Based on a statement by the International Energy Agency (IEA), Saudi Arabia’s 7.5 percent annual increasing energy demand is having a negative impact on oil exports.
The country has a historical background of being rich with oil, contributing significantly to the flourishing economy. With the high population growth rate it is impeding the export revenue which is leaving the country to turn to alternative energy sources, the IEA said in a report.
The national energy demand is met by an energy mix comprising of crude oil, gasoline, diesel, natural gas and fuel which is estimated to be 8.3 mboe/d by 2028.
Officials have recognised that these figures could lead to moving 3 million barrels per day of crude oil from export to feed local consumption, which would in effect negatively impact global markets.
According to the International Monetary Fund the 28.3 million inhabitants were getting wealthier, forecasting real gross domestic product (GDP) of 4.1 percent in 2014 and 4.2 percent in 2015.
With low consumer tariffs, US$0.6 per kilowatt hour (kWh), it is no surprise that energy demands are high.
Despite energy demand having an effect on export the region faces other challenges such as the depletion of fossil fuels, leaving authorities to seek alternative energy solutions.
Saudi Arabia has an abundance of natural gas, where reserves total 286 trillion cubic feet including 600 trillion cubic feet of unconventional deposits and is expected to increase to 15 billion cubic feet per day by 2018. The resource has primarily been used as a feed stock for its power generation facilities and not as a source of revenue for export.
Saudi’s energy mix comprises of 43 percent of gas, fuel and diesel make up the remainder, the IEA stated.
The IEA said that local energy demand is increasing much faster than the power generation capacity of both gas and fuel industries.
Alternative Energy generation targets
- Solar: 41 GW by 2032
- Wind: 9 GW for power generation and desalination
- Nuclear: 17.6 GW by 2032
The usage of gas is the short term solution to the energy crisis while the country has plans to harness the sun via solar technology as their long term energy plan. With extremely high direct normal irradiation (DNI), dust is their biggest challenge.
Solar technology cannot operate effectively when high levels of dust and high temperatures are added to the equation. Saudi research facilities are working hard to combat these challenges.
Developing energy efficient systems is key to ensure a sustainable energy future.
The IEA quoted Prince Abdulaziz bin Salman al-Saud, in an article in the May 2014 issue of Oxford Energy Forum:
‘Whereas the vast majority of countries have managed to lower the energy intensity of their economies, the Kingdom’s energy intensity increased significantly over the last two decades. … [I]t is a strategic imperative for the Kingdom that energy efficiency become a major topic for all decisions related to an increase in demand for fuel and feedstock’.
In support of the energy efficiency concept, the Saudi Electric Company has welcomed independent power producers (IPPs) who have attracted foreign investors and international expertise for developing large scale power systems.