Advancements in solar inverters and expensive diesel costs have made a winning business case for photovoltaic (PV) hybrid solutions across the world’s remote areas. In Saudi Arabia, the world’s second-largest producer of crude oil, the appeal is even greater.
Every summer, when the demand for power shoots up, the Kingdom has been forced to use imported fuel oil and diesel to reduce the amount of crude burnt in the power sector. Last year, Saudi Aramco imported about 7.5 million barrels of diesel each month on average from January to October, reaching record volumes of almost 11 million in July.
“A lot of diesel – millions of barrels – is imported to Saudi Arabia during the summertime to address the peak electricity consumption,” says Imtiaz Mahtab, executive vice president of Air Liquide MENA Electronics and a board member of the Saudi Arabia Solar Industry Association (SASIA). “Companies that use diesel generators can consider hybrid PV technologies right away.”
Determined to cut down on this expenditure, Aramco recently said it would stop term imports of diesel on a delivered basis for the first time, after years of signing contracts with sellers. At the same time, the company has been under pressure to develop its natural gas reserves in order to make more gas available for use in power generation.
Such a solution, however, could be limited in geographic coverage. According to a 2013 report by the Oxford Institute for Energy Studies, while natural gas is the dominant fuel for power generation in the Eastern and Central regions of the Kingdom, it does not enter the fuel mix in the Western and Southern regions.
“In the Western region, crude oil is the dominant fuel in the power mix, while in the Southern region it is diesel. This reflects the lack of adequate infrastructure capable of shifting natural gas from the production and processing centres – mainly in the Eastern region – to the Western and Southern regions,” the report reads.
This leaves the Western and Southern regions with an energy dilemma should power demand excessively rise – a gap that can easily be filled with PV-diesel hybrids.
Improved power quality
“We strongly believe that the growth of Saudi Arabia’s industry can benefit from taking advantage of the latest renewable and hybrid technologies, both for economic and environmental reasons,” says Juan Carrasco, president of GP Tech, a Spanish power management company whose Power Plant Controller is operating in the biggest PV plant in the U.S.
“One of the main advantages of combining solar and diesel is that the quality of power can be largely improved”, notes Carrasco. “This is very interesting for facilities located in remote areas, because it helps reduce the machine’s breakdown and production stoppages, avoiding waste of time and money to restart them.”
PV-diesel hybridization can indeed drive significant reductions in fuel consumption with direct cost savings. For instance, as the number of operation hours of diesel gensets decrease, their life-cycles are extended and their maintenance needs reduced, resulting in a fully-autonomous source of energy that does not depend on market conditions.
“In hybrid PV systems, diesel is used as a back-up power supply, which, in turn, enables the PV system to have a longer payback period – potentially double the original period,” highlights Abdulmohsen Al Shoaibi, managing partner of DarSolar, a Saudi-owned company that assists solar engineering and design companies to become established in Saudi Arabia and the MENA region.
“While the private sector benefits from the extended financial return and reduced vulnerability to fluctuating energy costs, on a national level the country benefits by saving indigenous crude oil and natural gas,” Al Shoaibi adds.
A number of sectors can implement diesel-hybrid technologies in Saudi Arabia. According to Mahtab, these include commercial buildings, dairy and poultry firms, telecom and data storage, emerging cities and residential complexes.
In addition, isolated locations such as border posts, highway family rests, remotely-located mosques and small-sized villages, which usually rely on diesel generators, all represent excellent potential for micro-generation through hybrid designs.
“There is definitely a business case for hybrid solar and energy storage in Saudi Arabia. The country has a very high solar irradiation and its electric power supply, especially in remote areas, is heavily dependent on diesel,” explains Susanne Henkel, corporate press manager at German inverter manufacturer SMA Solar Technology, the company that supplied central inverters for Aramco’s 3.5 MW PV plant in Riyadh.
As the Saudi population continues to expands and industrial activities extend further away from cities, the demand for off-grid power will continue to rise. And while diesel prices remain high, the cost of PV-generated power is decreasing, especially in countries with strong irradiance.
Last month, Thierry Lepercq, founder and president of France-based Solairedirect, revealed that it is possible today to reach a solar levelized cost of electricity of between US$70/MWh in the higher irradiation/elevation areas in the western part of the Kingdom, and US$90/MWh in the Gulf areas.
Taking these competitive costs into consideration, and given that inverter technologies can now stabilize the input of PV into diesel generators, it will be difficult to turn a blind eye to this promising off-grid solution.