SEC - Smart metering to lead to tariff increases

Measured consumption key to reducing demand, says SEC CEO Al Barrak.

Smart meters are instrumental for a smart grid, says SEC CEO Al Barrak.
Smart meters are instrumental for a smart grid, says SEC CEO Al Barrak.

 Smart metering will have to be rolled out across Saudi Arabia before tariffs for households are increased, said the head of the Saudi Electricity Company (SEC) on Tuesday.

The majority state-owned power and water provider increased tariffs to industrial and large commercial customers in July this year, and has introduced variable tariffs to encourage the use of power outside of peak demand hours.

Smart metering, which informs both seller and consumer of electricity about consumption almost in real time, has thus become a requirement for about 2,000 corporate users.

For tariff increases to become applicable to private customers, who currently enjoy subsidised rates, smart metering pilot programmes being rolled out in some cities would have to be extended to cover the entire country.

“We don’t want to face the consumer with a cost effective tariffs without giving him the tools to manage his consumption,” said Ali Saleh Al Barrak, the SEC’s president and CEO.

“We’ve made some pilot projects, a government quarter in Riyad is in the final stages today,” he added.

A roll out of smart metering is part of the first phase of the implementation of the smart grid, said Al Barrak, who spoke at the Smart Electricity World conference held in Dubai.

The CEO gave no precise timeline for the rollout, saying only that it will be completed in “a few years.”

The SEC, which is listed on the Saudi Stock Exchange (Tadawul), is keen to raise tariffs for all types of consumers to cover the costs of generating and distributing electricity, and has lobbied the government to this end.

“We are requesting for higher tariffs in general to meet increase cost of production,” said Al Barrak.

Demand in the Kingdom is soaring, with over half of the electricity consumed by households: “There is high residential consumption, 55 percent of our energy consumed by domestic use, and consumption per capita has been doubled over the last 15 years.”

“Unless we have a strong effort on the demand side, with population growth, demand will continue to grow,” said the CEO, adding: “We are looking for more energy preservation by giving the tools for the consumers.”

With demand to reach 77,000MW by 2020 according to company estimates, generation capacity will need to increase by 30,000MW over the next decade, said Al Barrak.
This increase in demand has prompted the SEC to embark on a massive spending programme.

“Over the next years investment of US$40 billion in generation expansion is needed, and $24 billion for expanding distribution, including some investment in making our system more intelligent and more smart,” he added.

The company is expecting higher sales of electricity for the fourth quarter compared to 2009, despite an anticipated slump of about 60 percent compared to the third quarter, the time of year when demand for electricity is highest, Al Barrak also revealed.


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