Kuwait is set to spend USD 100 billion on the nation’s domestic energy sector over the next 5 years – and for the first time, some of that investment is earmarked for renewable energy.
Via Arabiangazzete . com
by John Brian.
Phase I of the country’s first renewable energy project is already underway and it will be in the form of a 70 MW ‘hybrid power plant’ with PV-solar, thermal solar, and small wind power, set to come online by Q3 of 2016, in Shagaya, Kuwait – near its border with Iraq and Saudi Arabia.
- Phase I – 70 MW.
- Phase II – 930 MW.
- Phase III – 1000 MW.
Once the renewable energy plant is fully operational in 2030, the 2000 MW 3-part project will save Kuwait 12.5 million barrels of oil (BOe) per year — and power 100,000 Kuwaiti homes.
Saving 12.5 million barrels (BOe) per year will allow Kuwait to export that same amount of oil at the going rate. (12.5 million barrels of crude oil, is about equal to one fully loaded supertanker)
Oil prices have been hovering around the USD 80. – 100. mark recently, but this will certainly rise and some energy experts see oil rising as high as USD 250. per barrel, mid-century.
For demonstration purposes only, if that one supertanker load of ‘saved oil’ is priced near today’s USD 90. per barrel ($90. x 12.5 million barrels per year) it means Kuwait will rake in an extra USD 1.12 billion, per year, every year, due to this renewable energy project.
If the oil price shoots up as expected, the government will see even greater benefits. By the time oil hits USD 180. per barrel, this 3-Phase project will be complete — allowing the Kuwaiti government to take in USD 2.25 billion, per year, every year, due to this renewable energy project.
Separate from all of the foregoing, is the additional income that could be garnered from those ‘saved’ 12.5 million barrels per year — IF Kuwait added some value to that crude oil by refining it into valuable products before exporting it, such as gasoline, diesel, aviation fuel, plastics and synthetic rubber — instead of merely exporting it as raw crude oil.
At that point, the relatively small amount of 12.5 million barrels per year could become worth much more than crude oil sold for USD 1 or 2 billion per year. Instead, when sold as fuels or plastics, it becomes many billions of dollars contributing directly to the national GDP of Kuwait.
To extrapolate this further, Kuwait’s national power grid uses 14,000 MW at peak load. Out of their yearly production, Kuwait uses 126 million BOe (barrels-of-oil-equivalent) per year, to power their domestic electricity grid.
Based on USD 90. per barrel, with 126 million barrels (BOe) saved:
If Kuwait switched completely to renewable energy, and instead, exported all the crude oil and gas it burns to produce domestic electricity, national GDP could increase by USD 11.3 billion.
Based on USD 180. per barrel, with 126 million barrels (BOe) saved:
If Kuwait switched completely to renewable energy, and instead, exported all the crude oil and gas it burns to produce domestic electricity, national GDP could increase by USD 22.6 billion.
Based on value-added products made from crude oil, with 126 million barrels (BOe) saved:
If Kuwait switched completely to renewable energy, and instead, refined all the oil and gas it burns to produce domestic electricity, national GDP could increase by USD 56.7 billion, or more.
Only now, with the recent combination of high crude oil prices and the dramatic fall in the cost of renewable energy has it made economic sense for OPEC nations to consider the switch to renewable energy.
Simply put, OPEC nations can make more money by exporting their oil – instead of burning it to produce electricity for domestic consumption.
Adding value to the ‘saved’ crude prior to export, means that OPEC nations have the opportunity to make their money many times over, when compared to simply exporting raw crude product.
Embracing this new vision can work miracles for GCC economies, which are blessed with plentiful sunshine and wind resources, and already have the technology to refine their crude oil, thereby adding value to the raw resource while creating thousands of jobs for the region’s chronically under-employed youth.
Cleaner air for GCC citizens, billions more dollars via value-added exports and a lower unemployment rate among region’s youth. Now that’s something to celebrate!