Will Renewable’s Get a Boost Following Aramco IPO?

While much of the headline news about Saudi Arabia is focused on the IPO of Saudi Aramco, the country has also been focusing on increasing renewables, to further benefit the Saudi nation. Saudi Arabia is expected to begin offering loans for renewable energy projects as the kingdom tries diversify its economy away from crude oil. If other sources of energy are used domestically in Saudi Arabia, there will be more oil to sell to the rest of the world. Saudi Arabia has lofty goals when it comes to increasing the countries use of renewable energy. Saudi Arabia recently tripled its renewable energy target and has successfully tendered for large-scale projects in wind and solar energy.

New Funds Are Available

The Saudi Industrial Development Fund has recently announced that it will be accepting applications for the program, called Mutjadeda. The new energy program will give loans of as much as 1.2 billion riyals, depending on a company’s ownership, targeting renewable energy. The fund will also offer financing for firms in other sectors that want to start using renewable energy. Additionally, green energy has been branded as in the countries national interest. Costs for solar panel and windmill have also decline making this endeavor a beneficial process that might be successful. 

Fits and Starts

There have been many solar initiatives billed by the Saudi Kingdom has massive undertakings that have not moved forward. Recently a massive solar initiative was billed by the kingdom’s crown prince, Mohammed bin Salman, as groundbreaking when it was unveiled in March of 2018. It was cancelled by October during the same year. The collapse of the project was typical. There have been several headline-grabbing announcements have often been followed by limited progress. 

Oil Has Been the Issue

The problem that Saudi Arabia consistently runs into is that Middle Eastern oil producers believe that alternative energy sources are a threat to their prosperity. That resistance has lessened, as some have come to see the value of renewables to supplement the huge volumes of oil and gas used to desalinate the kingdom’s water supply and keep the country’s population cool during the summer. Less consumption at home means there will be more oil and gas to sell abroad. Additionally, renewables also mean new jobs for the kingdom that heavily relies on the oil and gas market.

Oil prices in the commodities markets have hovered near the $50 per barrel ahead of the Saudi Announcement of the Aramco IPO. If Saudi Arabia is less reliant on oil prices for everyday life issues, the country will be able to find many benefits that come from renewable energy sources.

The recasting of green energy as a national interest, coupled with record low prices for solar and wind power in particular, has raised hopes that this latest push by the kingdom to build renewable capacity might be more successful.