8 LEVANT: WHERE POLITICS DEFEAT ALTERNATIVE …
227
The growth of power demand was recorded at a rate of 7.4% annually 35 in the period before 2007. The master energy strategy of 2007
included an energy efficiency target to reduce consumption, but there
was no enforcement of this target, and consumers and investors preferred
implementing renewables over complex, long-term impact energy efficiency measures. The electricity demand was estimated to maintain its
rapid growth, necessitating an additional generation capacity of 4,140–
4,020 MW compared to 2007 baseline, in order to meet the demand and
replace old power plants.
Faced with the threat of intermittent electricity and supply shortage
after the Iraq war, and an accelerating growth in demand, the kingdom
doubled down on its efforts to increase power generation. The implementation model entailed awarding rather random long-term thermal PPAs,
spanning over approximately 20 years, in non-transparent processes, at
relatively expensive rates, with no consideration for the final energy mix,
and ensuring flexibility and balancing the systems, necessary for renewable
energy penetration.
The race to add conventional generation capacity became an unintentional competitor to renewable energy, resulting in a capacity reserve
margin of more than 33%, among the highest in the Middle East, most
of which remained thermal. The kingdom was therefore in a significant excess of electricity generation, which will be exacerbated when the
470 MW oil shale plant enters service, originally anticipated for 2020,
bound by its long-term unplanned contracts to fully purchase the power
produced by IPPs, and unable to reduce the high cost of electricity
negatively impacting the overall competitiveness of the economy.
With the prevalence of the single-buyer model, NEPCO would still be
losing money even in the scenario where subsidies are eliminated.
The focus on generation wasn’t met by a parallel emphasis on the grid
network, which remained weak and highly underinvested as the pressure
on state budgets and the power sector’s fiscal deficit mounted. Toward
the end of 2016, the Green Corridor project was initiated to increase the
grid capacity allowing the wheeling of power from the south region to
consumers in the north and central regions.
The challenge of increasing the share of renewable energy in the mix
was suddenly multiplied by the excess of non-consumed electricity and
the weak overall grid network, leading the government in early 2019 to
halt all large-scale renewable projects.
227
The growth of power demand was recorded at a rate of 7.4% annually 35 in the period before 2007. The master energy strategy of 2007
included an energy efficiency target to reduce consumption, but there
was no enforcement of this target, and consumers and investors preferred
implementing renewables over complex, long-term impact energy efficiency measures. The electricity demand was estimated to maintain its
rapid growth, necessitating an additional generation capacity of 4,140–
4,020 MW compared to 2007 baseline, in order to meet the demand and
replace old power plants.
Faced with the threat of intermittent electricity and supply shortage
after the Iraq war, and an accelerating growth in demand, the kingdom
doubled down on its efforts to increase power generation. The implementation model entailed awarding rather random long-term thermal PPAs,
spanning over approximately 20 years, in non-transparent processes, at
relatively expensive rates, with no consideration for the final energy mix,
and ensuring flexibility and balancing the systems, necessary for renewable
energy penetration.
The race to add conventional generation capacity became an unintentional competitor to renewable energy, resulting in a capacity reserve
margin of more than 33%, among the highest in the Middle East, most
of which remained thermal. The kingdom was therefore in a significant excess of electricity generation, which will be exacerbated when the
470 MW oil shale plant enters service, originally anticipated for 2020,
bound by its long-term unplanned contracts to fully purchase the power
produced by IPPs, and unable to reduce the high cost of electricity
negatively impacting the overall competitiveness of the economy.
With the prevalence of the single-buyer model, NEPCO would still be
losing money even in the scenario where subsidies are eliminated.
The focus on generation wasn’t met by a parallel emphasis on the grid
network, which remained weak and highly underinvested as the pressure
on state budgets and the power sector’s fiscal deficit mounted. Toward
the end of 2016, the Green Corridor project was initiated to increase the
grid capacity allowing the wheeling of power from the south region to
consumers in the north and central regions.
The challenge of increasing the share of renewable energy in the mix
was suddenly multiplied by the excess of non-consumed electricity and
the weak overall grid network, leading the government in early 2019 to
halt all large-scale renewable projects.