$$Saudi Arabia faces a challenging path to generate the electricity needed to keep growing while lowering its annual emissions. The emissions from electricity generation have grown significantly due to the rising electricity demand per capita and the abundant use of liquid fuels for electricity generation. The high demand is driven by the comparatively low costs of electricity, whereas the consumption of liquid fuels for generation is driven by the distorted market caused by strong subsidies for these fuels.
By 2030, in a scenario free of reforms, liquid fuels would provide more than half of the fuel energy consumed for generation and would emit around 64% of the emissions. However, they would only represent 10% of the fuel costs at a domestic price.
In this work, the effect and pertinence of reforms to the electricity price and to the fuels consumed for generation are addressed. Tariffs for countries with similar size of economy are taken as a reference.
We found that raising the electricity price to international tariffs could reduce the demand projections for 2030 by up to 9%. Being the industrial sector more sensitive to price changes than the residential sector.
The distortion between fuel price and consumption could be adjusted by increasing the domestic fuel prices to 30% of the international reference, which affects mainly liquid fuels. In this scenario, photovoltaic panels (PV) become a competitive substitute for gas turbines (GT). However, renewables would not exceed 43% of the total capacity and 28% of the energy generated without the early retirement of firm capacity. The resulting cost of emissions avoided by reforming fuel prices is of $43/ton CO2eq.
Simultaneously reforming electricity prices and fuel prices would favor the penetration of renewables without additional costs of investment. Besides, the marginal cost of electricity would remain close to $45/MWh.
Finally, reforming the price of fuel and exporting the saved fuel would derive in additional revenue of up to $6.6 billion by 2030, and would reduce the annual emissions by 2030 by up to 66 million tons of carbon dioxide. The economic gain from exporting the fuel saved by 2030 would be enough to relieve the additional cost in the electricity bill to the residents which represent 73% of the total consumption, through social programs.
| Identifer | oai:union.ndltd.org:kaust.edu.sa/oai:repository.kaust.edu.sa:10754/686309 |
| Date | 25 September 2022 |
| Creators | Fontecha, Harif Daniel |
| Contributors | Sarathy, Mani, Physical Science and Engineering (PSE) Division, Lima, Ricardo, Gascon, Jorge |
| Source Sets | King Abdullah University of Science and Technology |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Rights | 2023-12-08, At the time of archiving, the student author of this thesis opted to temporarily restrict access to it. The full text of this thesis will become available to the public after the expiration of the embargo on 2023-12-08. |
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