By David Matthews, Head of Renewables Strategy, Clarksons Renewable 

In a significant shift towards sustainability, Saudi Arabia has announced plans to trim its growth ambitions in the oil sector while turning towards renewable energy sources to address domestic oil consumption.

The decision to revise their 2027 production target from 13 million barrels per day (bpd) to 12 million bpd has captured widespread attention in oil and gas circles. However, what's often overlooked is the Kingdom's ambitious goal to displace 1 million bpd of oil used domestically with renewable energy and gas by 2030, aligning with their trajectory for oil export growth. With Saudi Arabia currently consuming approximately 3.6 million bpd of oil, various strategies are being explored to reduce this figure.

To replace the thermal energy equivalent of 1 million bpd of oil, approximately 620 TWh per year would be required. Assuming an average efficiency of around 40% for oil-to-power conversion, this necessitates approximately 250 TWh of renewable energy production annually to meet the demand. With Saudi Arabia's favourable conditions for solar energy, boasting specific yields exceeding 2200 kWh/kW, an estimated installation of 100-110 GW of solar and wind capacity by 2030 would be needed to achieve this generation target. The projected costs for this endeavour fall within the range of $50-70 billion, with additional investments of $20-40 billion required for grid infrastructure and load balancing. However, it's anticipated that a significant portion of the displaced oil consumption will be substituted by natural gas, thereby reducing the actual renewable energy capacity needed.

Saudi Arabia unveiled its official 2030 renewables target of 58.7 GW last year, comprising 40 GW from solar PV, 16 GW from wind, and 2.7 GW of concentrated solar power (CSP), marking a significant stride towards a sustainable energy future.

This strategic shift underscores Saudi Arabia's commitment to diversifying its energy portfolio, reducing reliance on fossil fuels, and embracing renewable energy to power its future growth and development.

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