“If Saudi Arabia has all that oil, why invest in solar energy?” The question sounds reasonable until you consider the Kingdom of Saudi Arabia (KSA) economy’s petrol dependence. Reliance on oil’s unstable demand and fickle pricing hinder any country, especially a nation intent on transforming into a diversified economy and global investment hub.
Consistent with Saudi Crown Prince Mohammed bin Salman’s far-reaching Vision 2030 plan, the prince and Softbank CEO Masayoshi Son announced a major agreement this week, according to the Washington Post.
Softbank signed a memo of understanding (MOU) with Saudi Arabia to create world’s largest solar power project. The 200-gigawatt project would build in stages with completion by 2030.
For perspective on the size of the announced solar energy undertaking, 200-GW is four times the current U.S. solar energy capacity, the Washington Post reports. Global capacity in 2016 totaled just 303-gigawatts.
If completed, the 200-GW plan would fill 95% of the country’s internal electrical demand, energy analysis firm Wood Mackenzie’s Benjamin Attia told the Washington Post.
Softbank’s investment strategy focuses on long-term investment in information-based technology partners. “Long-term” in CEO Son’s view translates to 300 years, a head-shaking concept for investors who think no further than the next wave of quarter-year reports.
Softbank’s long-haul perspective is a good match for Saudi Arabia. The prince and his father King Salman bin Abdul Aziz Al Saud announced Vision 2030 in 2016. The plan is to make the country the heart of the Arab and Islamic worlds, an investment powerhouse, and the hub connecting three continents.
Son gave props to Vision 2030 at the project announcement. “We have just signed an MOU to create the world’s biggest solar power generation project,” he said.
“The Kingdom has great sunshine, great size of available land and great engineers, great neighbors,” Son continued, “but most importantly, the best and greatest vision.”
A memo of understanding is not the same as a solid contract, but a statement of intent. The agreement’s relatively short timeline (“short,” considering the partners to the MOU think in terms of centuries) may move the progress to contracts quickly.
KSA’s plans, as presented in Vision 2030, include solar and wind-powered “energy grids storing power for generations.” The plan is most dramatically captured in the vision for NEOM, a vast project planned in KSA with almost 300 miles of coastline on the Red Sea. According to the NEOM vision statement, it will be “an independent economic zone with its own laws, taxes, and regulations” and “a global hub for trade, innovation, and knowledge.”