Interview: Fahad Al Sudairi
How will connecting Saudi electricity networks to neighbouring countries affect efficiency?
FAHAD AL SUDAIRI: Since Saudi Arabia has a surplus in terms of its electricity supply, the excess can be exchanged with neighbouring countries who have less supply at specific times of the day. This supports the growth of Saudi Arabia’s inter-regional trade activity and stimulates economic development. The current scope of these initiatives extends solely to other, nearby Gulf nations. Initiatives are currently under way to expand the international connectivity of the Kingdom’s electrical grids. An agreement was reached in January 2019 to develop a new power connectivity project between Saudi Arabia and Jordan. The 170-km power link between Eastern Amman and Qurayyat will support the development of a common Arab market for electricity exchange, and reduce the risk of sudden outages or continuous charges for electricity generated by renewable plants during poor weather conditions.
To what extent will downstream entities be impacted by increasing power generation efficiencies?
AL SUDAIRI: An integrated system between electricity companies and the energy sector is already in place. The Electricity and Cogeneration Regulatory Authority (ECRA) is co-supervised by the Ministry of Energy, Industry and Mineral Resources and the Electricity Regulatory Authority, and is focused on delivering fuel-efficient power generation solutions without affecting downstream distributors or customers. In the long term the system aims to raise the efficiency of the national economy, strengthen non-oil sectors and rationalise the consumption of natural resources.
The Kingdom is keen to support its citizens under Vision 2030 and to absorb any differences in electricity tariffs in the process of increasing fuel efficiency, while also ensuring a sustainable electricity supply is maintained. The steps taken by ECRA in this regard also aim to improve service quality, increase productivity and create a more competitive environment, as power generation efficiency continues to increase.
What structural changes are taking place to prepare for the privatisation of power generation?
AL SUDAIRI: Administrative, technical and financial teams have been assigned to work on the development of a new company, which will begin operations in the next few years. The purpose of this restructuring is to achieve greater economies of scale through increased flexibility and opportunities for foreign investment.
The Build and Employ National Abilities strategy further develops policies and procedures to support the inclusion of local manufacturers, contractors and small and medium sized enterprises, through a bidding system that gives a pricing preference of 10% to these entities when they implement local content strategies.
How can electricity networks be further optimised to underpin localised industrial growth?
AL SUDAIRI: Several large-scale electrical projects are currently under way. These projects are designed to support the economic development targets laid out under Vision 2030. Considering the Kingdom’s growing demand for electricity, the introduction of nuclear power to the energy mix will help to achieve the base-load electricity required as localised industrial production continues to expand. Meanwhile, the Generation and Optimisation Centre monitors the reliability and efficiency of electricity facilities, which represent more than 70% of total power generation assets. Lastly, new payment initiatives have also been implemented, which aim to increase the ease of financing electricity for Saudi businesses. The revolving credit facility agreement, signed in November 2018 between SEC and eight international banks, provides two tranches for financing. The first allows for a maximum of $1.6bn and is payable within three years, and the second allows for a maximum of $573m and is payable within five years.
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