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Saudi Arabia to Build $640 Million Solar Power Plant in City of Makkah

By James Burgess | Thu, 04 October 2012 22:16 | 3

Last month Citigroup released a report that Saudi Arabia, the world’s largest exporter of crude oil, could actually become a net importer by 2030 if its domestic consumption continues to grow at current rates.

Currently the Arab kingdom consumes all of the natural gas it produces and a quarter of its total oil (three million barrels per day), and that demand is growing by eight percent each year.

In order to avoid this fate, and maintain the vast revenue that it earns from exporting oil around the world, Saudi Arabia is embarking on various renewable energy projects. One of those is a giant solar power plant to be built in the city of Makkah.

The solar plant will cost around $640 million and have a capacity of nearly 100MW. Al-Eqtisadiah, a Saudi Arabian daily newspaper, commented that the project is intended to meet the growing power demands in the region, and believe that once up and running it could save the city around $587 million off its annual electricity bill.

Osama bin Fadl Al-Bar, the mayor of Makkah, told Al-Eqtisadiah that “the project will be established on an area of about 2m sqm. About 20 international consortiums consisting of about 100 companies will compete for the execution of the project.”

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Al-Bar said that the first bids will be accepted during the first week of 2013, and that depending on the success of the whole venture, other municipalities around the country may develop their own solar strategy, which could potentially save the kingdom up to eight million barrels of oil a day.

By. James Burgess of Oilprice.com

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  • Alfred on October 07 2012 said:
    The roi of the project is probably due to the amount of sun available(desert) versus other regions of the world.
  • David Rushton on October 05 2012 said:
    If these numbers are accurate - a $640 million investment - will pay for itself in a little over a year (annual savings of around $580m). That is an almost unheard of roi. Solar power is about to explode I think...
  • ymah on October 05 2012 said:
    It is about time for the Kingdom of Saudi Arabia to invest its resources in renewable energy rather than continue providing lib service for their desire to do so. A large project like this one will surely place the kingdom at the forefront in Solar Energy Projects. Saudi Arabia should sponsor innovation and growth of Solar and Wind generated electric power.

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