There are multiple components to this project:
- The estimated econometric models will provide important elasticity estimates for policymakers. They will also generate different energy demand forecast scenarios.
- Decomposition analysis will provide policymakers with a deeper understanding of the different factors that contributed to the observed changes in energy demand over time.
- The welfare analysis will show the net impact of different policies such as energy price reform on social welfare in Saudi Arabia.
- What has been the impact of the Citizen’s Account on household energy demand and social welfare?
The forecasts obtained using the STSM can be compared with the forecasts obtained using KGEMM, allowing KAPSARC to forecast future energy demand through different modeling approaches and compare the results.
- How do energy prices, economic output, population, energy efficiency, and economic structure influence energy demand in Saudi Arabia?
- How is energy demand likely to evolve?
- What might be the impact of energy price reform, changing population and demographics, and a transition to higher value added manufacturing?
- What about the impact on social welfare?
The goal of this project is to answer these questions by first modeling final energy demand in key end-use sectors in Saudi Arabia using the structural time series model (STSM).
This project will also look at the impact of the Citizen’s Account on household energy demand and social welfare, since the Citizen’s Account program is closely linked to the Energy Price Reform Program.