Saudi power sector looks to save $855 million

Saudi electricity tariff reform adds $855 million for Saudi Electricity Company, shifts industrial loads from peak hours, drives energy efficiency, enables export via interconnection lines, and supports solar desalination in Al Khafji and grid investment.

Abdullah Husain, the Saudi Minister of Water and Electricity, unveiled a recently approved tariff for electricity that will apply for the government, commercial and industrial sectors.

This tariff will add $855 million a year to Saudi Electricity Company to cope with developing electricity sector challenges, including plans to reinforce the grid across the Kingdom.

Al- Husain said that the cost of electricity in 90 of the industrial sector represents 1 of the total cost with the old tariff, and 3 of the total cost with the new tariff, noting that the main objective of the slides of the new tariff approved is to displace loads for peak times and ration energy consumption, while the SEC plans to invest $100 billion in power projects to expand capacity and reliability.

The electricity sector in Saudi Arabia is under considerable strain, including high growth rates that dramatically exceed the rest of the world, with several cities recently facing power disruptions amid heatwaves that highlight these pressures, as the peak hours during the summer equate to consumption for the rest of the year. Regarding the utilization of the large surplus through the rest of the months, Al-Husain said a new study with the World Bank to take advantage of the connection lines and international export surplus, which are worth 3,000 megawatts MW to neighboring countries.

On the other hand, while officials are analyzing bids for a Riyadh power project to expand supply, Al-Husain announced that there a planned desalination plant set up in Al Khafji, based on solar energy, that produces 30,000 cubic meters of water per day in its first stage, with the cooperation of King Abdulaziz City for Science and Technology.

The minister noted that the total capital investment required for the key activities of the electricity sector in Saudi Arabia from 2009 to 2108, covering the areas of generation, transmission and distribution, as the Kingdom aims to double generation by 2020 to meet demand, would amount to $88.2 billion. The generation sector will have more than $46.3 billion transmission will have $26.5 billion and distribution will have $15.4 billion.

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