Saudi Arabia, the world's biggest oil exporter, is going solar. The country has set a target of installing 41GW of solar capacity within two decades.

This represents as much energy as it pumps out of the ground and exports in the form of crude oil.

With an electricity demand that is growing by 8% per year, its government is looking for $109 billion of investment to build a solar industry that will generate one third of the country's electricity needs from the sun by 2032.

To put this in perspective, the world total for solar energy investments last year was $136 billion, according to Bloomberg New Energy Finance.

As an early stage in this plan, Mecca's Mayor, Osama bin Fadl Aidarous Albar, is seeking bids for developers to build and operate facilities that would produce for the city 385 GW-hours of power per year, which would include 100 MW of solar capacity. The holy city hosts an annual influx of 1.8 million pilgrims.

“No city in Saudi Arabia owns power-generation assets, and we want to be first city that owns power plants and hopefully the first in the Muslim world,” said Albar.

Current bidders include Saudi Binladin Group and ACWA Power International. One of the judging criteria is the length of the contractual period; the shorter the better, as the successful developer will operate the plants until its investment is recouped.

“During the Build-Own-Transfer contract duration, generators will be selling electricity to Saudi Electricity Co. (SECO), and after the contract ends, the city will own the power plants and it will sell electricity just like any other independent producer in the country,” added Albar, who is well-known for his interest in science, and a member of The Physical Society of London.

The winning bid will be announced on January 5, 2013; work will commence the following June and be complete by 2018.

Solar Arabia

Albar was a key speaker at a Solar Arabia Summit held in Riyadh last week, which was attended by many international companies such as Dow Chemicals, AE Photonics, Martifer, Enel Green Power & Sharpe, Ravano, Energes and Schneider Electric.

Chinese companies were also represented, by HIL International Lawyers and Advisers. The conference was chaired by Germany's Gerhard Stryi-Hipp, the Head of Energy Policy and Coordinator of Smart Energy Cities, at the country's Fraunhofer Institute for Solar Energy.

At the conference, the United Arab Emirate also reiterated its intention to become a leader in renewable energy. The Senior Analyst for Research and Development at DEWA Mohammed bin Rashid Al Maktoum Solar Park, Mohammed Abdulkareem AlShamsi, said the UAE government has already allocated 48 square kilometers for solar parks in the country, and aims "to develop 10MW by 2013 and a 1GW plan to be achieved by 2030".

The desert landscape provides specific problems, to do with wind-driven sand needing to be regularly cleaned from panels, and a high cost for land stabilisation in preparation for construction work.

Financing for Saudi Arabia's and the UEA's plans is being part-managed by Terra Nex Financial Engineering, a company that is well established as a family office for high-ranking members of the world families in the countries of the Gulf Cooperation Council.

The Group develops exclusive direct investments in the Middle East for its German, European and Middle East Investors. It is already successfully managing a $2 billion 400 MW solar photovoltaic investment in the Sultanate of Oman, including module and aluminum frame manufacturing, as well as technology transfer and training.

Germany was represented at the conference by the ILF consulting engineering company.

Masdar was also represented, by Daniel Calderon, Head of Origination and Investment Management. Masdar is the Abu Dhabi-based renewable energy company that is building what aims to be one of the world’s most sustainable cities.

Saudi Arabia diversifies

Solar is not the only component in Saudi Arabia's energy diversification plans. It also expects to develop nuclear power, wind, waste and biomass in order to make more of its reserves of fossil fuels available for export.

Mecca alone produces 4,000 tons of garbage per day that could provide feedstock for energy-to-waste plants.

Currently, renewables provide below 1% of the kingdom's energy. Yet it, like its regional companions, is a sleeping giant of solar energy, with a potential to generate more electricity from solar power than the world currently consumes, because it receives such a huge amount of solar radiation: between 4.5 and 7 kW per square metre a day, compared with Greece's 1.7 kW, according to the European Photovoltaic Industry Association.

The Saudi programme is being managed by a government-backed institution, the King Abdullah City for Atomic and Renewable Energy, which is independent of the Ministry of Energy and Aramco, the state oil company.

It is hoped that Mecca’s plan will inspire other Middle Eastern cities to get involved with more renewable energy, commented Adnan Amin, director general of the International Renewable Energy Agency.

“The project is very visionary, as Mecca has special significance around the world,” he said. “The [business] case is very simple. In 25 years, they (Saudi Arabia) could become net importers of energy. That makes renewables comparatively cheaper.”

Mecca is 70 km south of Jeddah, the port on the red Sea. It is the birthplace of Islam and has a population of around 2 million. Saudi Arabia depends on oil for 86% of its annual revenue and is accelerating exploration for natural gas.

The Arab region is to host the next UN climate change talks, COP-18, in November-December, at the Qatar National Convention Centre in Doha, Qatar. These are also expected to focus interest amongst the Arab states on renewable energy.

Story: David Thorpe, News Editor