254 P. MAHDAVI AND N. UDDIN
decarbonized investments because they are not ‘boxed in’ by private
investors. 67 If the government makes the decision to veer investments
away from fossil fuels, the SOE has the green light to do so and does
not have to worry about shareholder backlash. Kuwait offers an interesting example. The 1.5 GW Al Dibdibah (Shagaya Phase II) utility-scale
solar PV project is currently managed by the national oil company,
KNPC, who is the only market player large enough and managerially
competent enough to own and oversee the $1.2 billion investment. 68
Similarly in Oman, the giant 1 GW (heat output) Miraah solar thermal
project is owned and co-operated with GlassPoint Solar by the Petroleum
Development of Oman (PDO), the country’s NOC. 69
How Can These Countries Reduce Dependency on Fossil Fuels?
In light of existing and future challenges stemming from a reliance on
fossil fuels, what have the oil exporters in the region been doing so
far to reduce dependence? In brief, producers have been investing in
renewables for electricity generation and hedging with investments in
low-carbon petroleum production, petrochemicals, and carbon capture
and sequestration.
Sustained global competition over the last decade has dramatically
reduced generation costs for renewables when compared to conventionals. Figure 9.3, from IRENA, shows the strikingly low relative costs
of large-scale solar electricity generation in the Gulf Cooperation Council
(GCC) countries. Figures such as these are commonplace now in the
Organization for Economic Cooperation and Development (OECD),
where solar or wind beats out coal and gas. But this looks specifically
at the source: that is, solar is even cheaper than gas in the cheapest place
to produce natural gas in the entire world. IRENA reports that in Saudi
Arabia, for instance, the winning bid for the 300 MW Sakaka solar PV
farm in Saudi Arabia came in at 2.34 cents per kWh, and at 2.13 cents
per kWh for the 400 MW Dumat Al Jandal wind project. However, it
is important to maintain perspective: renewables, excluding hydroelectric
power, are still only 2% of total installed capacity in even the best case
(UAE) and 0% in the worst (Sudan). Of course, the share of renewable
capacity will only continue to increase as solar and wind costs only recently
reached such low levels.
Aside from minimal, but growing, investments into renewable energy
for electricity generation, the MENA oil exporters have also been heavily
decarbonized investments because they are not ‘boxed in’ by private
investors. 67 If the government makes the decision to veer investments
away from fossil fuels, the SOE has the green light to do so and does
not have to worry about shareholder backlash. Kuwait offers an interesting example. The 1.5 GW Al Dibdibah (Shagaya Phase II) utility-scale
solar PV project is currently managed by the national oil company,
KNPC, who is the only market player large enough and managerially
competent enough to own and oversee the $1.2 billion investment. 68
Similarly in Oman, the giant 1 GW (heat output) Miraah solar thermal
project is owned and co-operated with GlassPoint Solar by the Petroleum
Development of Oman (PDO), the country’s NOC. 69
How Can These Countries Reduce Dependency on Fossil Fuels?
In light of existing and future challenges stemming from a reliance on
fossil fuels, what have the oil exporters in the region been doing so
far to reduce dependence? In brief, producers have been investing in
renewables for electricity generation and hedging with investments in
low-carbon petroleum production, petrochemicals, and carbon capture
and sequestration.
Sustained global competition over the last decade has dramatically
reduced generation costs for renewables when compared to conventionals. Figure 9.3, from IRENA, shows the strikingly low relative costs
of large-scale solar electricity generation in the Gulf Cooperation Council
(GCC) countries. Figures such as these are commonplace now in the
Organization for Economic Cooperation and Development (OECD),
where solar or wind beats out coal and gas. But this looks specifically
at the source: that is, solar is even cheaper than gas in the cheapest place
to produce natural gas in the entire world. IRENA reports that in Saudi
Arabia, for instance, the winning bid for the 300 MW Sakaka solar PV
farm in Saudi Arabia came in at 2.34 cents per kWh, and at 2.13 cents
per kWh for the 400 MW Dumat Al Jandal wind project. However, it
is important to maintain perspective: renewables, excluding hydroelectric
power, are still only 2% of total installed capacity in even the best case
(UAE) and 0% in the worst (Sudan). Of course, the share of renewable
capacity will only continue to increase as solar and wind costs only recently
reached such low levels.
Aside from minimal, but growing, investments into renewable energy
for electricity generation, the MENA oil exporters have also been heavily