Saudi Arabia raised great expectations across the solar industry when it first announced renewable power targets in 2012.
Saudi Arabia has postponed the roll-out of its renewable power program by eight years, setting the milestone for its capacity targets to 2040, according to reports quoting Hashim Yamani, president of the King Abdullah City for Atomic and Renewable Energy (K.A.CARE).
· Saudi Arabia postpones the milestone for its 16 GW PV objective from 2032 to 2040. This target corresponds to average annual capacity additions of 640 MW over 25 years.
· IHS has halved the five-year outlook for PV installations in Saudi Arabia from 1.6 GW to 800 MW.
· The slump in oil prices weakens the argument for Saudi Arabia to substitute oil as the main source of power generation in the near-term.
Saudi Arabia raised great expectations across the solar industry when it first announced renewable power targets in 2012. The plan to open up tenders in one of the world's wealthiest nations attracted a hoard of developers and manufacturers to Saudi Arabia to develop new business. As regulators have not progressed on the planned tenders, and PV installations have stagnated at less than 20 MW, the PV industry is growing restless. The latest announcement from K.A.CARE to postpone the target year to 2040 deflates further expectations of near- to mid-term growth.
Since the initial industry optimism after the K.A.CARE announced PV targets in 2012, IHS has gradually revised down the PV demand outlook for Saudi Arabia. From having predicted 1-2 GW of tendered PV projects to be completed over five years, IHS now forecasts less than 1 GW to come into operation through 2020. This outlook hinges on the roll-out of a regulatory framework for PV, whether through tenders or feed-in tariffs. An additional factor that will determine the PV deployment is the evolution of a local manufacturing base, given Saudi Arabia's emphasis on supporting local industry.
The past months' extraordinary decline in global oil prices is likely to reframe the Saudi position toward new power generation sources. At current global oil prices, the incentive to save oil for export weakens for near-term deployment. In the long-term, the argument to reduce oil consumption remains valid, for which IHS expects Saudi to deploy the bulk of new PV capacity in the period from 2020 to 2040.
On 8 May 2012, the Saudi Arabian clean energy agency, K.A.CARE announced its ambition for Saudi Arabia to deploy 41 GW of solar power, 17 GW of nuclear power, and 13 GW of wind, biomass, and geothermal power capacity by 2032. The solar plan targets 16 GW of solar photovoltaic (PV) and 25 GW of concentrated solar power (CSP). KACARE initially planned to start with two rounds of capacity tenders in 2013. The planned tenders were then postponed to 2014, but no further details have been published to date.