KS-2023-CO16-The-Surg沙特阿卜杜拉国王石油研究中心（KAPSARC）：利雅得人口激增对电力需求的影响

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Commentary

TheSurgeinRiyadh’sPopulation:

ElectricityDemandImplications

September2023

JeyhunIMikayilovandRyanAlYamani

ThecityofRiyadh,

thecapitaland

mostpopulouscity

oftheKingdom

ofSaudiArabia,

isundergoinga

makeovertobecome

aglobalmetropolis

Thesesubstantial

investmentsand

associatedeconomic

activitieshavedrawn

residentsfrom

bothotherpartsof

theKingdomand

abroad,contributing

tothecity’s

populationreaching

7.4millionin2022

Motivation

ThecityofRiyadh,thecapitalandmostpopulouscityofthe

KingdomofSaudiArabia,isundergoingamakeovertobecome

aglobalmetropolis.SaudiVision2030announcedawiderangeof

projectsinthecity,placingitonanacceleratedsustainabledevelopmentpathtowardbecomingaworld-leadingcityeconomy.Theseprojects

includeKingSalmanPark,theworld’slargesturbanpark(i.e.,seven

timesthesizeofLondon’sHydePark);RiyadhMetro,theworld’slargestsingle-phasepublictransportproject;andKingSalmanInternational

Airport,anaerotropolisandoneoftheworld’slargestairports.Another

exampleistheGreenRiyadhProject,whichplanstoboostthedaily

amountofrecycledwaterinthecityto1.7millionm3andusethiswater

toincreasethecity’scurrentgreencoveragepercapitaby16-foldby

planting7.5milliontrees(Vision2030,2016).Inaddition,thecityis

strategicallylocatedtobenefitfromforthcominggigaprojectsbythe

SaudiPublicInvestmentFund,includingtheQiddiyaproject,theworld’slargestentertainmentcity;theDerayahproject,aworld-classdestinationforcultureandheritage;andtheRoshnProject,anenormousresidentialdevelopment(Vision2030,2016).Thesesubstantialinvestmentsandassociatedeconomicactivitieshavedrawnresidentsfromboth

otherpartsoftheKingdomandabroad,contributingtothecity’s

populationreaching7.4millionin2022.However,thegovernment

projectsthatthecity’spopulationwillcontinuegrowingto15-20millionby2030(ArabianBusiness,2021).

Thisextensiveupgrowthofthecitywillrequireclosecooperationbetweengovernmentagenciesandpolicymakerstomeetthecity’sobjectivesand

addressanysurfacingchallenges.Onesuchchallengemightbeinstalled

capacityplanningfortheenergyrequiredtopowertheemerging,vibrant

cityeconomy.Thus,thisanalysisfocusesonthepotentialevolutionof

electricitydemanddrivenbytheexpectedincreaseinpopulation.Indoingso,exceptpopulationgrowth,thisanalysisassumesthatallotherelectricitydemanddriversfollowthesamehistoricaltrends.

Background:Riyadh’sPopulationand

ElectricityDemand

DuringtheestablishmentofmodernSaudiArabiain1932,thepopulationofRiyadhwasestimatedtobeonly27thousand(Al-Gabbani,1991),

anditseconomicactivitywasmodestanddependentprimarilyon

agricultureandlivestock.AppointedastheKingdom’scapital,thecity

hasexperiencedtransformationalgrowthinpopulationandeconomic

activityeversince.Afterthecountry’sestablishment,thepopulationof

Riyadhincreasedfourfoldoverthefollowing20years,estimatedtohaveexceeded110thousandresidentsin1950,asshowninFigure1(WorldPopulationReview,2023).ThepopulationdatainFigure1showthat

thisgrowthcontinuedinPhaseI,supportedbyKingSaud’sdecisiontorelocateexisting(atthetime)andupcominggovernmentagenciesto

Riyadh(Al-Hathloul,2017).DuringPhaseII(1965–1992),populationgrowthcontinuedatamuchhigherpace,attainingacumulativeannualgrowth

rate(CAGR)of14.7%.Thegrowthduringthisperiodwasremarkableandhadonlyafewparallelsworldwide(Al-Faleh,2005;Al-Hathloul,2017),

wherethedriversofthissignificantexpansionincludedtheoilboom,highbirthratesamongnationalsandthein-migrationofnationalsandexpats

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications2

(Al-Faleh,2005).Intheearly1990s,thepopulationcontinuedtogrowbut

atarelativelymoderaterate.Currently,thecityisestimatedtobethemost

populousinthecountry,withanapproximatepopulationof7.4million,

accountingformorethanone-fifthoftheKingdom’soverallpopulation

(WorldPopulationReview,2023).

Figure1.HistoricalpopulationofRiyadhdividedintogrowthphases.

Source:WorldPopulationReview,2023

Intermsofelectricityconsumptioninthecity,theofficialpublicdata

fromtheSaudiWaterandElectricityRegulatoryAuthority(WERA)divide

electricitydemandinSaudiArabiaintofourregions:central,western,

eastern,andsouthernregions.ThecentralregionconsistsofRiyadh,

Qassim,andHailProvinces,whereRiyadhProvinceaccountsfor80%

ofthepopulationinthisregion(SAMA,2023).WithinRiyadhProvince,

thecityofRiyadhaccountsfor82%oftheprovince’spopulation(SAMA,

2023;WorldPopulationReview,2023).Toprovideadiscussionthataligns

withtheWERA’sregionalclassification,thisanalysisisconductedonthe

centralregion.Indoingso,exceptforthecityofRiyadh,business-as-usual

(BAU)populationgrowth(i.e.,averagehistoricalgrowth)isassumedinthe

centralregion.

Thecentralregionconsumesapproximately30%oftheelectricityin

theentireKingdom.Basedonthedataforthelastthreeyears,themain

contributortothiselectricitydemandistheresidentialsector(52%),

followedbythecommercial(19%)andgovernment(15%)sectors.The

dataforthelastdecadeshowa3%averageannualgrowthinelectricity

consumedintheregion.Since1990,theregionhasexperienced

continuousgrowthinelectricitydemand,exceptduringtwoperiods:the

secondwavesofenergypricereformsin2018(-6%)and2019(-1.6%)

(SAMA,2023).

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications3

AssessmentApproach

Consequently,thisstudyutilizesMikayilovandDarandary’s(2023)

regionalelectricitydemandmodelforSaudiArabia.Thismodeluses

apartialequilibriumframework,expressingelectricitydemandasa

functionofincome,population,andregion-specificweightedelectricityprice.Inthisanalysis,themodelissimulatedunderthreescenariostoevaluatetheimpactofincrementalelectricitydemandduetoRiyadh’spopulationincrease.ThefirstscenariorepresentselectricitydemandwithBAUpopulationgrowth,whiletheothertwoscenariosuseback-castingfromthe2030populationexpectationsof15and20million,

respectively.Inallscenarios,thepopulationsofallotherpartsofthe

centralregionareassumedtohavefollowedthesamehistoricalaveragegrowthrateforthelast10years.Theabovementionedthreescenarios

aredescribedbelow.

•IntheBAUscenario,populationgrowthisassumedtofollowthat

oftheWorldPopulationReview(2023),attaininga1.6%population

increaseinthecityofRiyadhforthe2023–2030period.Inthecontextofthecentralregion,thisincreasewillleadtoanannualpopulation

growthof1.7%.

•Inthe15-millionscenario,startingin2023,thecityofRiyadh’sannualpopulationgrowthrateisassumedtobe9.0%,reaching15millionin

2030.Consequently,thisratecorrespondstoanannualpopulationgrowthof7.8%inthecentralregion.

Inthe20-millionscenario,toreach20millionin2030,thecityofRiyadh’sannualpopulationgrowthrateisassumedtobe13.0%

startingin2023,whichtranslatestoanannualpopulationgrowthof11.3%inthecentralregion.

ThepopulationprojectionsforRiyadhinFigure2areattainedbyutilizingthegrowthratesforthethreedescribedscenarios.

GiventhecurrentpopulationofRiyadh,theannounced2030populationgrowthexpectations(15–20million)indicatethatthecitywouldhave

toatleastdoubleitspopulationintheupcomingdecade.However,as

showninFigure1,thelevelofpopulationgrowthneededforRiyadhto

reach15–20millionby2030farexceedsitshistoricalgrowthlevels.

Whilesimilargrowthrateswereattainedinfast-growingcitiesworldwidebetween2000and2020,theyaremuchsmallerinsizeandthus

indicatesmallerincrementsofnewresidentsannually.Inthe15-millionscenario,however,Riyadhwouldwelcome(bybirthormigration)an

averageofapproximately900thousandnewresidentseachyearoverthecomingdecade.Whilethissituationwouldbeunparalleledeven

inlightofthefastest-growingcitiesintheworld,themagnitudeandspeedofRiyadh’stransformationarenothingshortofexceptional.

Thus,wefocushereonanalyzingtheelectricitydemandimplicationsinacasewheretheremarkableevolutionofthiscityleadstothe

projectedpopulation.

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications4

Figure2.ScenariosofRiyadh’spopulation,inmillionpersons.

Source:Authors’calculationsbasedonannouncedtargets

SimulationResultsandDiscussion

Itisfoundthatbased

UtilizingMikayilovandDarandary’s(2023)modelanddecomposition

onhistoricaldatafor

analysis(seeAng(2005,2015),amongothers),themarginalcontributionofeachadditionalpersontoelectricityconsumptioniscalculatedacross

thelasttenyears,as

years.Itisfoundthatbasedonhistoricaldataforthelasttenyears,

showninFigure3,

asshowninFigure3,oneadditionalpersoninthecentralregion’spopulationleads,onaverage,toamarginalincreaseof3.8MWh

oneadditional

intheamountofregionalelectricityconsumption.AsindicatedinFigure3,decompositionanalysesconcludethatthemarginal

personinthecentral

contributionofeachpersonhasgraduallydeclinedafterthefirstwaveofenergypricereformsin2016.Thisdeclinemightbetheresultofthereformstargetingenergyefficiencyimprovementsaswellasthe

region’spopulationleads,onaverage,

saturationofconsumptionbehavior.

toamarginal

Asdiscussedearlier,MikayilovandDarandary(2023)expresselectricity

increaseof3.8MWh

demandasafunctionofincomeandelectricitypricesinadditiontothepopulation.Tohaveagreaterunderstandingofthepotentialincrease

intheamountof

inelectricitydemand,forallscenarios,changesinthesefactorsareconsidered.Indoingso,thecentralregion’sGDP(i.e.,asaproxy

regionalelectricity

forincome)isassumedtohaveaconstant3%annualgrowthrate.

consumption

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications5

Figure3.Marginalelectricitydemand,inMWh,foranadditionalpersoninthecentralregion’spopulation

Source:Authors’calculationsbasedonMikayilovandDarandary’s(2023)model

Thesector-specificelectricitypricesareheldconstantat2022prices.

Theinflationimpactisalsoconsidered,havinganaverageannual2%CPIinflationovertheforecastperiod.Importantly,onewouldexpecttheGDP

growthlevelsinthe15-and20-millionscenariostobehigherthanthatin

theBAUscenario;however,theformeriskeptthesameasthelatterinthisanalysistounderstandtheimpactofpopulationgrowthontheisolationofotherfactors.Theconsequentdemandlevelsforthethreescenariosare

presentedinFigure4.

In2022,electricitydemandinthecentralregionwas99TWh(SAMA,

2023).AccordingtoFigure4,demandataleveldoublethatofcurrent

demandwouldoccuroverthecomingdecadeifRiyadhreachesevenits15-millionpopulationprojection.Moreover,theresultsfromFigure4showthatforthe20-millionscenariocase,demandin2030almosttriplesthe

currentconsumptionlevel.Undoubtedly,suchasubstantialpopulation

increasemeansadditionalelectricitydemand,whichconsequentlyraisesthequestionofgeneration/supplycapacity.Thisquestionisofgreat

importance,especiallyforthecentralregion,asatitscurrentconsumptionlevels,ithastorelyontransmissioninterconnectionwithotherregions

intheKingdom.Additionally,inlightoftheKingdom’sannounced

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications6

Figure4.Simulationresultsforthecentralregion

Source:Authors’calculations,basedonsimulations

environmentaltarget,specialconsiderationoftheexpectedgrowthinthe

centralregion’selectricitydemandcouldsupportthesuccessofongoing

effortstoreplaceliquidfuelswithrenewablesandnaturalgasintheenergy

generationmix.

Theassessmentofgenerationpotentialcanbeelaboratedconsidering

thedemandprojectionsinthisstudyandotherongoingreformsto

replaceliquidfuelswithrenewablesandnaturalgasintheenergy

mixforpowergeneration.Inaddition,asdecompositionanalyses

show,thecontributionofeachdrivertodemandmightchangeover

timeasaresultofpoliciesfocusedonefficiencyimprovements,social

awarenessoftheconsequencesofexcessiveconsumption,and

environmentalconcerns.

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications7

Conclusions

Tryingtodisentangle

Usingapartialequilibriumframework,thisstudyestimatestheelectricitydemandprojectionsbroughtaboutbythestrategythroughwhichRiyadh’s

onlytheimpactof

populationwillreach15and/or20millionin2030.ItisessentialtonotethatthisapproachneglectsthepotentialgrowthofRiyadh’spopulationdueto

populationfrom

migrationwithinthecentralregion.Tryingtodisentangleonlytheimpact

2023to2030,the

ofpopulationfrom2023to2030,theprojectionresultsconcludethatthe15-millionplanwoulddoublethecurrentelectricityconsumption

projectionresults

levelinthecity.Moreover,itisalsoconcludedthatthedemandforelectricityinthe20-millionpopulationtargetcaseneedstobetripled.

concludethatthe

Numerically,comparedtothecasewherethecurrentpoliciesremainas

15-millionplan

theyareand2030demandis130TWh,demandvaluesreach207TWhand267TWhinthe15-and20-millionpopulationcases,respectively.

woulddoublethe

Takingintoaccountthissubstantialincreaseinelectricitydemand,the

powersupplypotentialofRiyadhcouldbereassessedbyconsideringother

currentelectricity

fuelreplacementandenvironmentaltargets.

consumptionlevelin

Moreover,wediscoverthatbasedonhistoricalinformationforthelast

thecity

decade,oneadditionalpersoninthecentralregion’spopulationleads,on

average,toamarginalincreaseof3.8MWhinthelevelofregionalelectricityconsumption.Furthermore,itisalsofoundthatthecontributionofone

additionalpersontoelectricityconsumptiondemonstratesgraduallydeclining

behaviorafter2016.Thisdeclineseemstobetheresultoftheongoing

energypricereformstargetingefficiencyimprovementsandreductionin

theamountofunnecessaryenergyused.Thefindingsofthestudycouldbeutilizedfordemandandsupply-sidepolicyplanningpurposes.

TheSurgeinRiyadh’sPopulation:ElectricityDemandImplications8

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