RIYADH: Prices of energy generated from renewables are expected to witness a continuous decrease in the region in the coming years, according to officials in a renewable firm and investment banks.

Paddy Padmanathan, president and CEO of ACWA Power, a leading renewables firm in the region, said in the virtual BMG Economic Forum on Wednesday that he sees a further decrease in prices of energy produced from renewable resources in the Kingdom.

“Competition brings the best out of the private sector, and what happened in solar and wind energy is one of many examples in this respect. Competition drives innovation and entrepreneurship, which drives down cost, which in turn attracts more demand, which then brings more participants, which then drives costs further down,” Padmanathan said.

He added that the massive decrease in the cost of generating power out of renewables can be attributed to the decrease in capital expenditures due to the advance of technology, the reduction of maintenance and operation cost due to the deployment of robots and improving efficiencies of panels and materials used, and finally the reduction of financing costs in light of negative interest rates in many countries worldwide.

“We’re able to deliver solar and wind energy at less than 2 cents per kilowatt in countries like Saudi Arabia and the UAE, and even in countries with more critical challenges like Egypt and Ethiopia to below 0.5 cents per kilowatt,” Padmanathan said.

Richad Soundardjee, CEO of Societe Generale Middle East, said although there is an increasing shift toward and demand for renewable energy globally, reaching the goal of a total transformation toward renewables is still far away.

“Energy transformation is much more complex than just to say let’s drop oil and move to renewables, or let’s change all the petrol cars to electric cars, because … this is the end of the game, but how we get there is really what matters,” he added.

Padmanathan said Saudi Arabia, which has the lowest cost of producing oil, is well positioned to continue supplying the demand for oil that will continue to be needed.

He added that the Kingdom is now on the frontline of the Oil to Chemical (OTC) project that will help in the journey of energy transformation.

“Let’s not forget, oil will still be needed in many tens of millions of barrels for a long time to come, because oil is used for much more than just transportation and industrial use,” he said.

“There are, I think, a list of more than 142 products, starting from lipsticks all the way to medicines … The reality is that there will still be demand for a significant amount of oil going forward.”