How can energy storage catalyze GCC electricity policy? Issues and options

Abstract

Saudi Arabia and other Gulf Cooperation Council (GCC) members have a parallel agenda of electricity market reforms together with ambitious goals of renewable energy deployment. The motivation for this agenda is multifaceted and extends beyond increasing economic efficiency. Renewable integration raises market and regulatory design issues for countries transitioning to markets and high levels of renewables though. This difficulty or perhaps even incompatibility may undercut both policies’ objectives. This paper analyses the implications of deploying new energy storage in this context. Although storage services would facilitate the integration of renewables and market restructuring policies, deploying this novel technology would raise additional regulatory issues in the electricity sector. Ignoring these regulatory challenges could not only lead to unnecessary costs of transition but also make it more difficult to obtain the full benefits of other economic policy objectives such as the removal of subsidies to relieve public finances and the release oil for sale in international markets.