Saudi Electricity Company (SEC)

Saudi Electricity’s has only gas and oil assets. Increases in electrical output from oil and gas sources between 2013 and 2018 drove up the company’s emissions intensity by 11%. Going forward, Saudi Electricity’s projected pathway for emissions intensity is set to continue diverging from its low-carbon pathway. Estimates of average asset lifetimes suggest that 64% of Saudi Electricity’s assets could reach retirement before 2033. However, without any commitment from the company not to extend the lifetime of these assets or to replace them with low-carbon capacity, it is assumed that these assets will be extended beyond their average lifetime through refurbishments or replacement with new fossil capacity. Anticipated ongoing fossil electricity generation out to 2033 results in a locked-in emissions budget far exceeding the company’s decarbonisation budget for absolute emissions. Saudi Electricity is one of the only companies assessed not to have any installed renewable capacity. If the company is to align with its decarbonisation pathway, it must establish an investment strategy that supports the rapid deployment of low-carbon technologies to replace its current oil and gas assets.

Saudi Electricity’s climate governance is non-existent. The company has failed to publicly acknowledge climate change, and so it does not have an individual or committee with responsibility for climate change. There is no reported expenditure on low-carbon technologies, and while the company will be obliged to comply with the Saudi Arabian government’s goal of 9.5 GW of renewable generation by 2023 through the National Renewable Energy Programme, it does not appear to have any planned future renewable capacity. Saudi Electricity should make significant effort to implement a low-carbon-aligned climate governance approach by drawing up a long-term transition plan, with embedded emissions reduction targets that have strategic oversight at the board level. This is necessary because as the low-carbon transition progresses, changes to regulation or the market will require the company to adapt its business in the short, medium and long term. It is better for the success of the company if these changes occur in a planned and controlled way.

Saudi Electricity has some activity in energy-as-a-service business models, such as operating fibre optic networks through its subsidiary Dawiyat and energy monitoring through smart meters. This is a positive sign. However, based on Saudi Electricity’s current electricity mix, these energy-as-a-service activities only facilitate the management of fossil-generated electricity. The contribution of these new business models to the low-carbon transition will not be meaningful until they are supported by low-carbon electricity.

Saudi Electricity has not publicly acknowledged climate change, and as such it has not made any public climate commitments. As a state-owned monopoly, however, the company is involved in Saudi Arabia 2030, which sets a target of 9.5 GW of renewable generation by 2023 through the National Renewable Energy Programme.

Saudi Electricity has not set out a road map for the company to take towards low-carbon alignment.

In 2018, Saudi Electricity’s installed capacity was composed entirely of gas and oil assets. The company does not have any renewable capacity. No commitments have been made regarding a fossil fuel phase-out.

Saudi Electricity’s emissions intensity has risen by 11% in recent years because of an increase in electrical output from oil- and gas-fired generation.

With a focus still entirely on fossil fuels, Saudi Electricity does not appear concerned with climate change issues. Significant internal efforts will be required if the company is to mitigate the risk that the low-carbon transition currently poses to its business.