How solar can save Gulf oil exports

Some peak oil observers view the "export land model" as a harbinger of doom, but it appears that some oil exporters would rather have income than consume all their oil internally. Giles Parkinson has a look at the adoption of renewable energy in the gulf states - How solar can save Gulf oil exports.

Something rather unexpected is happening in the Middle East. The oil-rich Gulf states, which have earned trillions of dollars in the past few decades exporting crude to the east and west, find they can no longer afford to consume their own oil. They are consuming ever increasing amounts at home, at a huge cost to exports, and are being forced to turn to renewables as a cheaper source of energy.

The Gulf state of Kuwait, the fifth biggest producer in OPEC, has announced it aims to supply 10 per cent of its electricity supply with renewables by 2020 – double what it contemplated less than a year ago. It may not seem a high percentage, but considering that the entirety of its renewable energy generation consists of a single 50kW turbine operated by an environmentally-minded former army engineer, and its energy demands will more than double over the period, this would be quite a feat.

It is a decision driven by necessity. Kuwait's domestic energy consumption has already more than doubled in the past 10 years – compared to a mere 14 per cent growth in production over the same period. It now consumes nearly one fifth of its production and, with consumption predicted to continue at 10 per cent a year, it could be consuming nearly half its production by the end of the decade. The increased domestic consumption has already cut its export income by around $4 billion a year, and that could rise to $20 billion by the end of the decade – at current prices – unless action is taken.

Kuwait is not the only OPEC nation in the Gulf region thinking along these lines: The figures on consumption growth and production growth are nearly the same for Saudi Arabia, which is estimated to be losing more than $7 billion a year in lost export income due to increased domestic consumption. It has announced its intention to spend big on both solar and nuclear for the same reason, to protect its export income, and has set a 10 per cent renewable energy target by 2020, or around 20 gigawatts of installed capacity.

Abu Dhabi has set a 7 per cent target and hosts the low-carbon, experimental Masdar City, and has implemented plans for a series of utility scale solar projects; Qatar has said it could construct up to 5GW of solar by the end of the decade, while Oman has established a tender for a 250MW solar plant, and Dubai is about to do the same.

The Gulf is shaping up to become one of the biggest growth areas for solar in the coming decade, driven not so much by its concern about climate change, by a fundamental economic rationale that the states will no longer be able to afford to subsidise oil-based consumption and will want to use cheaper renewables to free up more oil production for export. Gas is also proving hard to come by and more energy is needed to desalinate water and meet soaring peak demand. Nuclear is another option, considered by Saudi Arabia in particular.