Evaluating Building Energy Efficiency Investment Options for SA
About the Project
Increasing energy productivity holds some of the greatest possibilities for enhancing the welfare countries get out of their energy systems. It also recasts energy efficiency in terms of boosting competitiveness and wealth, more powerfully conveying its profound benefits to society.
KAPSARC and UNESCWA have initiated this project to explore the energy productivity potential of the Arab region, starting with the six GCC countries and later extending to other countries.
Aimed at policymakers, this project highlights the social gains from energy productivity investments, where countries are currently at, and pathways to achieving improved performance in this area.
This study suggests that energy efficiency programs in buildings can provide up to a 27 percent reduction in electricity consumption and a 30 percent reduction in peak electricity demand for Saudi Arabia.
It is well recognized, however, that given the low electricity prices in Saudi Arabia there is little incentive for households and businesses to invest in energy efficiency. On the other hand, when system-wide benefits of energy efficiency investments are included their value is much higher, especially from the government's perspective. These wider benefits include the reduced need for new electricity generation capacity investment, reduced carbon emissions and new employment opportunities. Among the key findings are:
- Investments in residential buildings are by far the most cost effective, with payback periods of less than a year for low cost energy efficiency programs. More ambitious plans with a wider scope have longer payback periods depending on the prevailing electricity price. This finding sits somewhat in contrast to the current focus of public policy on government buildings.
- The potential reduction in the need for new power generation capacity could drive up to around $28 billion in reduced capital expenditure over a 10-year period.
- Depending on the retail electricity price and scope of the efficiency program, the value of avoided energy consumption could be as much as $17 billion per year.
- We estimate that the measures explored in this report could generate up to 247,000 jobs per year by the end of a 10-year investment program.
Successful implementation will require the building of strong institutional and labor force capacities and strengthened policy frameworks. In particular, we recommend that the current KSA building energy efficiency code is enforced for all new buildings, that the code is gradually mandated for the entire existing building stock and that electricity prices are steadily increased to better reward efficiency investments.
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