With the lead-up to MENASOL 2013, Browning Rockwell Founder and Director of SASIA (Saudi Arabia Solar Industries Association) shares his views on both CSP and PV in the MENA region.
Now that the industry has had time to consider the 54GW renewable energy strategy in place for Saudi Arabia for 2032, what are your conclusions?
I still believe its early days as it's been out for a few weeks now. There has been a discussion for the past couple of years for that sort of magnitude of a programme but it wasn't formally announced until the white paper and other announcements came February 20th, so I think there still a lot of discussion to be had. The industry right now has been asked to respond to the white paper by April 5th. I know a number of individual companies as well as SASIA who are going to present an industry response to it, but it's the first step into the process. So I think it's unfolding and I like to say we were waiting for the marathon to begin; now it has begun and it's going to be a series of milestones that will happen.
The good news in all of this is that it will foster a greater development and interest both in Saudi and the surrounding regions because I think Saudi can be a catalyst for development in the surrounding region as well.
There are a number of local content conditions in the K.A. CARE White Paper. Is Saudi Arabia ready to create a workforce on the scale required to make the plans work?
Saudi Arabia has always been able to attract workforce from around the world - but the question is what type of workforce do they want to create? One of the issues in Saudi Arabia is the creation of jobs and so part of the plan would have to be what type of industry or jobs can we create out of this initiative for Saudis - especially young Saudis who are returning from universities and are looking for careers? I believe they are certainly capable of doing this but I think a study has to be made of how they go about doing.
I think like any other country they want to try to industrialise as this is part of their plan here. There will certainly be aspects of PV manufacturing and assembly localised and they will have other components being produced - probably inverters. As they have done this in other industries, they start out importing electrical components and over time they will build up internal manufacturing capabilities as well because Saudi is a huge country to off take that. Plus they have a surrounding region that they can export to.
Individually, the countries that make up the Middle East & North Africa region are so diverse that it is misleading to think of it as a homogenous market. What characteristics are specific to Saudi Arabia that defines it from others in the region?
The GCC MENA region must be studied individually. Though they do have common aspects such as language and culture, Saudi Arabia has a very large population, it's a wealthy oil producing country and an oil advantaged country. However, that advantage is going to diminish over time if they continue to consume as much oil as they do domestically for their power generation.
One of the aspects of this programme is to lessen the utilisation of their domestic oil production for domestic use so they can export it. They have a well-established industrial base, and whilst they still have large dependency on the oil industry and bi products, they have huge industrial manufacturing facilities. Saudi Arabia is quite strong and diversified in that respect and they have the capability of leveraging up manufacturing fairly quickly.
Internally they have a strong economy and private sector, with some very significant merchant families, with holdings all over the world, that can pool their resources and contacts to launch new manufacturing initiatives quickly and easily. Saudi are in a unique position, but you have to look at Middle East and GCC in one way and then the greater MENA region as a Rubik's cube. There are multiple variables that will impact why and how a renewable energy programme will be adopted; they have a nearby country Jordan, which has an oil deficiency, they have imported oil, an energy problem, and lack resources in the manufacturing base.
Over time, if the model in Saudi can work, we shall see a cross border investment into those markets and they will also be access for manufacturing coming from SA and others. This will help to invigorate a program in places like Jordan where they have tremendous needs but they have a problem with the financial resources to sustain the pay-out for long term which is necessary for these solar programmes.
What advice would you give to an international solar company that is looking to take its first steps in Saudi Arabia?
First and foremost visit Saudi Arabia and visit often with real insight and study the market, ‘measure twice and cut once'. Sometimes there is a rush in the market to find a local partner. The dynamics of local businesses in the whole region is changing. Companies must go to understand the market, understand the culture your dealing with and know it is a very personalised, relationship-based business. If the industry is going to merge over the next decade then is there is no need to fix up everything within the next 6 months but you have to have a commitment to the market and you have to work the market from the inside out. The ‘fly-in, fly-out' method is not going to work very well there.
In your view, will Saudi Arabia be primarily a PV or a CSP market? Which suits the market more?
At this stage, it's hard to pick one over the other. There are many technologies emerging and Saudi Arabia will be a great incubator for some new and emerging technologies. There, they will be very interested in particular technologies where manufacturing is not dependant on just lots of hands and labour, it can be automated. I think SA is made up of many different regions where one technology may be more appropriate than the other and this is a long haul process - so I don't think you want to pick a certain type of technology at this stage. Looking at the whole picture, it's not just about the installation of the system it is about job creation. Even within PV there are different levels and types that are still being challenged in the market. I don't see PV manufacturing cost declining much , but the efficiency will increaser. In CSP and CPV you may see drops in prices as it is adopted more around the world.
Beyond the Saudi Arabian opportunity, which MENA markets are the most exciting right now?
Success in SA will pave the way for solar projects throughout the GCC Mena region, once companies and financial institutes understand the business of Solar and ROI models. For Saudi, you may see a lot of nearby markets blossom. For now you are looking at markets that are initially unknown, Turkey is starting to come alive, Kuwait is interesting, primarily because of the dynamic is has to import with fuel oil it doesn't have refining capacity and therefore importing a lot of oil. Though it is a small country, Qatar can also adopt solar energy. They have the construction programmes in place for the soccer World Cup and are talking about using Solar for stadiums. Oman is another using solar for oil recovery. These are smaller markets, ones that have unique variations in solar.
Each country will have different dynamics to it, and financial resources, banks, investors and developers around the world have to get some experience as they have no bench mark right now in these markets. In Europe and USA you have had time and it almost an exact science now being able to evaluate these projects and programmes to assess their bankability. In the case of SA, they will certainly rely on external advice to validate these things but once they get going and get started, they will set a standard for their own requirements for large utility scale projects and think you will also see an emergence of a demand for energy storage which is being spoken about a lot in the industry now but Saudi is prime market for utilising that.
We have to be patient with the market and don't expect everything to happen straightaway. The positive right now is that we have a programme and Saudi Arabia is starting to get some traction so hopefully we will see it unfold in the months and years ahead.
The Saudi Arabia Solar Industries Association (SASIA) is a non-profit, non-governmental organization that brings together the national and regional solar industry. Our goal is to transform Saudi Arabia and the Middle East's vast solar potential into a commercially and environmentally viable solution for our growing demand for electricity.
SASIA provides its members with services such as educational workshops, networking functions and special reports on breakthrough solar innovations. We also provide assistance to international companies seeking to expand their solar operations in the Kingdom of Saudi Arabia and the Middle East. The association is currently working on initiatives that bring together leaders from the policy sector, academia, and the private sector. The MENA Solar Brief, a monthly newsletter produced by SASIA goes out to over 3,100 +readers in the Middle East renewable energy space.
SASIA are partnering with CSP Today/PV Insider for MENASOL 2013 (May 14-15, Dubai)
Now in its 5th year, MENASOL (Middle East and North Africa Solar Conference) heads to Dubai and will be bigger than ever. With a separate PV and CSP agenda, as well as officials and agencies from key markets giving the policy perspective, this conference is the most important solar event in the region. Get the latest on Saudi Arabia, U.A.E., Jordan, Morocco, Egypt, Kuwait, Oman and more to develop your project pipeline.