Saudi Arabia's Renewable Ambition: 5 pillars for businesses

Ever since the discovery of petroleum in 1938, Saudi Arabia has used oil to grow its economy with billions of dollars generated each day through exports. Nearly 80 years on, the energy landscape is shifting, and the oil rich nation now has an opportunity to become a world leader in clean energy.

Saudi Arabia’s commitment to the Paris Agreement and its Vision 2030 reforms has set the country on a path to energy diversification. After experimenting with solar power in the 1970s, the country has embarked on building a competitive renewable energy sector.

However, no government can make the shift to renewable energy alone, completing this journey also needs the support of the business community. Global businesses are now recognizing the commercial opportunity of tackling climate change, in some cases regardless of the policy landscape, and are taking steps to become more sustainable, including making investments in renewable energy.

Ahead of Abu Dhabi Sustainability Week (ADSW) 2018, we have identified five pillars on which the business sector can help Saudi Arabia build its ambitious renewable energy programme.

Partnerships: It doesn’t matter if you’re a start-up or a multinational conglomerate, realizing a low carbon economy requires the technologies of tomorrow. Developing these solutions and bringing them to market demands knowledge-sharing programmes and public-private partnerships. Such partnerships will fast track the deployment of renewables in Saudi Arabia and support its aims to become an international leader in future energy technologies.

Harness local talent: Besides oil and the desert sun, Saudi Arabia’s people are a vital resource. The kingdom has some of the best engineering, science and business universities in the Middle East, with thousands of students graduating each year. Nurturing this raw talent, as well as existing experts in the petrochemicals industry, will provide the ingredients for developing and deploying renewables in the country.  

Energy efficiency: In many countries, improving energy efficiency across the business sector has allowed renewable assets to be maximised. Every business can do its part, but it’s not just about achieving efficiency and becoming more environmentally friendly. It’s also an opportunity for businesses to improve their bottom-line. Across the US and Europe, commercial businesses and heavy industry are embracing smart grid technologies like Demand Side Response (DSR) to improve energy efficiency. DSR automatically adjusts in real-time the energy consumption of equipment, from air conditioning to furnaces, without compromising operational performance. With 70% of Saudi’s electricity consumed for air conditioning during the summer, the adoption of smart technologies by the business sector could be key in reducing peak demand and balancing the country’s electric grid.[1]

Energy storage: As Saudi Arabia works towards its initial target of generating 9.5 gigawatts from renewable energy, businesses are well positioned to deploy energy storage across the electricity network. We all know that wind and solar are intermittent sources of power—the wind doesn’t always blow and the sun doesn’t always shine. But advances in battery technology are allowing clean energy to continue to supply power grids even when the sun has set and the air is still. This is making storage applications for utility-scale renewable energy more attractive for investors. At smaller scales, businesses are using storage to better manage their own energy needs and create new revenue streams.

Invest for the long-term:  By supporting the diversification of Saudi Arabia’s energy portfolio, businesses can generate significant ROI, including from R&D, manufacturing, and project development. Building any sector from the ground up is unlikely to deliver instant returns. However, companies like Tesla are demonstrating the benefits of long-term investment. When the company was formed in 2003, Elon Musk and Tesla’s other co-founders outlined a simple mission statement – ‘to accelerate the transition to a sustainable energy future’[2]. Fast forward 15 years and Tesla has overtaken Ford and General Motors in market value[3].

With the right regulatory framework, entrepreneurial spirit, and innovative solutions, countries like Saudi Arabia can realise their renewable energy ambitions. The path to a renewable energy sector can’t be reached through the adoption of just one technology or business model; it’s going to need a multi-pronged approach with governments and businesses working side by side to achieve a common goal. That’s why each year, ADSW brings together thousands of delegates from around the world to discuss effective strategies for achieving a more sustainable future.

Making long-term commitments to clean energy will create new markets, generate jobs and deliver new investment opportunities. Acting now will ensure businesses are ahead of the clean energy curve while helping to transform Saudi Arabia as a global player in renewable energy.

[1] http://www.tandfonline.com/doi/abs/10.1080/15567249.2016.1248874

[2] https://www.tesla.com/en_GB/elon-musk

[3] http://www.bbc.co.uk/news/business-39485200