Saudi Arabia announces plans for major solar plant

Saudi Arabia has recently announced a development plan to constructing solar plants within the nation to decrease emissions and to change specialisation.

Saudi Arabia currently mass specialises in oil production as its land is particularly rich in oil compared to other regions.

Due to its crude oil being on land, it is also much easier to harvest compared to other sources, making the nation perfect for specialisation in the oil industry.

This is an example of Heckscher-Ohlin theory, the idea that nations should specialise in whatever resources are plentiful within a nation as it allows for greater levels of comparative advantage.

Comparative advantage is the idea that when nations specialise in certain fields, they can export surplus to other nations and import resources or industries they lack at a lower price, leading to higher levels of efficiency.

However, global oil demand has been decreasing as it is being replaced by greener alternatives.

This is because nations, firms and consumers are all taking responsibility for cutting carbon emissions, and one of the main sources of carbon emissions are fossil fuels, especially oil.

For example, transport is the main source of carbon emissions within the UK, crude oil can be used for fuel production, and, once electric cars are favoured by consumers due to the 2030 legislation, crude oil will consequently see a large loss in demand.

Therefore, Saudi Arabia is at risk as its current specialisation is becoming increasingly outdated with the shifting trend of nations becoming greener both energy-wise and consumption wise.

Consequently, Saudi Arabia has to change its specialisation to avoid this long term reduction in demand for the services of the nation as if they do not switch in time, the nation will be ravaged by painful, long-term structural unemployment.

So, to continue producing products that will be in demand in future, Saudi Arabia has decided to construct solar plants that will deliver power to various parts of the country.

Energy Minister Prince Abdulaziz bin Salman stated in a conference that the project will supply 3,760 Megawatts of capacity towards the Saudi Arabian electricity supply.

One of the plants will be developed by a sovereign Public Investment Fund, the plant will be the largest and will produce 1,500 Megawatts of clean power.

This switch to clean energy is predicted to cut Saudi Arabia’s carbon emissions by more than 7 million tonnes which will significantly improve air quality within the nation.

So, not only will this benefit the nation by providing clean energy, but Saudi Arabia will also reap the benefits of comparative advantage if it chooses to specialise in solar energy production.

At the same time, the nation also aims to become a lead producer of hydrogen power.

The energy minister stated in the conference that the nation will see 5 to 7-gigawatt solar power projects being built every year which will be enough for the nation to meet its goal of halving renewables to be part of its power production by 2030.


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