Qatar plans to generate 2 per cent of its electricity from solar energy by 2020 and 20 per cent by 2030. Considering the country’s rapid projected electricity demand growth, this chapter analyzes the economics of deploying solar photovoltaic (PV) energy, specifically the cost savings that could be achieved by replacing oil and gas for electricity generation and for transport with solar energy.

The chapter develops a cost utility function, based on nonlinear programming (NLP), to optimize the savings/returns that both Qatari consumers and the Qatari government can derive from diverse fuel mix strategies. To establish the cost-effectiveness of any given fuel mix strategy, the chapter takes six factors into account: oil price; gas price; oil subsidy; gas subsidy; levelized capital and fixed operation and maintenance cost of energy from gas (gas LCO&M); and the introduction of a carbon tax.