Increasing domestic Saudi Arabian energy demand bumping up against volumes of oil available for export is an issue Breaking Energy has followed closely, and a new report from the International Energy Agency provides some updated detail on how the kingdom is addressing its energy dilemma. Renewable energy – primarily wind and solar – and nuclear power are major parts of future Saudi energy strategy meant to fee up natural gas for power generation, petrochemicals and other industry, while preserving oil for export.

A staggering amount of fuel oil and diesel is currently used in the Saudi power generation sector,

“Gas provides around 43% of Saudi electricity, with fuel oil and diesel providing the rest. In recent years more and more crude oil has been diverted to the power sector, oil that might otherwise be sold internationally to augment national earnings. Since 2011, power generation has consumed more than 500 kb/d, with peak demand in summer now seen topping 900 kb/d.” – IEA

Energy efficiency is also a major component of Saudi Arabia’s energy plan, but highly-subsidized electricity and liquid petroleum fuel complicate efficiency measures.

“A principal cause of energy demand growth is very low end-user prices. Electricity costs no more than USD 0.6 per kilowatt hour (kWh), one-quarter the 2013 average for OECD households. Gasoline runs about USD 0.12 per litre – against the USD 1.71 average for premium unleaded in the OECD – to motorists’ delight but overwhelming the country’s 2.5 mb/d refining capacity enough to force gasoline and diesel imports in recent years.” – IEA

The kingdom plans to increase the use of solar for general power generation and wind power for desalination, which opens enormous potential for firms that manufacture equipment or provide expertise to facilitate deployment of these technologies.