COLUMN-Saudi solar is a no-brainer: Gerard Wynn

Wed Feb 27, 2013 6:54am EST

(The author is a Reuters market analyst. The views expressed are his own.)

By Gerard Wynn

LONDON Feb 27 (Reuters) - Saudi Arabia has the world's second best solar resource after Chile's Atacama Desert, making investment in solar a no-brainer as an alternative to burning its most precious resource.

The Kingdom has for several years been talking up its plans to become a major player in solar power.

Four years ago a senior oil ministry official told Reuters: "We can export solar power to our neighbours on a very large scale and that is our strategic objective to diversify our economy. It will be huge."

Since then the country has installed about 10 megawatts, a tiny fraction of cloudy England.

But the country has now detailed plans for installed renewable power capacity in 2020 and 2032 which could put the country among the world's top five solar power producers.

The competitiveness of solar photovoltaic (PV) power depends on the installed cost (including the price of solar modules and installation costs); local solar irradiation; and the cost of the alternative, as illustrated by the retail power price plus subsidies.

NASA solar irradiation data show that parts of Saudi Arabia are second only to the world's driest desert, in Chile.

Solar module demand would be boosted by a similar shift in other sunny, emerging economies with subsidised fossil fuel power.

COST

Saudi Arabia is dependent on electricity both for energy and water through desalination.

The main source of electricity is burning crude oil and increasingly, natural gas.

The country burned some 192.8 million barrels of crude to generate 129 million megawatt hours (MWh) of power in 2010, Saudi and International Energy Agency data show.

Saudi power generators pay about $4 per barrel for their oil, industry data show.

That works out at a running cost of $0.006 per kilowatt hours (kWh) in 2010, excluding all other capital, fixed and operating costs.

But accounting for the opportunity cost of exporting crude oil at international prices of $113 per barrel raises the economic cost of oil-fired power generation to $0.13 per kWh, ignoring all non-fuel costs.

A simplified solar cost calculator developed by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) estimates the cost of solar power at $0.07 per kWh under Saudi conditions.

That assumes a capacity factor of 33 percent as can be expected in sunnier locations in southern Saudi Arabia and a full capital cost of $1.5 per watt, a conservative estimate for utility-scale installations.

That is before taking into account the annual degradation of solar modules, and losses as result of dust, sand and high temperatures, none of which are deal-breakers.

The NREL calculator also appears to ignore DC to AC conversion losses which can cut power output by about 25 percent compared with nameplate DC capacity.

GERMANY VS SAUDI

NREL has helped develop an open access database measuring solar irradiance, with funding from the U.S. Department of Energy and sourced from NASA.

It is part of a Solar and Wind Energy Resource Assessment (SWERA) initiative started in 2001 with U.N. funding to advance the large-scale use of renewable energy technologies.

The data is measured at one-degree resolution globally averaged from 1983-2005 and calculated according to latitude and local weather.

Solar irradiance is calculated according to various formats, for example a flat surface laid horizontal to the Earth ("Global Horizontal Irradiance"), or tilted due south at the angle of local latitude ("Solar Tilt"), or tilted southwards and also tracking the sun ("Direct Normal Irradiance", or DNI).

The data reinforce how Germany is not the most obvious place for the world's leading solar market.

The sunniest region of southern Germany has a DNI of 3.39 kWh per square metre per day. (See Chart 1)

Saudi Arabia's capital, Riyadh, has a DNI of 6.68 kWh, and the vast empty land south of the city is as sunny as 7.99 kWh.

The country's Red Sea coastline north of the second biggest city Jeddah rises as high as 8.60 kWh.

That appears to be the second sunniest place on Earth, only over-shadowed by Chile's Atacama desert which has a DNI of up to 9.77 kWh per square metre per day.

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See Chart 1: goo.gl/Kks9E

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CAPACITY FACTOR

Local solar radiation determines how much power a given solar module will generate.

Capacity factor is a term which compares the electricity that a solar module actually generates compared with the theoretical maximum if it were running at full capacity all the time.

The standard test conditions (STC) for assigning the nameplate capacity of solar panels assume irradiance of 1,000 watts per square metre, or 24 kWh per square metre over 24 hours, at an ambient temperature of 25 degrees Celsius.

Such assumptions can be applied to actual field conditions recorded by the NASA data to calculate a capacity factor.

A solar panel located south of Riyadh, for example, would have a capacity factor of about 33 percent, given a local solar irradiance of 8 kWh, compared with test conditions of 24 kWh per day.

MORE LOSSES

There are further real-world losses associated with solar power.

In Saudi Arabia, high temperatures are relevant, where power output falls by about 0.5 percent per degree Celsius above 25 degrees, according to NREL assumptions, probably not enough to undermine its competitiveness.

Other emerging economies have rapidly growing power demand and subsidised fossil fuel consumption including China and India.

The NASA data show that both these countries have locations where solar irradiation rivals Riyadh.

Unsubsidised solar power can replace fossil fuels at scale in such locations over the next decade at zero or negative cost, with implications both for solar module and fossil fuel demand.

(Reporting by Gerard Wynn; editing by Jason Neely)