Saudi Arabia looks to power sector reforms to meet demands: report

In order to meet the growing demand, Saudi Arabia has begun plans to reform the power sector to have a more sustainable resource allocation plan, said a recent report.

According to the research report published by The Arab Petroleum Investments Corporation (APICORP), the reform comes at a time when the Kingdom is pursuing an ambitious plan to diversify its economy and allow for greater participation from private sector. 

The report noted that demand for electricity in Saudi Arabia has risen by 6.6 percent year-on-year since 2006, and while the government has previously invested in installed capacity to increase it from 60GW in 2010 to 82GW currently, it still puts pressure on the state energy budget.

Mustafa Ansari, Senior Economist at APICORP, commented: “On the supply side, a market structure reform with the breakup of Saudi Electricity Company (SEC) is imminent while on the demand side, the government will try to tackle rising demand by liberalising electricity prices and introducing efficiency measures. While these reforms are long overdue, they are certainly a step in the right direction.”

The government has also introduced a series of price reforms to help reduce demand growth.