Kingdom of Saudi Arabia

The Challenge

The Electricity and Cogeneration Regulatory Authority (ECRA) wished to advance the development of the district cooling sector in the Kingdom to reduce the pressure on electricity systems from growing cooling demand. The regulator also wanted to further involvement from the private sector. However, the sector was missing a policy and regulatory framework to define market participants’ roles, responsibilities and rights. IPA was commissioned to draft regulations to protect consumers while ensuring projects remained commercially viable.

Our Solution

Prior to creating draft regulations, IPA worked with ECRA to clarify the policy environment and objectives for these regulations. This included reviewing the broader government plans, such as Saudi’s Vision 2030, as well as outlining sector specific considerations for ECRA to discuss with the government. Using these principles, IPA presented ECRA with a range of policy options consistent with the policy environment. Drawing on our expertise and international best practice, we advised ECRA on our recommended option and the tools available to support and enforce the regulation. IPA helped ECRA understand the economic frameworks available ensure companies could earn the returns required to finance their operations while protecting consumers from inflated costs. We also produced guidance on the technical requirements for safe and reliable operation of a district cooling system. Throughout this process IPA drafted consultations and presented workshops on behalf of ECRA to ensure all potential market participants were able to engage and ensure stakeholder buy-in. ECRA embraced the draft economic and technical regulations and is currently working with industry on implementation of this framework. This includes strategies to overcome barriers to market entry and criteria to identify and fast track priority projects.