Shifting electricity use between seasons could save money and energy

In Saudi Arabia’s scorching summers, electricity use can be double what is consumed in winter. A KAPSARC study suggests that shifting a portion of industrial electricity use from summer to winter could bring significant financial savings and improve revenue from exports¹.

The Kingdom’s electricity use has grown 3.3% annually in the past decade. Managing demand growth could relieve the need to expand on generation, transmission, and distribution infrastructure, while still allowing for economic growth. The costs of electricity generation vary widely over seasons, with demand in summer being met with expensive liquid fuels to compensate for additional use. Power supply in winter months, on the other hand, runs on cheaper natural gas and requires the operation of fewer power plants. 

Benefits of load shifting

One way to adjust demand is load shifting, in which industries transfer some of their electricity use from peak to off-peak times. The team simulated the effects of load shifting across seasons in four major energy-intensive industries in Saudi Arabia: aluminium, chemicals, cement and steel. 

They found that shifting at least 15% of usage from peak to off-peak seasons could yield significant savings and reduce the need for oil and gas in power generation, freeing them for export. “There’s some real money that could be saved through managing industrial electricity demand in Saudi Arabia,” says Frank Felder, a visiting researcher at KAPSARC and a co-author of the study.

The high cost of electricity generation using crude oil makes load shifting an attractive option, with potential annual savings of up to $17.7 million at current fuel prices. Even greater savings of $239.4 million are projected when considering the opportunity cost of exporting the saved fuel at global prices, which is higher than the domestic subsidized price. This amounts to 8.1% of the total annual fuel cost for generating electricity. Shifting electricity use to winter could also lead to a reduction in carbon dioxide emissions of 584,000 tons per year.

Demand side management—where utilities encourage customers to modify their level and pattern of energy consumption to reduce peak demand by shifting their usage to off-peak times—is another strategy to enhance the overall efficiency and reliability of the grid. “Demand side management, if implemented efficiently, creates a win-win situation for the industry and the utility,” says Amro Elshurafa, Executive Director of the Utilities and Renewables Department at KAPSARC and co-author of the study.

Optimizing energy usage

Piloting load shifting in a real-world setting is an important next step, the study suggests. The implementation depends on factors like labor, storage, and customer requirements, which vary by industry. For example, a cement facility producing large loads of cement and chemicals must consider the effect on the workforce when shifting production. This then affects when products can be delivered to clients. The facility may also require additional storage for surplus produced during off-season. 

“Optimizing energy usage is an important part of the Kingdom’s energy future, alongside introducing new technologies, increasing renewables, and interconnecting electricity trade within the Gulf Cooperation Council and Middle East/North Africa regions,” says Felder.