Is the global energy transition in trouble?
文 / NE-SALON新能荟小编团
Recently, Amin Nasser, chief executive of Saudi Aramco, the country's state-owned petrochemical giant, made a statement at an energy conference calling on the world to abandon illusions about phasing out oil. He noted that the current energy transition strategy has encountered some difficulties, and that the dependence on oil and gas for global energy demand will continue to grow in the coming years. This has led to a deep reflection on the future of energy.
Nasser's account of the energy transition dilemma
Nasser stressed that although the International Energy Agency predicts that oil, gas and coal demand will peak in 2030, it will not be easy to achieve this expectation in the short term. In particular, attention needs to be paid to the needs of the United States, Europe and developing countries. While we have invested heavily in alternative energy over the past 20 years, the share of renewables in the global energy supply remains relatively low. Wind and solar currently account for less than 4% of the world's energy supply, and the penetration rate of electric vehicles is less than 3%.
At the same time, the share of fossil fuels in the energy mix, although declining, is still high. The global demand for hydrocarbons on a daily basis continues to increase, reaching new all-time highs. Nasser mentioned that the use of natural gas has increased by 70% since the beginning of the century. The U.S. has switched from coal to natural gas, which has led to a significant reduction in U.S. carbon emissions. But Nasser stressed that we should not paint a picture of the future demand for oil and gas with too much optimism, as more and more people are starting to focus on the security of oil and gas energy sources.
Moreover, the demand for oil and gas will continue to increase with the rise of developing countries. However, investment in renewable energy in these countries accounts for only 5% of total investment. In addition to increasing investment in renewable energy, we should also focus on research and practice to reduce oil and gas emissions. Over the past 15 years, improvements in energy efficiency have reduced global energy demand by nearly 90 million barrels of oil equivalent per day, while wind and solar have replaced only 15 million barrels of oil.
Nasser stressed that we should gradually adopt new and new energy sources when they are truly ready and economically competitive. This requires us to work together to find the right balance between the energy transition and its viability.
Chinese companies participate in Saudi Arabia's energy transition
In recent years, Saudi Arabia's energy transition has also attracted much attention. In Vision 2030, Saudi Arabia plans to diversify its economy by developing renewable energy and reducing its dependence on oil. One of the targets is to increase installed renewable energy capacity to 130GW by 2030. Take the Alshubach photovoltaic power plant as an example, it is the world's largest single installed capacity photovoltaic power plant project under construction, which is expected to provide a large amount of clean energy for the region.
On the road of energy transition in Saudi Arabia, Chinese photovoltaic companies have carried out extensive cooperation with Saudi Arabia. These companies are cooperating with Saudi Arabia in the construction of photovoltaic power generation projects and the supply of equipment, and are also considering the establishment of production bases in the region. The light conditions in the Middle East are very conducive to photovoltaic power generation, and Saudi Arabia wants to increase the proportion of local photovoltaic manufacturing to encourage the development of the local photovoltaic industry. In addition, Chinese PV companies also take a fancy to the geographical advantages of the Middle East, which is conducive to covering a broader market.
Leading Chinese PV companies such as LONGi Green Energy and JinkoSolar have signed a number of power plant construction or equipment supply projects in the local area. TCL Zhonghuan and Trina Solar have also reached an agreement with Saudi Arabia to build factories in Saudi Arabia. GCL Technology also recently said that it is in in-depth negotiations with Saudi Arabia on the construction of overseas factories.
In terms of the construction and equipment supply of photovoltaic power generation projects, the Alshubach photovoltaic power station project adopts the world's most advanced N-type bifacial photovoltaic modules and flat single-axis automatic tracking brackets, which are jointly built by the International Group under China Energy Construction, Guangdong Thermal Power and Northwest Institute, with an installed capacity of 2.6GW, and is expected to have a total power generation of about 282.2 billion kWh in 35 years after completion.
According to the plan, on March 31 this year, the power station will usher in the first important milestone node - reverse power transmission. On July 31 this year, the first phase of the power station's 600MW capacity will be put into trial operation and connected to the grid for power generation. On November 30, 2025, the project will be fully completed.
In particular, the Saudi Power Procurement Company (SPPC) recently announced the selected bidders for the final phase of the fifth round of the Saudi Arabian government's National Renewable Energy Program (NREP), including China JinkoSolar, China State Power Investment Corporation Upper Yellow River Hydropower Development Company and China Power Construction Corporation.
According to documents released by the SPPC, the PV plants in the tender include the 2 gigawatt (AC) Al Sadawi power plant in eastern Saudi Arabia, the 1 gigawatt (AC) Al Masa'a project in the northern province of Hail, the 400 megawatt (AC) Al Henakiyah 2 power plant in the western part of Madinah province and the 300 megawatt (AC) Rabigh 2 power plant in the western part of Makkah province. The total installed capacity is 3.7 GW.
In terms of establishing a production base in the region, TCL Zhonghuan recently said that the company actively promotes the investment in the construction of a photovoltaic crystal chip factory project in Saudi Arabia, and has sent relevant teams to actively promote the project process, and the company will fulfill its information disclosure obligations in a timely manner in accordance with relevant regulations.
According to public information, Vision Industries, which signed a contract with TCL Zhonghuan to jointly build a crystal wafer project, is a new energy enterprise in Saudi Arabia that is mainly engaged in the investment and development of the whole industrial chain of new energy such as solar photovoltaic, wind energy, and hydrogen energy. The company's chairman is also the chairman of the Saudi International Power and Water Company (ACWA Power). Saudi International Power & Water Company is the world's largest privately owned desalination company and is considered a leader in the Kingdom's energy transition.
Aramco's efforts on the Kingdom's path to net zero
In Saudi Arabia's net-zero pathway, in addition to renewable energy substitution, Saudi Arabia is also promoting the research and development of technologies such as carbon capture, utilization and storage (CCUS) to reduce fossil fuel emissions. Saudi Aramco has already begun investing in CCUS-related technologies and new energy projects, and has previously said it plans to achieve net-zero emissions by 2050. It has been working on CCUS-related R&D since 2010. In December 2022, Saudi Aramco signed a Memorandum of Understanding (MoU) with Continental Shandong Energy Group, which includes technical cooperation related to carbon capture and storage.
According to publicly available information, Saudi Aramco plans to capture, utilize or store 11 million tonnes of CO2 equivalent per year by 2035. However, CCUS technology still faces some challenges, such as high cost and low efficiency. As of 2023, Saudi Aramco's carbon capture capacity is only 800,000 tonnes per year, and to achieve its goal, it will need to rely on a planned CCUS center that captures 9 million tonnes per year, according to the Energy Security New Strategy Research Institute of China Energy Media.
As a petrochemical giant, Saudi Aramco can only rely on CCUS and hydrogen to deliver on its commitment to achieve net-zero emissions by 2050 without completely divesting its core business. Source: NE-SALON ZJ