Saudi Arabia puts world′s biggest solar power project on hold | Business| Economy and finance news from a German perspective | DW | 01.10.2018
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Business

Saudi Arabia puts world's biggest solar power project on hold

Saudi Arabia and funding partner SoftBank have reportedly shelved the $200 billion project. It was part of the kingdom's economic transformation plan and would have produced three times the energy that the country needs.

Citing government officials, on Monday the US business daily The Wall Street Journal (WSJ) reported that Saudi plans to build the world's largest solar power generation facility had been shelved, as the desert kingdom was working on a "broader, more practical strategy to boost renewable energy."

The project was expected to generate about 200 gigawatts of energy by 2030 — more than three times the country's daily requirement.

"It is easy to sway or grab one's attention, but difficult to do any execution," WSJ quoted a senior adviser to the Saudi government as saying. Now, no one was actively working on the project, the source added.

SoftBank, a partner in the $200 billion (€172.4 billion) project, was not immediately available for comment. Together with the Saudi sovereign wealth fund, the Japanese financial group has already created a $100 billion venture, the Vision Fund, aimed at boosting technology investment in the country, including in Saudi Arabia's renewable energy sector.

Read more: Saudi Arabia creates energy megaministry to implement Vision 2030 plan

Broader strategy

Despite vast deserts and abundant sunshine, Saudi Arabia currently has no solar power generation capacities. Instead, it produces its energy primarily from burning fossil fuels.

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Changing Saudi society

Under plans initiated by Crown Prince Mohammed bin Salman, the government intends to move away from heavy dependence on the oil sector and toward a more diverse economic structure.

Read more: Saudi Arabia's cultural change: Civil society meets 'top-down' reform

But the country's entry into the solar market is being hampered by high costs and logistical issues. The project's first phase alone was expected to gobble up $1 billion, and was to be funded by the Vision Fund this year.

According to the Saudi officials cited by WSJ, Riyadh hadn't yet made any decisions on the project's details, including land acquisition, the structure of development or whether it would receive subsidies from the state.

"Everyone is just hoping this whole idea would just die," a Saudi energy official familiar with the matter was quoted as saying.

Instead, Saudi officials said the government was now devising a broader renewable energies strategy to be announced in late October, which would help clarify renewable energy goals.

The framework wouldn't preclude SoftBank from becoming involved in building a solar project in the future, but it wasn't likely to lead to the development of a massive 200-gigawatt project, the official added.

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