Nuclear and Renewable Energy: Building Resources for the Future
US-Saudi Business Opportunities Forum, Atlanta
December 7, 2012
[Dr. Hashim Yamani] [Arabic greeting] Your Excellencies, distinguished guests, ladies and gentlemen, salaam aleikum.
From the outset, I would like to thank my friend and colleague, His Excellency Abdullah Alireza for inviting me to talk to you about a momentous initiative that the Kingdom undertook on April 17th of last year when it announced the creation of King Abdullah City for Atomic and Renewable Energy, KA-CARE.
The announcement was a culmination of a national discourse on energy from both supply and demand perspectives, taking into account the local, regional, and international markets. The founding Royal Order establishing KA-CARE states explicitly that the creation of the city is to contribute to the sustainable development in Saudi Arabia through the utilization of science, research, and industries related to atomic and renewable energy for peaceful purposes in a way that leads to raising the standards of living and quality of life in Saudi Arabia. This event sets in motion a series of decisions designed to transition Saudi Arabia from total dependence on fossil fuel for electricity generation and water desalinization towards a sustainable energy mix, thereby ushering in a new era during which Saudi Arabia shall be known not only as the Kingdom of energy, but more precisely as the Kingdom of sustainable energy.
I am sure that many of you are asking yourselves the logical question of why Saudi Arabia, which is sitting on the largest oil reserves, is promoting the introduction of alternative energies?
Here are some important facts, which will help us to answer the question.
First, a careful assessment of where we are from the energy point of view and where we are heading reveals a pattern of excessive demand for energy in Saudi Arabia, leading naturally to a rapid growth in the demand for fossil fuel.
Second, the forecast for energy demands in Saudi Arabia over the next 20 years is based on several factors, the most important of which are the expected economic growth together with expected population growth. Saudi Arabia, already the largest economy in the MENA region and member of the G20 is undergoing an extraordinary economic boom. It is expected that electricity demand in Saudi Arabia will exceed 120 gigawatts by 2032.
Thirdly, the demand for oil has also been growing at an alarming rate, with the past four years witnessing the increase of more than twenty-seven percent in consumption. Massive public investment, rapid private sector growth, and new sector initiatives are driving an expansion projected to offer more than 1.3 trillion dollars in trade and investment opportunities over the next decade.
Massive investment requires unprecedented massive energy supplies.
The challenge, therefore, is to meet the growing demand, reaching more than 80 gigawatts of additional required capacity by 2032 in a sustainable way. One option, as you can easily imagine, is to burn more oil and more gas, but there is a catch to this “business as usual scenario.” By 2028, Saudi Arabia will be consuming more than eight million barrels of oil equivalent to fuel its economy. Of course, the Kingdom intends to use its resources to fuel its development requirements. At the same time, the Kingdom is committed to continue being that reliable supplier of oil needed to fuel the development requirements of other nations. To meet these dual challenges, the Kingdom opted to bring in new energy sources. And to spearhead this mission, the Kingdom created KA-CARE.
KA-CARE will help usher in a new energy mix to meet local needs as well as maintain Saudi Arabia’s leadership role in the global energy arena through carefully chartered transition towards greater sustainability. By introducing atomic and renewable sources of energy, we are not alone as evidenced by the increasing global reliance on atomic and renewable energy. KA-CARE’s vision is to be the driving force for making atomic and renewable energy an integral part of the national sustainable energy mix in Saudi Arabia, creating and leveraging the competitive advantages of relevant technologies for the social and economic development of the Kingdom.
This sustainable energy mix, as we envision it, would result in alternative energy gradually replacing fossil-based generation. The target is to ensure that both base-load and seasonal-load variation are met using a sustainable approach, sustainable in its environmental footprint and its economic impact, and inspiring comprehensive social economic development. The balanced deployment of nuclear and renewable energy, together with energy conservation, will gradually and significantly reduce the dependence of fossil fuel for electricity generation and water desalination by 2015.
But before I describe the basic thinking process behind the myriad of options and scenarios for developing this energy mix, I would like to share with you the mandate with which we are working. KA-CARE’s responsibility spans promoting alternative energy policies and formulating the strategies, acting in a regulatory capacity, a role we are preparing to be taken up by an independent authority, conducting and supporting R&D activities, developing human capacity required by the alternative energy sector, investment and business development in relevant technologies, and of course representing the Kingdom internationally.
The reason for KA-CARE having a broad mandate is that the Kingdom with a critical need to upgrade its power sector to sustain economic and industrial development will need to carry out this upgrade in a sustainable manner. The new implementation paradigm of the alternative energy sector will ensure that a nuclear power plant when commissioned in Saudi Arabia will contribute to GDP creation through jobs, value chain development in the manufacturing and services sector, and economic development spill-over to other sectors, in addition to generating electricity. We will carry out this sustainable development in a partnership mode as we have done successfully in the past in various economic sectors such as the petrochemical sector.
Already, the foreign direct investment stock has exceeded $200 billion, and the U.S. is the number one source of FDI, hovering around 18% of the total FDI. We foresee a major role for the U.S. FDI in the upcoming alternative energy sector in Saudi Arabia. This balanced development approach requires comprehensive value chain integration with electricity generation on the local scene. It also demands careful localization of niche products and services, in addition to seamless integration with international product chains and global energy services. By sewing the seeds of sustainability in the newly created alternative energy economic sector, KA-CARE will enable a long-term energy sustainability and economic growth. The broad mandate entrusted to KA-CARE will create the necessary levers to deliver on the fulfilling the task of creating a new and sustainable alternative energy sector.
Now, let’s go back to the energy mix discussion. We started the process of developing the sustainable energy mix of Saudi Arabia by studying the following parameters: how much would increasing efficiency and conservation contribute to demand reduction; the quantity of liquid fuel that will be saved by the proposed energy mix; the generation related matter, such as load factors, dynamic load offsetting, nature size, and efficiency of generation technologies; practical limitations of each technology, capacity building, international product chains, and the Saudi role in the alternative energy sector, local value chain development for atomic and renewable energy.
Understanding the electricity demand profile in Saudi Arabia is very essential to developing suitable energy mix that is both viable and sustainable. First, the seasonal change in peak load in Saudi Arabia exceeds 40 percent. Daily load variation both in summer and in winter is less pronounced than the seasonal variation, and is roughly uniform. Secondly, the average swing between day and night demands is relatively constant through year, all year round. Third, summer average demand – which is higher than average peak load by 20 percent is persistent during 60 percent of the year in Saudi Arabia. Very high summer peak demand where generation capacity is threshed to maximum is with us only two to four percent of the year, depending on the region. This is just the detailed technical analysis, but the implication from the above is that first and foremost, energy solutions are to be crafted for base load, then attention should move to seasonal and peak demand.
The discourse upon which we have based our analysis and strategic development starts from the base and moves upward. Nuclear generation may be suitable for year round base load, including winter, with other types of generation technology fitting the bill for the remaining load. Summer is a bit more complicated, yet nuclear remains viable for base load, with solar energy being suitable for meeting part of the load balance, particularly the difference between day and night year round. And with continuous improvement in energy storage solutions, fossil capacity will gradually be phased out for as a primary energy supply, but will remain the dispatchable solution for peak demand and emergency situations.
I hope that the previous slides have shown you at least a glimpse of the thought process that went into the development of the optimum energy mix. The criteria used to develop and recommend a suitable energy mix include sustainability, economic viability, technical feasibility, and enabling of further development. Of course, any proposed energy mix must deliver the required capacity, both cost effectiveness and in a timely fashion.
And here [slide] is an example of one plausible energy mix that combines new fossil with nuclear and renewable, built on a base of energy efficiency deployment.
We also carried out a cost benefit analysis of each and every plausible scenario that was considered. The development of the proposed energy mix came about following extensive consultations with stakeholders in Saudi Arabia and elsewhere, and benefitted from comprehensive assessment of relevant case studies. KA-CARE teams worked very diligently with assistance from the world’s best consulting houses to assemble and thereafter assimilate relevant insights and learning into the identified solution for developing a viable and sustainable energy mix. Starting with the capital costs and adding operation and maintenance, comparing the cost against the value of oil saved, and factoring in the investment in industry and human capital we find that the introduction of alternative energy is cost effective for Saudi Arabia.
Setting up solar and wind farms and constructing nuclear power plants would undoubtedly generate electricity. Doing the above, however, while affecting comprehensive value chain development would, in addition to generating electricity, foster long-term economic development. Developing the alternative energy value chain in and for Saudi Arabia of course requires tight-knit cooperation among local stakeholders and also with our international partners. We expect that the U.S., being the Kingdom’s largest trading partner and the number one source of FDI in Saudi Arabia, will score high in establishing the alternative energy sector in the Kingdom.
In carrying out renewable and civil nuclear energy sector development, we are committed to the following principles: transparency always, safety first and safety always, and adherence to international best practices, commitment to non-proliferation and the highest standards of safeguard, affecting maximum localization of the nuclear and renewable value chains in Saudi Arabia, commitment to transparent incentives, off taking, and funding mechanism.
The ability of KA-CARE to deliver on its broad and overarching mandate has been bolstered by the planned development of the physical city location where we will first practice what we preach, and second provide a stage for applicable development of alternative energy, technologies, and services. The site where KA-CARE shall reside permanently is unique in its characteristics, which required a thorough analysis, creative thinking, and visionary articulation of how it will materialize. We sought out the best experience, both locally and internationally, to develop our understanding and conceptual vision of the physical city. Here is a conceptual snapshot of KA-CARE’s site’s most valiant features, gathered from a short but hopefully enjoyable virtual tour of our permanent abode. The site itself represents various challenges, but met correctly, it may be transformed into a model of sustainable living, aspects of which may be applicable both locally and internationally.
[DR. YAMANI PLAYS KA-CARE VIDEO PRESENTATION – “VIRTUAL TOUR”]
I would like to draw your attention to the proposed Phase I development of the site as conceptualized. I would like to propose to your Excellency, considering holding a future U.S.-Saudi Business Opportunities Forum at the Headquarters of the King Abdullah City for Atomic and Renewable Energy. [Applause]
Finally I would like to leave you with the two basic ideas which summarize what I have stated.
First, Saudi Arabia needs to add more than 80 GW of generation capacity by 2032. The additional capacity, anchored in energy conservation, would include nuclear, and renewable capacity. The investment requires is in the hundreds of billions of U.S. dollars.
Second, Saudi Arabia has been a favorable destination of U.S. FDI and exports, and we would certainly encourage this trend to grow in the renewable and nuclear energy sectors, as well as in energy conservation, conventional energy and energy support services.
Thank you very much.
H.E. Dr. Hashim Yamani
President, King Abdullah City for Nuclear and Renewable Energy
Dr. Hashim Yamani was appointed to serve as President of the newly established King Abdullah City for Atomic and Renewable Energy (KA-CARE) in April 2010. Prior to his appointment, he served as Minister of Industry and Electricity from 1995-2003 and as Minister of Commerce and Industry from 2003-2008.
Dr. Yamani’s association with King Fahd University of Petroleum & Minerals (KFUPM) dates back to the mid-1970s when he joined the University as a faculty member. He later became Professor and Chairman of the Physics Department. After a brief stay at King Abdulaziz City for Science & Technology (KACST) where he served as Deputy Chairman from 1978 to 1983, he returned to KFUPM in the early 1980s as Manager of the newly established Renewable Energy Division of the KFUPM Industrial Research Institute. Dr. Yamani was also a Guest Professor at the University of Bielfield in West Germany (Summer 1977) and a Post-Doctoral Fellow at the University of Western Ontario in Canada (1975).
Dr. Yamani has served as acting Chairman of the Board of Directors for a number of organizations including the Saudi Standards, Metrology & Quality Organization (2003-2008); Saudi Arabian Industrial Property Authority (MODON) (2001-2008); Saudi Arabian Authority for Auditors (2003-2008); Saudi Council for Engineers (2003-2006); Saudi Electricity Company (SEC) (1995-2003); Saudi Basic Industries Corporation (SABIC) (1995-2003); and Saudi Arabian Consulting House (1995-2001), among others. Dr. Yamani was also Head of the Kingdom’s Delegation to the United Nations Industrial Development Organization (UNIDO) and Head of the Kingdom’s Delegation at the Ministerial Council Meeting of the Organization.
Dr. Yamani is also a Member of the Supreme Economic Council; the Permanent Committee of the Supreme Economic Council; the Supreme Petroleum & Minerals Council; the Coordination Council for Saudi-Yemeni; the Ministerial Committee for Accession to the World Trade Organization; the Board of Directors of the General Investment Fund; the Board of Directors of the Supreme Commission for Tourism; the Board of Directors of the Food & Drug Authority; the Arab Industrial Development & Mining Organization, (Rabat, Morocco); and the Board of Directors of “ALBA” Bahrain. In addition, Dr. Yamani serves on charitable boards such as the King Abdulaziz and His Companions Foundation for the Gifted and Creativity.
Dr. Yamani received his B.A. in Physics and Mathematics from the University of California, Berkeley in 1969; his M.A. in Physics from Harvard University in 1971; and his PhD in Physics from Harvard University in 1974 (Thesis: L2 Approach to Quantum Scattering Theory). He was also the recipient of several awards including the Ministry of Higher Education’s Undergraduate and Graduate Scholarships, as well as KFUPM’s Scholarship.
- US-Saudi Business Opportunities Forum – SUSRIS Special Section
- Business Forum: A Common Desire for Greater Cooperation – Alireza – SUSRIS – Dec 10, 2011
- Civilian Nuclear Trade Agreement – SUSRIS Special Section
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- Business Forum: Nuclear & Renewable Energy – Bernhard Briefing