Saudi Arabia

Energy Demand

The minister of water and electricity has been responsible for electricity in Saudi Arabia and has been since 2003. All the electricity providers operating in the kingdom were consolidated in 1998 into the publicly traded Saudi Electric Company. Rapid economic development at the end of the 20th century and into the 21st century led to sharp increases in electricity consumption, with peak loads reaching 25 times their 1975 level at the beginning of the 21st century. Much of this increased demand is due to the delay in fully electrifying the country: the number of electricity customers grew from 216,000 in 1970 to 3,035,000 in 1996, not because of population increases but simply because of increased access to electricity, which had previously been unavailable in much of the country's rural areas. Despite the plenitude of oil, consumption has increased so drastically that the government began to stress energy conservation in order to avoid what seems to be an inevitable energy shortage. A facility has been approved to turn waste into electricity, which, if successful and efficient, will be the prototype for more such facilities throughout the kingdom.

At the end of the 1990s, the government responded to the consumption increase by restructuring the electricity sector in order to move toward sustainability. Demand is still increasing much faster than capacity, and inefficient energy use is a countrywide problem. Further, the electricity sector has adopted no time-of-use rate adjustments, and the government has not been willing to seriously commit to the significant capital investments necessary to expand the country's electricity-generation capacity. Inefficient usage is believed to be widespread enough that simply changing habits—in many of the same ways promoted in the United States in the 1970s, like turning off lights that are not in use—could reduce demand by as much as 10 percent, a $3 billion savings over 20 years. In hot, arid Saudi Arabia, air-conditioning usage is a considerable source of demand, and the government has been promoting more-efficient air conditioner designs and moderate usage. Because of the lack of time-of-use rates and other controls, the “buffer” between the energy demand on the Saudi grid at peak and the total generation capacity—the difference between the total used and the total available—is quite slim—slim enough to make critical outages a real possibility, particularly if climate change continues to drive demand for air-conditioning.

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