Discussion Paper

August 2025 I DOI: 10.30573/KS--2025-DP40

The Rising Cost of

Cooling: Regional Energy

Futures in a Warming

Saudi Arabia

Jeyhun I. Mikayilov, Abdulelah Darandary, and

Khalid Alhadrami 

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economics and sustainability providing advisory services to

entities and authorities in the Saudi energy sector to advance

Saudi Arabia’s energy sector and inform global policies through

evidence-based advice and applied research.

This publication is also available in Arabic.

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The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Summary

This study quantifies the impact of a warming climate on residential cooling

demand in Saudi Arabia, examining four regions through 2060. Utilizing

region-specific electricity demand models and IPCC temperature pathways,

we find that a 1°C increase in average temperature could raise electricity

consumption for cooling by 12.9% in the Western region, 10.3% in the

Southern region, 8.3% in the Central region, and 4.8% in the Eastern region,

based on data from 1990 to 2018. Under the high-emission SSP5 – Fossil-

Fueled Development (Taking the Highway) pathway (high-emissions scenario),

cooling-related electricity use in 2060 is projected to be nearly 20 TWh

higher than under the SSP2 – Middle of the Road baseline. By contrast,

the SSP1 – Sustainability (Taking the Green Road) scenario could reduce

consumption by about 8 TWh. These findings underscore the strain that rising

temperatures place on households and utilities, leading to higher bills and

greater infrastructure demands.

Furthermore, using a power system optimization model to

evaluate identical scenarios, we find that the SSP1 scenario

yields the lowest long-term system costs, resulting in

$9.41 billion in savings compared to the baseline scenario

(SSP2) over the 2024-2060 period. These savings arise

from reduced fuel consumption and lower investments

in generation and transmission assets. Additionally, SSP1

eases infrastructure pressures associated with growing

electricity demand, which could otherwise increase total

system costs by as much as $22 billion over the period

2024-2060 across scenarios. These costs are ultimately

borne by utility companies (which require higher capital

investments), electricity consumers (who may face higher

tariffs), and government budgets (which support subsidies

and infrastructure).

These results underscore the economic benefits of

global climate mitigation efforts for the Kingdom of Saudi

Arabia (KSA). National contributions to these efforts could

include policy interventions such as accelerated electricity

price reforms to align with market levels, implementation

of demand response mechanisms in electricity market

design, and targeted efficiency investments with

appropriate price signals to avoid rebound effects.

Achieving net-zero emissions by 2060 while addressing

adaptation challenges is critical for Saudi Arabia to

effectively manage future cooling demand and mitigate

economic and environmental risks.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 4

Key Points

• All regions in Saudi Arabia are experiencing notable warming, with the Western region’s summer temperature rising

by 2.00°C and winter by 1.30°C between 1990 and 2020 – the highest among all regions.

• A 1°C temperature increase drives significant growth in cooling demand, raising residential electricity use by up to

12.9% in the Western region, followed by 10.3% in the Southern, 8.3% in the Central, and 4.8% in the Eastern regions,

based on estimations using data from the 1990-2018 period.

• Under a Saudi-specific temperature projection corresponding to SSP5 – Fossil-Fueled Development (Taking the

Highway), electricity demand in the Kingdom of Saudi Arabia in 2060 is projected to be nearly 20 TWh higher

than under the SSP2 – Middle of the Road baseline. By contrast, the SSP1 – Sustainability (Taking the Green Road)

scenario could reduce demand by about 8 TWh.

• System-wide cost analysis shows that SSP1 yields cumulative savings of $9.41 billion compared with SSP2, while

SSP5 increases total costs by $12.57 billion. These figures, calculated over the 2024-2060 period, underscore the

economic benefits of climate mitigation.

• Targeted investments in efficient cooling, renewable energy, and regional infrastructure – especially in the Western

and Southern regions – combined with both price and non-price behavioral nudge mechanisms, are critical to

managing warming-driven electricity demand and supporting Saudi Arabia’s 2060 net-zero targets.

Keywords: Climate Change, Cooling Demand, Electricity Consumption, Saudi Arabia, Regional Energy Modeling, IPCC

Scenarios, SSP Pathways, Net-Zero Emissions, Energy Efficiency, Renewable Energy

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Introduction

Since the onset of the Industrial Revolution, greenhouse gas emissions

have surged globally (IPCC 2021). This increase has led to significant shifts

in temperature patterns worldwide, affecting socioeconomic conditions and

energy systems. Saudi Arabia, situated in the Middle East, is particularly

vulnerable to climate change. In 2018, the country’s average temperature

exceeded the 29-year historical average (Peerbocus et al. 2020). With its arid

desert climate and proximity to the equator, Saudi Arabia experiences some

of the highest temperatures on Earth (Lelieveld et al. 2016).

The Kingdom’s energy profile is closely linked to

its evolving climate conditions and socioeconomic

development. Most of the population depends on cooling

to maintain comfortable living conditions. Unsurprisingly,

electricity demand is heavily driven by air conditioning

(Howarth et al. 2020). Residential electricity demand

accounts for nearly half of the Kingdom’s total electricity

consumption (Argaam 2025), with some regions

exceeding the 50% mark. The growing number of high-

temperature days poses challenges for power systems

that must adapt to meet demand while aiming for long-

term sustainability.

We utilize data on cooling degree days (CDD)1 and heating

degree days (HDD) from Mikayilov et al. (2020), and we

extend it to the subsequent years. Figure 1 illustrates

historical trends in CDD and HDD across various regions

of Saudi Arabia for 1990, 2009, and 2019. It clearly

demonstrates a significant increase in CDD values over

the period, indicating that the climate is becoming warmer,

leading to higher cooling demand. In the Western region,

CDD rose notably from 2,440 in 1990 to 3,276 in 2019,

marking the largest increase among the regions. Similarly,

the Central region experienced a consistent increase

in CDD, growing from 1,773 to 2,174 over the same

period. The Eastern and Northern regions also saw an

increase, with CDD rising from 2,000 to 2,377. Although

the Southern region showed some fluctuations, the CDD

remained relatively high overall.

Figure 1. Saudi Arabia CDD and HDD across time.

Source: Authors’ calculation.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 6

Saudi Arabia is committed to achieving net-zero carbon

emissions by 2060 (Ministry of Energy 2021). Fulfilling

this pledge requires a strategic approach centered on

climate mitigation, with an emphasis on sustainable energy

planning and low-carbon development pathways. A crucial

element of this strategy is understanding how expected

climate change in the country and developments in

temperature scenarios will influence residential electricity

demand. As temperatures rise, the demand for cooling

in Saudi Arabia is expected to increase in both intensity

and duration (Howarth et al. 2020). This trend presents a

significant challenge for energy policymakers: balancing

the rising demand for electricity with evolving load profiles

driven by climate change. These changes could lead to

supply challenges and potential grid instability, highlighting

the importance of proactive planning. Conversely,

accurately measuring and forecasting demand patterns

under various temperature scenarios can guide strategic

investments in system flexibility through market design,

price signals that stimulate flexible demand response,

smart grid infrastructure, and climate-resilient generation

planning.

Recognizing the need to address energy consumption

and environmental impact, Saudi Arabia has implemented

various measures over the past decade to boost energy

efficiency and reduce excessive electricity use. The

establishment of the Saudi Energy Efficiency Center

(SEEC) in 2010 aimed to promote awareness and

encourage the adoption of efficient technologies, such

as improved air-conditioning units, and to introduce

energy efficiency labels. Through SEEC, the government

has worked to foster a culture of energy conservation.

Additionally, electricity price reforms in 2016 and 2018

marked significant policy shifts designed to cut subsidies

that previously encouraged overconsumption (Mikayilov

et al. 2020; Darandary, Mikayilov, and Soummane 2024).

Looking forward, price and non-price policies should

carefully consider the potential for inflation to offset reform

impacts, suggesting that sustained real price increases

integrated into reformed market and tariff design will be

necessary to encourage load shifting and system flexibility.

These reforms are part of broader structural changes

under Saudi Vision 2030, which focuses on economic

diversification and sustainability, and have significantly

affected electricity consumption, costs, and carbon

emissions, with average annual electricity consumption

reductions of approximately 9% for the 2016-2019 period

(Darandary Mikayilov, and Soummane 2024).

The Intergovernmental Panel on Climate Change (IPCC),

established in 1988 by the United Nations Environment

Program and the World Meteorological Organization,

provides comprehensive assessments of climate science,

impacts, and mitigation strategies. It synthesizes the latest

climate research and offers periodic reports that inform

policymakers about urgent environmental issues. The

IPCC develops future climate scenarios that encompass a

range of possible temperature increases based on varying

levels of greenhouse gas emissions and socioeconomic

pathways. These scenarios, known as Representative

Concentration Pathways (RCPs), provide insights into how

human activities might influence future temperatures and

extreme weather events.

The IPCC’s climate projections are particularly significant

for Saudi Arabia, where high temperatures already pose

environmental and social challenges. The country is highly

vulnerable to the effects of global warming, which can

intensify extreme temperatures, increase energy demand

for cooling, and create challenges for public health,

infrastructure, and economic resilience. According to the

IPCC’s latest report (2021), average temperatures in the

Middle East are projected to rise more sharply than the

global average, potentially increasing by 4-6°C by the

end of the century if high-emission scenarios continue.

This trend is expected to intensify heat waves and extend

high-temperature periods, further increasing the already

significant demand for cooling in Saudi Arabia’s residential

sector. The IPCC scenarios offer a valuable framework

for understanding potential temperature increases in

Saudi Arabia, depending on global emission trends and

mitigation efforts.

Utilizing these projections, we explore how temperature

increases could drive electricity demand for cooling,

especially in regions where air conditioning is already

prevalent. This exploration allows us to assess potential

energy requirements under each scenario, providing

insights into the investment needed in additional energy

infrastructure, renewable resources, and energy efficiency

measures to ensure a reliable supply while minimizing

environmental impacts. This framework lays a foundation

for planning and policy decisions that can address the

energy challenges posed by climate change, supporting

Saudi Arabia’s broader sustainability and net-zero

objectives.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Literature Overview

Several studies have explored the relationship between temperature and

electricity demand in Saudi Arabia and the Gulf Cooperation Council (GCC)

region. Atalla and Hunt (2016) modeled residential electricity demand as

a function of its drivers, including CDD and HDD, for the Gulf Cooperation

Countries (GCC).

The impact of HDD is significant only for Saudi Arabia,

with an elasticity of 0.16. The CDD elasticities are 0.66,

0.58, and 0.50 for Bahrain, Oman, and Saudi Arabia,

respectively, and are insignificant for Kuwait, Qatar, and the

UAE. Howarth et al. (2020) modeled electricity generation

as a function of temperature using regional data for

Saudi Arabia. They found that for every 1°C increase in

temperature, approximately 1.177 GW of additional power

generation was needed.

However, at the regional level, these increases vary.

For every 1°C increase in temperature, they estimate an

increase in electricity generation of 334 MW (2.9% of

average generation), 267 MW (2.0% of average power

generation), 87 MW (2.4% of average generation), and 489

MW (4.6% of average generation) for the Central, Eastern,

Southern, and Western regions, respectively. Analyzing

historical temperature data from 1979 to 2018, they found a

warming trend of 1.9°C over the period. The study reveals

strong relationships between temperature and electricity

demand, with significant regional and seasonal variations.

The Western region showed the highest sensitivity to

temperature changes.

Mikayilov et al. (2020) analyzed regional residential

electricity demand in Saudi Arabia from 1990 to 2018,

reporting long-run CDD elasticities of 0.51 for the Central

region, 0.27 for the Eastern region, 0.75 for the Southern

region, and 0.66 for the Western region. Only the Central

region (0.16) and Eastern region (0.23) showed significant

responses for HDD, while the Southern and Western

regions had no significant heating demand response.

Mikayilov et al. (2020) related the higher cooling impacts

in regions with older housing stock (33% in the Southern

region versus 22% in the Western region) and lower

apartment density (30% in the Southern region versus 61%

in the Western region). Heating effects were significant

only in the Central and Eastern regions, potentially due to

longer winters. Aldubyan and Gasim (2021) studied total

residential electricity demand in Saudi Arabia (estimation

period 1981-2018) and found the CDD elasticity to be 0.39.

They concluded that Saudi Arabia’s electricity demand

significantly responds to temperature, highlighting the

essential nature of cooling in the region’s hot climate.

Mikayilov and Darandary (2024) modeled total electricity

demand (sample period 1990-2019) for Saudi Arabian

regions. They found that CDD only had a statistically

significant impact in the Western region, with an elasticity

of 0.57. They did not find HDD to be significant in any

of the regions. They attributed the significant impact of

CDD in the Western region to its status as the hottest

region in Saudi Arabia and its highest share of electricity

consumption in the residential sector.

Mikayilov and Al-Mestneer (2024) updated Mikayilov and

Darandary’s (2024) findings using revised census data and

found statistically significant CDD impacts in two regions:

Central (elasticity: 0.40) and Western (elasticity: 0.57). The

authors explained the significant impact of CDD in the

Central region, which has dry weather conditions, a hot

climate, and a high share (50%) of villa-type houses. In

contrast, the Western region is the hottest in the country

and has a high population density. The revised analysis

revealed new temperature sensitivities in the Central

region while confirming previous findings for other regions.

We employ region-specific residential electricity demand

models to forecast consumption patterns up to 2060,

aligned with IPCC temperature scenarios for Saudi Arabia.

The implications of this research extend beyond academic

interest; they have practical significance for policymaking

and energy strategy. The wider academic and policy

community can derive valuable insights from this analysis,

contributing to a growing body of literature on climate

adaptation in energy systems (Pachauri and Meyer 2014).

This approach ensures that Saudi Arabia can address the

dual challenges of meeting growing energy security needs

and advancing its net-zero agenda.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 8

Saudi Arabia spans approximately 2.15 million square

kilometers, which results in significant regional weather

variations due to its vast size and diverse topography.

Because of its proximity to the equator, the Kingdom is

known for its hot climate conditions. Table 1 summarizes

the temperature data in two periods (1990-2005 and

2006-2020) for the summer and winter.

Table 1. Mean temperature for Saudi Arabian regions (1990-2020).

Note: The temperature data used for the weather variability are the same as those used in Mikayilov et al. (2020), with two additional

updated years ending in 2020.

Central Eastern Southern Western

Period Summer Winter Summer Winter Summer Winter Summer Winter

1990-2005 36.39 16.03 36.95 15.18 30.61 22.58 34.11 21.91

2006-2020 37.16 16.50 37.79 15.58 31.42 23.02 35.05 22.79

Delta temp 0.76 0.47 0.84 0.41 0.81 0.44 0.94 0.88

% Change 2.1% 2.9% 2.3% 2.7% 2.6% 2.0% 2.8% 4.0%

All regions of Saudi Arabia have experienced a similar

warming trend in both summer and winter. The Central,

Eastern, Southern, and Western regions recorded

average summer temperature increases of 0.76°C, 0.84°C,

0.81°C, and 0.94°C, respectively, along with average

winter temperature increases of 0.47°C, 0.41°C, 0.44°C,

and 0.88°C. The Western region had the highest winter

increase at 4.0%, indicating significant warming during the

colder months. Overall, while summer periods showed

slightly higher temperature increases, winter warming was

particularly pronounced in the Western region, reflecting

the broader impacts of climate change in Saudi Arabia.

The heatmaps in Figure 2 illustrate significant warming

trends over time across Saudi Arabia during both summer

(June, July, August) and winter (December, January,

February). On a national level, the average summer

temperature has risen by 1.54°C, indicating a notable

warming trend during the hottest months. Similarly,

a 1.54°C increase in winter temperatures suggests

consistently milder winters, highlighting year-round

warming.

Regional Temperature

Variability

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Figure 2. Temperature heatmaps for Saudi Arabia’s regions (1990-2020).

Source: The temperature data used for the weather variability are the same as those used in Mikayilov et al. (2020), with two

additional updated years ending in 2020.

a) Central region

b) Eastern region

c) Western region

d) Southern region

Winter Average Temperature Heatmap for Central Region (1990-2020)

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Day of Season

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Temperature (0C)

Year

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 10

In the Central region, summer temperatures rose by

1.75°C, exceeding the national average and signaling

a strong warming trend. Winter warming in the Central

region was even more pronounced, with a temperature

increase of 2.12°C, potentially reducing extreme cold

events and altering local climate patterns. In contrast, the

Eastern region experienced moderate summer warming

of 0.63°C, indicating less intense temperature increases

than other regions. However, winter temperatures in the

East rose significantly by 1.80°C, suggesting a marked

shift in winter climate conditions. The Southern region

saw a temperature increase of 1.38°C, reflecting moderate

summer warming. This region also experienced the

smallest increase during winter, at 0.56°C, indicating a

slower warming trend and potentially less impact on winter

conditions.

The Western region recorded the highest increase at

2.00°C, indicating a marked summer warming trend

that likely leads to more extreme heat conditions

and increased energy demand. Additionally, winter

temperatures rose significantly by 1.30°C, demonstrating a

noticeable warming trend.

Table 2 summarizes temperature changes at both national

and regional levels, revealing several key insights.

Summer warming is generally more intense in the Western

and Central regions, while winter warming is particularly

pronounced in the Central and Eastern regions. The

data highlights significant regional variations in how

climate change impacts different parts of Saudi Arabia,

emphasizing the importance of developing region-specific

adaptation strategies to effectively address each region’s

unique challenges and vulnerabilities.

Table 2. Summary of the temperature changes.

Region overall change (°C) Summer change (°C) Winter change (°C)

KSA 1.55 1.54 1.54

Central 1.59 1.75 2.12

Eastern 1.41 0.63 1.80

Southern 1.23 1.38 0.56

Western 1.78 2.00 1.30

Temperature

Scenarios for

Saudi Arabia

Corresponding

to Global SSP

Scenarios

The SSPs provide various scenarios for future temperature

changes in Saudi Arabia.

SSP1 – Sustainability (Taking the Green Road): This

scenario envisions a future characterized by rapid

environmental improvements, driven by significant

investments in green technologies and sustainable

practices. As a result, it leads to moderated temperature

increases and a more resilient climate system.

SSP2 – Middle of the Road: This scenario features

moderate socioeconomic and environmental changes,

projecting steady growth with incremental progress

in sustainability measures. Consequently, it results in

intermediate temperature trends.

SSP5 – Fossil-fueled Development (Taking the

Highway): In contrast, this pathway assumes continued

reliance on fossil fuels and rapid economic growth, with

minimal emphasis on environmental protection. This

leads to more pronounced temperature increases and

heightened climate impacts.

Figure 3 illustrates the temperature trends for Saudi Arabia

corresponding to the Global SSP scenarios from 2025

to 2060. Table 3 provides a summary of the scenario

statistics.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Figure 3. Temperature scenarios for Saudi Arabia corresponding to the Global SSP scenarios.

Source: Authors’ data based on World Bank Group (2024).

Table 3. Summary statistics for SSP scenarios.

count mean std min 25% 50% 75% max

SSP1 36 26.826 0.243 26.370 26.668 26.895 27.033 27.190

SSP2 36 27.026 0.389 26.350 26.738 27.000 27.373 27.660

SSP5 36 27.502 0.684 26.410 26.878 27.410 28.083 28.680

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 12

Empirical Estimations

Relation of Regional Cooling Degree Days

to Temperature

This paper utilizes regional residential electricity models developed by

Mikayilov et al. (2020) for forecasting purposes. Mikayilov et al. (2020)

employed cooling degree days (CDD) as an indicator of weather conditions.

To assess the impact of Shared Socioeconomic Pathways (SSP) temperature

scenarios on electricity demand, we must connect average temperature to

regional CDD indicators.

Accordingly, we modeled regional CDDs as a function of

average annual temperature. In these modeling exercises,

a maximum lag of 4 was selected based on sample size,

and the optimal lag was determined using selection

criteria alongside a set of diagnostic tests. The following

specification was used for modeling:

CDD!,# = a$+∑b%Temp!,#&% + ϵ!,#

%($

(1)

Where, CDDr,t stands for CDD for region r at time t; Tempr,t-k

is the temperature in region r, at time t-k; ϵr,t is a region-

specific error term.

The World Bank Group (2024) sourced historical reference

temperature data. Using the general-to-specific (GETS)

modeling approach (see Hendry and Doornik 2014, among

others), we modeled regional humidity-adjusted CDD

numbers based on average temperature. The results are

presented in Table 4.

Table 4. The impact of reference temperature on the annual regional cooling degree days.

Region Central Eastern Southern Western

Coecient 361.500 435.210 295.379 644.880

p-values 0.000 0.000 0.001 0.000

R-square 0.740 0.735 0.872 0.706

# of observations 29 29 29 29

The coefficients in the table indicate the sensitivity

of CDD to changes in average temperature for each

region of Saudi Arabia. They represent how much the

annual CDD will increase in response to a 1°C rise in

average temperature, specifically how many degrees are

needed annually to cool indoor temperatures to 21°C.

Higher coefficients suggest that a region’s CDD is more

responsive to temperature changes, implying greater

cooling demand as temperatures rise. The Western region

has the highest CDD sensitivity to temperature increases,

followed by the Eastern, Central, and Southern regions.

These differences highlight how regional climate

characteristics influence the extent to which temperature

increases drive cooling demand across Saudi Arabia.

Regions with higher coefficients, such as the Western

region, would experience a more significant rise in cooling

requirements with even minor temperature increases,

affecting electricity demand and cooling infrastructure

needs in those areas.

Using the estimated models and SSP scenarios for

temperature from the World Bank Group (2024), we have

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Table 5. The impact of temperature on electricity consumption.

Region Central Eastern Southern Western

Semi-elasticity, % 8.3 4.8 10.3 12.9

projected the CDD scenarios for each region of Saudi

Arabia through 2060. Specifically, we utilized the SSP1 –

Sustainability (Taking the Green Road), SSP2 – Middle of

the Road, and SSP5 – Fossil-Fueled Development (Taking

the Highway) temperature scenarios to estimate the

corresponding CDD projections.

How Temperature

Impacts Electricity

Demand

Using the CDD elasticities of electricity demand from

Mikayilov et al. (2020) and the temperature-CDD

relationship results from Table 3, we calculated the

temperature semi-elasticities of electricity demand.

Semi-elasticity refers to the percentage change in

electricity demand resulting from a one-unit change in the

temperature metric, in this case, CDD. By leveraging the

CDD elasticities derived from our analysis, we quantify how

sensitive electricity demand is to variations in temperature

through CDD. This provides a nuanced understanding

of the relationship between temperature fluctuations

and electricity usage, offering insights into how climatic

factors drive energy consumption patterns. The results are

presented in Table 5.

Source: Authors’ estimation results.

The provided semi-elasticities indicate the percentage

change in residential electricity consumption resulting

from a 1°C increase in temperature across different regions

of Saudi Arabia. An 8.3% increase in the Central region

suggests moderate to high sensitivity to temperature

changes. This region experiences hot summers and cold

winters, leading to substantial use of air-conditioning

and heating systems. Dense populations and urban

lifestyles in major cities like Riyadh contribute to higher

energy demand. In contrast, the smallest increase among

the regions is in the Eastern region (4.8%), indicating

a relatively lower sensitivity to temperature changes.

Proximity to the Arabian Gulf may moderate temperature

extremes and reduce reliance on cooling systems.

Additionally, significant industrial activity in the Eastern

region may dominate overall electricity consumption,

making residential temperature sensitivity less

pronounced.

A 10.3% increase in the Southern region reflects a

strong response to temperature changes. The diverse

climates, including cooler highlands and hotter lowlands,

lead to varying energy needs. The relatively high CDD

elasticity observed in the Southern region may seem

counterintuitive given the area’s mountainous terrain

and milder climate conditions. The southern highlands,

including Abha and Aseer, are characterized by cooler

summers and serve as popular seasonal destinations,

suggesting lower cooling demands than in other regions.

Several factors may explain this high elasticity. First, the

mountainous geography and milder climate may lead

households to underestimate their cooling needs, resulting

in delayed investment in efficient cooling equipment.

When temperature increases occur, older or less efficient

air-conditioning systems respond more aggressively to

heat, creating higher elasticity of demand.

Second, regional differences in energy efficiency

adoption patterns provide additional context. Darandary

and Belaïd (2024) demonstrate that Southern regions

exhibit the lowest responsiveness to energy-efficient

appliance adoption compared to other areas. This finding

is consistent with Mikayilov et al. (2020), who show that

the Underlying Energy Demand Trend (UEDT) – a proxy for

residential electricity efficiency – indicates relatively poor

performance in the Southern region.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 14

Additionally, methodological factors may contribute to the

observed pattern. The apparent discrepancy between

our own temperature-CDD estimates, where the Southern

region shows the smallest effect (Table 4), and findings

from Mikayilov et al. (2020) – where the Southern region

exhibited the largest CDD impact – may reflect differences

in data coverage and updated population figures revealing

substantial regional changes over time.

The combination of these behavioral, technological, and

methodological factors suggests that while the Southern

region experiences milder temperatures overall, multiple

mechanisms may contribute to the observed high

elasticity of electricity demand in response to temperature

changes. Rural and urban disparities might affect energy

consumption patterns, with temperature increases

significantly impacting cooling demand. The largest

increase in the Western region (12.9%) indicates a very

strong responsiveness to temperature changes. Cities like

Mecca and Medina attract millions of visitors, amplifying

electricity demand, especially during hotter periods. High

temperatures and humidity levels increase dependence

on air conditioning.

Projecting Electricity

Demand

Assumptions for Demand Projections

To project electricity demand through 2060, we made the

following assumptions about the inputs:

• Regional CDD figures: Estimated using the SSP1,

SSP2, and SSP5 temperature scenarios from the

World Bank Group (2024).

• Regional electricity prices: Fixed at the 2022 nominal

level. We assumed 2% annual inflation, meaning that,

in real terms, prices decrease over time.

• Regional GDP numbers: Based on the last 10-year

average growth.

• Regional population: Based on the last five-year

average growth, using new population data

from the General Authority for Statistics census

(GASTAT 2023).

• HDD: Based on historical average growth.

• Regional underlying energy demand trends (UEDT):

Kept constant at 2018 levels.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Projection Results

and Discussion

Using the estimated CDD scenarios across the SPP temperature scenarios,

we have projected electricity demand figures through 2060. Figures 4a-c

present projections of residential electricity demand across regions for the

three SSP scenarios: T1, T2, and T5, which correspond to SSP1, SSP2, and

SSP5, respectively. Figure A1 in the Appendix shows demand projections for a

selected years. Figure 5 compares the outputs of the SSP1 and SSP5 scenarios

with those of the SSP2 scenario for the overall Kingdom using a heatmap.

Figure 4. Residential electricity consumption projections.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 16

Source: Authors’ projections results.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Source: Authors’ design based on the projection results.

Figure 5. Comparison of scenarios (T2 and T5 vs T1) in electricity consumption.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 18

As previously mentioned, the heatmap illustrates the

differences in electricity consumption between SSP1 (T1)

and SSP5 (T5) relative to SSP2 (T2) for KSA.

When comparing SSP1 (T1) to SSP2 (T2), we observe

negative differences (blue gradient): SSP1 consistently

demonstrates lower electricity consumption than SSP2

throughout the entire period. The differences begin

modestly, around -0.14 in 2024, but grow significantly

over time, reaching approximately -7.98 by 2060.

This widening gap indicates a substantial reduction in

electricity consumption under the Sustainability (Taking the

Green Road) (SSP1) scenario compared to the Middle of

the Road (SSP2) scenario. The SSP1 scenario emphasizes

energy efficiency, sustainable practices, and a shift toward

greener technologies, resulting in a continuous decrease

in electricity demand compared to SSP2, which reflects

moderate technological adoption and policy actions. The

notable reduction in electricity consumption aligns with

aggressive sustainability measures aimed at mitigating

climate change and promoting energy conservation.

In contrast, when comparing SSP5 (T5) and SSP2 (T2),

we see positive differences (red gradient): SSP5 displays

higher electricity consumption compared to SSP2. The

differences start at a moderate level, around 0.18 in 2024,

and increase sharply to about 19.84 by 2060. This trend

indicates a significant rise in electricity consumption under

the Fossil-Fueled Development (Taking the Highway)

(SSP5) scenario compared to SSP2. SSP5 represents a

pathway characterized by high economic growth driven

by extensive fossil fuel use and minimal efforts in energy

conservation or transition to greener technologies.

The sharp increase in electricity consumption reflects a

reliance on energy-intensive technologies and practices,

resulting in higher overall demand.

Power System Cost

Implications

As residential cooling demand rises due to climate

warming, the strain extends beyond households, placing

increased pressure on national infrastructure and long-

term fiscal resources. To assess this broader impact,

we evaluate the power system costs and generation

composition associated with different climate scenarios

using a power system model that incorporates electricity

demand projections and Saudi Arabia’s 2060 net-zero

emissions commitment.

We utilize the power system optimization model

developed by Alhadhrami et al. (2025) to support Saudi

Arabia’s net-zero target by 2060. This model minimizes

total electricity system costs from 2024 to 2060, subject to

constraints on energy demand, emissions, and technology

deployment. The evolution of Saudi Arabia’s electricity mix

is derived from a Generation and Transmission Capacity

Expansion Model (GTCEP) with hourly temporal resolution,

implemented using PLEXOS software. It encompasses

various generation and storage technologies, including

solar, wind, natural gas (with and without CCS), and

batteries.

Among the tested pathways, achieving net-zero with 10

MtCO₂ of removals via carbon dioxide removal (CDR) was

identified as the most cost-effective strategy, assuming a

CDR cost of $500 per ton. We adopt this scenario as our

base model and apply three demand pathways (T1, T2, T5)

to assess how warming-driven electricity demand affects

system costs and the generation mix under a net-zero

strategy.

Table 6 summarizes the average annual system costs by

decade and the total costs for the 2024-2060 period.

The analysis indicates that higher warming pathways

significantly increase system costs. T1 has the lowest total

system cost at $221.25 billion, followed by T2 at

$230.66 billion, while T5 incurs the highest cost at

$243.23 billion. Compared to the baseline, T1 offers

savings of $9.41 billion over the entire period from 2024

to 2060. In contrast, T5 results in an additional cost of

$12.57 billion due to increased electricity demand and the

necessary infrastructure expansion to support it.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Table 6. Average annual system cost by scenario and time period (in billion $).

Scenarios 2024-2030 2031-2040 2041-2050 2051-2060 Full period

Average annual system (in billion $) Total Cost

T1 2.14 3.78 5.44 11.40 221.25

T2 2.14 3.83 5.52 12.22 230.66

T5 2.16 3.91 5.72 13.18 243.23

Dierences in average annual system cost (in billion $) Dierence

T5 – T2 0.01 0.08 0.21 0.96 12.57

T1 – T2 0.00 -0.04 -0.08 -0.82 -9.41

Source: Authors based on Alhadhrami et al. (2025).

The generation mix and system costs evolve significantly

across scenarios in response to rising electricity demand

and the constraints of a net-zero future (Figure 6). In the

early period (2024-2030), oil (heavy fuel and crude) and

natural gas dominate the electricity supply. While all liquid

fuels are phased out by 2030, gas remains a significant

contributor throughout this period. Over time, the system

shifts toward greater reliance on renewables – especially

wind and solar, which collectively surpass natural gas

in total generation by 2051-2060 across all scenarios.

However, gas-fired generation still contributes 84-87 TWh

during this timeframe, reflecting its role in providing flexible

capacity. Battery storage technologies begin to contribute

in the final period but remain modest, accounting for about

2% of total generation.

These shifts in generation technology directly impact

system costs. As shown in Table 6, costs rise consistently

over time in all scenarios, driven by growing electricity

demand. From 2024 to 2030, average system costs

are nearly identical across all scenarios (around $2.14 to

$2.16 billion per year). However, differences widen in later

decades: by 2051-2060, average annual costs rise to

$11.40 billion in T1, $12.22 billion in T2, and $13.18 billion

in T5. Compared to the baseline (T2), T1 saves $0.82

billion per year in the final decade, while T5 incurs nearly

$1 billion more per year. The middle periods show smaller

but consistent trends: T5 is always more expensive, and T1

consistently offers cost savings relative to T2, particularly

after 2030. These results confirm that more aggressive

warming pathways lead to higher infrastructure and energy

system costs.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 20

Figure 6. Average annual system cost (billion $) vs. average annual power generation (TWh).

Note: Gas refers to natural gas. Oil includes heavy fuel and crude. Solar encompasses both photovoltaic (PV) panels and

concentrated solar power (CSP) technologies. Wind refers to onshore wind turbines. Storage includes energy storage systems with

durations of 2, 4, and 10 hours.

Source: Authors based on Alhadhrami et al. (2025).

This shift in the generation mix reflects not only the

technical requirements for achieving net zero under

higher demand but also the financial implications. The

T5 scenario requires more aggressive grid expansions

and investments in flexible capacity, which further inflate

total system costs. In contrast, the T1 scenario allows for

a smoother decarbonization trajectory, resulting in lower

peak capacity requirements and reduced overall system

costs.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Conclusion

This study provides critical insights into how climate change is likely to impact

residential electricity demand across Saudi Arabia’s regions through 2060.

Our analysis reveals significant regional disparities in temperature sensitivity,

with the Western region demonstrating the highest vulnerability (a 12.9%

increase in electricity demand per 1°C), followed by the Southern (10.3%),

Central (8.3%), and Eastern (4.8%) regions. Under the temperature scenario

corresponding to the global fossil-fuel-intensive SSP5 scenario, nationwide

cooling-related electricity consumption could surpass the moderate-growth

SSP2 baseline by nearly 20 TWh by 2060 – equivalent to an annual average

difference of 8.7 TWh between 2024 and 2060.

Conversely, under the sustainability-focused SSP1 scenario,

electricity demand could decrease by approximately

8 TWh relative to SSP2 by 2060, providing annual average

savings of 3.4 TWh. Regionally, the Western region

faces the largest increase in electricity demand (9 TWh)

under the SSP5 scenario, emphasizing its heightened

vulnerability. By testing the same scenarios using a

power system optimization model, we demonstrate that

a sustainable pathway (T1) minimizes long-term system

costs, saving $9.41 billion compared to the baseline (T2),

and reduces infrastructure burdens under rising electricity

demand, which increases total system costs by up to

$22 billion across scenarios.

These findings highlight the importance of proactive,

targeted policy interventions. It is recommended that

policies prioritize investments in infrastructure and grid

capacity expansions for temperature-sensitive regions,

particularly the Western and Southern areas. To ensure

that the benefits of stricter building efficiency standards

and the adoption of advanced energy-efficient appliances

are fully realized, it is essential to complement these

measures with appropriate pricing signals and supportive

non-price policies that help mitigate rebound effects and

sustain energy savings.

Rapidly expanding renewable energy resources is

crucial to sustainably meeting increased cooling demand

while aligning with Saudi Arabia’s 2060 net-zero goals.

Future research could enrich policy development by

incorporating socioeconomic factors, such as urbanization

trends, income levels, housing characteristics, and the

role of energy prices, examining the intersection of

the water-energy nexus, and exploring impacts from

extreme weather events beyond average temperature

changes. Such comprehensive analyses will help Saudi

Arabia navigate a path toward a secure, affordable, and

sustainable energy future in the face of escalating climate

risks.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 22

Endnote

1 CDD and HDD are used as proxies for climatic indicators in economic modeling. They quantify how much the outside air

temperature exceeds a base temperature (typically 21.1°C for cooling and 18.3°C for heating) (Atalla and Hunt 2016).

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The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

Appendix

Figure A1. Electricity consumption projections for the selected years.

104

100

120

2030 2040 2050 2060

Electricity Consumption, TWh

COA_T1 COA_T2 COA_T5

30 35

30 36

2030 2040 2050 2060

Electricity Consumption, TWh

EOA_T1 EOA_T2 EOA_T5

2030 2040 2050 2060

Electricity Consumption, TWh

SOA_T1 SOA_T2 SOA_T5

2030 2040 2050 2060

WOA_T1 WOA_T2 WOA_T5

100

120

Electricity Consumption, TWh

162

193

227

263

163

194

230

271

165

198

241

291

100

150

200

250

300

350

2030 2040 2050 2060

Electricity Consumption, TWh

KSA_T1 KSA_T2 KSA_T5

Source: Authors’ projection results.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia 26

About the Authors

Jeyhun I. Mikayilov

Jeyhun I. Mikayilov is a Principal Fellow at KAPSARC. He received his B.A. and M.S. from

Azerbaijan State University (now Baku State University) in Mathematics. Jeyhun holds a

Ph.D. in Applied Mathematics and a D.S. in Econometrics. Jeyhun’s research is focused on

applied time series econometrics, the economics of energy, the environment, and sustainable

development. He has authored over 40 scientific articles published in peer-reviewed journals.

He is an editorial board member of the International Journal of Advanced Multidisciplinary

Research and Review, the Journal of Management, Economics and Industrial Organization,

the Journal of Socio-Economic Studies, and the Journal of Sustainable Development Issues,

as well as a member of the International Association for Energy Economics and the Italian

Society for Econometrics (SIdE).

Abdulelah Darandary

Abdulelah Darandary is an economist and Research Fellow at KAPSARC with expertise in

various fields, including macroeconomics, energy, international trade and investment flows,

financial development, and public policy. He currently leads the project “Applying Behavioral

Economics Methods to Energy Policymaking in Saudi Arabia,” which has resulted in the

first randomized controlled trial for electricity consumption. His work has been published in

top-tier peer-reviewed journals in the field of energy economics. As a passionate advocate

for evidence-based policymaking, Abdulelah is committed to using his expertise to help

shape the future of energy and economic policy in Saudi Arabia and beyond, having worked

on many projects for the energy ecosystem. He is also a sought-after speaker and panelist

on economic and energy policy, having participated in several high-profile events and

discussions.

Khalid Alhadhrami

Khalid Alhadhrami is an Analyst in the Utilities and Renewables program at KAPSARC. He is

an Electrical Power and Machines Engineer with a bachelor’s degree from the Department of

Electrical Engineering at King Abdulaziz University. With three years of research experience,

his work at KAPSARC has focused on renewables, energy modeling, and the electric power

systems field.

The Rising Cost of Cooling: Regional Energy Futures in a Warming Saudi Arabia

About the Project

The goal of the “Modeling Energy Consumption and Its Impacts in Saudi

Arabia” project is to conduct advisory and applied research activities focused

on modeling and forecasting indicators of energy consumption and their

impacts in Saudi Arabia. In line with the ongoing energy policies that the

Kingdom is implementing, the project focuses on three main areas:

• Modeling and forecasting energy consumption indicators.

• Modeling and forecasting the environmental impacts of energy

consumption.

• Investigating the trajectories and potential of energy efficiency.