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Kingdom of Saudi Arabia: Designing a competitive wholesale electricity market to meet rising demand

As one of the world’s hottest countries, where air conditioning accounts for more than half of its electricity consumption, Saudi Arabia faces a real challenge from rising energy demand. The country’s electricity consumption has doubled since 2000 and the government is planning for a significant increase in generation by 2032. In order to meet this ambition, they needed to create a competitive wholesale electricity market to stimulate private investment in developing new capacity. Recognising PA’s expertise and experience in electricity market design across countries ranging from Singapore to the UK, the Electricity Cogeneration and Regulatory Authority (ECRA), Saudi Arabia asked us to develop a market design and a roadmap for its implementation.

A central strength of PA’s approach was the application of the lessons we had learned from our work in other countries and our detailed engagement with stakeholders which ensured that the recommended solution met the specific needs of the Saudi electricity sector. The resulting strategy set out a phased approach which recognised the scale of change required across generation, transmission and distribution. PA then developed an operational plan outlining the detailed activities needed to implement each phase. These included a focus on the major organisational changes associated with future evolution of Saudi Electricity Company and other stakeholders.

By applying our detailed practical experience of electricity market reforms, PA has provided ECRA with a clear and realistic plan to move towards a wholesale competitive market that will ensure that the country is well placed to meet its growing demand in a sustainable manner.

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