Saudi predicts it will need to burn 8.3 MMBOEPD to fuel its domestic electricity demands by 2028

The world’s No. 2 oil producer is starting to explore new ways to meet its growing internal energy needs. Unlike many countries which have been seeing a steady decline in their energy intensity, Saudi Arabia is experiencing an increasing need for more energy at home to supply the domestic market.

Given Saudi Arabia’s tremendous oil and gas resources, it might sound strange that the country would look for alternative sources of energy, but demand is growing at such a rate that even a country as hydrocarbon-rich as Saudi Arabia needs to find new ways to keep up with demand, possibly even renewable energy. The need to burn its own resources is real. In 2010, overall energy demand nationwide was estimated at 3.4 MMBOEPD, and the kingdom predicts it will grow to 8.3 MMBOEPD by 2028.

By burning significant amounts of produced oil to generate electricity for its own use, Saudi Arabia cuts into its export revenue and put strain on global markets, according to the International Energy Agency (IEA).

Saudi Oil Consumption Graph

Currently, natural gas provides around 43% of Saudi electricity, with fuel oil and diesel providing the rest, reports the IEA in a separate article. Electricity use has been increasing at 7.5% annually, adding to the already large demand in the kingdom. In 2011, Saudi electricity demand was at about 7,420 kWh per capita, more than three times as high as Mexico’s per capita use, despite having similar total levels of consumption.

Eighty percent of this consumption comes from Saudi’s building sector, with 70% of that coming from running air conditioning units, according to IEA reports . Because such a large amount of the electricity consumed in Saudi Arabia is linked to air conditioning, the peak demand for energy in the summer can be as much as twice the average demand in winter.

The installed power generation capacity in Saudi Arabia, which was listed at 58.4 gigawatts in 2013, is already being pushed to its limits. Demand growth is already outpacing the supply of power stations, forcing Saudi Arabia to consider new solutions.

According to Forbes, Saudi Arabia hopes that both nuclear and solar power will each provide 15% (or 30% total) of the country’s total domestic power within 20 years. Both solutions seem like reasonable goals. Saudi Arabia could move towards these targets by utilizing approximately 500,000 square miles of arid, cloudless land is well suited for photovoltaic technologies, along with the capacity to build nuclear reactors.

However, as of October 2014, Saudi Arabia had not committed to building nuclear reactors, according to the World Nuclear Association, and the IEA points out concerns with dusty conditions and temperatures over 30 degrees Celsius (86 degrees Fahrenheit) lowering the efficiency of current solar panels.

In the past few years Saudi Arabia has often publicly expressed goals of finding new ways of supplying domestic energy demand as its need for fuel to create electricity skyrockets. It remains to be seen if (or when) it will take action to meet its high expectations, including rapid development of its own unconventional gas resources, initiating the long processes of designing, approving and contracting for nuclear power plants, or contracting to cover its deserts with solar panels. Desert Solar Saudi Arabia reports that the installed solar capacity in Saudi Arabia is stands at 12 MW.

By comparison, the Solar Energy Industries Association’s (SEIA) Q2 2014 U.S. Solar Market Insight report, listed the U.S. installed 1,133 megawatts of solar photovoltaics (PV) in the second quarter of 2014 alone, and that the U.S. is approaching 16 GW of installed solar capacity, GreenTech Media reported.

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