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Saudi Arabia Scrubs Plans to Build World's Biggest Solar Power Project

October 2, 2018

The Saudi Arabian government has cancelled a plan to build a solar power project with an estimated 200 GW of output by 2030.

In March 2018, SoftBank Group Corp. of Japan and the Government of Saudi Arabia inked a memorandum of understanding to build a solar facility with 200GW of output power. That’s over 100 times the capacity of the next two largest solar plants in the world: Australia’s 2GW Solar Choice Bulli Creek PV Plant and Greece’s Helios PV Plant Phase 1. The project was to cost an estimated $200 billion to complete, would add 100,000 jobs in Saudi Arabia, and would be at full capacity no later than 2030.

The project on its own was to produce over 3 times Saudi Arabia’s current electricity generation capacity. In 2016 that amounted to 77 gigawatts of output power. Two-thirds of that electricity was produced by burning natural gas, with almost all the rest coming from oil.

Once operational, the project was also expected to cut $40 billion from the country’s total power costs, had they been provided for with fossil fuel resources instead of solar.

The Memorandum of Understanding to complete the deal was signed by SoftBank founder Masayoshi Son and Saudi Crown Prince Mohammed Bin Salman.

It was a momentous moment. As Prince Mohammed said at the time, “It’s a huge step in human history. It’s bold, risky and we hope we succeed doing that.”

This past weekend news broke that the $200 billion project has now been shelved. Internal government officials within the Saudi kingdom apparently confirmed the news. They said that no one is working on the project at this time. A new strategy regarding renewable energy will be apparently unveiled later this month.

Although not confirmed, it is possible that disagreements about the project within the Saudi government are behind why the project was shut down. At that time, the Financial Times said Crown Prince Mohammed bin Salman had not effectively involved the country’s energy ministry and Saudi Aramco, the state-owned energy firm, when the plan was being developed. The energy ministry has overall responsibility for the country’s renewable energy programs.

If true, while the plans at the end of October may help explain everything, this suggests not just a disagreement on the nature of the project itself but also whether the ambitious Saudi Crown Prince Mohammed Bin Salman may have to curtail some of his attempts to reform and update the country’s economy.

Copyright: North America Procurement Council Inc., PBC