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Jointly reforming the prices of industrial fuels and residential electricity in Saudi Arabia

Walid Matar () and Murad Anwer

Energy Policy, 2017, vol. 109, issue C, 747-756

Abstract: The Saudi electricity sector currently buys fuel and sells electricity at prices administered by the government. In this analysis, we illustratively explore combining the reform of the fuel prices used in power plants with the implementation of alternative electricity pricing schemes for the households. Compared to the scenario replicating the year 2015, we find:•The aggregate gain to the energy system could reach nearly $12 billion per year by raising both electricity prices to households and industrial fuels to reflect the cost of supply or international markets.•Households would pay an additional $3 billion in electricity costs without any mitigation for the low-income households. However, Lifeline prices would halve this burden, while maintaining greater gains than deregulating fuel prices alone.•The average electricity price paid under the lifeline scenario would be a more manageable 4.0cents/kWh, versus an average marginal-cost price of 7.1cents/kWh.

Keywords: Residential electricity; Equilibrium model; Saudi Arabia; Demand response; Electricity sector (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.enpol.2017.07.060

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Handle: RePEc:eee:enepol:v:109:y:2017:i:c:p:747-756