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Saudi Arabia has set up a $320-million (1.2 billion riyals) fund that will provide debt financing for renewable energy projects, including the manufacturing of renewable energy components, Bloomberg reports.
“Whether you’re in manufacturing, agriculture or retail, if you want to deploy renewable energy, we will finance it,” said the director general of the investment vehicle—the Saudi Industrial Development Fund. "For renewables to be adopted in the kingdom, we need to support it.”
Investment in renewables is a key part of the Kingdom’s diversification strategy called Vision 2030. So far, however, it has not made much progress.
Back in 2012, even before the latest oil price crash, Saudi Arabia said it would invest more than $100 billion in renewable energy. Plans were to soon have a third of electricity generated by solar installations. To date, however, the share of renewable energy in Saudi Arabia’s energy mix is a tiny 0.1 percent.
Then came an even more ambitious project: a $200-billion solar power installation dubbed a solar city and touted to be the largest solar power project in the world. Riyadh, which was planning the project with Japan’s SoftBank, announced the cancellation of the solar city last year.
Still, some smaller-scale plans for renewable energy remain on the table, it seems. In January this year, Riyadh said it will tender 2.22 GW of solar power this year with a view to building as much as 40 GW of solar capacity by 2030. By 2023, the Kingdom said sat the time, it should have 20 GW in solar capacity, up from an earlier target of just 5.9 GW.
To support these projects, the Saudi Industrial Development Fund will provide funding to any company that wants to switch from fossil fuels to renewables.
“Whether you’re in manufacturing, agriculture or retail, if you want to deploy renewable energy, we will finance it,” the fund’s director general, Ibrahim Almojel, also told Bloomberg.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.