Low electricity consumption after reforming energy prices in Saudi Arabia

Low electricity consumption after reforming energy prices in Saudi Arabia

KAPSARC study recommends an understanding of the demand for more cost flexibility programs

Sunday – 8 the month of Rabi` al-Awwal 1442 AH – October 25, 2020 AD Issue No. [

Energy price reform contributed to reducing electricity consumption in Saudi Arabia (Asharq Al-Awsat)

Riyadh: «Middle East»

The King Abdullah Center for Petroleum Studies and Research (KAPSARC) called in a study that is the first of its kind dealing with the analysis of the difference in demand for electricity according to regions in the Kingdom after reforming energy prices, to understand the demand for electricity in the four regions of Saudi Arabia in order to design flexible programs that help in cost flexibility the prices.
The study, prepared by researchers Jehan Mikayelov, Abdul Ilah Dirndari, Rayyan Al Yamani, Fakhri Hasanov and Hatem Al-Atwi, found that residential electricity demand varies from region to region, as it performs a variety of holistic and detailed drivers such as market concentration, regional wealth, population, and income. A role in the impact of energy price reform on building electricity consumption.
The paper “Varying Regional Drivers on Electricity Demand in the Kingdom: Modeling Regional Demand for Residential Electricity” emphasized that understanding the demand for electricity in the four regions of the Kingdom allows the establishment of regional programs to reform prices and support families, and helps determine price elasticity for each region and anticipate demand responses therein. In addition, it gives the opportunity to more accurately estimate the revenues from energy price reform; This, in turn, helps with better budget planning.
The KAPSARC paper explained the effect of the electricity price reform implemented by the Kingdom in both phases in 2016 and 2018, which led to a decrease in total residential electricity consumption in buildings by 9.1 percent. The central region topped the regions most affected by the decline in residential electricity after the price reform program that reached 10.7 percent, followed by the eastern region by 8.8 percent, and then the western and southern regions with 8.1 percent.
The study researchers found that the responses of electricity demand in the residential sector in the Kingdom to income, price, and temperature vary according to the region, in addition to that the effects of price changes on demand in the near term will be significant for all regions at about 0.1 percent, with the exception of the eastern region, given the region’s characteristics. And the fact that it is considered the wealthiest region compared to the regions of the Kingdom, changing consumption habits and decisions to buy new, more efficient devices requires more time.
The paper recommended providing smart meters to consumers and using strategies to encourage the use of efficient devices, as smart meters have the ability to modify consumers’ habits by monitoring their energy use and providing them with data, and suppliers can use smart meters to allow consumers to compare their energy use with other consumers, and the meters can also help. The study also suggests planning to improve the types of buildings, taking into account the characteristics of the area, working to increase the insulation capabilities of existing homes and buildings, and adopting central air conditioning in apartments. In addition to ensuring that the population density is taken into account in the city’s future expansion plans to ensure sustainable energy consumption.
The study falls under the “KAPSARC” econometric model devoted to global energy, which aims to analyze the effects of various policy options, such as changes in energy prices and fiscal policy on the economy, evaluate the effects of Saudi Vision 2030 initiatives, evaluate their objectives, and work to link the energy and macroeconomic environment in the Kingdom with the global economy and markets. energy.
In February, the center announced its progress in the list of the best research centers regionally and globally, as it jumped 14 places in the ranking of Middle East and North Africa research centers. It is ranked 15th out of 103 research centers in the region, and at the global level, the center ranked 13th out of 60 research centers specializing in energy policy.


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