Modeling cross-seasonal fuel savings from load shifting in the Saudi industrial sector and interlinkages to export revenues

Abstract

We use a national Saudi power system dispatch optimization model to assess the implications of load shifting from the industrial sector. This model quantifies the fuel offtake, emission, and cost implications of shifting industrial loads from peak summer to off-peak winter months with industrial electricity tariffs and production levels unchanged. Then, the power sector results are used to assess macro implications –in the form export revenues. Our analysis shows that load shifting can save between $7.9 million and $17.7 million per year at the prevailing administered fuel prices and could reduce carbon dioxide emissions by up to 584 thousand tons. Furthermore, the total cost savings range from $127.2 million to $239.4 million per year when the opportunity costs of saved fuel (mostly crude oil) are considered. These potential savings represent 8.1% of the annual fuel costs of the system. Furthermore, we recommend shifting at least 15% of total industrial load to increase fuel savings if natural gas prices are reformed. We conclude by discussing potential policy enablers and barriers to adopting load shifting in Saudi Arabia.