Accepted Manuscript

Evaluation of Building Energy Efficiency Investment Options for the Kingdom of

Saudi Arabia

Moncef Krarti, Kankana Dubey, Nicholas Howarth

PII: S0360-5442(17)30841-1

DOI: 10.1016/j.energy.2017.05.084

Reference: EGY 10892

To appear in: Energy

Received Date: 28 December 2016

Revised Date: 11 May 2017

Accepted Date: 13 May 2017

Please cite this article as: Moncef Krarti, Kankana Dubey, Nicholas Howarth, Evaluation of Building
Energy Efficiency Investment Options for the Kingdom of Saudi Arabia, Energy (2017), doi: 10.1016
/j.energy.2017.05.084

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 ACCEPTED MANUSCRIPT

Evaluation of Building Energy Efficiency Investment Options in the Kingdom of Saudi Arabia

Highlights

Benefits of energy efficiency programs for KSA new and existing buildings are evaluated.
Optimization based analysis has been used in the analysis using a wide range of technologies.
Significant benefits can incur form large scale building energy retrofit programs.
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Evaluation of Building Energy Efficiency Investment Options for the Kingdom of Saudi Arabia

Moncef Krartia,b,*, PhD, PE, LEED

Kankana Dubeyb
and Nicholas Howarthb

a Building Systems Program, University of Colorado, Boulder, CO USA

b KAPSARC, Riyadh, KSA

Abstract:
In this paper, economic and environmental impacts of energy efficiency programs associated with new and
existing buildings are evaluated for the Kingdom of Saudi Arabia (KSA). In particular, the analysis
considers optimized designs for new buildings as well as different energy retrofit programs for existing
buildings are considered in the bottom-up analysis using archetypical building energy models located in
five sites representing a wide range of KSA climates. In particular, the analysis presented in this paper
provides specific estimations to the extent of the energy and demand savings that could be achieved in the
building sector even under highly subsidized energy prices. It is found that even a basic energy retrofit
program using low-cost energy efficiency measures implemented to the existing building stock can provide
significant economic and environmental benefits. Indeed, a level 1 energy efficiency retrofit program
targeting only the existing residential building stock could reduce electricity consumption by 10,054
GWh/year and peak demand by 2,290 MW and carbon emission by 7.611 million tons/year.

Keywords:

Carbon Emissions; Buildings; Energy Efficiency; Life Cycle Costs; Optimal Designs; Energy Retrofits

*Correspondent Author: krarti@colorado.edu

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Nomenclature

Acronyms:
CDD: Cooling Degree Days
CFL: Compact Fluorescent Lamp
COP: Coefficient of Performance
EEM: Energy Efficiency Measure
EER: Electrical Efficiency Ratio
ESCO: Energy Service Company
GCC: Gulf Cooperation Council
GDP: Gross Domestic Product
HDD: Heating Degree Days
HVAC: Heating, Ventilating, and Air Conditioning
KSA: Kingdom of Saudi Arabia
LCC: Life Cycle Cost
MENA: Middle East and North Africa
NZEB: Net Zero Energy Building
PV: Photovoltaic
SASO: Saudi Arabia Standard Organization
SBC: Saudi Building Code
SEC: Saudi Electricity Company
SEEC : Saudi Energy Efficiency Center
SEEP: Saudi Energy Efficiency Program
WWR: Window to Wall Ratio

Symbols
LCC: Life Cycle Cost [expressed in $]
N: Life Period [defined in years]
rd: Annual Discount Rate [provided in %]
RSI: Thermal resistance of building matrials including insulation [expressed in
m2.K/W]
USPW: Uniform Series Present Worth factor [defined by Equation (2) and expressed
in years]

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1. Introduction

Saudi Arabian government considers that it is a strategic imperative for the Kingdom that energy efficiency

becomes a major topic for all decisions related to an increase in demand for fuel and feedstock (OEF,

2014). Several energy efficiency standards and programs have been introduced to the Saudi building sector

to lower its energy consumption. In particular, the National Energy Efficiency Program (NEEP) has been

established at King Abdulaziz City for Science and Technology (KACST) to support research activities and

provide recommendations to meet the countrys goal of rational energy consumption patterns. Specifically,

the Kingdom of Saudi Arabia (KSA) is committed as part of its Vision 2030 to reduce its carbon emissions

by 130 million tons by 2030 relative to business as usual by promoting energy efficiency and renewable

energy technologies (Mitchell and Mitchell, 2016). Moreover, KSA government has established the Saudi

Energy Efficiency Center (SEEC) in 2010 in order to promote energy efficiency for all sectors including

buildings. The main focus of SEEC is to reduce energy demand through audits, load management,

regulation and education. The country is currently developing a Mandatory Energy Efficiency Plan with

specific energy conservation targets (Asif, 2015).

However, the significant low energy prices remain a major obstacle for the private sector to invest in energy

efficiency measures (Nachet and Aoun, 2015). In this paper, a bottom-up evaluation of several energy

efficiency programs for both new and existing buildings is carried out specifically to assess the potential in

reducing energy consumption, peak demand, and carbon emissions associated with the KSA building

sector. First, the current building energy efficiency policies in KSA are outlined. Then, the analysis

approach for assessing the impact various energy efficiency programs is briefly described. Finally, the

analysis results are presented and discussed.

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2. Overview of Building Energy Sector

Over the last decade, KSA has experienced a rapid increase in its domestic energy consumption as noted in

Figure 1. In particular, energy consumed by both the residential and commercial buildings increased

noticeably in the last five years with an annual growth rate of almost 10%. As a result, this growth has

significantly increased KSA requirements for electrical power generation to meet the national

needs especially in the growing residential sector (SEC, 2015). Indeed, the building sector makes up

76% of the total electricity demand in the Kingdom as illustrated in Figure 2 when accounting for

residential, commercial, and governmental buildings. In particular, residential buildings consume almost

half (i.e., 49%) of the generated electricity in KSA.

Figure 3 illustrates how the monthly total electricity consumption in KSA follows closely average ambient

temperatures based on data recorded during 2014. The strong correlation between the electricity

consumption and the ambient temperature clearly reflects the importance of air-conditioning in the summer

months when electrical demand is double levels in winter.

Figure 4 shows the annual electrical peak demand and power generation capacity and the annual growth in

total electricity use consumed and generated from 2000 to 2014. In 2014, KSA has a combined electrical

generation capacity of 65,506 MW with a peak demand of 56547 MW (SEC, 2015). The average annual

growth rate of the electrical peak demand over the period of 2000-2014 is 7.1%. The difference between

the generated and consumed electrical energy corresponds mostly to the transmission and distribution

losses. The projections for the annual electrical generating capacity and net electricity consumed in KSA

are predicted to be respectively, 94.9 GW and 384.5 TWh by 2024 (BMI, 2014).

Based on the Ministry of Water and Electricity statistics, the number of customers connected to the KSA

electrical grid was around 7,142,816 in 2013 as illustrated in Figure 5 (MOMRA, 2014). The vast majority

of these customers are residential dwellings representing 79% of the total customers. The importance of the

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residential building sector is also reflected in the number of the new construction permits approved during

2014 as show

Electricity, like most energy resources in the region is sold at a low price. Figure 7 shows the current

electricity prices for both residential and non-residential customers in KSA both before and after the recent

energy price reforms. As illustrated in Figure 7, the electricity prices vary with the consumption levels

following a block rate structure. Average electricity prices are estimated to be $0.0479/kWh based on

current production costs (ECRA, 2015). However, if international oil prices were used as a benchmark for

utility fuel input costs, then the cost of production would be $0.1678/kWh. For 2013, International

Monetary Fund (IMF) estimated that the total energy subsidies amount to $128.9 Billion or 13.6% of the

Saudi GDP including electricity subsidies of $19.1 Billion (IMF, 2015). Based on 2013 electricity

consumption in KSA of 256,688 GWh, the IMFs estimate of energy subsidies amount to about $0.07/kWh.

Based on the current KSA electricity rate schedule as shown in Figure 7, the average electricity price can

be estimated to be $0.05 per kWh for a residential customer having a monthly energy consumption of 5000

kWh. While low energy prices combined with the extremely high ambient temperatures of the region are

key drivers behind the growth of domestic energy consumption, other important factors are population

growth, increasing wealth and energy efficiency. These factors can be assessed through a Kaya

decomposition of building electrical consumption shown in Figure 8 (Andreoni and Galmarini, 2012;

OMahony, 2013; Lima et al, 2016). In this study, the Kaya decomposition analysis is performed based on

available data to determine factors that have direct impacts on the overall KSA building electrical

consumption.

In particular, the Kaya decomposition analysis outlined in Figure 8 suggests that both population growth

and increasing per capital incomes have played a leading role in driving forward the energy consumption

of buildings in the Kingdom. In most years, the energy intensity of the economy has actually increased,

suggesting that there is a slightly negative energy efficiency effect, or at best only a very weak energy

efficiency signal.

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3. Current Building Energy Policies

As early as 2007, KSA has developed one of the most comprehensive building energy efficiency codes in

the GCC region. Indeed, the Saudi Building Code accounts for all the building energy systems including

the building envelope, mechanical systems, electrical systems, lighting systems, domestic water heating

systems (SBC, 2007). The code has both prescriptive and performance compliance options. The

performance compliance approach may require simulation and modeling analysis of the proposed building

design to compare its overall performance to a baseline building energy model meeting the prescriptive

code requirements. Initially, the building energy efficiency code was introduced on a voluntary basis in

2009 and then was made mandatory in 2010 for the government buildings but is not yet enforced for all

other buildings. It should be noted that the code itself has been developed and finalized in 2007 based on

the International Energy Conservation Code of 2003 and ASHRAE standard 90.1 of 2001. Since 2014, the

Saudi government has started to require mandatory installation of thermal insulation for walls and roofs for

all new buildings as one condition to have electrical service connection with the Saudi Electricity Company

(Asif, 2015). However, enforcing this regulation is still a challenge in KSA (Asif, 2015). For instance, it

has been reported that it was difficult to perform energy audits within residential buildings since Saudi

value their privacy. Moreover, KSA lacks sufficient facilities and institutional to test and evaluate all

imported products such as lighting fixtures and air conditioning systems (Asif, 2015).

It should be noted that KSA has already introduced energy efficiency regulations and mandatory labeling

for refrigerators and freezers, washing machines, and air conditioners. Minimum energy performance

standards were introduced for room air conditioners in 2001 and have been regularly updated. Table 1

illustrates the regulations for refrigerators, freezers, and air conditioners set by the Saudi Arabia Standard

Organization (SASO, 2005, 2006, 2007). Specifically, Table 1 provides energy performance thresholds for

various star rating levels expressed in energy efficiency ratio (EER) for air conditioners, electrical energy

consumption per load for washing machines, and percent reduction relative to baseline energy use for

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refrigerators and freezers. Currently, regulations are being prepared by Saudi Energy Efficiency Program

(SEEP) to focus on the phase out of the least efficient light sources in residential and commercial buildings

(Asif, 2015).

4. Analysis of Energy Efficiency Options for KSA Buildings

4.1 Methodology Approach

In order to assess the impact of specific energy efficiency measures and technologies on the building energy

performance, a bottom-up engineering modeling analysis is highly recommended (Swan and Ugursal,

2009). Several studies of large-scale building energy efficiency programs for other countries have utilized

this bottom-up approach (Corrado and Ballarini, 2016; Dascalaki et al. 2013, 2016; Mata et al., 2013; Mata

et al., 2015; Labanca et al., 2015). In this study, a simulation environment has been developed to perform

the bottom-up analysis of various energy efficiency technologies. In particular, the developed simulation

environment integrates a detailed whole-building energy building simulation, EnergyPlus with a sequential

search optimization technique (Ihm and Krarti, 2014). The optimization based analysis to design large-scale

energy efficiency programs for both new and existing buildings has been considered only for few reported

cases (Krarti, 2015). A series of parametric analyses is used first to assess the most effective single energy

efficiency measures that can significantly reduce annual energy consumption and peak demand for new and

existing buildings. Then, optimization analyses are carried out to determine the best combinations of energy

efficiency measures to minimize life cycle costs while reducing the source energy use for new and existing

buildings. Figure 9 illustrates a flowchart for the simulation environment as well as its components.

In this study, a series of energy efficiency measures for both existing and new buildings has been evaluated

using detailed simulation analysis. The evaluation includes potential impacts on energy consumption,

electrical peak demand, and carbon emissions. Moreover, a life cycle cost analysis is carried out to

determine the optimal set of energy efficiency measures that can be implemented to improve the energy

performance of buildings. The analysis considers archetypical residential buildings and five KSA sites to

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account for the wide variation in climatic conditions (Alaidroos and Krarti, 2015). The optimization

analysis is based on a sequential search technique that has been applied for a wide range of applications

including designing net-zero energy buildings and retrofitting existing buildings (Krarti, 2011; Ihm and

Krarti, 2012; Krarti and Ihm, 2014).

Table 2 illustrates the climatic conditions using both cooling and heating degree-days for five Saudi cities

selected in this study (Krarti, 2012). Riyadh is located in the center of the desert and has dry and hot climate.

Jeddah is located in the west coast while Dhahran is in the east coast with humid and hot climates. Tabuk

is in the north with some cold winter days, and Abha is in the southwest with an elevation of about 10,000

feet above sea level with rather mild winters and summers.

The simulation environment and the analysis approach is applied to several building energy models and

climatic conditions. For this study, the analysis is mainly considered and discussed for residential buildings

and five KSA heavily populated cities.

4.2 Energy Use for Baseline Building Models

The energy end-use for an archetypical home in the five KSA representative climates was estimated using

building simulation models (Alaidroos and Krarti, 2010). The results from this simulation analysis are listed

in Figure 10. The modeling results have been verified against reported measured data (Al-Mofeez, 2007;

Bahel, 1985). As expected, space cooling is the main end-use of the total annual electricity consumption

for an archetypical KSA villa. Indeed, air conditioning represents 66% and 71% of the total villa electricity

consumption respectively in Riyadh and Jeddah. Figure 11 compares the total villa annual electricity

consumption among the five KSA sites indicating that the hot and humid climate of Jeddah results in the

highest energy consumption for the archetypical residential building. The relatively mild climate of Abha

results in the lowest energy consumption for the villa. The analysis results of Figure 11 also indicate that

no space heating is needed for the villa when it is located in Jeddah. However, heating may be required in

other sites especially in Tabuk to maintain acceptable indoor thermal comfort.

4.3 Parametric Analysis Results

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The impact of several design and operating measures on the annual energy consumption as well as electrical

peak demand is evaluated in this study using a comprehensive parametric analysis (Alaidroos and Krarti,

2015). In particular, over fifty (50) different energy efficiency options are considered including adding

thermal insulation to the building envelope, reducing infiltration rates, installing energy efficient lighting

fixtures, appliances, and air conditioning systems, as well as changing operating and control strategies.

Figure 12 shows the percent reduction in annual energy consumption and actual electrical peak demand

associated with some design and operating measures considered for the baseline villa model located in

Riyadh. In particular, Figure 12 indicates that installing an energy efficient air conditioning system has the

most significant impact reducing annual energy consumption by 36% and electricity peak demand by 37%

from the baseline values (Alaidroos and Krarti, 2015). The measure that has the second most impact is

adding wall insulation to reduce energy consumption and adding roof insulation to lower peak demand.

Generally, the measures that can reduce annual energy consumption are also effective in reducing electrical

peak demand.

As illustrated in Figure 12, the addition of thermal insulation to both the walls and roof can achieve 25%

savings in total energy consumption and electrical peak demand. As noted earlier, thermal insulation

requirements for exterior walls and roofs have been made mandatory for all new KSA buildings in 2014.

The impact of well insulated walls and roofs has been evaluated and documented in several reported studies

for various KSA building types. Reductions of annual energy consumption and electrical peak demand

ranging from 15% to 35% have been reported (Al-Homoud, 1997; Al-Sanea, 2002; Al-Sanea and Zedan,

2011; Alaidroos and Krarti, 2015; Mujeebu, and Alshamrani, 2016).

Note that other options can be considered in case of retrofitting existing buildings where cost-effective and

easy to achieve targets of 10% or 25% energy use savings are set. Table 3 provides for three energy

efficiency options and implementation cost estimates for three levels of retrofitting residential buildings in

KSA based on the results of the parametric analysis.

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4.4 Optimization Analysis Results

Typical results of the optimization analysis using the sequential search technique are illustrated by the

Pareto graph of Figure 13 showing the life cycle cost as a function of percent in annual source energy use

savings for the energy efficiency measures considered in the analysis. The Pareto diagram of Figure 13(a)

shows the typical cost optimal path to design and retrofit high energy performance up to net zero-energy

buildings. In addition to the baseline new or existing building condition, four options for designing or

retrofitting buildings can be identified as part of the optimal path towards achieving net-zero energy

building model as noted in Figure 13(a). These options include:

The optimal energy efficient model, depicted in Figure 13(a) at the bottom of the optimal path, has the

lowest life cycle costs while providing some energy savings due to the application of the optimal

package of energy efficiency measures.

The switchover energy model is associated with the package of energy efficiency measures that

achieves the maximum energy savings obtained without using any PV system. With this option, using

PV becomes more cost effective than implementing any additional EEMs.

The neutral energy model corresponds to the combined package switchover EEMs and a roof-mounted

PV array selected so the total LCC is the same as the baseline LCC.

The net-zero energy building or NZEB energy model presents the option combining both EEMs and

PV panels with the annual building energy consumption is entirely compensated by the PV electricity

production.

The details of the optimization methodology and the assumptions for the costs of various energy efficiency

measures are discussed in Alaidroos and Krarti (2015). Figure 13(b) shows an example of the optimization

results obtained for a residential building located in Riyadh with each dot representing a building designed

or retrofitted with a set of EEMs.

Table 4 illustrates the results of the sequential search optimization analysis when electricity prices of 0.38

RS/kWh ($0.10/kWh) are considered to account for both production and distribution costs (ECRA, 1025;

IMF, 2015; Alaidroos and Krarti, 2015). In particular, the results of the optimization analysis summarized

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in Table 4 indicate that optimal cost-effective residential building designs can achieve significant reduction

in total energy consumption and in peak electrical demand for the five KSA sites considered in the analysis.

For instance, a potential cost-effective reduction of 63% in total electricity consumption and of 68.3% on

peak electrical demand can be obtained for residential buildings located in Riyadh. In Abha, with milder

climate, potential cost-effective energy reductions of 52% in electricity consumption and 67% in peak

electrical demand can be achieved using optimal energy efficiency design for residential buildings. As

indicated in Table 4, a wide range of energy efficiency measures are included in the modeled optimal

designs for all sites such wall and roof insulation, high efficiency air conditioning systems and lighting

systems, and higher cooling set-points.

5. Energy Use and Peak Demand Reductions for New Buildings

The impact of the thermal insulation requirements on the entire new Saudi building stock can be estimated

using the same bottom-up analysis carried by Krarti (2015). The results of the analysis of the impact of

enforcing a thermal insulation regulation for all new buildings are summarized in Table 5. The carbon

emissions for generating electricity within KSA are estimated to be 0.757 kgCO2/kWh (IEA, 2015). The

power generated in KSA is based only on fossil fuels including oil and gas (Al-Garni, 2016). The cost of

constructing new power plants in the GCC region is estimated to be $1700/kW (ECRA, 2015). The

economic benefits of the energy efficiency interventions are estimated using the actual price of 0.38

RS/kWh for generating and distributing electricity (i.e., $0.10/kWh) rather than the subsidized tariffs

outlined in Figure 7.

As indicated in Table 5, the addition of thermal insulation to exterior walls and roofs for all new buildings

can achieve reductions of 755 GWh/year in electricity consumption, 172 MW reduction in electrical peak

demand, and 571 103 Tons/year reduction in power sector carbon emissions.

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Using the results of the optimization analysis outlined in Table 4, a more stringent building energy

efficiency code can be developed and adopted in KSA for all new residential and commercial buildings.

The impact of this stringent energy efficiency code applied to the new building stock can be estimated and

is summarized in Table 6. The analysis accounts for the climatic variations within KSA as well as the

building stock statistics in Figures 5 and 6. As shown in Table 6, the enforcement of a more stringent

building energy efficiency code for all new buildings could decrease the electricity consumption by 1751

GWh/year, electrical peak demand by 468 MW, and carbon emissions by 1,326 103 Tons/year.

6. Energy Use and Peak Demand Reductions for Existing Buildings

Three levels of energy efficiency building retrofits are suggested for KSA as noted in Table 3 with different

economic and environmental benefits. Some building retrofit programs implemented in other countries have

considered three levels of energy audits and retrofits to provide some flexibility on the required investments

(ASHRAE, 2011; DOE, 2011; Hong et al., 2015; Krarti, 2011):

Level-1 of energy efficiency retrofit: in this case, low-cost energy efficiency measures are

implemented including installation of programmable thermostat, use of CFL or LED lighting, and

weatherization of building shell to reduce air infiltration (Krarti, 2012). The estimated savings from

a level-1 retrofit program are 8% for all building types based on documented studies and case

studies reported for residential, commercial, and governmental buildings (Al-Mofeez, 2007; Krarti,

2015).

Level-2 of energy efficiency retrofit: a standard energy audit is required for this program in order

to improve the building envelope components to meet at least the current energy efficiency code as

well as use of energy efficient air-conditioning systems and appliances. Based the existing

literature, average savings of 23% can be achieved for level-2 retrofits for all building types (Bahel,

1985; Krarti, 2012, Mujeebu, 2016).

Level-3 of energy efficiency retrofit: detailed energy audit is required to perform deep retrofit of

existing buildings. In addition to the measures noted for level-1 and level-2 programs, several other

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energy efficiency measures can be considered including window replacement, air conditioning

system replacement, use of variable speed drives, and installation of daylighting control systems.

While, deep retrofits are typically costly, they are typically linked with architectural refits to

minimize costs, but can provide significant energy use savings exceeding 50% as noted in few case

studies (Krarti and Ihm, 2014; Zhou et al., 2016).

It should be noted that the savings expected from the various energy retrofit levels as noted above and as

estimated in Table 6 are rather conservative compared to those obtained through the optimization analysis

as summarized in Table 4. These lower estimates are considered to account for behavioral variations

including any rebound effects (Majcen et al. 2013 and Jabobsen et al., 2013). The impacts of the behavioral

changes in KSA absent of any significant increases in energy prices are expected to be minimal (Borenstein,

2013). While some studies of implemented large-scale energy efficiency programs in other countries have

indicated that the actual energy savings from building retrofits are generally lower than those predicted by

modeling analysis due mainly to occupant behaviors (Geller, 2007; Vringer et al., 2016; Zha et al., 2016),

other studies have shown that refurbishing building energy systems can achieve significant savings as high

as 57% (Aste et al., 2016; Hou et al., 2016; Zhou et al., 2016). Therefore, the threshold of 50% savings

considered for deep retrofits (i.e., level-3) can be potentially achieved especially for KSA existing building

stock as documented for some specific case studies (Bahel, 1985; Iqbal and Al-Homoud, 2007; Al-Mofeez,

2007).

Table 7 summarizes the annual energy use and electrical peak demand savings that originate from two

sources:

Using less fuel to generate electricity; and

The peak demand reductions associated with avoided demand for new transmission and distribution

capacity of new power plants.

As might be expected, higher benefits can be achieved from level-2 and level-3 programs compared to

Level-1. However, these programs require higher investments. The benefits are significantly higher for the

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residential buildings than for commercial or governmental buildings for any retrofit level. Indeed, 50% of

the benefits can be achieved by solely retrofitting KSA residential buildings.

7. Impacts of Energy Efficiency Program Implementation

7.1. Energy Demand Reduction

According to Asif (2015) energy efficiency program implementation, rather than further tightening

standards per se, is the main challenge in capturing the benefits from new energy efficiency investments.

Asif points to regional buildings surveys and notes that, despite strong enforcement efforts by authorities,

there are still non-compliant air conditioners in the market and a large number within the existing buildings

stock. Achieving full implementation of announced policies therefore requires dedicated and realistic

institutional support policies in the areas of energy auditing and management. Similar and other social,

economic, legal, and institutional challenges and barriers to building energy efficiency programs have been

reported for other countries (Hong and Yan, 2015; Luong, 2015; Sahoo et al, 2016; Zhang and Wang, 2013).

In general, strong commitment and involvement by the governments are recommended to ensure the success

of implementing large scale energy efficiency programs especially in the residential building sector

(Labanca et al., 2015).

Figures 14 through 17 illustrate the impacts of implementing various energy efficiency programs for both

new and existing buildings on future electricity consumption and peak demand. Specifically, the following

programs are compared to the baseline business as usual (BAU) scenario:

1. Implementation and enforcement of the existing building energy efficiency code for new

construction. Both the current code and a performance based code (more stringent) are modelled

(Figure 14);

2. Implementation of energy retrofit programs including levels 1, 2, and 3 for only existing residential

buildings (Figure 15);

3. Implementation of energy retrofit programs including levels 1, 2, and 3 for the entire existing

building stock (Figure 16);

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4. Implementation of a performance based building energy efficiency code combined with energy

retrofit programs for the entire new and existing building stocks (Figure 17).

In estimating future electrical load projections, it is assumed that:

The construction of new buildings will continue at a steady annual rate of 4%;

The building energy efficiency code is fully enforced starting in 2015; and

The retrofit programs are implemented over a period of 10 years starting with industry capacity

building in 2017, and a ramp up of retrofits over 5 years so that about 10% of the existing building

stock is retrofitted on annual basis.1

As indicated in the profiles of Figures 14 through 17, the implementation of only new building energy

efficiency interventions reduces energy consumption and peak demand slowly as the building stock is

replaced by new construction over time. On the other hand, the energy retrofit programs for the existing

building stock have significant impacts on both energy consumption and peak demand during the 10-year

implementation period. The highest impact scenario for reducing the energy use and peak demand would

be (i) to implement a more stringent building energy efficiency code for new buildings and (ii) to retrofit

over a 10-year span the entire existing building stock. Figure 17 shows that there is a significant potential

saving of both energy consumption and peak demand especially when Level-3 energy retrofit program is

implemented during a period of 10 years and new buildings are constructed using a stringent code.

In this fourth scenario, by 2030 the total KSA annual electricity energy consumption could be reduced by

up to 27% from a projected 470,000 GWh per year under the baseline scenario to 340,000 GWh per year,

and electrical peak demand could be decreased by up to 30% from a projected 95,000 MW under the

baseline case to 65,000 MW.

7.2 Cost-Effectiveness Analysis

1 A more aggressive retrofit program can be implemented during a period of 10 years if sufficient financial support is allocated. Less aggressive

retrofit programs can also be considered with a period extending over 20 or even 30 years.

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The cost of the implementation for each level of building energy retrofit depends on several factors

including the building size and the physical conditions of the building energy systems. Based on various

sources for the cost of labor and materials in KSA, the average costs of completing energy retrofit for

buildings are estimated as noted in Table 8 (Krarti, 2011; AECOM, 2013; Krarti and Ihm, 2014; and

Alaidroos and Krarti, 2015). It should be noted that the analysis ignores the additional non-energy benefits

that can incur from energy efficiency improvements of buildings (Hyland, 201; Skumtaz, 2015). As

buildings in the others category are made up of hospitals and mosques, it is assumed that the costs for

energy retrofits of these facilities are the same as those considered for the governmental buildings.

Based on 2013 data, a retrofit of the entire KSA building stock would require investments of $10 Billion,

$104 Billion, and $207 Billion for Level-1, Level-2, and Level-3 retrofits respectively. While significant

sums, these investments are not considered to be exceptional amounts. For instance, the KSA government

has allocated SAR 969 billion ($258 billion) to real estate in its current targeted investment plan (2015-

2019) as part of its Comprehensive growth strategy, tabled at the G20 Summit in Brisbane in 2014.

The cost benefit analysis results for the three buildings energy retrofits programs are summarized in Tables

9 and 10 when the government provides all the required investments. Since the cost-effectiveness of the

programs depends largely on the estimated avoided costs for electricity consumption, two scenarios are

considered in the analysis:

1. The cost of electricity at $0.0479/kWh (i.e., electricity cost of production in KSA); and

2. Cost of electricity at $0.1678/kWh (i.e., opportunity electricity prices).

The cost of constructing new power plants in KSA is taken to be $1700/kW (ECRA, 2015). It should be

Based on the electricity costs considered, implementation of retrofit level-1 program for the entire existing

building stock is highly cost-effective especially when the opportunity electricity prices (i.e., $0.1679/kWh)

are considered. The other retrofit programs (i.e., levels 2 and 3) applied to all existing buildings can be cost

effective only for the opportunity electricity prices.

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The residential building stock offers the most cost effective investment options with level-1 retrofit offering

a net benefit to even the private investor when production electricity costs of $0.0479/kWh are considered.

For the governments perspective, a level-1 retrofit program does not effectively require any net outlay

since it provides sufficient savings from the reduction in electricity peak demand to avoid investing in

additional power plants.

For the residential buildings, level-2 and level-3 retrofit programs have a payback period of 4.6 years and

4.0 years, respectively when opportunity electricity costs are considered. Figure 18 illustrates the annual

variation of the net present value of the investments in the three retrofit levels for the existing KSA

residential building stock when the production electricity costs are considered. The implementation cost

for level-3 retrofit program for the entire Saudi residential building stock is estimated to be $56.730 Billion.

As a reference, when oil prices were high and the IMF estimated the implicit subsidy based on the

opportunity cost of oil consumed domestically at $128.9 Billion (IMF, 2015). Thus, investment in a large

scale retrofit program would have represented a substantial benefit to the Saudi society especially when oil

prices are high.

7.3 Carbon reduction benefits

Tables 11 provides estimates for the annual CO2 emissions reductions for various energy efficiency

programs considered in this analysis for both new and existing buildings. The carbon emissions for

generating electricity within KSA is taken to be 0.757 kgCO2/kWh (IEA, 2015).

7.4 Job creation benefits

Another major benefit of a large scale energy efficiency investment program is its potential to create new

jobs. The direct effects for retrofitting buildings include jobs needed to implement the energy efficiency

measures while the indirect effects are associated with the jobs needed to produce and supply energy

efficiency equipment and materials. Most of the jobs created in building retrofits are in the construction and

manufacturing industries with a wide range of pay level and technical specialization including electricians,

HVAC technicians, insulation installers, energy auditors, building inspectors, and construction managers.

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Using the job creation model considered in the analysis of Krarti (2015), up to 246,780 new jobs can be

created per year when the existing building stock is retrofitted during a 10-year period using Level-3

program in KSA as shown in Table 12. It should be noted that retrofitting commercial buildings can

generate significantly more jobs than in the residential sector regardless of the retrofit level.

8 Summary and Conclusions

The main findings of the analysis presented in this paper indicate that improving the energy efficiency of

the building stock in KSA has several benefits with the reduction in electricity utilization and associated

primary fuel consumption, the decrease in electrical peak demand and associated development of new

power generation plants, the elimination of significant carbon emissions and associated improvement in

environmental conditions, as well as the creation of a significant number of employment opportunities.

Specifically, it is found that:

Given the low electricity prices in Saudi Arabia, it makes little sense for households and other

private organizations to invest in energy efficiency. The subsidies for the energy prices have to be

reduced in order for building owners and/or operators to cost-effectively invest in energy

efficiency.

When the economic benefits from avoided fuel consumption and reduced need for electricity

generation capacity are considered, energy efficiency investments by the KSA government for

retrofitting existing buildings are highly cost effective. For instance, a basic retrofit of households

can be for itself less than one year even when low electricity prices are considered.

Other benefits include stimulating employment in energy auditing and management and carbon

mitigation. In particular, over than 76 million tons of carbon emissions can be eliminated when

level 3 retrofit program is implemented for the existing KSA building stock. The same program

would avoid the construction of 22,900 MW in power plant capacity and the consumption of

100,000 GWh electrical energy per year. In addition, level-3 retrofit program would create 247,000

new jobs per year over a 10-year implementation period for a total of 2,470,000 job-years created.

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Innovative financing mechanisms will need to be developed to incentivize the private sector to

undertake large-scale energy efficiency investments. For instance, the creation of energy service

companies can be initiated by the government using the concept of performance contracting as a

means of financing energy efficiency based on future savings.

Successful implementation for any energy efficiency program for both new and existing buildings

will require the development of strong institutional and labor force capacity.

While, it is found that the implementation of energy efficiency programs for both new and existing buildings

have a significant potential in reducing both energy consumption (27%) and electricity peak demand (30%),

additional investigations are needed to consider specific KSA cultural settings and proper financial

mechanisms to undertake large scale retrofit programs.

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Tables

Table 1: Labels for minimum energy performance standards for refrigerators, freezers and air
conditioners, and washing machines
Star Rating Air Conditioners Refrigerators/Freezers Washing Machines
(EER=3.412 COP expressed in (Percent of energy (function of energy
Btu/Wh) consumption relative to a use per load capacity)
baseline)
1 < 7.5 5% < 2.0
2 7.5 - 8.5 10% 2.0 2.9
3 8.5 9.0 15% 3.0 3.9
4 9.0 9.5 20% 4.0 4.9
5 9.5 10.0 25% 5.0 5.9
6 10.0 11.5 30% >6.0

7 11.5 12.4
7.5 12.4 13.4
8.0 13.4 14.5
8.5 14.5 15.6
9.0 15.6 16.8
9.5 16.8 18.1
10 < 18.1
(Source: SASO, 2012, 2013, 2014)
Note: SASO has updated the energy performance standards for washing machines (conforming to star rating 4 and
above only), refrigerators (conforming to star rating 1 and above only), and air-conditioners (conforming to star
rating 3 and above can only be sold and manufactured)

Table 2: Cooling and heating degree-days for the five cities in KSA
CDD HDD
City
[oC-days (oF-days)] [oC-days (oF-days)]
Jeddah 3659 (6587) 0
Dhahran 3307 (5953) 79 (142)
Riyadh 3160 (5688) 162 (291)
Tabuk 2422 (4359) 317 (571)
Abha 1740 (3132) 270 (486)

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Table 3: Options for energy efficiency measures specific to three retrofit levels of KSA residential
buildings

Recommended Retrofit Retrofit Level for Residential Buildings

Options Description Level-1 Level-2 Level-3
(a)

1. List of EEMs EEM-1 EEM-1, EEM-1, EEM-2,

EEM-2, and EEM-3, and
EEM-3 EEM-4
Energy Use 10.0% 26% 52.5%
Savings
Cost $0 (b) $1489 (b) $7920 (b)
2. List of EEMs EEM-2 EEM-4 EEM-2, EEM-3,
and
EEM-6
Energy Use 10.0% 28.1% 51.0%
Savings
Cost $462 $6250 $8670
3. List of EEMs EEM-3 EEM-1 and EEM-1, EEM-5,
EEM-5 and
EEM-6
Energy Use 10.4% 28.5% 53.5%
Savings
Cost $1,208 $6,958 $12,550
Notes
(a) Description of EEMs:
EEM-1: Increase the cooling set from 21oC to 23oC, from 22oC to 24oC, or from 23oC to 25oC depending on the
existing operating conditions.
EEM-2: Replace existing lighting fixtures by LEDs
EEM-3: Seal air leakage sources around building envelope (i.e., window and door frames so ACH =0.21)
EEM-4: Replace the existing AC unit by high efficiency system (COP=4.0)
EEM-5: Replace the existing AC unit by standard efficiency system (COP=3.5)
EEM-6: Insulate the roof using RSI-3
(b) A programmable thermostat is assumed to be already installed in the residential building/apartment unit

Table 4: List of optimal design and operating strategies and potential energy use and peak demand
savings for residential buildings in five KSA sites
EEM Riyadh Jeddah Dhahran Tabuk Abha
Wall RSI-3.0 RSI-3.0 RSI-3.0 RSI-3.0 RSI-3.0
insulation (R-17.0) (R-17.0) (R-17.0) (R-17.0) (R-17.0)
Polystyrene Polystyrene Polystyrene Polystyrene Polystyrene
Roof RSI-3.0 RSI-3.0 RSI-3.0 RSI-3.0 RSI-3.0
insulation (R-17.0) (R-17.0) (R-17.0) (R-17.0) (R-17.0)
Polystyrene Polystyrene Polystyrene Polystyrene Polystyrene
Glazing Double Low-e Single Clear Double Low-e Single Clear Single Clear
Shading No shading Projection 0.7 m Projection 0.7 m Projection 0.7 m Projection 0.7 m
Azimuth 0 0 0 0 180

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WWR 0.1 0.1 0.1 0.1 0.1

Lighting 70% Reduction 70% Reduction 70% Reduction 70% Reduction 70% Reduction
Infiltration 75% Reduction 75% Reduction 75% Reduction 75% Reduction 75% Reduction =
= 0.21 ACH = 0.21 ACH = 0.21 ACH = 0.21 ACH 0.21 ACH
Cooling Set 26C 24C 26C 25C 26C
Point (78.8F) (75.2F) (78.8F) (77F) (78.8F)
Refrigerator Premium Efficient Standard Standard Premium
65% Reduction 30% Reduction 65% Reduction
HVAC COP 3.5 3.5 3.5 3.5 3.5
Total Energy 57444.486 58457.091 55519.0856 42422.778 24796.9796
Use (kWh)
Total Energy 62.6% 62.7% 60.3% 59.0% 52.2%
Savings
LCC 63687 74860 66936 56113 45912
Peak 12623 10180 12461 11287 8064
Demand (W)
Peak 68.3% 69.4% 68.5% 68.7% 67.2%
Demand
Savings
Peak Time 07/28 18:00 08/19 18:00 07/29 18:00 07/29 19:00 06/12 18:00

Table 5: Economic and environmental benefits for thermal insulation building code applied to all new
buildings in KSA
Building Type Electrical Annual
Annual Peak Annual CO2 Energy Cost Peak
Energy Demand Emissions Savings Demand
Reduction Savings Savings ($ Savings
(GWh/yr) (MW) (10 Tons/yr) Million/yr)
3 ($ Million)
Residential Buildings 471 107 357 47 182
Commercial Buildings 148 34 112 15 58
Governmental Buildings 103 23 78 10 39
Others 33 7 25 3 12

Total 755 172 571 75 292

Table 6: Economical and environmental benefits for thermal insulation building code applied to all new
buildings in KSA based on 2013 building stock statistics
Building Type Annual Peak Annual CO2 Peak
Energy Use Demand Emissions Annual Energy Demand
Savings Savings Savings Cost Savings Savings
(GWh/yr) (MW) (10 Tons/yr) ($ Million/yr)
3 ($ Million)
Residential Buildings 1093 292 828 109 496
Commercial Buildings 344 92 260 34 156
Governmental Buildings 238 64 180 24 109

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Others 76 20 58 8 34

Total 1751 468 1326 175 796

Table 7: Potential energy and demand reductions for building energy efficiency retrofit programs

Building Type Annual Energy Reduction Electrical Peak Demand Savings

(GWh/yr) (MW)

Level 1 Level 2 Level 3 Level 1 Level 2 Level 2

Residential 10054 28906 62839 2290 6583 14312

Commercial 3160 9085 19750 720 2069 4498

Governmental 2191 6298 13692 499 1434 3118

Others 700 2014 4378 160 459 997

Total 16105 46303 100659 3668 10546 22926

Table 8: Average costs for energy retrofits of buildings in KSA (USD)

Building Type Level-1 Level-2 Level-3

Residential Buildings 500 5,000 10000

Commercial Buildings 5,000 50,000 100000

Governmental Buildings 7,500 75,000 150000

Others 7,500 75,000 150000

Table 9: Cost benefit analysis of investments in entire existing building stock energy retrofit options for
the government
Total Peak Annual Energy Cost Savings NPV Payback Analysis*
Retrofit Demand (Million $/year) (Years)
Retrofit
Cost Savings
Level $0.0479/kWh $0.1678/kWh $0.0479/kWh $0.1678/kWh
(Million $) (Million $)

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Level-1 10,369 4,402 772 2,703 8.9 2.3

Level-2 103,695 12,655 2,218 7,769 - 14.7

Level-3 207,390 27,511 4,822 16,891 - 13.0

Note (*): net present value analysis assumes a discount rate of 3%

Table 10: Cost benefit analysis of investment in residential building stock energy retrofit options for the
government
Total Peak Annual Energy Cost Savings NPV Payback Analysis
Retrofit Retrofit Demand (Million $/yr) (Yrs)
Level Cost Savings $0.0479/kWh
$0.1678/kWh $0.0479/kWh $0.1678/kWh
(Million $) (Million $)
Level-1 2,836 2,748 480 1,686 0.2 0.1
Level-2 28,365 7,900 1,385 4,851 20 4.6
Level-3 56,730 17,174 3,010 10,545 17 4.0
Note (*): net present value analysis assumes a discount rate of 3%

Table 11: Carbon emission reduction estimates for energy efficiency investment options expressed in
million ton per year

New Buildings Existing Buildings

Building Type Insulation Performance Net-Zero Level 1 Level 2 Level 3
Only based Energy Retrofit Retrofit Retrofit
Residential 0.357 0.828 1.426 7.611 21.882 47.569
Commercial 0.112 0.260 0.448 2.392 6.877 14.951
Governmental 0.078 0.180 0.312 1.658 4.768 10.365
Others 0.025 0.058 0.100 0.530 1.525 3.314

Total 0.571 1.326 2.286 12.192 35.051 76.199

Table 12: Number of Jobs that can be created from 10-year Building Energy Retrofit Programs in KSA

Building Type Level-1 Level-2 Level-3

Residential Buildings 3,380 33,750 67,500

Commercial Buildings 6,870 68,710 137,430

Governmental Buildings 1,170 11,720 23,440

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Others 920 9,200 18,410

Total 12,330 123,380 246,780

Table 13: Summary for policy makers

An evaluation of building energy efficiency retrofit investments for Saudi Arabia
Retrofit Program level 1 level 2 level 3
Investments Required
10 104 207
(USD Billion)
Avoided Electricity
16,000 46,000 100,000
Consumption (GWh/year)
Value of Avoided
Electricity Consumption 0.5 - 1.7 1.4 4.9 3.0 10.5
(USD Billion/year)
Avoided Electricity
Generation Capacity 3,700 10,500 22,900
(MW)
Value of Avoided
Electricity Capacity (USD 2.8 7.9 17.2
Billion)
Jobs Created
(per year for a 10-year 12,000 123,000 247,000
period)
Reduced Carbon
Emissions 12 35 76
(million ton/year)

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Figures

Figure 1: Total final energy consumption by sector in Saudi Arabia

Figure 2: Electricity consumption in KSA during 2014 (source: SEC, 2015)

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40,000.00 40

35,000.00 35

30,000.00 30

Average Temperature, oC
Electtriicty Consumption, GWh

25,000.00 25

20,000.00 20

15,000.00 15

10,000.00 10

Total KSA Electricity Use Average Temperature

5,000.00 5

- 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month

Figure 3: Monthly total KSA electricity consumption and average ambient temperature during 2014
(Data Source: SEC, 2015)

Figure 4: Peak demand, generating capacity, electricity generated and electricity consumed in Saudi
Arabia (Data Source: SEC, 2015)

n in Figure 6 (MOMRA, 2014).

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Figure 5: Type and number of customers of electricity in Saudi Arabia (Data Source SEC, 2014)

Figure 6: New construction permits during 2014 in Saudi Arabia (Data Source MEW, 2015)

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Figure 7: Electricity prices in Saudi Arabia for pre and post-January 2016 reforms (Source: SEC, 2015)

Figure 8: Drivers of change in energy consumption in buildings sector electricity demand using Kaya
decomposition

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Figure 9: Flowchart for the simulation environment used for the optimization analysis

Riyadh

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Figure 10: Annual energy end-use distribution for an archetypical villa in five KSA sites

Figure 11: Annual electricity consumption for an archetypical villa in five KSA sites
(Source: Alaidroos and Krarti, 2015)

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Max & Min Total Energy Savings - Riyadh

5.0 36.2%

COP
2.0 -18.1%
Class 1: 65% Reduction 0.3%

Cool-SP Refreg
Class 3: 30% Reduction 0.1%
26C (78.8F) 15.1%
22C (71.6F) -17.4%
75% Reduction = 0.21 ACH 9.9%
Infil

25% Reduction = 0.63 ACH 3.4%

70% Reduction 7.5%
Light

30 % Reduction 3.2%
40% -32.1%
WWR

20% -10.8%
180 0.0%
Azim

45 -2.2%
Projection 1.0 m 6.6%
Shad

Projection 0.2 m 3.3%

Double Low-e 7.2%
Glaz

Double Clear 3.1%

RSI-5.0 (R-28.4)
Wall ins Roof ins

14.8%
RSI-1.0 (R-5.7) 9.6%
RSI-5.0 (R-28.4) 17.1%
RSI-1.0 (R-5.7) 11.7%

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

(a)

Max & Min Peak Load Savings - Riyadh

5.0 37.5%
COP

2.0 -18.7%
Class 1: 65% Reduction 0.2%
Cool-SP Refreg

Class 3: 30% Reduction 0.1%

26C (78.8F) 10.3%
22C (71.6F) -11.0%
75% Reduction = 0.21 ACH 10.4%
Infil

25% Reduction = 0.63 ACH 3.5%

70% Reduction 10.0%
Light

30 % Reduction 4.3%
40% -30.3%
WWR

20% -10.6%
180 0.0%
Azim

45 -2.2%
Projection 1.0 m 5.0%
Shad

Projection 0.2 m 2.3%

Double Low-e 7.6%
Glaz

Double Clear 3.7%

RSI-5.0 (R-28.4)
Wall ins Roof ins

21.9%
RSI-1.0 (R-5.7) 14.9%
RSI-5.0 (R-28.4) 14.6%
RSI-1.0 (R-5.7) 10.0%

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

(b)
Figure 12: The impact of each optimal energy efficiency measure on energy savings and peak demand
for the five KSA sites

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Life Cycle Cost

Net Zero-Energy
Energy Efficiency Measures Renewable Energy Systems

Baseline Neutral

Switch-over

Optimal

10% 25% 40-60% Source Energy Use Savings

(%)

(a) General Approach

KSA - Riyadh
$350,000
$300,000
Life Cycle Cost

$250,000
$200,000
$150,000
$100,000
$50,000
0% 20% 40% 60% 80% 100%
Energy Savings

Opt-Runs PV-NZE Baseline KSA Code Optimum

(b) Optimization Case of a residential building in Riyadh

Figure 13: Sequential optimization path toward net-zero energy building

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Figure 14: Impact on load profiles for electrical energy consumption and peak demand due to
implementation of energy efficiency codes for new buildings

Figure 15: Impact on load profiles for electrical energy consumption and peak demand due to
implementation of energy retrofit programs for only existing residential buildings

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Figure 16: Impact on load profiles for electrical energy consumption and peak demand due to
implementation of energy retrofit programs for the entire existing building stock

Figure 17: Impact on load profiles for electrical energy consumption and peak demand due to
implementation of both energy efficiency code for new buildings and energy retrofit programs for the
entire existing building stock

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20000
Level-1 Level-2 Level-3
10000
Net Present Value (Million USD)

0
0 5 10 15 20 25 30
Year
-10000

-20000

-30000

-40000

-50000

Figure 18: Payback period of investment options in residential building stock for the government at
$0.0479/kWh

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