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Abstract

Electricity sector reform is a key part of the Kingdom of Saudi Arabia’s economic transformation agenda, as set out in the Saudi Vision 2030 goals, and of achieving its renewable energy targets. The electricity distribution sector in the Kingdom is expected to evolve, with implications for the ongoing affordability, reliability and sustainability of electricity services in the country.

Lessons for the Saudi distribution sector can be drawn from international experience, including opportunities and challenges, to better inform policymakers and regulators in the Kingdom about possible evolutionary pathways for the industry. This workshop produced the following key insights:

  • Transformational technologies are fundamentally changing the electricity distribution sector. This transition is testing the limits of existing market, business and regulatory models, and pushing governments and industry to innovate in these areas.
  • A key challenge is the rapid adoption of distributed energy resources (DERs) in many parts of the world, which have disrupted the traditional utility business model. They have also prompted a variety of regulatory responses aimed at addressing the relentless trend in revenue losses and network operators’ consequent inability to recover their network costs.
  • New pricing models and tariffs are being proposed and tested in order to be able to reflect true network costs, with the aim of sending the correct signals to network users and informing network investment decisions.
  • New business models are beginning to emerge around differentiated products and services that offer enhanced reliability, convenience and flexibility, to better address consumer needs and preferences. Early customer trials of innovative services are already providing valuable insights into the viability of the ‘energy-as-a-service’ concept.
  • Testbeds for trialing new business models and electricity sector offerings can offer a reliable and safe way to help stakeholders in the Kingdom better understand the implications of current trends in the electricity industry. The findings can then help inform the development of a new regulatory framework to support the sector’s transformation.
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