Saudi Arabia can longer rely on oil as the foundation of its economy in the long term. Instead, the kingdom needs to turn toward renewable energy sources.

This is why the country has set ambitious targets for developing renewable energy. This includes plans to generate 50% of its electricity from renewable sources by 2030.

Different countries start the energy transition from other points. Some countries, like Germany, China, and the United States, have abundant coal resources, so they rely on coal-fired generation.

In contrast, Saudi Arabia has abundant oil resources, so it has been using oil as a power source. However, the country has been reducing its use of oil in electricity generation and replacing it with natural gas.

In the past decade, gas-fired generation doubled to over 200 terawatt-hour in 2020. Meanwhile, oil-fired generation has fallen by 28% from a peak of 183.7 terrawatt-hour in 2015 to 132.8 terrawatt-hour in 2020.

This transition from oil to gas has been the country's primary driver of reduced carbon dioxide emissions since 2016.

According to BP data, carbon dioxide emissions from fossil fuel combustion in Saudi Arabia fell by 5.7% between 2016 and 2020. And this reduction is impressive considering the country's rapidly rising domestic energy demand.

However, renewable energy technologies like wind, solar PV, and Concentrated Solar Power now offer sustainable energy generation in addition to natural gas.

Expanding renewable energy sources will help Saudi Arabia further reduce its carbon dioxide emissions and create a more sustainable future.

Saudi Arabia's Public Investment Fund has launched a new renewable energy program. This includes the construction of the largest solar power plant in the Middle East and North Africa.

A PIF-backed consortium, including ACWA Power and the Water and Electricity Holding Company, has signed a 35-year power purchase agreement for the 2.06 gigawatt solar power plant.

The project is expected to start operating in 2025, with a total investment value of $1.75 billion. ACWA Power and Badeel will own a 50% stake in the project through their joint venture, the Shuaibah Two Electrical Energy Company.

In April 2021, a group of investors signed a deal with SPPC to build a massive solar power plant in Saudi Arabia with an investment of around $905 million.

This plant is part of the country's goal to develop 70% of its renewable energy capacity by 2030.

The project is a significant step towards a more sustainable future and is expected to be up and running by the end of 2022.

The Deputy Governor of PIF emphasized that renewable energy is a top priority for the country. He also said it’s part of its broader efforts to diversify revenue sources.

And this plant is a concrete example of the energy transition underway in Saudi Arabia.

ACWA Power's Chairman, Mohammad Abunayyan, expressed his pride in partnering with Badeel and SPPC to develop a new renewable energy project in Saudi Arabia.
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