The growth in the Middle East countries have been slowed down due to constraints in oil production .Saudi Arabia, presently facing an economic downfall due to 2014-2015 collapse in oil prices. The major revenue generation that contributed the Saudi economy is from oil production. The largest reserve for hydrocarbon energy sector is under question whether a sustainable renewable energy source can be developed or not. Over the past few years, renewable source of energy have gained a prominence presence over other source of energy. Countries such as China, U.S., and Canada are heavily investing in renewable energy such as wind, hydro, solar, and biofuel. Saudi Arabia is also expected to invest heavily for the development of this sector.
Saudi Arabia moving towards renewable source of energy
Saudi Arabia is expected to launch a renewable energy program with an investment of about USD 30 to USD 50 billion. The decision toward moving in renewable energy source is due to the downfall in oil revenues. Saudi Arabia has invited 25 companies to build 400 megawatt wind power project that includes EDF Energies Nouvelles, GE, Siemens and among others. The government wants to diversify its energy mix to make the economy stable. Saudi Arabia has collaborated with many global leaders that deals in environment management system to monitor the quality of air and water sensors for environment safety. This system has already been installed in cities of Dammam, Mecca, and Riyadh. This system will collect data that will be used to develop environmental strategies so as to move towards Eco-friendly industrial city.
Climate change is another major factor that would be responsible for going towards renewable source of energy. If the climate changes are to be met, then much of their oil reserves could not be extracted, rather it would be left in the ground itself.
The major impact of Saudi Arabia moving towards renewable energy is that the economy will not be dependent on only one source of energy. The introduction of renewable energy in Saudi Arabia will mitigate the consumption of oil for the generation of electricity used for domestic purpose. The main source of electricity production in Saudi Arabia is through oil and remaining is fulfilled by natural gas. This dependency on oil will result in higher price in future which can affect the economy of other countries energy portfolio. Saudi Arabia moving towards renewable energy will ensure that most of the oil is kept under ground and reducing the higher margin in the price of oil in near future.