Saudis tap US solar company for massive panel factory

SAN FRANCISCO — Saudi Arabia, long synonymous with oil, may have its sights set on solar power.

Saudi officials signed an agreement Tuesday with Belmont, Calif.-based SunEdison Inc. to explore building a solar panel factory in the kingdom.

The proposed $6.4 billion plant would be located at Wa’ad Al Shammal, an industrial city in the country’s north. The factory would use SunEdison technology to process polysilicon into wafers, then turn them into cells and modules.

Its size would be significant. As planned, the plant would produce enough photovoltaic (PV) solar modules each year to generate 3 gigawatts of electricity — roughly the output of three nuclear reactors.

“We anticipate substantial growth in solar PV within the Kingdom and the region,” said SunEdison CEO Ahmad Chatila, in a prepared statement. “This project will support that growth, and the growth aspirations of SunEdison and our Saudi partners.”

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SunEdison inked the agreement with the Saudi government’s public investment fund and Sanabil Investments, which is also owned by the government.

Asia, not Arabia, has emerged as the center of solar manufacturing, even for companies based in the United States.

But the Saudi government wants to nurture its own renewable power industry, setting a goal of getting one third of the country’s electricity from renewable sources by 2032.

Saudi Arabia still produces more than half of its electricity by burning oil, and its electricity demand is growing along with its population. The government also wants to diversify the kingdom’s economy, still deeply reliant on fossil fuels.

Other Gulf States have come to the same conclusion, with both the United Arab Emirates and Qatar trying to incubate cleantech companies. The Emirates are building an entire community — Masdar City — that will use only renewable power.

“They view themselves as leaders of the energy industry long-term, and they recognize that their current resources will deplete at some point, so why not make some investments now?” said Shayle Kann, senior vice president of research at Greentech Media, which closely follows the energy industry.

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Saudi Arabia boasts strong sunlight and rare rain, making it a promising location for generating solar power.

“The fundamental characteristics are right for it to be a good market,” he said. “But right now, they don’t have any mechanisms in place to develop the market.”

Although the agreement signed Tuesday stops short of authorizing construction, plans for the plant appear to have advanced well beyond the initial stages. The government’s Ministry of Petroleum and Minerals has already agreed to supply the plant with natural gas, while the state-run electrical utility provides power. If all goes as planned, the factory would open in 2017.

“We will bring our downstream solar PV development expertise to the region, and will partner with the Kingdom to build a large and dynamic solar energy industry,” Chatila said. “We are very proud to take this next step with our Saudi partners as the Kingdom becomes a world leader in solar energy.”

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