Saudi Arabia to invest $30-50bn in renewable energy by 2023

Saudi Minister of Energy, Industrial and Mineral Resources Khalid Al-Falih, speaks during the 10th edition of the World Future Energy Summit on Monday in the United Arab Emirates capital Abu Dhabi. (AFP)
Updated 15 March 2017

Saudi Arabia to invest $30-50bn in renewable energy by 2023

JEDDAH: Saudi Arabia is launching a renewable energy program in the next few weeks that is expected to invest $30-$50 billion by 2023, Energy, Industry and Mineral Recourses Minister Khalid Al-Falih announced Monday.
Al-Falih said at the World Future Energy Summit in Abu Dhabi that the Kingdom would start the first round of bidding for projects under the program, which would produce 10GW of power.
He also said that Saudi Arabia is in the early stages of studying its first two commercial nuclear reactors with a total of 2.8GW. Al-Falih told Reuters that, “there will be significant investment in nuclear energy.”
The minister also said Saudi Arabia was working on ways to connect its renewable energy projects with Yemen, Jordan and Egypt.
“We will connect to Africa to exchange non-fossil sources of energy,” he said.
The step falls into the country’s targets set in Vision 2030, launched last year to prepare for a post-oil era following a plunge in oil prices. Saudi Arabia, the world’s largest oil exporter, plans to reduce its reliance on oil and diversify the economy by moving toward sustainable sources rather than depending on fossil oil.
Renewable energy is listed among the sectors to be launched, as the Vision reads: “In the manufacturing sector, we will work toward localizing renewable energy and industrial equipment sectors.”
John Sfakianakis, director of economic research at the Riyadh-based Gulf Research Center, told Arab News that Saudi Arabia has a “considerable solar power potential” that can reduce its reliance on fossil fuels.
“Saudi Arabia wants to balance economic needs against environmental goals as it has considerable solar power potential and is eager to reduce its use of fossil fuels,” Sfakianakis said. “The country ranks high in per capita greenhouse gas CO2 emissions.”
Achieving the ambitious renewable energy program by 2023 needs time, technical knowledge and capacity, and above all coordination between various stakeholders, according to energy expert Mohamed Ramady.
“The fact that there are many stakeholders in Saudi Arabia involved in the renewable energy program, such as KACST, KACARE, KAPSARC and KAUST among others ensures some duplication of effort and above all lack of specific focus for renewables,” said Ramady, a former professor at King Fahd University of Petroleum and Minerals.
He told Arab News that whether the focus would be on solar or nuclear energy would determine the policy and would lead to different paths and options in terms of domestic and international cooperation.
“If nuclear energy option is the preferred option, then Saudi Arabia has to assess whether current leaders using such energy like France, South Korea and Finland are still committed to this renewable energy source in the long term and whether their technology transfer and nuclear waste programs can be safely transferred,” Ramady said.
Achieving a viable large-scale renewable energy application is not as easy as it sounds, according to Ramady.
“The United Arab Emirates’ (UAE) MASDAR renewable energy model city initiative was a path breaker with mixed success, but from which valuable lessons can be learned by Saudi Arabia,” he said. “However, in the meantime starting off by installing smart electricity household meters coupled with incentives to save energy could help to reduce pressure on the government in the face of potential lower oil prices and revenues.”
The Riyadh-based King Abdullah City for Atomic and Renewable Energy (KACARE) stated that hydrocarbons would remain a prime element in the energy mix in 2023, by an estimation of 60GW. This will also be supported with nuclear energy at 17.6GW, solar at 41GW, of which 16GW will be generated through the use of photovoltaic cells and the balance of 25GW by concentrated solar power, wind at 9GW, waste-to-energy at 3GW and geothermal at 1GW.
Renewable energy is increasingly becoming a new sector in the country and is expected to expand until the new renewable energy program can reach its target by 2023.
“By creating an entirely new sector for the economy, jobs will be generated as it moves into more advanced areas of the production chain. Job creation for Saudis and a cleaner environment are important goals of Vision 2030 for better quality of life values,” said Sfakianakis.
According to the International Renewable Energy Agency (IRENA) report on renewable energy market analysis in the Gulf Council Countries (GCC) region, Saudi Arabia is the world’s seventh largest oil consumer. Domestic consumption of oil witnessed a surge in the 2000s rising from 17 percent in 2000 to 28 percent in 2014. The report, published in 2016, estimated that achieving the GCC renewable energy targets could create an average of 140,000 direct jobs per year.


Powell: No clear hint on rates but says Fed will aid economy

Updated 23 August 2019

Powell: No clear hint on rates but says Fed will aid economy

  • The outlook for the US economy, Powell said, remains favorable but continues to face risks
  • Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter

WASHINGTON: Federal Reserve Chairman Jerome Powell sent no clear signal Friday that the Fed will further cut interest rates this year but said it would “act as appropriate” to sustain the expansion — phrasing that analysts see as suggesting rate cuts.
Powell said President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rates and have contributed to a global economic slowdown.
Speaking to a gathering of central bankers in Jackson Hole, Wyoming, Powell didn’t give financial markets explicit guidance on whether or how many rate cuts might be coming the rest of the year. The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of more rate cuts this year.
The outlook for the US economy, Powell said, remains favorable but continues to face risks. He pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
Reacting to the speech Friday, Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the US will do great.”
Trump added:
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?“
Powell’s speech comes against the backdrop of a vulnerable economy, with the financial world seeking clarity on whether last month’s rate decision likely marked the start of a period of easier credit.
The confusion only heightened in the days leading to the Jackson Hole conference, at which Powell gave the keynote address. Minutes of the Fed’s July meeting released Wednesday showed that although officials voted 8-2 to cut their benchmark rate by a quarter-point, there was a wider divergence of opinion on the committee than the two dissenting votes against the rate cut had indicated.
The minutes showed that two Fed officials favored a more aggressive half-point rate cut, while some others adopted the polar opposite view: They felt the Fed shouldn’t cut rates at all.
The minutes depicted the rate cut as a “mid-cycle adjustment,” the phrase Powell had used at his news conference after the rate cut. That wording upset traders who interpreted the remark as suggesting that the Fed might not be preparing for a series of rate cuts to support an economy that’s struggling with a global slowdown and escalating uncertainty from President Donald Trump’s trade war with China.
There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others worried more about the threats to economic growth.
Comments Thursday from Fed officials gathering in Jackson Hole reflected the committee’s sharp divisions, including some reluctance to cut rates at least until the economic picture changes.
“I think we should stay here for a while and see how things play out,” said Patrick Harker, the president of the Fed’s Philadelphia regional bank.
Esther George, president of the Fed’s Kansas City regional bank and one of the dissenting votes in July, said, “While I see downside risk, I wasn’t ready to act on that relative to the performance of the economy.”
George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed’s target level. She said her decision on a possible future rate cut would depend on forthcoming data releases.
Robert Kaplan, president of the Fed’s Dallas branch indicated that he might be prepared to support further rate cuts.
If “we are seeing some weakness in manufacturing and global growth, then it may be good to take some action,” Kaplan said.
George was interviewed on Fox Business Network; Harker and Kaplan spoke on CNBC.
The CME Group, which tracks investor bets on central bank policy, is projecting the likelihood that the Fed will cut rates at least twice more before year’s end.
Adding to the pressures on the Fed, Trump has kept up his attacks on the central bank and on Powell personally, arguing that Fed officials have kept rates too high and should be cutting them aggressively.
Trump has argued that a full percentage-point rate reduction in coming months would be appropriate — a suggestion that most economists consider extravagantly excessive as well as an improper intrusion on the Fed’s political independence.
The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt US export sales.
“Our Federal Reserve does not allow us to do what we must do,” Trump tweeted Thursday. “They put us at a disadvantage against our competition.”
Earlier in the week, he had told reporters, “If the Fed would do its job, you would see a burst of growth like you have never seen before.”
Powell has insisted that the White House criticism has had no effect on the Fed’s deliberations over interest rate policy.