KAPSARC Study Analyzes Regional Electricity Demand After Energy Price Reform

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

KAPSARC Study Analyzes Regional Electricity Demand After Energy Price Reform

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

King Abdullah Petroleum Studies and Research Center (KAPSARC) has published the first study of its kind that analyzes regional electricity demand in the Saudi Arabia after energy price reforms.

The paper, prepared by the center’s researchers Jeyhun Mikayilov, Abdulelah Darandary, Ryan al-Yamani, Fakhri Hasanov and Hatem al-Atawi showed that residential electricity demand is determined by a variety of drivers, which vary from one area to another.

These drivers include, among other things, market concentration, regional wealth, population and income.

According to the study, dubbed “Regional Heterogeneous Drivers of Electricity Demand in Saudi Arabia: Modeling Regional Residential Electricity Demand,” a better understanding of regional electricity demand and its drivers may allow for tailored price reform and regional household assistance programs.

This is in addition to better anticipating demand responses and estimating the revenues they would get from future price reforms more accurately.

The impact of the 2018 price reforms led to a decline in the total residential electricity consumption of 9.1% nationwide, it noted.

Meanwhile, the central region ranks as the most affected region in the reduction of residential electricity consumption, which decreased to 10.7 percent followed by the eastern region with 8.8 percent, then the western and southern regions with 8.1 percent.

Researchers found that the price, income, weather, and population were considered the drivers of residential electricity consumption in each region.

The short-run impacts of price changes on demand were found to be significant for all regions, at around 0.1 percent, except for the eastern region, for which they were insignificant.

Notably, the eastern region has specific features. It has the highest income compared with the other regions.

The paper recommended utilization of smart meters and deploying strategies to promote the use of efficient appliances, as these meters offer consumers the ability to adjust their habits by monitoring their energy use and supplying them with the data.

Suppliers can also use smart meters to allow consumers to compare their energy use with that of other consumers.

In addition, the research suggests planning optimal housing types considering region-specific features, increasing the insulation capacities of the existing houses/buildings, setting centralized AC's in apartments. The population densities should also be considered in future city expansion plans to ensure sustainable energy consumption.

The study comes under the KAPSARC Global Energy Macroeconometric Model (KGEMM), aiming to analyze the effects of different policy choices, such as energy price and fiscal policy changes, on the economy, assess the effects of the Saudi Vision 2030 initiatives and its targets and link Saudi Arabia’s macroeconomic-energy environment with the global economy/energy markets.

In February 2020, KAPSARC announced making progress in the list of the best research centers regionally and globally, as it jumped 14 ranks in the Middle East and North Africa (MENA) research centers.

It was ranked 15th out of 103 research centers regionally, and 13th out of 60 research centers globally specializing in energy policy.



Saudi Arabia to Host Multilateral Industrial Policy Forum

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat
TT

Saudi Arabia to Host Multilateral Industrial Policy Forum

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat

Saudi Arabia, in partnership with the United Nations Industrial Development Organization (UNIDO), will host the Multilateral Industrial Policy Forum (MIPF) in October, underscoring the Kingdom's significant industrial transformation, in line with Vision 2030, and aiming to expand the Saudi industrial base and solidify its position as a leading global industrial center.
Organized by the Ministry of Industry and Mineral Resources in Riyadh, the forum is yet another substantial industrial development initiative the Kingdom relentlessly takes.
By carrying out programs focused on innovation, diversification, and boosting of the industrial sectors, including 12 strategic sectors identified in the National Industrial Strategy, Saudi Arabia seeks to raise competitiveness and support its national economy.
Beyond the National Industrial Strategy, the Kingdom has invested in developing industrial infrastructure, such as industrial cities and special economic zones, and fostered international cooperation to facilitate transfer of knowledge and technology. The forum, in which global experts and decision makers participate, is an ideal platform to exchange expertise and set best practices in industrial policies.
Saudi Arabia aims to develop policies that are in line with international standards, thus increasing the global competitiveness of its industrial sector. By leading initiatives for sustainable industrial practices, promoting international cooperation, exchanging expertise, and adopting environmentally friendly technologies, the Kingdom seeks to enhance the flexibility of its supply chains, in line with the Global Supply Chain Resilience Initiative.
The industrial sector in Saudi Arabia witnessed significant developments in 2023, including announcing major investment opportunities in targeted sectors, issuing a license for the first Saudi-made electric car brand "Ceer", and opening the first electric vehicle manufacturing factory "Lucid". The Kingdom aims to produce over 300,000 cars annually by 2030.
Attracting private sector investments is crucial to achieving the goals of the National Industrial Strategy. The industrial sector focuses on enhancing integration among various sectors and their supply chains, developing infrastructure, encouraging joint investments, promoting local content, and empowering national companies through policies, financing, and training.
In July 2022, the Ministry of Industry and Mineral Resources launched the Future Factories Program, which aims to transform 4,000 factories from labor-intensive models to efficient, automated operations utilizing advanced industrial solutions. This initiative seeks to enhance competitiveness, improve product quality, and increase exports of Saudi non-oil products.
The ministry has also made strides in improving the regulatory and legislative environment for the industrial sector, creating an environment conducive to investments and fair competition.
The ministry's goals for 2024 and 2025 include attracting investments in targeted industrial sectors, reaching a total investment volume of SAR451 billion, adding 1,500 products to the mandatory local content list, increasing the industrial sector's contribution to non-oil GDP to SAR412 billion, and boosting non-oil exports to over SAR300 billion. Moreover, the ministry aims to launch the industrial sector governance initiative to stimulate integration and concerted efforts among relevant stakeholders.
The second edition of the Multilateral Industrial Policy Forum, hosted by Riyadh under the theme "Transforming Challenges into Sustainable Solutions through Industrial Policies", will bring together some 3,000 industry leaders from around the world, including decision makers, CEOs, industry specialists, and people interested in developing industrial policies.