How will the world’s industry adapt to the solar energy revolution? More than 50 years ago Britain’s leading geographer, Professor Sir Dudley Stamp, published his own prediction: “We may expect a gathering movement of industrial towns to the sun, especially to coastal situations in the arid lands.”
This prediction was widely interpreted to refer only to new types of employment - such as software development and call centres - which were ‘footloose industries’. Stamp’s words, though, show that he was referring to heavy industry. He pointed out that industry first sprang up where the most valuable commodity - energy - was cheapest, as in the weaving towns in England which located near the running water needed to drive the mills.
As coal came into use with steam power, industry relocated to the coalfields. But when oil appeared, it was so cheap to transport that every country wanted to have its own heavy industry even if it had no local energy resources. The consequences, according to Professor Stamp, were negative in terms of tariff barriers and industrial inefficiency. In his day, solar energy was based on mirrors to concentrate the sun’s rays to drive turbines, but the subsequent development of photovoltaic technology makes his prediction even more relevant.
Earlier this century, the ‘old’ industrial nations of the higher latitudes developed their own plan to benefit from cheap solar energy. Their Desertec initiative wanted to generate electricity in the Sahara and transmit it northward across the Mediterranean. This initiative has not progressed, so will the northern nations now lose their dominance of industry in favour of ‘coastal situations in the arid lands’?
A look at the map shows one region which seems to tick all the boxes: the Atacama Desert in northern Chile, possibly the sunniest land on earth. And sure enough, something new is happening in the Atacama, where copper is mined. Chile is the biggest exporter of copper in the world, but has almost no fossil fuel resources to power its energy-hungry mining and smelting. In 2015 Chile abandoned a scheme to flood large parts of its southern provinces to create hydroelectric energy to be transmitted to the north. Instead, it suddenly became the world’s largest buyer of industrial-scale solar energy plants, both for the national grid and for off-grid supplies to the copper industry. The first units, equivalent in total output to a nuclear reactor, were in place several years before the hydroelectric scheme could have been operational. Unlike hydroelectric or nuclear, solar energy plants can be expanded incrementally as demand grows.
The Atacama might aim to attract other industries, but has the disadvantage that it is remote from the rest of Chile, separated from its neighbours by the Andes, and not on regular sea lanes. Seaborne connectivity is what Professor Stamp had in mind when he foresaw the industrialisation of ‘coastal regions in the arid lands’, and this connectivity is one of the sultanate’s strong cards, witness its maritime success in former times.
How should the sultanate exploit its solar energy advantages? Possibly not only by competing for a share of established industrial markets, like the aluminium smelting favoured in hydroelectric-rich countries such as Canada and Norway. Turning to newer industries, those requiring energy-intensive supercomputing power would be an obvious candidate. The best-known such industry is blockchain processing, which is used mostly for the Bitcoin cryptocurrency at present. Bitcoin itself is not considered a reliable market, but blockchain processing may find other applications, for example in keeping a record of trade shipments.
Bitcoin’s greatest cost is electricity, and cryptocurrency will use 0.5 per cent of the world’s electricity by the end of 2018 according to Digiconomist. A Bitcoin processing plant in Mongolia, estimated to have four per cent of the world Bitcoin processing market, pays US$0.04 per kilowatt hour for subsidised energy generated by local coal. Two years ago, a large solar farm in Dubai was quoting less than US$0.03 per kilowatt hour, and prices for photovoltaic equipment are falling. Other new computing-intensive industries that might blossom under the sun include Artificial Intelligence (AI) and Virtual Reality (VR) processing.
New transport technology start-ups may also achieve high growth where they can benefit from cheap electricity and advances in battery technology. Battery-powered ships are already carrying passengers and freight on the world’s seas, and need recharging. A more interesting prospect is electric aircraft - in particular pilotless electric air taxis which are already undergoing trials and could become an important passenger transport mode given the relatively sparse road and rail networks in the Gulf area.
Professor Stamp’s 1964 prediction is sure to come true at least in part, enabling the sultanate and other Gulf states to play a role in the world economy much greater than that of energy exporter.
The writer can be reached at www.hugh-small.co.uk