Solar in Saudi Arabia:

How We Can Use it to Reduce Residential Blackouts

By

Yasmeen Fuad Abualsaud

Master of Science in Urban Environmental Systems Management

School Of Architecture

Graduate Center for Planning & The Environment

Pratt Institute

Advisors:

Alec Appelbaum

Jaime Stein

December 17, 2014

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Outline

Acknowledgments

Preface

Abstract

Introduction

Background and Context

Electricity Peak Loads and Demands

Oil and Electricity Prices and Subsidies

Analyzing Consumer Behavior

Socio-Demographics

Population Trends

Psychological Variables

Attitudes and Predispositions

Historic

Cultural

The Role of Solar Energy

Solar Energy Technologies

Photovoltaic (PV) Solar Panels

Concentrated Solar Projects (CSP)

Case Study

Al Farasan Island Solar Plant

SWOT Analysis

Recommendations and Conclusion

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Acknowledgments

I would like to express my gratitude to my advisors Jaime Stein and Alec Appelbaum for

their guidance and constant efforts without which the completion of this thesis would not be

possible. In addition, I would like to acknowledge my colleagues and friends in the Urban

Environmental Systems Management program at Pratt for their friendship, and encouragement

throughout the course.

I would like to extend my deepest appreciation and affection to my parents for their

unconditional love, dedication, and the many years of support they have given me throughout

the years. My husband, who was the wind beneath my wings. Thank you for always believing in

me, and giving me the strength to go on.

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Preface:

Saudi Arabia, Dhahran, Eastern Provence

July 7th, 2014, 2:00 PM, 113 °F

It was a typical hot, summer day. Which also happened to fall in one of the days of the fasting

month of Ramadan. I was sitting with my mom and dad in their living room. We were casually

going about our daily routine when all of a sudden the TV screen went blank, the white noise

from the central AC deafened, and everything around us fell into silence. My father

immediately knew that we were in blackout. He called our neighbors to check and just as he

had expected, the entire housing block was experiencing the same issue.

Unfortunately this scenario is not foreign and happens quite frequently across all

neighborhoods in Saudi. During any hot summer day in Saudi the electricity is prone to go out

and with no previous warning from the Electrical Company. The blackouts occur particularly

when there is high demand which makes the entire system vulnerable to collapse. This “energy

crisis” is not only a problem the nation will face in the future as temperatures continue to rise,

but in fact it is a problem now.

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Abstract:

According to the World Bank, in 2011 the average world’s energy use per capita was

1890 Kg and Saudi Arabia’s energy use per capita averaged at 6738 Kg.1 And according to Saudi

Aramco (national petroleum and natural gas company), if we continue at this rate of energy

consumption, by the year 2028 we will need more than 8 million oil barrels a day to occupy this

rising demand for energy.2 This means that most of the oil produced will be consumed locally,

and 90% of Saudi export earnings depend on oil and its products. The relevance of telling the

story of solar power in Saudi Arabia is because of the increase in demand that is mainly due to

the constant rise in population. The kingdom has a population growth rate of 1.49% the internal

demand of oil is increasing sharply and if Saudi continues to follow the same conventional ways

to produce electricity there will be no oil left for exports in the year 2028 as Saudi Aramco

estimated.

This paper aims to start a conversation about one of the pressing issues in modern day

Saudi and will be exacerbated in the future if we don’t do something about it. Through a

discussion of different patterns including consumer patterns, behavioral patterns, and other

sets of data that identify the sources of the problems related with residential blackout. And

how can Saudi utilize solar energy, a strong contender, to solve that problem to reduce

electrical blackouts and outages in residential areas.

1 World Development Indicators, World Bank, http://data.worldbank.org/topic/energy-and-mining [last accessed 12/8/14] 2 Christopher Segar, IEA Energy: The Journal of the International Energy Agency, pg. 40-41, (November 2014), http://www.iea.org/media/ieajournal/Issue7_WEB.pdf

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The kingdom is the world's sixth largest oil consumer after the United States, China,

Japan, India, and Russia. All these countries have much larger populations and more diversified

economies than Saudi Arabia. Meaning, when we compare the size of Saudi Arabia propionate

to number of population and size of land while correlating that to its non-diverse economy

depends on oil exports, we realize how energy consumption patterns are ridiculously high in

comparison. Saudi per capita energy consumption is four times higher than the world average.

A Saudi citizen consumes a little more than a U.S. citizen and around twice as much as

Japanese. In recent years, economies have grown faster than energy consumption in many

countries, but the kingdom is moving in the opposite direction, meaning energy efficiency is

getting worse. This poor performance is due to the heavy concentration on energy-intensive

industries (petro-chemical) and the largely energy-intensive lifestyles in residential and

transportation sectors. This lifestyle is heavily supported by very low fuel prices. Like their

counterparts in other oil producing countries, Saudi citizens enjoy generous social and

economic benefits, including heavily-subsidized petroleum products. A subsidy is the

"difference between the market price and the real opportunity cost of the commodity." Since

these government subsidies do not distinguish between the poor and rich, they are not

considered an appropriate way to distribute public wealth. Although they provide support to

lower-income population, their benefits are mainly enjoyed by the better-off. The hidden costs

of subsidies are embedded in the depleting reserves of natural resources. Over-consumption

contributes to pollution as well as electrical blackouts. Lifting or reducing subsidies has been

under consideration in recent years. The experience in many gulf countries shows that this

approach is likely to be strongly resisted by large segments of the population who have grown

accustomed to low energy prices which has become a subject for debate. Since the people are

so reliant on subsidies, it might be a better idea to segment subsidies by population income and

tenure in the short run. And in the long run execute a plan that will phase out direct electrical

subsidies in the next 10 to 20 years by switching subsidies to solar (i.e dis-incentivizing bad

consumption behavior and incentivizing good). So far the Saudi government has not attempted

to reduce/remove any subsidies, but they have explicitly expressed their interest in using

renewables, such as solar to reduce consumption of energy especially since 100% of energy

sources come from fossil fuels.3 In addition to that, the government has dedicated special

funding and budgeting to build research and development centers for solar and other forms of

renewable technology.

Electricity Loads and Peak Demands

To further understand the problem and the issue at hand we must look at the direct

relationship between energy, energy consumption, and the electrical load. While all three have

distinct definitions they all relate to one another and help us understand the bigger picture that

leads to electricity outages in Saudi Arabia. According to the BP Statistical Review of World

Energy 2014, Saudi Arabia was the world's 12th largest consumer of total primary energy in

3 Royal Order No. A/35 3/5/1431 A.H – 17/4/2010

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2013 at 9 quadrillion British thermal units (Btu), of which about 60% was petroleum-based, with

natural gas accounting for the rest. 4 The demands on electrical loads have been growing since

2000. These loads require sufficient power generation capacity. The population growth rate is a

major indicator of electricity demands. It is noteworthy to mention that Saudi Arabia has one of

the fastest population growth rates. The reason behind that growth may be tied to cultural and

historical reasons, such as very little, if no, family planning. In the last two decades the

population doubled. Not to mention the fact that Saudi hosts millions of expatriate workers.

And by 2020, Saudi Arabia is projected to have a population of 34 million, based on

intermediate estimates of the World Population Prospect of the United Nations.

In general, the peak load coincides with the maximum incident solar radiation. r. Load

profiles in Saudi Arabia show that the period of peak loads lies mostly from 12:00 P.M. to 5:00

P.M. Accordingly, solar power plants may serve to extend the peak load capacity and provide a

part of the spinning reserve capacity for the daytime period. This is known as peak savings.

Thus total power demand from conventional sources in Saudi Arabia may be reduced in

particular during peak periods, and the peak saving pattern shows the amount required from

conventional generation. Usually, most electrical loads increase from 7:00 A.M. and decline

from 6:00 P.M., particularly during workdays, while solar radiation is available from

approximately 6:00 A.M. to 6:00 P.M. Peak loads in Saudi Arabia are mostly observed from May

to September, when the monthly pattern of sunshine duration matches that of peaks in

electrical loads.5

Figure: Solar Radiation Map (source: Saudi Arabia Solar Industry Association http://saudi-sia.com/solargis-data/ )

4 BP Statistical Review of World Energy, (June 2014), pg 1-20, http://www.bp.com/statisticalreview 5 Almasoud, A.H., Gandayh, H.M. Future of solar energy in Saudi Arabia. Journal of King Saud University Engineering Sciences (2014), http://dx.doi.org/10.1016/j.jksues.2014.03.007

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The current capacity of SECO (Saudi Electric Company) is 58,462 MW. This means that

the grid has the capacity to generate 58,462 MW at every instant in any given time. The peak

load is around 500 hours on annual and it usually happens during summer time, when AC’s are

used extensively everywhere. The peak load reaches 53,864 MW. Even though the capacity of

SECO is 58,462 MW, it is a fact that generators can’t operate at a 100% capacity all the time.

Hence, temporary blackouts occur during the hot summer months.6 This particular problem

with blackouts is currently not a problem with finding the energy to power the power plants

and is more of a problem with energy consumption. It is crucial to address consumption

patterns as part of the solution in addition to introducing solar energy. On one hand, finding an

alternative source that is renewable is ideal, but we must ensure that we’re not just replacing

one source of energy with another. The use of solar energy in Saudi to help with residential

blackouts must go hand-in-hand with addressing consumption and informing the consumer of

the problem.

Oil and Electricity Prices and Subsidies

The International Energy Agency, in this year’s annual World Energy Outlook, states that

Saudi Arabia has the world’s largest fuel subsidy after Iran, at $61 billion a year. Saudi Arabia is

among the nations feeling the least pain at the pump, with a gallon of premium gasoline costing

Saudis 1 percent of their daily income. It costs Americans 3 percent. The main problem with

subsidies in Saudi Arabia is that they benefit all classes, including the rich and expats, and not

only the low-income classes.

Saudi Arabia has a domestic fuel subsidy bill exceeding 162 billion riyals ($43 billion) a

year. The average production unit cost of energy (kWh), transmission, and distribution, which is

produced by the Saudi Electricity Company is around (15.2) Halalas (per kilowatt hour)

(approximately $0.04). That includes operating expenses, head financial, price of fuel, energy

purchased, and depreciation. The percentage of the residential sector consumption of

electricity in 2013, is (48%) of the total electric energy sold.7 According to Saudi Electrical

Company annual report, the residential sector alone accounted for about half of the total

consumption of electricity in the Kingdom; indicating that the air-conditioning loads are solely

responsible for (70%) of the sector's consumption of electricity.8 The governmental subsidies

for both fuel and electricity are a major force in driving energy demands. As a result, consumers

don’t have the incentive to change behaviors in the way they consume electricity. Which is why

it is important to address that and not just rely on the introduction of solar energy.

6 Hussain Al Awami. Electrical Engineer II, Saudi Aramco, Interviewed November 26, 2014 7 Electricity & Cogeneration Regulatory Authority Annual Report (2013), pg. 85- 87 http://www.ecra.gov.sa/documents/Annual%20Reports/Annualreport%20for%20Web2013-english.pdf 8 Saudi Electrical Company Annual Report 2014 http://www.se.com.sa/NR/rdonlyres/2F4F7D91-34DC-4711-88F7-826FBB059DF8/0/SE_EN_AnnualReport2013.pdf

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Analyzing Consumer Behavior

Factors including booming population, developing economy, and scarcity of natural

resources such as water have exerted tremendous pressure on the demand for electricity. “In

recent years the demand for electricity has been rising at an annual rate of 8 percent and is

expected to triple by 2032. According to a study in 2010, the electricity consumption per capita

in Saudi Arabia was more than three times the world average.” 9 This surge is closely linked to

the kingdom's rising oil consumption as it is the dominant fuel to generate electricity and to

power water desalination in the country. This heavy dependence on oil to generate electricity

has two major negative impacts: it contributes to air pollution and carbon emissions; and

relying on oil via a state-owned fund hides the costs of all externalities, leading to irrational

consumer behavior.

If we look at consumer behavior as a large piece that is driving the demand for energy,

we can use it as force of change that will help in solving the problem with electricity outages. By

now we identified one major contributor to their behavior: subsidies. But other information is

critical to analyze. Socio-demographic variables as age, gender, income could be looked at to

identify the consumer and segment the market. But because we are talking about an essential

product that everybody is using, looking at psychological variables of consumer, such as

attitudes, motivations of consumptions provide richer information about our consumer profile.

In the case of Saudi Arabia and as I previously mentioned, electricity is subsided. The consumers

of electricity in Saudi don’t bear any of the costs that are related to extraction of fossil fuels,

nor transportation. This established a clear relationship between consumer attitude, behavior

and the product.

Saudi is perceived as one of the richest countries in the Middle East. However that is not

entirely accurate. Still, with $31,300 gross domestic product (GDP) per capita in 2013, the Saudi

per capita income is higher than most of the regional powers. So, generally affluent people

drive bigger cars, longer distances, live in bigger homes, and use more energy than lower

income people do. Still, the general population rely on cars as their means of transportation,

and everyone owns an air conditioner as it is impossible to bear the heat during the summer

days without any. Behavioral change theories provides insight into the formulation of effective

teaching methods that tap into the mechanisms of behavioral change. While financial

(dis)incentives can be successful, however the problem with money is that it doesn’t address

other barriers to behavior. Saudi Arabia is a young nation. Meaning that the population mainly

falls between the age groups of 20-40 with the median age of 26.4 years. The population

growth rate is at 1.49% (2014). The majority of the population are in their education years it is

vital to start the educating process from an early stage. The first step towards more powerful

behavior change education is to acknowledge the importance of social, psychomotor, and

affective/emotional dimensions of change. Simple behaviors such as turning off the lights in

9 Gawdat Bahgat, The Journal of Social, Political and Economic Studies. 37.2 (Summer 2012): p181. “Will Saudi Arabia face an energy crisis?”

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rooms that are not being used as well as turning off appliances and electronics when not in use.

Other interventions to behavioral change include raising awareness of the energy problem and

beyond that making the population environmentally cautious.

When we think back to the 1930’s a time before oil was discovered, a time where

people lived a basic, simple life in houses made out of mud. These architectural techniques that

are just recently popularized as vernacular architecture or passive and environmentally-friendly

designs. Mud houses were built in such a manner that helped the entire space breathe and cool

during hot summer days without air-conditioning devices. It incorporated certain architectural

elements like the wind-catcher (badger or malqaf) which helped in directing airflow downward

and upwards using a direct wind entry, and using a wind-assisted temperature gradient.

However, after the discovery of oil, the architectural geography of cities in Saudi completely

changed and shifted towards concrete and steel framed houses, sometimes with minimum to

no insolation and disregard to any issues relating to climate. With that shift in architecture

people’s mind-sets changed and they slowly started becoming a consuming nation because to

the general population money or lack thereof stopped being an issue.

Nevertheless, the harsh and unbearable climate of the country, makes it unrealistic to

ask people to not use their AC’s or turn them down. However, the main problem here lies

within bad consumer behaviors, or rather unnecessary consumption. The goal of trying to

change the way the Saudi population consumes electricity is to try and educate them and make

them aware that the way they use their electricity which is all part of the “social norm” in that

region is part of the problem that causes a residential blackout. Moreover, instead of keeping

the focus on individual consumption, looking at the alteration of the conventions of the

collective could provide a better insight into consumption patterns.

On October 2012, the European Union adopted the Energy Efficiency Directive in

reaction to the fact that EU Member States were not on track to reduce primary energy

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consumption by 20 % by 2020. The implementation of the study, and other policies that have

been adopted in recent years, will require a change in consumer behavior and energy

consumption practices. This report aims to provide timely and reliable information and analysis

for those involved in schemes designed to achieve energy efficiency through behavior change.10

Without an appropriate frame of reference, consumers cannot know whether their

consumption is excessive. Technological developments, considerations of the general economic

situation, age, social norms, belief systems and cultural traits, and marketing strategies all play

an important role. On the other hand, energy infrastructure plays a significant role in

determining consumer behavior as related to energy consumption. Meaningful, clearly

communicated and continual feedback is therefore essential for a long-lasting change in

consumer behavior by displaying and educating about the hidden costs of energy. The report

shows that there is evidence that routine consumption is controlled to a large extent by social

norms, and is profoundly shaped by cultural and economic factors. Not only are habits

changing, but they are doing so in a way that often leads to a standardization of consumption

patterns (via commercial interests, more often than not) conducive to an escalation of resource

consumption and environmental degradation.

The Role of Solar Energy

Saudi Arabia is geographically suitable for solar technologies because it is located in the

so-called “sun belt.” And, due to its high direct solar radiation, is a preferred location for the

deployment of any concentrated solar technology. Saudi receives some of the most intense

sunlight in the world: With over 250 hours of sunshine each month, 105 trillion kilowatt hours a

day, which is roughly the equivalent of 10 billion barrels of crude oil in energy terms. 11 It only

makes sense to make the most of solar power and the empty stretches of desert that can host

large solar structures and its vast deposits of clear sand can be used to manufacture silicon

photovoltaic cells. More recently, the Kingdom has expressed strong support for a sustainable

future in Saudi Arabia by encouraging the development of a substantial alternative energy

capacity fully supported by local industries. On 17th April 2010, King Abdullah issued a royal

order which established King Abdullah City for Atomic and Renewable Energy (K.A. CARE).

While solar energy is not the one and only answer to the energy crisis, there is no one

solution fits all but rather a mix of interventions that we need to look at. Nevertheless, solar

can offer an opportunity to solve a fraction of the problem. Since the rise of renewable energy

and the recent appetite that was expressed by the government and major companies in the

nation, solar remains a strong contender in contributing to the solution of reducing residential

10 European Environmental Agency Technical report, 2013, Achieving energy efficiency through behavior change, ISSN 1725-2237 11 The KICP Annual Strategic Study (2009) “Saudi Arabia Solar Energy Manufacturing and Technology Assessment” p. 15-43. http://www.kaust.edu.sa/assets/downloads/kicp-solar-energy-study.pdf

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blackouts simply because of the fact that the sun is available year-round and can be produced

locally. Meaning, residential-sized solar systems that are installed in rooftops can help reduce

loads during peak demand hours by relieving the stress off of the main grid. And while it is

usually the utility company who is responsible for providing a reliable service, the stresses,

challenges, and opportunities should not be handled with a business-as-usual approach and

should no longer be considered the only cost-effective way to meet this responsibility. The

traditional paradigm: that there is little or no role for customers to play in addressing system

needs, except in times of emergency. Conversely, using solar energy for demand management

potentially helps customers optimize their individual priorities with respect to resilience, power

quality, cost, and sustainability. 12 Current governmental efforts are focused on solar as a

general way to alternatively produce energy. The specific needs of residents that experience

summer blackouts can benefit if the Saudi Electrical Company involves the Saudi population in

the conversation by starting a program that encourages the installment of solar panels on

private residential properties. The program of solar employment should work along with the

30-year timeline that the government had already set specifically for the solar energy mix.

Solar Energy Technologies

As part of the government’s 30-year plan to introduce renewable energy to the country,

it is currently focusing on two types of solar technologies to support the conventional grid.

When I spoke to Professor Ibrahim M El-Amin13 he explained to me the efforts that are

currently being deployed in the country as of today and leading up to the future. When I

expressed to him that my focus in this paper is to use solar power as way to reduce blackouts

that occur during the summer time, he clarified how I can write my recommendations based on

the current government plan. He also mentioned how each one works and could be used

differently to achieve that goal.

The first technology being solar photovoltaic (PV) which directly converts solar energy

into electricity using a PV cell made of a semiconductor material. Photovoltaic systems convert

sunlight directly into electrical energy. The electricity generated by a system travels through an

inverter and then into a building. Some systems also have batteries to provide backup

electricity. The system could be either grid connected or off-grid. When grid-connected systems

generate more electricity than the building uses, the surplus electricity enters the grid. When

the system produces less than the building uses (such as in the evening or when it is cloudy),

the utility company grid provides electricity to the building. Photovoltaic (PV) plants have an

efficiency of (13%-15%) and the plan foresees that it will produce 16,000 MW. PV system costs

12 NYS Department of Public Services Report and Proposal, “Reforming The Energy Vision” 2014 13 Professor Ibrahim M El-Amin. Electrical Engineering Department, King Fahd University of Petroleum & Minerals, Interviewed October 22nd, 2014

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depend on the system’s type and size. An average panel produces 30W with a minimum price

of $250. The second form of solar technology is Solar Concentrated Power (CSP) which has an

efficiency in the range of 20% and the plan that it will produce 25,000 MW. CSP will be mainly

used to reinforce and strengthen the electrical grid. Concentrating solar power (CSP) devices

concentrate energy from the sun’s rays to heat a receiver to high temperatures. This heat is

transformed first into mechanical energy (by turbines or other engines) and then into electricity

– solar thermal electricity (STE). The kingdom is more interested in this method and is investing

more in CSP because of its better efficiency. (CSP) is a power generation technology that uses

mirrors or lenses to concentrate the sun’s rays to heat a fluid and produce steam. The steam

drives a turbine and generates power in the same way as conventional power plants. Due to the

storage system and the larger solar field, their greater capacity for electricity generation will

generally result in a lower electricity generation cost. 14

Due to the conversation with Professor El-Amin and his explanation, it would be more

appropriate to use solar (PV) panels for residents. Because unlike (CSP), solar (PV) is more

affordable, smaller in scale, and a can work off-grid to supply electricity in case of a blackout.

Meanwhile, (CSP) make sense at a larger scale, they require large quantities in order to function

and be economic. Unlike photovoltaic technologies they cannot operate on diffuse or scattered

irradiance as well.

Case Study: Al Farasan Island Solar Park (June, 2011)

The Saudi Electricity Company (SEC) and Showa Shell Sekiyu have signed an agreement

on the operation of a solar power plant on Farasan. Saudi Aramco (National Oil Company) owns

15% of the project. Part of this project’s importance is because of the stakeholders.

The solar plant is considered to be a pilot project and has been linked with Jizan area’s

main distribution network, which annually produces about 864,000 kilowatt hours; this is

sufficient to power approximately 150-20 homes. The 500-kilowatt (kW) plant is currently

hosting 6,000 solar (photovoltaic) cells.

Said to produce 864,000 kilowatts (kW) annually, the equivalent of 28,000 barrels of diesel fuel.

Energy Production:

2011: 339,021 Kwh

2012: 741,828 Kwh

2013: 775,430 Kwh

2014: 616,114 Kwh

14 IRENA, International Renewable Energy Agency, Renewable Power Generation Costs in 2012

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As a result of this project, a number of other projects already floated to the market and there is

a plan from the Saudi Electrical Company to cover other cities with solar panels as well as

reinforcing the project in Farasan and increase energy production to 5 MW.

Strengths:

This project is a venture between two of the biggest companies in the nation: the Saudi

Electrical company (the only electrical company that supplies that entire nation), Aramco

(Largest national petroleum and natural gas company), and a global partner: Showa Shell Sekiyu

from Japan. The three companies have expressed their satisfaction with how Al Farasan plant is

operating and are interested in upgrading and expanding. Which means if the three partners

deem this project successful, then it brings hope that they won’t oppose ideas to future joint

ventures and installation of other projects in other areas of the country. The measured success

of Al Farasan is clear through the goals that it has met in its 4-year operation. Moreover, the

project replaced traditional, carbon based energy sources and the burning of fossil fuels. And

produces carbon-free power. The installed photovoltaic (PV) panels, in comparison to other

renewable energy technologies, require minimum operating or maintenance costs. Just

performing some regular cleaning of the panel surface is adequate to keep them operating at

high efficiency levels.

Weaknesses:

There are some drawbacks to solar PVs especially when compared with other sources of

energy. The most obvious one being, solar production still can’t compete with fossil fuels in

terms of production as well as cost. Most solar products cost 8- 10 times more on installation.

Another shortcoming of solar is that panels need significant amount of space in order to

produce a significant amount of power. The average requirement for the panels is

approximately 250W/m2.

Opportunities:

Because the technology is always evolving and ever-changing, there is always room for

upgrades and improvements. It is also often described as the fastest-growing market. So

relatively, as these technologies develop more and more, the prices are subject to drop. This

has been evident throughout the years as the cost for panels has fallen by more than 99% in the

past three decades, from more than $75 per watt in 1977 to about 50 cents per watt today.

Furthermore, as these advancements in solar technology take place, the opportunity for

features such as exposed real-time monitoring will become handy when consumers adapt the

use of solar in their residence. Real-time monitoring allows information on daily solar energy

available to grasp. That information contributes to the public awareness and the overall

promotion for renewable energy benefits. Using simple wall mounted screens to give an

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estimate of the amount of electricity used in real time. They allow employers to view their real

time electricity usage in units of energy used (kWh), cost, and carbon emissions. 15

Threats:

One major, obvious threat that is often associated with the use of solar panels is storage

of unused energy and batteries. Batteries usually contain hydrofluoric acid and are made with

flammable lithium-based components which are harmful to the environment when looked at in

terms of end-of-life product cycle. However, this problem is mainly related to projects that are

not connected to the grid. Another common problem with PV panels in particular is that they

are affected with climate. And Saudi Arabia can be subject to sand-storms and dust which could

reduce the efficiency of the panels. Also, there is a lack of policies in the kingdom regarding

energy standards as well as building standards that will otherwise help regulate the technology

and ensure best practices.

Recommendations

With all of the effort the government is already putting forth into the planning and

promoting of renewable energy systems for the future, it’s important to ask if the country’s

administrative policies are in place to help expedite that potential growth. Saudi history, culture

and behavior along with what I’ve learned and analyzed about solar and consumer behavior

provide important pieces of the information needed to move forward towards energy

efficiency. Energy efficiency/conservation initiatives use several different types of interventions

that can help with solving the problem of residential blackouts. In addition to solar energy a

wide range of interventions and recommendations are key to solving the problem of blackouts.

These recommendations aim at the very least to start an open conversation about how

electrical blackouts is an issue and is by no means limited to blackouts. It is part of a bigger

issue related to energy and the way –as a nation- consume it. Part of solving the problem is by

identifying it.

1. Communication and consumer engagement:

First and foremost it’s imperative to make the consumer informed and part of

the conversation. Consumer behavior can be targeted by the promotion,

demonstration, benchmarking, and labelling of the product (appliances, electronics, and

lighting). This will educate consumers, and generate public interest about renewable

energy resources. Consumer Education includes: Raising awareness of the benefits of

renewable electricity generation. Another key element is making information about

products clear and accessible for everyone in the market. Take Energy Star for example.

Energy Star is a program backed by the government which helps businesses and

15 Energy Technology, How real time monitors can add significant value to your operations, June 2012

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individuals protect the environment through superior energy efficiency, and make it

easy for consumers to save money while protecting the environment. The US

Environmental Protection Agency (EPA) first introduced Energy Star (1992) as a

voluntary labeling program designed to identify and promote energy-efficient products

to reduce greenhouse gas emissions. The EPA then expanded the label to additional

office equipment products and residential heating and cooling equipment. Today the

Energy Star label is on major appliances, office equipment, lighting, and home

electronics.16 The Saudi Ministry of Water and Electricity (MOWE) could work with the

Ministry of Commerce and Industry (MCI) to make products that are Energy Star labeled

(or any equivalent) available in the Saudi market for purchase. As well as the monitoring

and/or banning of any other appliances or electronic products that don’t comply with

high quality energy standards that are being traded in the market.

2. Economic incentives and disincentives:

Subsidies, levies, surcharges, taxes, bonuses, tax differentiations, tax refunds, financial

instruments such as interest free loans, rewards and penalties:

The Saudi Electrical Company (SECO) should formalize a task force with measurable

goals designated to create a solid plan that will help employ solar energy in residential

buildings. Since one of the problems leading to bad consumer behavior and unnecessary usage

of power and electricity is the fact that it is heavily subsidized, I recommend that SECO uses a

more dynamic pricing process. This could be achieved by reducing subsidies of electricity and

maintain it only for low income population. Furthermore, SECO should work with the Ministry

of Water and Electricity (MOWE), and the Ministry of Commerce and Industry (MCI) to support

investments in installing solar energy. This should help create an attractive industry to draw

businesses to invest in producing and installing solar panels. I am proposing that they work

according to the timeline the government has already set. Implementation of solar energy in

the residential sector would work best in 5-year increments to slowly set the roadmap that

eventually leads to the government’s 30-year goal. This road-map consists of subsidies for solar

panels to create a market for manufacturers and supply enough panels for home owners to

install. These subsidies would continue for 5 years until the market is mature enough and solar

panels are available for supply and installment in the residential sector. After the first 5-year

period, existing subsidies on electricity would continue for customers who have been engaged

in the solar panels campaign, and subsidies would be cut for consumers who didn't. Because

people are price sensitive, this will give an incentive –which was otherwise missing- for

consumers to install solar panels, be part of the conversation, and change the way they

16 About ENERGY STAR Website, http://www.energystar.gov/about, [Accessed December 12, 2014]

Yasmeen Abualsaud Solar in Saudi Arabia

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consume energy. In addition, it will result in lowering electricity consumption along with

lowering the high peak loads which will then result in reducing the probability of blackouts.

The state of NY there are federal tax credits that incentives solar PV installment on

residential buildings these incentives supports investments in solar. Residential building owners

are eligible to receive a federal tax credit worth 30% of the cost of the solar installation.

Example, the federal tax credit for a 7 kilowatt residential solar installation that cost $50,000

minus a $7,000 incentive from the New York State Energy Research and Development Authority

(NYSERDA), would be:

($50,000 - $7,000) = $43,000 X 30% = $12,900 17

Saudi can learn from these federal tax credits, because tax credits in NY are similar to

subsidies in Saudi Arabia. Moreover, Con Edison has a program for solar rebates that SECO can

benefit from this program and adopt the same application process. The application process is

essential to guide customers and familiarize them with installing solar panels and receiving

rebates and subsidies. The flow chart below illustrates the installation/application process.18

17 The City University of New York (CUNY), Installing Solar in NYC: NY Solar PV Incentive Guide: Residential, http://www.cuny.edu/about/resources/sustainability/solar-america/installingsolar/incentives/NYSolarPVIncentiveGuide_Residential_11_2014.pdf , (Updated: November 2014), [Accessed December 11, 2014] 18 http://www.coned.com/dg/solarenergy/Solar%20Installation%20Process%20Flow%20Chart.pdf

Yasmeen Abualsaud Solar in Saudi Arabia

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Along with incentivizing good consumer behaviors (reduction in energy bills, installation

of solar panels on residential premises) I suggest the decentralization of the national grid

system and installing smart grids to create micro grids into specific neighborhoods. This will

help reduce blackouts. The meaning of a decentralized system is to produce energy close to

where it will be used, rather than at a large plant elsewhere and sent through the national grid.

Local generation can be produced by solar panels which would then decrease transmission-loss

and lower carbon emissions. The supply of energy would be secure because customers don’t

have to share a supply or rely on relatively few, large and remote power stations.

SECO could start by piloting a program for the installation of off-grid solar PV’s that

work even in case of blackouts. The installation of PV’s on the rooftops of residential buildings

is easy and convenient. Since rooftops in Saudi are generally flat and are dedicated to services

such as water tanks, AC, and satellite dishes. Panels would be perfectly tucked away with the

rest of services. An especially good use of these solar panels would be to install them on top

water-heating tanks (which use a lot of energy).

3. Regulatory:

General laws and rules, specific exemptions, covenants and agreements:

There is a lack of a green building legislation in Saudi, however small groups and private

organizations have started to surfaces in the past couple of years. A good example is Saudi

Green Building Council (SGBC), a public organization. As more governmental and private sector

companies are in support of international green building standards and initiatives, both LEED

registrations and LEED certifications have significantly increased. But there is a need for a more

prominent and robust process. The Saudi government should reinforce Building Codes and

Standards to evaluate the properties of parts and components used in buildings and their

performance. I stated earlier in the paper how the shift in architectural scenery across Saudi

has affected the way of living, leading to more electricity consumption. It is necessary to

require energy efficient building designs for all new buildings. The Saudi Electrical Company

(SECO) has just recently this year issued a new law that mandates all new buildings be well

insulated in order to connect said buildings to the electric grid. Energy efficiency helps control

rising energy costs, and reduces environmental footprints. As of now, the process of building

and construction in Saudi does not require a formal display of compliance with certain rules

that help building perform better and are more energy efficient. SECO could benefit if the

government enforces codes and regulations which include the usage of energy efficient

components (building materials, windows, fixtures and appliances).

It is noteworthy to mention that a Saudi Energy Efficiency Center (SEEC) was established

by the Council of Ministers decision No. 363 dated 24 Thu Al-Qiida 1433 A.H. (October 10th,

2012). The Center aspires to raise national awareness and enhance energy consumption

efficiency. Also, to unify the efforts of governmental and non-governmental agencies.

Yasmeen Abualsaud Solar in Saudi Arabia

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According to their website 19 their mission is to develop policies, regulations, and rules to

organize energy consumption while supporting other agencies in the country to implement.

However, they were not clear as to how they are going to achieve that. As of today, the only

concrete evidence of (SEEC)’s work is the nation-wide campaign they launched through social

media (Twitter and YouTube).20 What they are currently missing is what links them with the

electricity consumers. Which is why I urge the Saudi Electrical Company to work together with

(SEEC) and create a portal of information that will make it easier for the end-user to understand

their role which will then increase the adoption rate of solar. But what is most essential is to

consider the type of information that is most useful to those residents, therefore what is most

likely to persuade them into installation of solar panels.

Conclusion

Solar energy provides a viable solution for the energy crisis Saudi Arabia is going to face

in the future. As 90% of Saudi exports go to oil and 100% of electricity generation comes from

fossil fuels, it should go without saying that employing solar along with other renewable energy

mixes is a matter of survival. I urge that the plans be implemented as soon as possible.

Furthermore, the Saudi Electrical Company must work hand-in-hand with the government to

introduce these new policies and regulations while ensuring to include the population in the

conversation since analysis showed that consumption behavior is a big piece that is causing the

problem of blackouts. Our goal ultimately is to secure a sustainable future for generations to

come and not just replace one form of energy with another.

19 Saudi Energy Efficiency Center (SEEC), http://www.seec.gov.sa/?lang=en, Last updated 2014, [Accessed December 11, 2014] 20 Official website for (SEEC) Energy Efficiency campaign http://taqa.sa/landing/

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References

1 World Development Indicators, World Bank, http://data.worldbank.org/topic/energy-and-mining [last accessed 12/8/14] 2 Christopher Segar, IEA Energy: The Journal of the International Energy Agency, pg. 40-41, (November 2014), http://www.iea.org/media/ieajournal/Issue7_WEB.pdf 3 Royal Order No. A/35 3/5/1431 A.H – 17/4/2010 4 BP Statistical Review of World Energy, (June 2014), pg 1-20, http://www.bp.com/statisticalreview 5 Almasoud, A.H., Gandayh, H.M. Future of solar energy in Saudi Arabia. Journal of King Saud University Engineering Sciences (2014), http://dx.doi.org/10.1016/j.jksues.2014.03.007 6 Hussain Al Awami. Electrical Engineer II, Saudi Aramco, Interviewed November 26, 2014 7 Electricity & Cogeneration Regulatory Authority Annual Report (2013), pg. 85- 87 http://www.ecra.gov.sa/documents/Annual%20Reports/Annualreport%20for%20Web2013-english.pdf 8 Saudi Electrical Company Annual Report 2014 http://www.se.com.sa/NR/rdonlyres/2F4F7D91-34DC-4711-88F7-826FBB059DF8/0/SE_EN_AnnualReport2013.pdf 9 Gawdat Bahgat, The Journal of Social, Political and Economic Studies. 37.2 (Summer 2012): p181. “Will Saudi Arabia face an energy crisis?” 10 European Environmental Agency Technical report, 2013, Achieving energy efficiency through behavior change, ISSN 1725-2237 11 The KICP Annual Strategic Study (2009) “Saudi Arabia Solar Energy Manufacturing and Technology Assessment” p. 15-43. http://www.kaust.edu.sa/assets/downloads/kicp-solar-energy-study.pdf 12 NYS Department of Public Services Report and Proposal, “Reforming The Energy Vision” 2014 13 Professor Ibrahim M El-Amin. Electrical Engineering Department, King Fahd University of Petroleum & Minerals, Interviewed October 22nd, 2014 14 IRENA, International Renewable Energy Agency, Renewable Power Generation Costs in 2012 15 Energy Technology, How real time monitors can add significant value to your operations, June 2012 16 About ENERGY STAR Website, http://www.energystar.gov/about, [Accessed December 12, 2014] 17 The City University of New York (CUNY), Installing Solar in NYC: NY Solar PV Incentive Guide: Residential, http://www.cuny.edu/about/resources/sustainability/solar-america/installingsolar/incentives/NYSolarPVIncentiveGuide_Residential_11_2014.pdf , (Updated: November 2014), [Accessed December 11, 2014] 18 http://www.coned.com/dg/solarenergy/Solar%20Installation%20Process%20Flow%20Chart.pdf 19 Saudi Energy Efficiency Center (SEEC), http://www.seec.gov.sa/?lang=en, Last updated 2014, [Accessed December 11, 2014] 20 Official website for (SEEC) Energy Efficiency campaign http://taqa.sa/landing/

Figures and Graphs

Figure 1 Solar Radiation Map (source: Saudi Arabia Solar Industry Association http://saudi-sia.com/solargis-data/ )

Figure 2 Main Factors Influencing Consumer Behavior and Emergence of Consumption Practices, European Environmental

Agency Technical report, 2013, Achieving energy efficiency through behavior change, ISSN 1725-2237

Figure 3 Con Edison Solar Rebate installation/application process,

http://www.coned.com/dg/solarenergy/Solar%20Installation%20Process%20Flow%20Chart.pdf