Market structure in Saudi Arabia

Transcription

1 Market structure in Saudi Arabia ERRA Tariff / Pricing Committee meeting 19 October 2016, Bratislava, Slovakia Engr. Zaid Rajeh Al-Zaid Economic & Tariff Affairs, ECRA 1

2 Outline Introduction 2015 Facts Current Market Structure Main Players Challenges Overview: Proposed development path 2

3 Outline Introduction 2015 Facts Current Market Structure Main Players Challenges Overview: Proposed development path 3

4 Introduction 1930 to to to Present Private Government Agencies Sector Restructuring Starts as 100% private ownership and operation as Small commercial companies Started as department of Electricity Services. Then, Electricity Corporation Late 70`S consolidated into four major power co (SCECO), the government involved as major shareholder. Mid 2000 All operating entities merged in one company, Saudi Electricity Company (SEC). 2002, ECRA assigned to be the Regulator 4

5 Introduction 2015 Facts + 80 MW Installed Capacity + 68 Transmission Networks (km Circular) 62 MW Peak Load Distribution Networks (km Circular) 2015 Facts Fuel used Gas 43% Oil 57% Gwh Energy Sales + 8 M Number of Customers 5

6 Outline Introduction 2015 Facts Current Market Structure Main Players Challenges Overview: Proposed development path 6

7 Current Market Structure Saudi Electricity Company (SEC) owns: About 70% of generation, Transmission Distribution SEC is the Largest electric entity in the region in terms of capacity and market capital (Total assets over 95 billion US$), 74% directly owned by the Government. Private sector participation under long-term (20 year) PPAs, procured through competitive tender. Saudi Aramco is the only fuel provider in the market. 7

8 Generation TO Distribution Current Market Structure Regulator SEC Others Consumers IPPs/IWPPS PB SO Large Consumers 8

9 Current Market Structure Main Players Main Players 9

10 Current Market Structure Challenges The Impact of Subsidies Today The very low fuel price distorts the incentive for generators to produce efficiently. The very low consumer prices result in high levels of consumption. The Impact of High Growth rate The high capital outlay. Reduce the project period affecting choice of technology. Need to operate in commercial basis Cost-based Tariff and Tariff structures 10

11 Outline Introduction 2015 Facts Current Market Structure Main Players Challenges Overview: Proposed development path 11

12 Desired Final Market Structure Regulator Gen CEM Retail Gen Gen Gen Market Operator System Operator Retail Retail Retail Consumers Gen Bilateral contracting Transmission Large Consumers 12

13 Overview: Proposed development path 5 Ongoing CEM 1 Unbundling SEC restructuring; PB and TSO Government financing mechanism Competitive generation investment 2 New fuel arrangements Fuel price reforms Generators procure own fuel Tariff reforms for large customers 3 Wholesale energy market Initial shadow spot market Then full spot market for energy and ancillary services Bilateral contracting between generators and large customers 4 Capacity market SO operates capacity market No new PB PPAs PB reduced with generation and retail separated Default retailer supplies noncontestable customers Multiple retailers, large customers in wholesale market Gradual removal of transition features 13

14 Stage 1:Unbundling Components SEC s restructuring plans progressing Establish business unit for PB Establish subsidiary companies for 4 SEC Gencos, Distribution and TSO Ring-fencing regulation for the PB inside SEC Government explicit financing mechanism for the PB Competitive tenders for new generation investment 14

15 Stage 1:Unbundling Purpose Establish the structural foundations for subsequent steps, addressing conflicts of interest More transparency of costs within the sector Establish Government financing mechanism Introduce competitive pressures to generation investment 15

16 Thank you 16