Saudi Arabia Implements $ 200 Billion SoftBank Solar Project

The blocked solar project marks the setback of a partnership between Saudi Arabia and SoftBank that pursues ambitious ideas. Together, they created a $ 100 billion fund for investments in technology companies, which has led to a resurgence of new sources of money in startups.

The solar project would have turned the world's largest oil producer into a giant solar power, ultimately generating about 200 gigawatts of energy, more than triple the country's daily needs. The plan was announced by SoftBank CEO Masayoshi Son and Crown Prince Mohammed bin Salman in New York last March and was intended to be an extension of their partnership.

Now, officials and a Saudi government advisor have said no one is actively working on the project.

Instead, officials and the advisor said the Saudi kingdom is putting in place a broader and more concrete strategy to boost renewable energy, which will be announced late October towards the time of a conference on investments to Riyadh. The announcement will help dispel the confusion created by the SoftBank plan and clarify the kingdom's renewable energy goals, said a Saudi official.

The development of solar power generation is the latest large-scale project that Saudi Arabia has re-examined after further consultations. In 2016, Riyadh announced a fundraising of up to $ 100 billion by listing the Saudi Arabian Oil Co., known as Aramco, but which was later postponed after its completion. Initial Public Offering.

"It's easy to get attention" with the $ 200 billion SoftBank project, said a senior advisor to the Saudi government. "But difficult to make an execution."

SoftBank declined to comment. Saudi government officials did not respond to requests for comment.

The solar project was to be part of the economic and societal transformation of a generation underway in Saudi Arabia. Under Prince Mohammed, 33, the kingdom lifted the only global ban on driving women, allowed the first theaters to open up and took steps to reduce the influence of extremist religious views.

The project was to extend a partnership between Saudi Arabia and SoftBank. Together, the Kingdom's sovereign wealth fund and SoftBank had already unveiled a $ 100 billion Vision Fund project to invest in new technologies and global companies.

Although the solar project cost $ 200 billion, its first phase was a $ 1 billion investment by Vision Fund this year. Son said in March that he would produce about 7.2 gigawatts in two years and a total capacity of 200 gigawatts in 2030.

The Vision Fund did not reveal whether it had already invested money in the Saudi project.

Saudi energy officials had not yet defined the main details of the solar project, such as the land that would be used; the development structure or if it would receive state subsidies, said a Saudi energy official and a councilor familiar with the matter.

"Everyone hopes that this whole idea will die," said a Saudi energy official.

Building such a capacity now could mean that Saudi Arabia will put an end to the development that will seem costly in the future with the arrival of new technologies, said another official. The project and the goal of 200 gigawatts were considered a vague agreement and a potential ambition, and not an explicit commitment to generate this volume of capacity by 2030, and it is not clear whether the created power could be exported to other countries. .

The framework to be announced in October will not prevent SoftBank from becoming involved in the construction of solar power generation in the future, but it should not lead to the development of a massive 200 gigawatt project, added the manager.

With vast desert plains and abundant sunshine, Saudi Arabia has long sought to shift from the world's oil producer to the solar energy actor, but its projects have already faced costs and logistical problems.

Prior to the agreement with SoftBank, the Saudi Ministry of Energy had launched a solar and wind power generation program to produce a modest 9.5 gigawatts of power by 2023, or about 10 percent of the total. total capacity of the kingdom. In February, the ministry granted 300 megawatts to the 2023 target, awarding a contract to a local private company to develop and produce solar power at one of the lowest prices in the world for the end consumer. Saudi Arabia produces virtually no solar energy and produces electricity by burning crude oil, diesel and gas.

Mr. Son has always announced plans for huge renewable energy projects around the world that do not achieve the original ambitious goals. After the earthquake and tsunami that devastated Japan in 2011 and caused a nuclear meltdown, Son said SoftBank would build enough mega-solar power plants to offset a 50-gigawatt nuclear capacity, but did not still achieved this goal.

– Mayumi Negishi in Tokyo contributed to this article.

Write to Rory Jones at [email protected] and Summer Said at [email protected]