Scenario analysis of Saudi Arabia's residential solar energy incentives

Sikandar Abdul Qadir, Amjad Ali, Md Tasbirul Islam and Muhammad Shahid

Utilities Policy, 2025, vol. 96, issue C

Abstract: Incentives for renewable energy are essential for advancing sustainability; however, the global transition to renewable energy faces several challenges, including a lack of financing, particularly in countries where fossil fuels are subsidised. The residential sector in the Kingdom of Saudi Arabia accounts for 48 % of the total generated electricity. This study focuses on reducing residential energy demand by promoting rooftop photovoltaic systems in tenant-occupied buildings, where direct installation is often impractical. To encourage investment, it is crucial to provide building owners with well-structured financial incentives that enhance the economic appeal of solar adoption. A comprehensive framework is proposed, incorporating capital incentives, production-based incentives, net metering, and net billing policies. Techno-economic analyses are conducted under various constraints to minimise the net present cost of solar PV systems, with further evaluation based on key economic indicators such as levelised energy cost, payback period, and return on investment. The results show that with a 50 % renewable energy share and applying all incentives, the NPC decreases from Saudi Rials (SAR) 703,974 to SAR 302,434, achieving an energy cost of SAR 0.097/kWh. The proposed framework offers a practical and economically viable pathway to accelerate solar energy adoption in residential buildings, contributing meaningfully to the sustainable energy transition.

Keywords: Incentives; Solar PV; Renewable energy; Optimal configurations; Techno-economic analysis; GHG emission analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:96:y:2025:i:c:s0957178725000852

DOI: 10.1016/j.jup.2025.101970

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