Saudi Arabia's Vision 2030: Black Swans for Saudi Arabia's Power Sector

Analysis

During the global financial crisis it became fashionable to identify so-called “Black Swans” - events that apparently came from nowhere often with devastating effect, although in hindsight their causal factors were often hiding in plain sight.

This article discusses a number of Black Swans which have implications for Saudi Arabia's Vision 2030 (the “Vision”), Saudi Arabia's fifteen year plan to wean itself from its current dependency on oil revenues. Before doing that, it also considers the socio-economic backdrop to Vision 2030.

The Oil Paradox

Saudi Arabia's consumption of its own oil and gas is growing at around 7% per year. Demand for power is especially high during the scorching heat (in some places well over 50C) of the summer months when power consumption increases significantly in order to run air conditioning but with significant regional variance. The very title of the 2011 Chatham House report “Burning Oil to Keep Cool” captures the essence of the problem. However, air conditioning is only a part of the energy challenge faced by the country.