Identifier
Created
Classification
Origin
10DHAHRAN18
2010-02-06 11:38:00
CONFIDENTIAL
Consulate Dhahran
Cable title:  

SOLAR ENERGY PICKS UP MOMENTUM IN SAUDI ARABIA

Tags:  EPET ENRG ECON PGOV SA BA 
pdf how-to read a cable
VZCZCXRO8140
PP RUEHDH
DE RUEHDH #0018/01 0371138
ZNY CCCCC ZZH
P R 061138Z FEB 10
FM AMCONSUL DHAHRAN
TO RUEHC/SECSTATE WASHDC PRIORITY 0357
INFO RUEHHH/OPEC COLLECTIVE
RUEHDH/AMCONSUL DHAHRAN 0480
C O N F I D E N T I A L SECTION 01 OF 02 DHAHRAN 000018 

SIPDIS

DEPT FOR EEB/ESC/IEC, NEA/ARP, AND S/CIEA
DOE FOR ELKIND,HEGBURG,PERSON

E.O. 12958: DECL: 2/6/2020
TAGS: EPET ENRG ECON PGOV SA BA
SUBJECT: SOLAR ENERGY PICKS UP MOMENTUM IN SAUDI ARABIA

REF: 09 DHAHRAN 150

CLASSIFIED BY: Joseph Kenny, Dhahran Consul General, Department
of State.
REASON: 1.4 (b),(d)
SUMMARY

-------

C O N F I D E N T I A L SECTION 01 OF 02 DHAHRAN 000018

SIPDIS

DEPT FOR EEB/ESC/IEC, NEA/ARP, AND S/CIEA
DOE FOR ELKIND,HEGBURG,PERSON

E.O. 12958: DECL: 2/6/2020
TAGS: EPET ENRG ECON PGOV SA BA
SUBJECT: SOLAR ENERGY PICKS UP MOMENTUM IN SAUDI ARABIA

REF: 09 DHAHRAN 150

CLASSIFIED BY: Joseph Kenny, Dhahran Consul General, Department
of State.
REASON: 1.4 (b),(d)
SUMMARY

--------------


1. (U) The First Energy Bank of Bahrain plans to build a
polysilicon plant in Saudi Arabia to serve an increasing demand
for solar energy power generation in the Middle East. The King
Abdul Aziz City of Science and Technology (KACST) launched a
major initiative to use its research facilities to develop solar
energy and build solar-powered desalination plants in order to
reduce water and energy costs by as much as 40 percent. End
Summary.



POLYSILICON PRODUCTION EXPECTED IN 2013

--------------


2. (U) The First Energy Bank of Bahrain plans to build a
polysilicon plant in Saudi Arabia to serve an increasing demand
for solar generated power in the Middle East. (Note:
Polysilicon is an essential raw material in the production of
solar cells used in panels that convert sunlight to electricity
for businesses, homes, and farms. End Note.) Reuters reports
that the Bank is joining Project Management and Development Co.
(PMD) in Saudi Arabia to build a factory in Jubail, which will
cost approximately USD $1 billion. The factory is expected to
have an annual capacity of 7,500 tons of polysilicon with
production set to begin in 2013. Saudi Oil minister Ali
al-Naimi has highlighted KSA's intent to be "the Saudi Arabia of
solar power," and aims to make solar power a major component of
Saudi energy supplies in the coming years.




3. (C) On January 25 CG Dhahran and PolOff met with VP of Fluor
Arabia Limited, the company contracted by PMD to handle the
front-end engineering and construction management of the
polysilicon plant in Jubail, Saudi Arabia. This project is the
first of its kind in KSA. Fluor's execution plan is to have the
front-end engineering design performed in Fluor's Greenville,
South Carolina offices, where they have already completed
similar projects. Fluor VP expects this to not only maintain

the jobs of those with the experience, but to add to Fluor's
reputation as a world leader in the engineering and construction
of polysilicon plants.



SOLAR TO POWER DESALINATION INDUSTRY

--------------


4. (U) On January 24, the King Abdul Aziz City of Science and
Technology (KACST) launched a major initiative to use its
research facilities to develop solar energy and build
solar-powered desalination plants in order to reduce domestic
water and energy costs by as much as 40 percent. (Note: The
new nanotechnology for using solar energy to operate
desalination plants was developed by KACST in association with
IBM. End Note.) As a result, the project is expected to
significantly reduce the amount of oil and gas currently needed
to power desalination plants. At present, desalination plants
on the Red Sea and the Gulf consume an estimated 1.5 million
barrels of oil per day.




5. (U) Though neither KACST nor the ministries involved have
mentioned a specific date, the initiative will be carried out in
several stages. (Note: KACST Vice President confirmed to
EconCouns in Riyadh that the ministries of Finance, Water and
Electricity, Commerce and Industry, and the Saline Water
Conversion Corporation are all involved in the initiative, which
will proceed in three phases over the next three years, building
out from an initial pilot stage to full-scale implementation.
As the KACST VP explained to EconCouns, KACST is using this
project as the model for fourteen more Technology Implementation
Centers it plans to create over the next five years. End Note.)
The first plant will be a small 30,000 cubic meter per day
facility in al-Khafji and is expected to serve 100,000 people.
A 100,000 cubic meter per day facility will be built during the
second phase with the expectation that, eventually, a network of
plants will be built across the country. (Comment: These
initial facilities are relatively small when compared to the
880,000 cubic meter per day facility on KSA's West coast, the
world's largest. End Comment.)


DHAHRAN 00000018 002 OF 002




COMMENT

--------------


6. (C) Given the insatiable domestic consumption of energy, the
Saudis are very concerned about the need for sustainability.
Though rich with oil and gas, the two are heavily subsidized in
KSA. As a result, domestic demand is growing considerably (with
no real incentives for conservation),in parallel with strong
industrial growth and a rapidly growing population. As such,
the SAG is missing an opportunity to profit from the export of
oil and gas. The Saudis have said on numerous occasions in
private meetings that the forgone opportunity cost is one they
are willing to endure in the short term, as a repeal of
subsidies is so politicized and could cause considerable social
upheaval. The development of alternative energy in Saudi
Arabia, though at first counterintuitive, is actually a
strategic necessity. Again, subsidizing energy costs provides
no incentives to conserve. As such, demand will continue rising
unchecked.




7. (C) The advent of solar energy will have a positive impact,
especially in the field of water desalination, as KSA reportedly
supplies more than 18 percent of the world's desalinated water.
Saudi Arabia's water consumption, too, is excessive, surpassing
per capita European consumption rates by nearly double. Aside
from the precious nature of water in a desert environment, water
is a depreciating resource as well, and thus a strategic
concern. Desalination is an effective method to maintain a
consistent supply of water; but, it is taxing KSA's natural
resources and hence the move to an alternative/additional energy
source, though an expensive one (at least initially),is a
necessary one. This project is also a very important milestone
in the Kingdom's efforts to create job-generating elements of a
knowledge based economy, and is a further indication that the
SAG is increasingly determined to play a major role in the
world's solar power industry. End Comment.
CG: JKENNY