Fuel-price reform to achieve climate and energy policy goals in Saudi Arabia: A multiple-scenario analysis

Saudi Arabia experiences annual growth of 6% in its power demand. Generation expansion has been driven by low domestic retail fuel prices leading to a power generation mix based on fossil fuels only. In light of current climate change discussions, this research assesses future generation expansion under different potential fuel-price reforms by an enhanced OSeMOSYS model. Results demonstrate that domestic retail fuel price levels >20% [>60%] of expected international wholesale fuel prices1 are necessary to minimize emissions when considering emissions penalties [without pricing for emissions]. By 2030 renewables can reach 70% penetration by capacity and 30% by energy.