How times change: oil-rich countries in the Middle East are building massive solar facilities.
Last year, the first large-scale solar power plant in Dubai started up. Kuwait and Oman have planned their own solar power plants, and in the article Solar Achieves Grid Parity in Saudi Arabia – Significant Developments Expected, industry analyst Michael Deaves claims that large scale solar costs less in Saudi Arabia than electricity from oil-fired plants:
Since Saudi Arabia relies so heavily on oil for electricity production, measuring solar grid parity in Saudi Arabia is best done by comparing the cost of solar electricity generation with the opportunity cost of burning oil for electricity rather than export. According to ClearSky Advisors’ analysis, solar energy in Saudi Arabia is currently cost competitive with oil fired power plants. The analysis states that with currently available technologies and cost structures, large-scale solar PV costs less than $0.15/kWh, while the opportunity cost of burning oil for electricity costs the Kingdom between $0.127-$0.174/kWh.
Following a trend seen in other key emerging markets, most notably Chile, solar power in Saudi Arabia has achieved grid parity. In addition, the costs of solar PV are expected to decrease further as the industry within Saudi Arabia develops, making solar power even more attractive within the region; of course the same cannot be said for the global price of crude oil.
Deaves reports that electricity production in Saudi Arabia has increased 124% in the past 11 years.
Interestingly, oil and water consumption in Gulf countries are directly connected. Water is subsidized and provided at a low cost, which has helped lead to some of the highest water consumption rates in the world. Saudi Arabia has reached peak water; their water source is seawater from the Persian Gulf. Because desalinating seawater requires large amounts of energy, the more water is wasted, the more oil is needed to burn for electricity.