Solar Energy:

The Sustainable Energy Mix

Cornerstone for Saudi Arabia

2

“...there shall be established a scientific city to be called, King Abdullah

City for Atomic and Renewable Energy” Royal Order No. A/35 3/5/1431 A.H.

عبداهلل الملك مدينة مدينة علمية تسمى نشأ ت هـ1431جمادى األولى 3في 35/األمر الملكي رقم أ. والمتجددةالذرية للطاقة

Target Capacity by 2032

Nuclear

Optimizing Energy Generation with Alternative

Energy Economic Sector Development

17 GW

54 GW Renewable

3

4

India 4%

China 2%

US 23%

KSA 0%

EU-27 37%

Today 2030

4% 6 11

2% 9 11

23% 20 16

45-50% 20 25-30

51% 24 27

Renewables

Nuclear

% of Electricity Generated from

Alternative Energy – Today vs. 2030

Solar Energy Development Targets

5

Target Solar Capacity by 2032

Solar PV

Maximizing solar deployment potential

16

25 Solar CSP

6

28 - 35

75 - 110

Installed

Capacity

(GW)

Energy

Generation*

(TWh/y)

* Load factor: PV = 0.2 – 0.25, CSP = 0.34 – 0.5

** Average hydrocarbon plant efficiency = 45%

33 - 46

99 - 145

Hydrocarbon

Fuel Saved**

(MMBOE/y)

7

1 3 16 9 2

13 11

2 6

6

11 14

31

899

358

185 33

70

196

401

930

34

Wind PV Biomass 2 CSP Geothermal

KSA Rest of Middle East

KSA % of Rest Middle

East & Africa 29% 37% 27% 68% 33%

KSA % of World 1% 4% 2% 36% 3%

Africa Rest of the World

25

6

RE Capacity Installed by Technology GW in 2030

Solar Energy Deployment Roadmap

8

0 2 3 5 6 7 8 9 9 10 11 12 13 15 16 16

0 0 2

3

6 7

10 11

13 14 16

17 19

20 22

25 25

0

5

10

15

20

25

30

35

40

45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

GW

Years

Cumulative installed capacity, GW

Solar CSP

Solar PV

The Case for Alternative Energy

9

10

Industrial 17.9%

Agricultural 2.6%

Commercial 12.2%

Governmental 15.1%

Residential 52.2%

Building 79.5%

Source: Saudi Electricity Company (SEC) 2009

70%

consumed

by HVAC

Energy Consumption Patterns

Total of 193,472 GWH

Peak Power Demand Will Nearly Triple in Next 20 Years…

11

0

20

40

60

80

100

120

140

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

GW

YIC System

SOA Remote

SOA System

WOA Remote

WOA System

COA Remote

COA System

EOA Remote

EOA System

2010

2015

2020

2025

2030

2032

Source: ECRA 2010

121 GW

…Creating Tremendous Capacity Gap

Peak Demand

New Committed

Existing Diesel

Existing HFO

Existing Crude

Existing Gas v

v

v

v

v

GW

140

120

100

80

60

40

20

0

2012 2020 2032

60 GW

(Approx.)

Year

Gap between peak demand and existing + planned capacity

12

Could impact ability to meet international oil demand

Business As Usual: KSA’s Petroleum Demand

Expected to Nearly Triple by 2032

*Total local consumption (transportation, industry, electricity, etc.)

2032

10.2

MBOE

2010

3.4*

MBOE

13 Source: Saudi Aramco 2010

14

Maximizing Return

Oil Saved

Economic Sector

Sustainability

How Much Can We Do ? Demand Growth

Demand Pattern

Technology Characteristics

How Much Should We Do ? Economics

Sustainability

Technology maturity

Summary of Saudi Arabia’s Alternative

Energy Program

• CONTRIBUTES to a sustainable future for Saudi Arabia

• PRESERVES non-renewable fossil fuel resources

• SAFEGUARDS Saudi Arabia’s international energy leadership

• ENSURES greater long-term global energy market stability

• TRANSFORMS KSA into the Kingdom of Sustainable Energy

15

K∙A∙CARE Mandate

16

Established by Royal Order April 17,

2010, the Mission is to be:

17

…The driving force for making atomic and

renewable energy an integral part of a national

sustainable energy mix, creating and

leveraging the competitive advantages of

relevant technologies for the social

and economic development of the

Kingdom of Saudi Arabia…

“

”

Key K.A.CARE Objectives

18

• CREATE a sustainable economic sector for Saudi

Arabia anchored by local alternative energy

demand market

• CONTRIBUTE to job creation, GDP growth,

environmental footprint reduction and sustainable

development

• MAINTAIN highest levels of safety, security and

transparency

K.A.CARE

City

Investment

& Business

Internation

al Relations

Execution Policies &

Strategies

Regulatory

Human

Capacity

R&D &

Innovation

19

Mandate

• SUGGEST alternative

energy mix

Execution of K.A.CARE Mandate

Sustainable and efficient

energy future for KSA

20

• DEVELOP & LEAD

execution plans

• PLAN for and BUILD

physical city

Selecting the Optimum Energy Mix

21

Parameters Affecting Energy Mix Development

Value chain

development

Economics

of

hydrocarbons

saved

Electricity and

desalination

demand patterns

Technology

choices

Regulatory and

physical

infrastructure

requirements

Human

capacity

development

22

Energy Mix

Criteria for Solar Energy Economic Sector

Sustainable Development

23

Incentivize Manufacturing and Services Industry, Coupled with Incentivizing R&D, Innovation, and Human Capacity Development

Creating Industry Pull through Incentivize production of Solar Kwh, both for Utility Scale and Distributed Applications

Target Long Term Developmental Goals by Reducing Significantly KSA’s Greenhouse Gases Emissions in Power Generation as well as in Manufacturing

Annual Electricity Demand Pattern in KSA

24

Week Number (July 2009 – August 2010)

MW

Seasonal change in peak

load exceeds 40%

1 15 29 43 57 71 85 99 113

127

141

155

169

183

197

211

225

239

253

267

281

295

309

323

337

351

365

GW

Day-Night Load Variation for Saudi Arabia

Uniform day-to-night

variation year round

25

Night

Day

0 0 : 0 0 0 6 : 0 0 1 2 : 0 0 1 8 : 0 0 2 4 : 0 0

140

120

100

80

60

40

20

0

GW

Genera

tion

Demand

Peak load

Base load v

v

Daily load during a work day in August 2032

Daily load during a holiday in January 2032

Time of Day

Forecasted Daily Electricity Demand Pattern

2032

26

27

Capacity Identification Using Technology –

Load Matching Approach

(Existing + Committed – Retiring) Start with known

hydrocarbon capacity in

target year X:

Required

Additional

Capacity

Base Load

Nuclear

+ Wind

+ Waste-to-Energy

+ Geothermal

Load

Following

Solar PV

Solar CSP

28

Technology Installed Capacity Estimation

2032

60.5 GW Start with known

hydrocarbon capacity

in year 2032:

121 – 60.5 =

60.5 GW

Base Load

17 GW

9 GW

3 GW

1 GW

Load

Following

16 GW

25 GW

Source: ECRA, SEC, Team Analysis

Proposed Energy Mix

29

Solar PV

Solar CSP

Hydrocarbons

Nuclear + Geothermal + Waste-to-Energy

16 GW

25 GW

21 GW

Load-Specific Technology Component of

the Proposed Energy Mix by 2032

30

• PV will meet total day time demand year round

• NUCLEAR + GEOTHERMAL + WASTE-TO-

ENERGY will meet base-load demand up to night

time demand during winter

• CSP with storage will meet maximum demand

difference between PV and base-load technologies

• HYDROCARBONS will meet the rest of the demand

Solar Value Chain

Development

31

Global Solar PV Energy Trends

32

991

278

108 76 54 43 38 20 15

197

5

198

0

198

5

199

0

199

5

200

0

200

5

200

9

201

21.3 1.7 2.1 2.7

3.8 5.3

7

9.8

15.4

19.4

27.7

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

1

Solar electricity costs - utility scale PV (c$/kWh)

Global installed capacity (GWp)

Electricity cost of ~10 c$/kWh in 2020 ~7 c$/kWh in 2030

200 GW installed in 2020 (10x)

Solar CSP LCOE Today

33

Ouarzazate Concentrated Solar

Power IPP in Morocco:

• Capacity = 160 MW

• Technology = Parabolic Trough

with storage

• Levelized tariff = 18.971 c/KWh

34

Manufacturing, EPC and O&M split

100

80

60

40

20

0

O&M

O&M

O&M O&M O&M

O&M

O&M

O&M

EPCEPC

EPC EPC

EPC

EPC

EPC

EPC

CSP Trough CSP Tower Silicon PV Thin Film PV HCPV Wind Geothermal Waste-to-

energy

Core Localization Localization not considered for industrial impact

Mirrors

Absorber

Structures

Turbine

Steam generator HTF Molten salt

Other

Structures

Mirrors Receptor

Steam turbine

Molten salt

Other

Integrated module manufac-turing

Tower

Rotor blades

Gearbox

Other

Nacelle housing Generator

Turbine

Cooling tower

Pre-heater

Condenser Other

Rest of manufacturing

Boiler

Air pollution control

Turbine & generator

Fuel & ash handling

Other Other

Integrated module manufac-turing

Polysilicon

Cell

Module

% total capex and opex throughout the plant lifetime

35

Technology Elements

Wind • Blades

• Towers

• EPC & O&M

• Gearbox

• Generator

• Power converter

• Nacelle housing and

assembly

• Bearings

• Minor elements

Waste-to-

Energy

• EPC & O&M

• Steam Turbine

• Boiler

• Grate

• Other power block elements

• Minor elements

Geothermal • EPC and O&M

• Steam Turbine

• Heat exchanger

• Condenser

• Minor elements

CSP Technology Elements

Trough • Collector

• Mirror

• Absorber

• EPC & O&M

• Molten Salts

• HTF

• Steam turbine and

generator

• Storage Tank

• Other power block

elements

• Minor elements

Tower • Heliostat

• Mirror

• EPC & O&M

• Receiver

• Molten Salts

• Steam turbine and

generator

• Storage tank

• Other power block

elements

• Minor elements

PV Technology Elements

Thin Film • Integrated Module

Factory

• EPC & O&M

• Inverter

• Rest of balance of system

HCPV • Integrated Module

Factory

• Tracking System

• EPC & O&M

• Inverter

• Rest of balance of system

Silicon • EPC & O&M

• Poly Silicon

manufacturing

• Inverter

• Wafer

• Cell

• Module

• Rest of balance of system

1

2

3

4

5

6

7

8

Potential RE Value Chain Components

Building a World-Class Solar Energy Sector:

Value Chain Development

Industrial

investment

Research,

development

and innovation

Technology

development

Education

and training Human capacity

development

36

Value Chain Development: Beyond the

Solar Cell and the Mirror

37

Electricity

Generation

Industrial

Energy

Applications

Seawater

Desalination

& Water

Management

Applications

District &

Solar

Cooling

Localization of Solar Industry

38

Maximizing benefits of solar energy requires

localization policies …

…which depends

highly on local

skills…

…and cooperation

and JV’s

39

Value Chain Opportunities

Regulatory

environment

Development

of R&D

centers and

programs

Development

of local

human

capabilities

Leveraged

procurement

Feed-in tariff /

PPA

Bid

preparation

Value chain interfaces

Value chain

organization

capacity

building

Independent

quality

assurance

authority

Industrial

readiness program

(cost, quality,

delivery)

SME

development

program

FDI

attractiveness

and promotion

Stakeholder

engagement and

communication

Global

vendor

engagement

&

qualification

Value chain enablers

Value chain activation

Program

and project

structure

Certification

process

assistance

Monitor implementation Assist in JV/ partner

selection

Step 6 Step 7

Action plan

evaluation and

validation

Readiness

action plan

Identification &

prioritization

of preferred

local suppliers

Capability gap

assessment

Step 1 Step 2 Step 3 Step 4 Step 5

1 3 2 4 5 6 7

9

10 11 12 13 14 15

Alignment

with current

and planned

national

initiatives

8

16

Value Chain Activation Plan

The Road to Successful Implementation

40

41

Engagement with Local Stakeholders

Eco

nom

ic S

ub-S

ect

or Human Capacity

Development

Value Chain

Development

Research,

Development,

and Innovation

Technology

Acquisition

Policy, Rules and

Regulations

Incentives

Infrastructure

MoHE, TVTC, SABIC, Aramco, HDF

MCI, SAGIA, Chambers of Commerce, MODON,

RCJY

Commercial Banks

KACST, KAUST, SABIC, Aramco, SWCC, SEC

Venture Capital Management Firms

Commercial Banks

MCI, SAGIA, Shura Council

SIDF, PIF, SCB

MODON, RCJY, MCIT, MoT

PPP

42

Engagement with International Stakeholders

Eco

nom

ic S

ub-S

ect

or Human Capacity

Development

Value Chain

Development

Research,

Development,

and Innovation

Technology

Acquisition

Policy, Rules and

Regulations

Incentives

Infrastructure

International universities and training institutions

Export credit agencies, technology providers

Battelle, Franhofer, CSIRO

Venture Capital Management Firms

WTO, nuclear bilateral agreements

Export credit agencies

Multinational/international corporations

PPP

43

Clear Developmental Goals

Eco

nom

ic S

ub-S

ect

or Human Capacity

Development

Value Chain

Development

Research,

Development,

and Innovation

Technology

Acquisition

Policy, Rules and

Regulations

Incentives

Infrastructure

Saudization rate for solar energy service industry

KSA world leader in CSP technology exports

CSP development fully supported through local R&D

KSA ownership of world best performing CPV

technology

Technology and region-based FIT scheme

Energy mix not needing incentives anymore

Smart grid development and connectedness with

MENA region countries

PPP

44

Implementation Roadmap: Prioritization

Eco

nom

ic S

ub-S

ect

or Human Capacity

Development

Value Chain

Development

Research,

Development, and

Innovation

Technology

Acquisition

Policy, Rules and

Regulations

Incentives

Infrastructure

Research, Development, and Innovation

Value Chain Development

Technology Acquisition

Infrastructure

Human Capacity Development

Incentives

Policy, Rules and Regulations

7

6

5

4

3

2

1

45

Implementation Roadmap: Sequencing

Human Capacity

Development

Value Chain

Development

Research,

Development,

and Technology

Technology

Acquisition

Policy, Rules and

Regulations

Incentives

Infrastructure Key prerequisites

Sowing the seeds of

sector development

Sustaining sector

development

Sector transition to

maturity

Tim

e

Rese

arc

h,

Develo

pm

en

t,

an

d I

nn

ovati

on

Valu

e C

hain

Develo

pm

en

t

Tech

no

logy A

cq

uis

itio

n

Infr

ast

ructu

re

Hu

man

Cap

acit

y D

evelo

pm

en

t

Incen

tives

Policy, Rules and Regulations

Strategic objectives

The Kingdom of Sustainable Energy

46

Thank You

47