In a new report prepared for the Saudi Electricity and Cogeneration Regulatory Authority (ECRA), Brattle Group economists Ahmad Faruqui and Ryan Hledik demonstrate that the systematic application of demand-side management (DSM) can help address the significant challenges currently facing the electric industry in the Kingdom of Saudi Arabia (KSA).
The KSA faces a number of obstacles in meeting its future electricity needs, including rapid peak demand growth (6% per year), capital-intensive grid expansion (SR 20 to 40 billion per year), low resource utilization, and lost revenue when oil is sold to electric utilities at a substantial loss. The authors contend that DSM can provide a number of benefits, including:
- Free up capital investment that would otherwise be tied up in peaking generation plants for other productive uses in the Kingdom
- Free-up oil that is currently sold to the electric utilities at a significant discount to be exported, yielding higher revenues that can be used to promote economic development in the Kingdom
- Reduce greenhouse gas emissions and improve the health of Saudi citizens, today and in the future
- Allow for complementary development of renewable energy sources and integration of customer-side activities with the anticipated roll-out of the smart grid
