106 F. AL-SULAYMAN
Here we can see the rentier state prohibitively affecting distributed
renewables deployment in two distinct ways. The first and more direct
effect is caused by the distributive state feeling an obligation to maintain
energy subsidies as part of the social contract. 30 This has prolonged the
journey of distributed renewable generation toward economic feasibility.
The Citizens’ Account, a direct cash subsidy program rolled out in Saud
Arabia in 2018 with millions of individuals signed on, is meant to mitigate
the effects of the then newly imposed VAT and increases in fuel and electricity prices. 31 Once this program is fully functional, the state will likely
feel less politically inhibited in further removing subsidies, particularly on
residential consumers.
The second is related to the predictability of pricing in the future.
With the exception of the UAE and Bahrain, the GCC states have not
given clear indications of where electricity pricing is heading, and when
it is set to change. From the perspective of the region’s rulers, this maintains energy subsidies as a bargaining chip to be wielded when politically
expedient. From the perspective of energy consumers considering capital
investments in solar PV, for example, this makes the investment case
uncertain, as depicted in Fig. 4.1. The absence of strong and credible
institutions—albeit in some states more than others—capable of outliving
a specific minister or ruler plays an important role in shaping how businesses and individual consumers in the GCC assess long-term investment
opportunities in renewable assets.
A Closer Look at Saudi Arabia
Both due to its size, and the fact that Saudi Arabia lies roughly in the
middle of the GCC in terms of fiscal buffers, this section will now take
a closer look at what explains the current level of renewables deployment
in the Kingdom and its future plans. The picture given in the section
above of how things currently stand in the Kingdom is one of expansive
ambition, but as yet unproven regulatory and policy capabilities.
Within the unveiled plans, and more broadly the rhetoric of the state
in international forums, is a clear if belated acknowledgment of the soft
power potential that can come from embracing the renewable energy
transition, and an understanding that the Saudi market can be a launchpad
for national champions. The centrality of the NREP to discussions about
the Vision 2030 and the repeated references to the projects by state
representatives at international forums and in the media is a testament
to this shift. Despite the fact that the Kingdom’s climate negotiators
still predominantly emanate from the NOC, there has been a notable
Here we can see the rentier state prohibitively affecting distributed
renewables deployment in two distinct ways. The first and more direct
effect is caused by the distributive state feeling an obligation to maintain
energy subsidies as part of the social contract. 30 This has prolonged the
journey of distributed renewable generation toward economic feasibility.
The Citizens’ Account, a direct cash subsidy program rolled out in Saud
Arabia in 2018 with millions of individuals signed on, is meant to mitigate
the effects of the then newly imposed VAT and increases in fuel and electricity prices. 31 Once this program is fully functional, the state will likely
feel less politically inhibited in further removing subsidies, particularly on
residential consumers.
The second is related to the predictability of pricing in the future.
With the exception of the UAE and Bahrain, the GCC states have not
given clear indications of where electricity pricing is heading, and when
it is set to change. From the perspective of the region’s rulers, this maintains energy subsidies as a bargaining chip to be wielded when politically
expedient. From the perspective of energy consumers considering capital
investments in solar PV, for example, this makes the investment case
uncertain, as depicted in Fig. 4.1. The absence of strong and credible
institutions—albeit in some states more than others—capable of outliving
a specific minister or ruler plays an important role in shaping how businesses and individual consumers in the GCC assess long-term investment
opportunities in renewable assets.
A Closer Look at Saudi Arabia
Both due to its size, and the fact that Saudi Arabia lies roughly in the
middle of the GCC in terms of fiscal buffers, this section will now take
a closer look at what explains the current level of renewables deployment
in the Kingdom and its future plans. The picture given in the section
above of how things currently stand in the Kingdom is one of expansive
ambition, but as yet unproven regulatory and policy capabilities.
Within the unveiled plans, and more broadly the rhetoric of the state
in international forums, is a clear if belated acknowledgment of the soft
power potential that can come from embracing the renewable energy
transition, and an understanding that the Saudi market can be a launchpad
for national champions. The centrality of the NREP to discussions about
the Vision 2030 and the repeated references to the projects by state
representatives at international forums and in the media is a testament
to this shift. Despite the fact that the Kingdom’s climate negotiators
still predominantly emanate from the NOC, there has been a notable