In my opinion, there is no better example of where demand energy policy is pivotal than in the KSA (Kingdom of Saudi Arabia).
In KSA, peak demand is expected to nearly triple from 44 GW in 2010, up to 121 GW, in 2035 (Source: ECRA 2010). This is, of course, with the actual demand patterns and expected growth.
The supply energy policy takes these predictions as valid and focuses in covering the expected demand. How is it planned in the KSA case? By building 41 GW solar plants and 21 GW of nuclear, geothermal and waste-to-energy (source: KACARE, Saudi Solar Energy forum 2012). The lead time for building the capacity (specially in the case of nuclear) is difficult to synchronize with the aggregate demand behavior, and there can be frictions. An example of supply energy policy going wrong is that of Spain, where current excess power generation capacity has been (mainly) a consequence of decreasing demand opposed to predicted growth.
However, if we take a look at the demand (source: Saudi HVAC confex), the HVAC represents more than 70% of electricity consumption.
Demand energy policy focuses, instead of building GWs of nuclear power to generate, transport, distribute and transform into cooling, in reducing the expected growth in demand. Solutions are building retrofits, HVAC efficiency improvements, renewable self-consumption, solar cooling, etc. Deferred investments in generating capacity are the best return on investment for these energy efficiency and demand response measures.
In fact, during the recent WEC (World Energy Congress), the SEC Eng. Ali Saleh Al Barrak, President and CEO , highlighted the building retrofit as offering the biggest opportunities. That’s not only true for KSA, Spain, again an example, has a great opportunity in building retrofits to improve energy efficiency and reactivate the building industry.
Moreover, a 2012 paper on efficiency measures, described the opportunity for the future of the KSA, both on supply and demand:
In short, both demand and supply policies have to be considered, but in my opinion, demand measures are more sustainable, more efficient, faster to deploy and have a better return on investment. We’ll see what Saudi does…