Journal of Energy and Power Engineering 9 (2015) 296-302 doi: 10.17265/1934-8975/2015.03.009

Saudi Arabia’s Growing Demand for Electricity: Some

Strategic Recommendations

Yasir Abdulkarim Alturki1 and Abdel-Aty Edris2

1. Electrical Engineering Department, King Saud University, Riyadh 11421, Saudi Arabia

2. IEEE Fellow, Sr Manager, Exponent, Inc., California 94025, USA

Received: November 16, 2014 / Accepted: January 04, 2015 / Published: March 31, 2015. Abstract: Demand for electricity in Saudi Arabia is growing at a significant annual rate of nearly 8%. It is expected that, by 2030, the demand will increase to about 120 GW per year, approximately three times the 2010 load. Satisfying this demand will require a significant investment in the power grid at an estimated cost, over the next 10 years, of SAR (Saudi Arabia Riyal) 500 billion. Existing power plants rely on oil and natural gas, it is anticipated that meeting the demand in 2030 will consume 3 million barrels of oil each day, which significantly impacting the economy by reducing the country’s income from oil exports, which is a hot button for Saudi decision makers. This paper reviews the responses of various countries in meeting their loads, and therefore, draws recommendations for some resources that should, and should not, be considered best-candidate options for Saudi Arabia economically, technically and environmentally. The discussion primarily examines renewable and nuclear resources. Key words: Load growth, nuclear power, renewable, Saudi Arabia.

1. Introduction

Demand for electricity in Saudi Arabia is growing at

a significant annual rate of approximately 8%. It is

expected that, the demand for 2030 will be about 120 GW

(Fig. 1) (ECRA (Electricity and Co-generation

Regulatory Authority) of Saudi Arabia) [1, 2].

Meeting this demand requires a significant investment

in new power plants as well as an upgrade using

advanced transmission technologies, the goal of which

is to increase transmission capacity. The estimated

investment over the next ten years is expected to be

more than SAR (Saudi Arabia Riyal) 50 billion [3].

Based on the current electricity generation, which

relies solely on oil and natural gas, by year 2030, this

amounts to a consumption of approximately 3 million

barrels of oil each day [1, 2]. Because oil exports are

the country’s primary source of revenue, the increase in

Corresponding author: Yasir Abdulkarim Alturki, assistant

professor, research fields: power system analysis, economics, operation, electricity markets and deregulation issues. E-mail: yasir@ksu.edu.sa.

oil consumption in order to meet the ever-growing

demand for electricity will have significant negative

ramifications for the Saudi Arabian economy for

generations to come. There is a real and urgent need for

strategic and comprehensive planning to adopt

alternative sources of energy.

This paper looks globally at energy resources which

should be considered best-fit alternatives for meeting

Saudi Arabia’s growing demand, examining in

particular nuclear and renewable energy resources

despite no official plan or approved regulations for

using renewable energy having been announced to date.

The findings are substantiated by economic, technical

and environmental factors. The paper concludes with

strategic recommendations.

2. Nuclear Energy

Nuclear energy as a resource for generating and

meeting the demand for electricity is widely considered

one of the basic options. Construction of nuclear power

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Saudi Arabia’s Growing Demand for Electricity: Some Strategic Recommendations

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Regardless of the ongoing safety and environmental

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plants as an attractive option for meeting their

respective base load demands, such as France and

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the biggest investor in nuclear power until the period

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Spain and Russia continued building nuclear power

plants until after 1986, the year of the Chernobyl

disaster. France, the UK and some Asian countries

continued constructing nuclear facilities even after

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changes related to nuclear power plants in Japan as

well as around the world. Japan stopped issuing

licenses for new plants and announced its intention to

cease its dependence on nuclear power, eliminating 54

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announced a phasing out of nuclear power plants with

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Saudi Arabia’s Growing Demand for Electricity: Some Strategic Recommendations

300

energy. Despite these challenges, renewable energy

alternatives currently offer strategic options and are

being supported financially by many governments

worldwide.

4. Important Considerations for Saudi Arabia

Followings are some points that Saudi Arabia should

keep in mind when considering various options in

responding to the growing demand for electricity over

the next 20 years:

Countries that are currently relying on nuclear

power for electricity generation are faced with a

significant challenge: decommissioning nuclear plants

due to the justified and growing fears of

environmental safety concerns. The estimated cost to

decommission a plant is about USD 300-400 million [14].

Even though the running costs of nuclear plants are

quite low compared to other types of power generation,

their short life spans coupled with their high

decommissioning costs minimize their financial

appeal;

Another significant challenge is the overreliance

on nuclear power to reduce dependence on imported

fuels. For example, in 2009, Europe imported 83.5%

of its oil needs and 64.2% of its natural gas needs [15],

so, the pressure was on to reduce this reliance;

At the same time, however, because reducing

CO2 emissions is a driving factor in the move toward

clean energy, European nations are now tasked with

finding an acceptable alternative to nuclear energy;

As seen in Fig. 4, even prior to the Fukushima

disaster, the general trend in the construction of

nuclear power plants was declining—most notably

after the two previous disasters. Consequently, based

on the history of these two events, it is logical to

anticipate the Fukushima disaster that would have had

a marked impact on the increasing difficulty of

building new nuclear power plants. The increasing

difficulty coming in the form, for example, of higher

capital outlays, the greater need for safety assurances,

or mounting public opposition. The same challenges

hold true for efforts to extend the life of existing

plants;

The impact of the events at Three Mile Island

and Chernobyl along with the disaster at Fukushima,

in spite of its compliance with the highest technical

and safety standards, led General Electric, which is

one of the world’s largest manufacturers of nuclear

power equipment, to conclude that the use of nuclear

power plants is an option that is no longer viable,

neither from an economic nor an environmental

perspective [16]. The former chairman of the U.S.

Nuclear Regulatory Commission who was chairman

of the commission at the time of the Fukushima

disaster posits the nuclear industry in the US is

“Going Away” [17];

A demand-side management study by ECRA

revealed that it is feasible to save approximately SAR

50 billion over the next 10 years [2];

Investing in the development of a program for

the efficient use of electricity will result in a reduction

in the growth rate of current and future power

demands. On point, there have been successful

implementations of such programs in many countries,

particularly in the US where spending on energy

efficiency programs was approximately USD 5.9

billion in 2011 [18];

The total investment in energy efficiency and

related programs in the US in 2010 was USD 47

billion [19]. Furthermore, the U.S. EIA (Energy

Information Administration) estimated a new power

station in 2020 would cost approximately four times

the 2009 cost of having invested in energy efficiency

programs [20];

It would be an imprudent move for Saudi Arabia

to consider investing in the construction of nuclear

power plants to meet its growing demand for

electricity. This conclusion is supported by the

following:

- There is currently an ongoing worldwide debate

about moving away from a reliance on nuclear power;

- Countries are opting to decommission existing

Saudi Arabia’s Growing Demand for Electricity: Some Strategic Recommendations

301

nuclear power plants in the near future;

- Building nuclear power plants is costly;

- It is highly likely research and development of

nuclear technology will not continue, making the

ongoing operations and maintenance of nuclear power

plants difficult to guarantee;

- Choosing renewable energy is visionary.

As shown in Fig. 5, renewable energy is expected

to generate a large percentage of the world’s needs for

electricity. This shift towards renewable energy

resources will prompt increased investment in the

research and development of related renewable energy

technology, thus resulting in lowering the initial

capital outlay. It would, therefore, be an astute and

strategic move for Saudi Arabia to invest in

harnessing renewable energy, particularly solar

energy.

5. Strategic Recommendations to Meet Growing Electricity Demands

From the above analysis and perspectives, the

followings are strategic recommendations to meet the

growing demand for electricity in Saudi Arabia for the

upcoming 10 years of load growth.

Invest in and implement energy-efficiency

programs and load-management technology. The

investment will result in a reduction in the current

load level and allow for better management of load

forecasts, the goals of which are a significant

reduction in electricity consumption—there could be

up to a 50% reduction in consumption based on the

results of a study conducted by the JICA (Japan

International Cooperation Agency) for the Saudi

Arabian Ministry of Water & Electricity [21]. The

study found that, homes with good insulation could

save up to 50% of their electricity consumption for

meeting its air conditioning needs compared to homes

without insulation. The study concluded that,

investing in energy efficiency is economically feasible

and desirable—especially when oil prices are high.

This conclusion is also supported by the ACEEE

(American Council for an Energy-Efficient Economy)

which found building new power generation plants is

more expensive than investing in energy efficiency

programs [22, 23];

ECRA conducted a study on demand-side

management that concluded up to SAR 50 billion

could be saved over the next 10 years by avoiding the

need to build a new 3,200 MW power station [2];

Partner with companies that have proven track

records in successfully designing, manufacturing, and

building solar energy stations. This would be a

particularly attractive option for the country due to its

financially liquidity;

With financial support from the government,

promote the harnessing of solar energy in residential

areas. This will not only result in the creation of new

jobs, but also reduce peak loads. Furthermore,

harnessing solar energy in residential areas will result

in engaging consumers in the optimal use of

electricity as it will make them calculate the solar

energy produced by their panels and consumed or sold

to the grid. People tend to reduce their energy

consumption when they know more about their

detailed use of home electricity [24];

Encourage and facilitate the establishment of

civic and cooperative companies that will invest in

building renewable-energy power plants based on the

experience of and knowledge in other countries;

Avoid building large solar power stations

integrated into the electric grid. Building large solar

power stations is likely to require long-term

contractual commitments with the investor that could

prove costly for the Saudi economy and will increase

the challenges to the restructuring plan, which is being

implemented in its first stages, the electricity sector

faces.

6. Conclusions

The paper presents factors that should be taken into

consideration when Saudi Arabia is debating which

resources for power generation ought to be considered

Saudi Arabia’s Growing Demand for Electricity: Some Strategic Recommendations

302

best-fit candidates for the country, economically,

technically and environmentally. The paper concludes

with strategic recommendations based on an analysis

of the practical challenges to the current status of

meeting electricity demands in various countries

around the world. For Saudi Arabia, to consider

investing in building nuclear power plants to meet the

growing electricity demands would not be the right

move for the Kingdom. This is supported by several

factors: ongoing debate regarding moving away from

relying on nuclear power plants, decisions worldwide

to decommission existing nuclear power plants in the

near future, and other feasible options being available.

For example, there is significant potential for energy

savings by investing in energy-efficiency and

demand-side management programs, both of which

would decrease the required investments in generation

expansion needed to meet demand growth. Moreover,

the adoption of solar energy technologies is a strategic

and beneficial solution for the Saudi electricity sector.

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