In recent years, Saudi Arabia has embraced solar and other sources of renewable energy to reduce its dependence on oil and diversify its economy, under the general reform plan being pushed by the Crown Prince of the Kingdom, Mohammad Bin Salman Al Saud. Although operational PV and wind capacity remains limited, the government has launched and finalized ambitious tenders for the deployment of 1.8 GW of large-scale solar in recent months. It has also raised the country’s 2023 solar target from 5.9 GW to 20 GW, and its 2030 target to 40 GW.
According to Indra Overland — head of the Center for Energy Research (NUPI) and a research panel member for the Global Commission on the Geopolitics of the Energy Transition at the International Renewable Energy Agency (IRENA) — the target, even if reached, would not change the country's geopolitical status in the Middle East. He also notes that solar and renewables are currently being promoted by some actors in the country, but not by others.
“Saudi Arabia’s interest in renewables does not seem to have changed its geopolitical outlook much,” Overland said. “It seems a bit like the renewable energy interest is a separate compartment from the rest of Saudi politics.”
A series of geopolitical issues
Overland also said the country faces multiple geopolitical issues, and that the greatest long-term threat to Saudi Arabia is the possibility that renewable energy and electrification could significantly dent global oil demand, or at least suppress demand via new CO2 taxes on oil. This has not been possible thus far, he argued, and oil demand is in fact still rising. However, if that trend should change in the future, it could drive down prices and reduce Saudi Arabia's only significant source of income.
“As I have argued in one of my publications, the main external security guarantor of the Saudis, the USA, would probably also have less interest in propping up the Saudis if the long-term value of their oil is reduced,” he explained. “But the oil price has always gone up and down, so if it is forced down long-term, it will probably take a while before people really realize it and it starts impacting on international affairs and military alliances.”
Saudi Arabia’s Eastern Province is home to most of the country’s hydrocarbon resources, while the best solar irradiation is on the western side of the country, reaching its peak in the southwestern provinces. Overland, however, believes that a shift towards clean technology may have a minimal impact on the country's geopolitical power. “Saudi Arabia is a highly centralized state and therefore it does not matter much where the resources are located — whether they be oil or sunshine,” he said.
Geopolitical balance in the Middle East
Overland also believes that the geopolitical balance in the Middle East will probably change in the next few decades, even if the Saudi commitment to renewable energy proves genuine and lasting. “An economically weakened Saudi Arabia would be in a much weaker position vis-a-vis its main rival in the region, Iran,” he stated. “While Iran is also a major oil producer, it is a more technologically and industrially advanced country with a bigger population and would probably come out stronger than Saudi Arabia.” He is also optimistic that changes in the geopolitical balance of the region could force the Saudis to be less belligerent and try to find ways to cohabit with their regional neighbors more peacefully.
On the other hand, Overland also sees little chance of Saudi Arabia becoming an exporter of solar power. “All of its neighbors also have lots of sunshine, even if most of them don’t have quite as much as the Saudis. The real attractive markets — in Europe — are too far away, and other countries with a lot of space and sunshine are closer to them, like Algeria,” he asserted.
Considering the role of Saudi energy giant ACWA in the future energy landscape, Overland said that business-wise the utility may play a major role in the Middle East, as the combination of solar power and desalination is very interesting for the entire region. “Geopolitically, however, I do not see how it is important,” he said.
Another important geopolitical issue, he added, may be demography in general and the lack of a qualified workforce in particular. “If Saudi Arabia were to lose much of its income over a protracted period, the lack of a skilled, hard-working and tax-paying workforce could be a big challenge,” he said. “Now, much work is done by imported labor, but all that is paid by oil revenue.”
Giant solar projects are not just a dream
When asked about the feasibility of the ambitious 200 GW solar project the Saudi government announced in March 2018, Overland stressed — as he did in a previous interview with pv magazine — that at some point, such projects could be built in many places throughout the world. “It is just a question of falling costs and time, and I believe that in the long term the cost of solar power will fall significantly,” he argued. “But I don’t think such a project has any particular geopolitical implications for the region. Rather, its geopolitical implications lie in the effect on international oil demand if many such projects are realized.”
As for plans to build the innovative city of Neom in northwestern Saudi Arabia — which includes several gigawatts of solar — Overland is not convinced that the country can afford to start construction anytime soon, as the Jamal Khashoggi murder case and Riyadh’s involvement in the conflict in Yemen are not encouraging foreign investment. For the time being, in spite of some impressive renewable energy developments and plans, the Saudis are still investing much more in the petroleum sector, he said.
“So, I am not sure how soon Neom will be built,” Overland explained. “The concept is similar to that of Masdar in the United Arab Emirates, which has had an important symbolic effect, but nothing revolutionary. If it is built at some point, it may be important symbolically and in terms of setting precedents and testing out avenues of change for Saudi Arabia. But it is not really about geopolitics.”
It also remains unclear whether the Saudi prince has any real chance of achieving his reform program. “Reform is always difficult, as Thatcher experienced in the U.K. and Macron is experiencing in France. In Saudi Arabia, much more reform is needed, making the challenge even greater. To improve the chances of success, it would be better to try harder to avoid foreign entanglements and to be more sincere about domestic reform,” Overland concluded.
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