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Shining Perspectives for Solar Industry in Saudi Arabia
CONFIDENTIAL
Information Document 2010Version: Final
Saudi Arabia & Germany
“A Path to Renewable Energies”
Conference, May 29, 2010
1
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Projects in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
2
Growth RatesThe Demand for Energy asks for Sustainable Solutions
Population Growth at 2.3% per
annum
Growth of new homes 3.7% per
annum
Demand in new homes more
than 5 million by 202042
70
100
2009 2020 2030
Generation Capacity in GW
Approx. 35 GW of new generation capacity are needed in the medium term
at an expected cost of $80-120 billion.
Source: ECRA, Saudi Aramco, Arab News, team analysis
CAGR of 4.2%
3
* Growth in population of employment age (>15 years) driven by existing population (ages 0-15)
** Assuming increase in female participation from 10% to 25%
*** Assuming current unemployment rate of 11% (8.3% for men and 24.7% for women)
Source: Statistical Yearbook 2005, Ministry of Labor; CDSI Labor Survey 2007
3.6
7.4
Kingdom
employment
2007
1.8
Labor
population
growth*
1.5
Higher
Participation**
0.5
Unemploy-
ment
reduction
to 4%***
Required
Saudi
employment
2020
+104%
3.8 million
Saudi employment needs by
2020
Millions of people
UnemploymentIncreasing Number of Saudi Job-Seekers creates Pressure on the
Social Society
4
Poverty TrapThe private sector is skewed towards low income jobs
Source: General Organization for Social Insurance (GOSI) 2006
Saudi
nationals
employed
Percent
Average income
per employed Saudi
in private sector
5.5
0
5
10
15
20
25
30
35
0 1 2 3 4 5 6 7 8 9 10
Monthly income SAR thousand
80% 20%
More than 80 per cent of the Kingdom’s registered private sectors jobs are
low wage
5
Environment KSA is among the most intensive CO2 emissioneers per capita
globally.
Per capita CO2-emissions, 2006 [tons]
Source: United Nation Millennium Development Goals Indicators
6
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Projects in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
7
Saudi Arabia has twice the average of Solar Irradiation than Europe
Source: Meteonorm
The Sun
☼ up to 2,550 thermal kWh/m2
Saudi Arabia
8
Saudi Arabia has a substantial potential for Solar Energy
Technical potentialTWh per year
Algeria 169,000
Egypt 74,000
US 64,000
India 20,000
China 20,000
UAE 2,000
Spain 1,600
Italy 100
Saudi Arabia 125,000
Global Electricity
Demand in 2020
(~ 26,000 TWh)Source: Saudi Aramco
The Technical Potential
9
Notes:2010f Population in millions; 2010f Gross Domestic Product per capita in US$ thousands; MENA=Middle East and North Africa; CIS-
Commonwealth of Independent States; .South Asia=Bangladesh, India, Sri Lanka including Pakistan
Source: The Economist Intelligence Unit, EIU, July 2009
European Union
394.1 m
GDPPC ($k) 32.4Main CIS
243.7 m
GDPPC ($k) 11.8
South Asia
1.541 m
GDPPC ($k)
2.9
Saudi is in the center of a developing market of ~ 400 million peoplePlus has logistics advantages to reach regional markets such as EU, CIS and SA
The Market
10
Source: NICDP; Team analysis
Saudi Arabia is expanding its strong rail network backed up by its sea-ports
Infrastructure
Deep sea Port
International airport
Railway
Sea routes
Under construction
Land bridge (under construction)
To Far EastEthiopia
To Far East
To Europe and North America
Yemen
Sudan
Egypt Dammam
UAE
OmanYanbu
Zabirah
Buraidah
Jubail
Hofuf
Haradh
Makkah
MadinahRiyadh
JeddahSaudi Arabia
Ras Az-Zour
Al-JalamidIran
IraqJordan
Syria
Kuwait
Qatar
Bahrain
Lebanon
Eritrea
Average shipping time between Saudi Arabia and Europe****, Days
Fom Jeddah to
4 days 14 hoursPiraeus
7 days 18 hoursMarseille
8 days 07 hoursValencia
13 days 21 hoursAntwerp
14 days 2 hoursHamburg
The Logistic and Infrastructure
11
Adjacent to PetroRabigh refinery and petrochemical
complex
Land Leasing rate (30 year term) $ 1.6 m2
Industrial Electricity rate
$0.027 kW
Water rate
$1.2 m3
Resin prices Competitive net back based pricing
New Economic Cities in the Kingdom PetroRabigh Conversion industrial Park - 240 ha
Attractive Locationsfor Investors in Saudi Arabia
The Royal Commission’s two major Industrial Cities
Yanbu Jubail
MODON Industrial Cities are spread all over
12
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Projects in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
13
Overview of the solar PV value chains and main supply materials
ModuleSubstrate
(e.g. glass)System
IngotSilicon Wafer Cell Module System
The crystalline PV value chain
The thin-film PV value chain Main production inputs/supply materials:
• Glass
• Process gases (e.g. oxygen, nitrogen,
hydrogen, argon)
• Process chemicals (e.g. hydrochloric
acid, hydrofluoric acid, phosphoric
acid, potassium hydroxide)
• Aluminum and steel
• Plastic foils
14
Conditions for CSP installations in KSA
Concentrated solar thermal power (CSP) is another major focal point for investor attraction
Geographic conditions
• High irradiation (5-7 kWh/m2/day)1
• No area restrictions
• Flat lands
Market conditions
• High and increasing energy demand
(35 GW in 2008 => 70 GW in 2023)2
• Few large utility companies
The Kingdom is a highly attractive
location for CSP installations.
Very favorable for
CSP technologies
Very favorable for
CSP companies
Dish engine
Linear Fresnel
Power tower Parabolic trough
Source: http://blog.sellsiusrealestate.com/ Source: Novatec Biosol AG
Source: Flagsol GmbH
Source: Abengoa Solar, S.A.
CSP Technologies
Source: 1) NASA; 2) ECRA.
Main inputs/supply materials:
• Reflector (aluminum/steel, glass)
• Receiver tubes (glass)
• Process gases for protective &
antireflective coatings
15
Ingot/wafer 1
2010 2012 2014 2016 2018 2020
Investment project
Investment decision Start of production
Ingot/wafer 2
Silicon 1
Silicon 2
CSP 1
CSP 2
Thin-film 1
Cell 1
Module 1
Short-term Medium-term Long-term
Ingot/wafer 3
CSP 3
Thin-film 3
Thin-film 4
Cell 2
Ingot fab 3500t/a 300* jobs per facility
wafer fab 250m/a 1000* jobs per facility
Crystalline Silicon factory 5,000t/a- 250-350 jobs per facility
Integrated Thin-film Module 75MW/a- 170 – 200* jobs per facility
CSP fab 250,000 m2/a mirror surface- ~100* jobs per facility
Silicon 3
Silicon 4
Ingot/wafer 4
Thin-film 5
Potential road map for the attraction of solar manufacturing projects
CSP 4
Thin-film 2
Module 2
Cell Factory 100MW/a- 150-200* jobs per facility
Module Assembly 100MW/a- 300 – 350* jobs per facility
*Source: Indications from different internationals companies
Solar Energy – Industrial Road Map
Today
Cell 3 Cell 4
Module 3 Module 4
CSP 5 CSP 6
16
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Activities in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
17
Solar Activities in the Region
18
Ongoing Projects in Saudi Arabia
Poly-Silicon Project in Jubail• Size: 3.600 t/a
• Status: Plan of Execution
• SOP: End of 2012
Poly-Silicon Project in Yanbu• Size: 5.000 t/a
• Status: E Plan of Planning
• SOP: Early 2013
Thin Film Module Manufacturing in Jubail• Size: 50 MW/y
• SOP: Q1st 2012
KAPSARC in Riyadh• Size: 3.5 MW PV
• Status: Bids under evaluation
Sport City in Dammam• Size: TBD Rooftop PV installtion
• Status: Bidding process
Aramco North Parc 4 in Dammam• Size: 10 MW Thin Film
• Status: Final cost estimation, structural foundation work under way
19
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Projects in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
20
• 100% ownership in the Kingdom of Saudi Arabia
• 20% tax on corporate profits. Losses carried over to offset future taxes
• No personal income tax.
• No value-added tax or sale tax
• No property tax
• No currency conversion or currency export restrictions
• Repatriate 95% of capital, profits and dividends (5% is deducted as a
withholding tax)
• Customs duties exemption on imports of machinery and equipment, raw
material and spare-parts if imported for industrial use
• Preferential treatment for national products in government procurement
• Foreign Companies enjoy all the benefits, incentives and guarantees extended
to national (100% Saudi owned) companies.
source: Local Enterprise Development Division (LEDD)
Business environment
21
Demand Enablers (in process)
Feed in tariffs* (FIT) set a standard price per kWh for qualifying renewable
energy generators.
They are effective at guaranteed revenue stream for generators.
Central Procurement* involves an agency providing renewable energy contracts
through competitive bidding, such an agency has to be powerful to regulate
demand and supply.
Fixed renewable share requires a regulation committing the power generators
to use renewable energy for peak load and as supplement.
*Source: ECRA – the ratification of a renewable energy regulation is in process
22
The following incentives are provided to foreign and local investors:
• The Saudi Industrial Development Fund (SIDF) - interest-free loans up to 50% or
$160 million of project capital whichever is lower,
• The Public Investment Funds (PIF) provides interest free loans up to $1.3 billion
• Human Resources Development Fund (HRDF)- financial support for Saudi
manpower of $400 per month during training and up to $533 per month upon
employment for up to 2 years.
• Promotion of non-oil product and service exports by the Saudi Export
Development center (established under the umbrella of the Saudi Council of
Chambers of Commerce and Industries)
source: Local Enterprise Development Division (LEDD)
Investment Enablers
23
KSA electricity cost is one of the lowest 2006, $ cent per KWh
KSA gas prices are the lowest of the world2006, $ per MM Btu
Source:
Modon charges http://www.modon.gov.sa/ContentPage.aspx?ContentID=631&Lang=en
Saudi Arabia Information; EIA 2006; Gulf News; Gov of India Ministry of Petroleum; Tamil Nadu Electricity Board (Chennai region); CRA Analysis; Team analysis
Global Competitive InfrastructureLow energy costs and world class industrial infrastructure
0.75
KSA
1.6- 2.8
14.7
India France
JapanKSA France IndiaThailand
MODON cities
Land Leasing rate (25 year term) $0.26-0.53 m2
Land development charge (one time) $1.06-13.3 m2
Industrial Electricity rate $0.032 kW
Water (over 301 m3) $1.06 per m3
Royal Commission cities
Land Leasing rate (20 year term) $1.06 per m2
Electricity charge $0.032 kW
Water (over 301 m3) $1.06 per m3
24
Saudi Export Program (SEP)
• SEP provides export credit, pre- and post shipment financing, guarantee and insurance of Saudi exports
• The Program’s financial resources has increased to $ 5 billions to support exports
SEP objective is to increase non-oil exports
25
Pressing Challenges ask for new Solutions 1
NICDP Solar Industry Road Map3
Solar Projects in the Region and Saudi Arabia4
Enablers and Incentives5
NICDP Services6
Rational for Solar Energy/Manufacturing in Saudi Arabia2
26
Services of NICDP
NICDP offers a comprehensive service package - free of charge - to investors to
ensure minimal risks and an optimum payback period. The services support (but are
not limited to):
• Market studies and market data
• Specific product requirements
• Location Requirements
• Identification of local suppliers
• Labor and Training requirements
• Evaluation of best fitting business model (FDI, JV or licensed Manufacturing)
• Incentives assessment and application support
• Match making with Saudi companies and investors
27
More information about the “Program” is available at www.saudiclusters.com
Contacts:
National Industrial Cluster Development Program
P.O. Box 65295
Riyadh 11556
Saudi Arabia
Solar Industry Cluster:
Ulrich Dill Saleh Al-AgiliVice President Director
Office: +966 1 218 8940 +966 1 218 8942
Cell: +966 532 572 556 +966 501 172 500
Fax: +966 1 218 8911 +966 1 218 8911
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شكرا لحسن إصغائكم
Danke fuer Ihre Aufmerksamkeit
Thank you for your Attention