Macroeconomic, energy, and emission effects of solar PV deployment at utility and distributed scales in Saudi Arabia

Abstract

For the first time, this paper assesses the macroeconomic, energy, and emission impacts of solar photovoltaic (PV) deployment in Saudi Arabia by linking an energy-and-environment-sector augmented macroeconometric model with a power model and a distributed generation model while distinguishing between utility scale and distributed-generation scale of the PV deployment. We analyze three policy scenarios of deploying 5.5 TWh PV for the period 2021–2030: (S1) fully government-funded utility-scale PV deployment, (S2) half-government-funded utility-scale PV deployment, and (S3) household-funded distributed generation scale PV deployment with little government support. We find that: S1 is best suited if the objective is fiscal expansion, 2 is best suited to improve non-oil fiscal positions, increase non-oil value added and employment, and increase household consumption, and S3 is best suited to reduce energy consumption and associated emissions and enhance international trade. We show that government and foreign investment play an important role, and it would be desirable for the Saudi government to partner in financing renewable energy projects, saving budgetary resources to invest in other projects to support economic growth.