How a developer perceives the implications of the recently introduced self-consumption regulation concerning renewable energy systems in Saudi Arabia

The highly anticipated update to Saudi Arabia's Water & Electricity Authority (WERA) Regulatory Framework for Renewable Energy Generation for Self-Consumption V02/23 was published at the close of July this year, pending the release of an English version. However, this release came with unexpected changes that deflated some investor expectations.

This version complements the existing Regulatory Framework for Small-Scale Solar PV Systems (02/19, also known as Shamsi) and revises the criteria for Renewable Energy Generation Systems that range from over 1 kilowatt to a maximum of 30 megawatts.

Perhaps the most surprising aspect was the removal of the "virtual-net billing" arrangement, which was permissible under the prior version of the regulation (V01/22). This arrangement allowed Eligible Consumers to have a Renewable Energy Generation system connected to one location on the transmission system while generating solar energy and consuming it at another location within the same period. This setup permitted a Maximum Connected Capacity to be installed across various premises of the Eligible Consumer, provided it didn't surpass the Contracted Load of each premise or the combined Contracted Load of the Eligible Consumer when connected to the transmission grid.

The present regulation applies to facilities both connected to the grid and those operating off the grid. It restricts the utilization of electricity from renewable energy sources solely for self-consumption purposes, where both the generation and consumption occur within the same facility.

A notable addition to the previous regulation's requirement for a feasibility study is that the cost assessment, previously the responsibility of the Eligible Consumer, is now alleviated from their burden. The new version explicitly states that no preparatory or construction works for establishing the Renewable Energy Systems (including studies, planning, offering, and announcements) should commence prior to obtaining the necessary study license from WERA. The complete cost breakdown is provided in the regulation as follows:

Study request to connect a Renewable Energy Generation

• System capacity 1 to 4,000 (kW) - 1,500 Saudi Riyal
• System capacity 4,001 to 30,000 (kW) - 5,000 Saudi Riyal

Connecting Renewable Energy Generation Systems

• System capacity 1 to 4,000 (kW) - 15,000 Saudi Riyal
• System capacity 4,001 to 30,000 (kW) - 30,000 Saudi Riyal

Important information for Offtakers (Eligible Consumers)

• The facility must have legal possession rights for the installation of the Renewable Energy Generation.
• The maximum connected capacity at a single facility (on or off-grid) cannot exceed 30 megawatts.
• For grid-connected facilities, the installed capacity should not exceed the contracted load (TCL).
• Generation and consumption must occur at the same facility.
• The meter for electricity generated by the Renewable Energy Generation Systems Connection will be installed and maintained by the Service Provider, with costs covered by the Eligible Consumer.
• Net-Metering can be arranged for multiple consumption accounts under the same Eligible Consumer and Service Provider. Surplus energy exported to the grid will be recorded as a financial balance and carried forward to the next billing cycle.

Important information for Developers and Investors

• The self-consumption billing arrangement will be provided as long as the total aggregated capacity of the REG connected to the transmission grid under this arrangement doesn't exceed 3% of the KSA power system's peak load from the previous year. Expect annual updates from WERA.
• The term of validity of Power Purchase Agreements is 20 years, commencing from the date of signature, and can be extended to an additional period of 5 years, following mutual agreement between all parties.

The implementation of this new policy is expected by the end of this month and will establish a structured environment for developers, investors, consultants, and contractors. Local authorities are committed to ensuring a smooth implementation process and a transparent permitting procedure.