Energy efficiency in Saudi Arabia

It may be surprising to some but Saudi Arabia has a vigorous programme to promote energy efficiency. The rationale for this is an analysis that shows the rapidly increasing Saudi population, and rising wealth coupled with very low energy prices means that Saudi electricity demand is growing at 7% per annum and domestic use of oil is growing at 5% per annum. In 2012 domestic oil use reached 35% of production and in 2011 Chatham House estimated that by c.2035 domestic oil consumption could equal production1. Clearly if that scenario ever happens the Saudi economy, and no doubt political structure, would be under severe pressure and there would be a major impact on the global oil market.
 
With this in mind, in 2003 Saudi Arabia launched a national effort (the National Energy Efficiency Program, NEEP) to enhance demand side efficiency. Between 2007 and 2010 there was an initiative by the Ministry of Petroleum to transfer the NEEP to a permanent entity and in October 2010 the Saudi Energy Efficiency Center (SEEC) was formed. The mission of SEEC is to “reduce energy consumption and improve energy efficiency to achieve the lowest possible energy intensity”.
 
It’s key tasks are to:

• develop an EE plan covering policies, regulations and initiatives
• monitor the implementation of the plan
• promote EE awareness and support building capacity
• promote the EE industry.

In 2012, SEEC in conjunction with ministries, regulatory authorities and major companies launched the Saudi Energy Efficiency Program (SEEP). SEEP is purely focused on demand side management and its remit does not include the issue of price reforms. The subject of energy prices, which are heavily subsidized to consumers, is highly sensitive in the Middle East. In 2012 there was civil unrest when the Jordanian government changed the subsidy regime on fuel and there is no doubt that all Middle Eastern governments are very conscious of the social impacts of changing energy subsidies – especially at this time of instability in the region.
 
The SEEP is focused on three sectors; industry, buildings and transport.
 
Industry represents 42% of total energy use with 80% of the energy going into the petrochemical, cement and steel industries. Feedstock is not part of SEEP as it is handled by the Ministry of Petroleum and Mineral Resources. In the cement industry over 600 cement plants were benchmarked with the World Business Council for Sustainable Development (WBCSD), all plants were visited to share the methodology, targets were set for existing plants, a defined maximum energy intensity was set for the design of new plants, and the new roles and responsibilities were developed. In addition SEEC is looking to enhance its mandate to include the collection of data, the setting of targets and their enforcement. Another major energy user in Saudi Arabia of course is desalination of water and there are programmes to improve the efficiency of desalination.
 
Buildings account for 23% of Saudi’s energy use with not surprisingly 70% being used for cooling. The aim is to catch up with the rest of the world in terms of standards and codes. In Buildings the key energy efficiency initiatives have included:

• updating the efficiency standards for small capacity air conditioners to ASHRAE standards
• developing an efficiency standard for large air conditioners
• updating thermal insulation product standards
• finalizing efficiency standards for residential lighting products
• developing efficiency standards for commercial and street lighting products
• updating efficiency standards for refrigerators and washing machines
• updating the Saudi Building Code energy conservation section (SBC 601) to ASHRAE standards
• developing a process to ensure proper enforcement of SBC601.

Transport accounts for 23% of total energy use. There are 0.7m Light Duty Vehicles (LDVs) entering the market every year and the stock of LDVs is forecast to reach 20 million by 2030. Incoming LDVs have low average fuel economy given the nature of the fleet mix. In transport SEEC, working with its partners, has developed fuel economy standards in line with international benchmarks. Specific measures include:

• developing a Saudi specific fuel economy standard for LDVS (to catch up with US CAFE standards over time)
• adopting a fuel economy label design similar to EU’s to be enforced on LDVs from model year 2015
• developed a tyre rolling resistance and wet grip standard for LDVs
• identifying key initiatives for Heavy Duty Vehicles (HDVs) (anti-idling regulations, aerodynamic additives, light weighting and mandatory retirement of old HDVs.

Energy intensity in Saudi Arabia intensity has grown significantly over the last 25 years, particularly since 1985, reflecting the growth of the economy, its level of economic development and reliance on heavy industry. Energy intensity was twice the world average in 2010 and energy use is still growing faster then the economy. The overall objective of SEEC is to reduce the electricity intensity by 30% between 2005 and 2030 and half the peak demand growth rate by 2015 compared to the period 2000-2005.
 
As well as energy efficiency Saudi Arabia is of course also pursuing renewable energy and nuclear power. It has a target of attracting investment of $109 billion in renewables and building 54 GW of renewables by 2032 (producing half of all electricity demand), as well as 18 GW of nuclear. So far, however, the largest ground mounted PV plant, at the King Abdullah Petroleum Studies Center (KAPSARC) is only 5 MW. Keeping PV panels clean is a major issue in the harsh, dusty climate.
 
Clearly there is a long way to go but it is encouraging that Saudi Arabia is working to improve energy efficiency. As in many other issues Saudi Arabia faces particular constraints that are rooted in unique social and historical factors – balancing these factors and modernization is a massive challenge. Given the importance of Saudi in the oil market globally and the region generally we should support the national energy efficiency programme’s success. The fact that there is a vigorous Saudi’s programme just adds to the view that the potential resource of energy efficiency is now widely recognized everywhere, but in Saudi as everywhere else we now need to improve the utilization of that resource and work to make investing in efficiency as mainstream as investing in oil, gas and renewables.