Saudi Arabia has announced sweeping reforms in the electricity sector that will, in the long-term, ensure the health and sustainability of the power industry and also boost the achievements of the kingdom's goal under Vision 2030.
These reforms from Saudi Arabia's Ministry of Energy, are considered a crucial steppingstone in achieving its goals for the electricity sector which are in line with the goals of Vision 2030, and include the following:
*Transition to the optimal energy mix for electricity production in the Kingdom, with shift to renewable energy and efficient natural gas sources; and
*Increase system efficiency and the reduced use of liquid fuels for energy production; and
*Increase the sector's Transmission and Distribution network security and reliability to enable effective integration of renewable energy and interconnection with neighboring countries; and
*Greater environmental compliance to reduce the sector's carbon footprint
The comprehensive reform package of measures includes the establishment of a revenue requirement mechanism for sector service providers and a tariff balancing account to compensate for the difference between the efficient cost to serve and the income from tariffs.
Announcing the key reforms, Minister of Energy Prince Abdulaziz bin Salman bin Abdulaziz Al Saud, said: "This is a major achievement for Saudi Vision 2030 and for the Ministry of Energy's ambitious goals for creating a sustainable, reliable, and diverse power sector."
"The reforms are considered the largest and most extensive on a global scale. These reforms lay critical foundations by helping to create a more solid and financially viable sector attracting the required investments. The expected outcomes of this sweeping reform program include more efficient power generation, reduction in the use of liquid fuels for electricity generation and increased environmental protection," he added.
"Moreover, the reforms aim to increase the reliability and quality of service of the Kingdom's electricity transmission network and to facilitate the production of electricity from renewable energy sources, bringing it in line with the Kingdom's optimal energy mix for electricity production."
Dr Khaled bin Saleh Al Sultan, Chairman of Saudi Electricity Company, said: "With this historic comprehensive reform program, SEC's balance sheet will become more robust enhancing SEC's ability to fund projects and enabling it to execute on its strategy to contribute to the development of a stronger, more sustainable, and diverse electricity sector."