The timing of Saudi Arabia’s unofficial move away from renewable energy is unsurprising. No decisions have been announced, but the renewables industry no longer expects Saudi Arabia to be an important market.

In early 2015, the King Abdullah Centre for Atomic and Renewable Energy (KA-CARE) was handicapped by the dissolution of its Supreme Council shortly after King Salman inherited the throne.

He is less politically committed to renewable energy than his predecessor King Abdullah, who gave his name to KA-CARE.

KA-CARE was a new, untested institution in a complex power generation framework. In retrospect, it was never well-equipped to successfully tender the largest renewable energy programme in the region.

The halving of global oil prices has taken away the urgency of reducing the quantity of oil diverted onto the domestic market. Saudi Arabia burned 900,000 barrels a day (b/d) of crude oil for power generation in July 2014, according to the US Energy Information Administration. This represents over 9 per cent of daily oil production in 2013, which averaged at 9.64m b/d.

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Saudi Arabia renewables slows

Low oil prices also make renewable energy less competitive with conventional generation, although oil is still sold at $4 a barrel on the domestic market.

The Saudi Electricity Company, thought to be taking responsibility for renewables projects, and Saudi Aramco, an important player in power generation, have more pragmatic strategies. They are dedicated not to renewables, but to building capacity and efficiency. Electricity demand is set to more than double by 2030, and over 60GW in new capacity will be needed.

But in the long term, the quiet withdrawal of commitment to developing sources of renewable energy leaves the issue of domestic fuel consumption untouched.

Estimates from Saudi Arabia’s Electricity & Cogeneration Regulatory Authority suggest that consumption of liquid fuels for power generation will rise from 270m barrels a year (b/y) in 2011 to 850m b/y in 2030, a 215 per cent increase.

Saudi Arabia must either tackle one of the highest rates of energy consumption in the world, or look at alternative sources of energy.

Nuclear power appears an increasingly likely option.

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