Saudi Energy Minister Abdulaziz bin Salman recently said the government has asked its state-owned oil company Aramco to halt its capacity additions. This, he said, was meant to expedite the green transition in the country.
He said that the halt in new investment in fossil fuels meant the transition. He said the oil company is on its way to becoming an energy company. He also conveyed to the public that the decision was instant but a well-thought-out decision. The recent move has surprised several people in Saudi Arabia’s energy sector, which is dominated by oil and gas.
The move comes as Saudi Arabia plans to reach 50 percent renewables in its generation mix by 2030. To boost its green energy mix, Saudi Arabia has planned several projects in solar, green hydrogen, and other areas.
Saudi Arabia’s total power capacity will stand at 82 GW by 2022, where natural gas takes the lion’s share of around 60%. The country, meanwhile, has also pinned hopes on its ambitious project-NEOM Green Hydrogen Project to increase its renewable share and shun fossil fuel dependency in a phased manner.
“Through the Neom Green hydrogen project, the Kingdom expects to produce 600 t/d of low-emission hydrogen and 1.2 Mt/y of green ammonia powered by 3.9 GW of renewable energy over the same time frame. The project reached a final investment decision (FID) in 2023,” a recent report from the International Energy Agency (IEA) said while talking about the energy mix of the Middle East country.
The IEA report said that in the next few years, upto 2026, Saudi’s reliance on natural gas would continue. However, the share of renewable in its energy mix is likely to increase. The IEA report said that renewable generation, though growing rapidly, is expected to account for only around 4% of Saudi Arabia’s total generation in 2026, up from 1% in 2023.
