The energy demand in the Kingdom of Saudi Arabia has increased steadily with an average annual increase close to 5% since 2010. Such rise is driven mainly by the economic prosperity of the region, the rapid industrial development of the Kingdom, and the population growth. However, the per capita energy consumption of KSA is almost three times higher than the world average, explained by the presence of energy-intensive industries, harsh climate conditions, and a high energy demanding lifestyle encouraged by historical low energy prices.
Link between Economic Growth and Energy Consumption
Although the link between economic growth and energy consumption is universally evident; when the growth in energy consumption is higher that the economic growth of a country, it suggests an inefficient usage of resources. This situation is widely prevalent in all Middle East nations, including Saudi Arabia.
The annual GDP growth of KSA averaged 2% during the past five years. For a country which sources its energy from oil and gas, and those too happen to be the main products for exports, such inefficiency translates in less product available for trading and therefore a reduction on monetary benefits.
Energy Consumption by Building Sector
Electricity is one form of energy, perhaps the easiest form available for the building sector. The Saudi Energy Efficiency Center estimates that more than half of the electricity available in the KSA is used by the residential sector (see also Figure below). About 143,000 GWh of electricity where consumed in 2017 by the residential sector, 70% out of it was used for cooling.
The building sector becomes even more relevant when looking at the role of construction within the Saudi Vision of 2030. The Saudi plan attempts to drive the demand for construction projects in the country in order to move away from oil profits, with housing as the most significant area of expenditure under the plan.
The current scenario of the residential sector in Saudi Arabia is one of very high and continuously increasing energy demand. Inexpensive electricity charges limited the motivation for the users to invest in energy efficient features in new buildings or improvements of old ones.
Moreover, the lack of enforcement of building regulations and the availability of poor energy performing materials is reflected in the inefficient designs (i.e more than 60% of the residential buildings in the KSA are not thermally insulated). It is therefore imperative for the KSA to adopt a strategy to reduce the excessive use of energy in residential buildings.
Significance of Energy Efficiency
Energy efficiency is the most cost-effective mean to reduce the energy intensity of an economy. An appropriated implementation of energy efficient practices can save millions to the government and private sector in generation, operation and maintenance cost. Savings in energy translate directly in reduction of greenhouse gas emissions, supports the global efforts towards the achievement of the Sustainable Development Goals, and reduces the risk of an economy vulnerable to oil price fluctuations.
Moreover, as the residential electricity consumption is strongly dependent on seasonal and daily temperature profiles; without energy saving measures the country will require additional capital investments to increase the generation capacity to be able to supply the maximum demand at peak times.
Benefits of Energy Efficiency
A study conducted by the KAPSARC has found that energy efficiency programs for the existing residential building stock of the KSA can reduce 27% of the electricity consumption, which translates into 10,000 GWh/year and 7.6 million tons of carbon emissions avoided.
Additional benefits include the saving of up to 28 billion USD in capital expenditure for new power generation capacity, an avoided energy consumption equivalent to 17 USD Billion/year, resources which then will be available for trading. It is expected that the rise in the electricity bills introduced in January 2018 will make many energy efficiency and retrofit projects more attractive to investors and users.
- World Energy Balances 2018. Total final consumption by Source – Saudi Arabia – Available at https://webstore.iea.org/world-energy-balances-2018
- The World Bank. 2014. Energy use (kg of oil equivalent per capita)
- The World Bank. Annual GDP Growth – Available at: https://data.worldbank.org/country/saudi-arabia
- King Abdullah Petroleum Studies and Research Center. Energy data portal. Available at https://datasource.kapsarc.org
- King Abdullah Petroleum Studies and Research Center (KAPSARC). 2016. Evaluating Building Energy Efficiency Investment Options for Saudi Arabia
- From 5 Halalas for <= 2000 kwh/month to 18 Halalas for <=6000 kwh/month. Sourced from https://goo.gl/fDdduS