The Importance of Solar Energy in Saudi Arabia

Hamza Aljamaan
December 11, 2012

Submitted as coursework for PH240, Stanford University, Fall 2012


Fig. 1: Large Scale Dual-Purpose Power and Water Production plant. [1] (Courtesy of KACST.)

Saudi Arabia is predominately known for its oil production, more than 10 million barrels a day, making it the largest oil producing country in the world followed by Russia. Based on current projections, the local demand for power in Saudi Arabia will increase to 120 GW in the year 2028, which in equivalent to 8.3 million barrels of oil equivalent per day. This poses a major risk for Saudi Arabia in maintaining its position in OPEC (Organization of the Petroleum Exporting Countries) as a major oil supplier for many international countries. [1][2] Some experts also believe that the country has passed its peak oil production rates, and there is a greater incentive to find new, renewable and clean energy resources for the future. Saudi Arabia's desert climate and high levels of heat exposure make it a potentially huge hub for solar energy. Not only does the rich gulf state have the climate to support solar plants, it also has the financial resources and manpower to compliment the initiative.

Fig. 2: Share of Different Technologies for Electricity Generation in the Year 2000. [4] (Courtesy of DLR.)

Opportunity and Challenges

The region currently possess large areas of empty space, a major component for solar energy harvesting, there is also a very high levels of DNI (direct normal irradiation), which are necessary to generate solar energy. There are two primary methods used to collect solar energy, the first is through photovoltaic (PV) cells that usually cover large areas and face technical difficulties under very high ambient temperatures accompanying the heat gathered from the concentrated solar rays. This creates an obstacle for using PV in Saudi Arabia. Concentrated solar power plants (CPS) are the other dominant method of harvesting solar energy. This method requires less space and can be very effective in regions with high DNI, such as Saudi Arabia. Dust and high ambient temperatures are also a concern with this type of infrastructure, yet ways to overcome these problems are currently being developed. A study was conducted to assess the impact of utilizing solar energy for water desalination in comparison to conventional power generation using fossil fuels in Saudi Arabia as shown in Fig. 1. The study concluded a saving of 1.5 billion dollars if solar thermal energy were utilized in generating power for water desalination plants in comparison to fossil fuel powered water plants. [1] Investing in such projects will be essential in order to ease the dependence on oil and gas for generating electricity when currently Saudi Arabia consumes all of its natural gas production to generate electricity. [3] Fig. 2 illustrates the pure dependence of Saudi Arabia on fossil fuels for power generation.

Fig. 3: Concentrated Solar Power Potential in the MENA Region. [4] (Courtesy of DLR.)

Investing in solar energy will reduce the dependency on oil and gas in Saudi Arabia, and relieve some of the pressure on these resources to supply energy for electricity generation and petrochemical and desalination plants. Despite the very high opportunity cost associated with solar energy generation, Saudi Arabia is harvesting a long term investment plan of US$109 billion in the solar energy sector. Capitalizing on this Saudi Arabia announced a very ambitious plan of generating about 41 GW of electricity through solar energy by year 2032. [5] About 86 percent of Saudi Arabia's annual revenue comes from oil. Hence, diversifying the energy portfolio will be essential in preserving this oil revenue. The fact that Saudi Arabia is among the highest per capita energy users in the world poses a major challenge. This raises questions on the local energy consumption efficiency among the local population. High energy subsidies could be one of the reasons behind this inefficient energy consumption. In fact, due to high energy subsidy levels, it was estimated in 2011 that more than $80 billion dollars of oil and gas revenues were lost because of that. [3] For Saudi Arabia to maintain the high oil revenue income, it is important for the country to revise its current energy subsidy level and the high government spending.


Several countries within the Persian Gulf are also looking into various alternative energy resources and not limited to solar power but potentially wind, nuclear, and geothermal as well. This will reduce the countries reliance on fossil fuels to ultimately maximize crude oil exports and profitability. In fact, the potential of concentrated solar power generation in the Middle East and North Africa, where solar radiation is abundant, is exceptional and untapped. This region has the potential of becoming a world leader in solar energy production as shown in Fig. 3. [6]

© Hamza Aljamaan. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] A. Baras et al., "Opportunities and Challenges of Solar Energy in Saudi Arabia," Proc. World Renewable Energy Forum, 14 May 12.

[2] M. Haroutunian and A. DiPaola, "Saudi Arabia Looks to Solar, Nuclear Power to Reduce Its Oil Use by Half," Bloomberg, 3 Apr 11.

[3] A. Daya and D. El Baltaji, "Saudi Arabia May Become Oil Importer by 2030, Citigroup Says," Bloomberg Businessweek, 4 Sep 12.

[4] F. Trieb, "Concentrating Solar Power for the Mediterranean Region - Final Report," German Aerospace Agency (DLR), April 2005.

[5] W. Mahdi, Saudi Arabia Plans $109 Billion Boost for Solar Power," Bloomberg, 22 Nov 12.

[6] I. El-Husseini et al., "A New Source of Power The Potential for Renewable Energy in the MENA Region," Booz & Company, 2009.