System Gaps

✍️Islam Zween

Around a dinner table in one house, an unplanned conversation ran between four siblings — all of it starting from a simple question about the household electricity bill.

It began with a suggestion from Ray, whose background is in renewable energy. The obvious answer, he said, was to cover the roof with solar panels: use the sun that is available almost year-round in the Kingdom, and bring the bill down. It sounded logical, and at first everyone was persuaded.

But Heaven, the electrical engineer, saw it differently. What happens, he asked, on a scorching summer evening, when the sun has gone and the air conditioners are still running at full tilt?

His measure was not how much the panels save over a year, but whether they can meet actual consumption in the hour of peak demand. So he accepted the panels — on condition the house stayed connected to the public grid as a safety valve.

Here their sister Clare, who works in environment and sustainability, stepped in. The solution was still incomplete, she said: the public grid runs on gas plants, which means the emissions remain in the air regardless. Why not capture that carbon directly at the generating stations, and bring emissions to zero?

Up to this point, it seemed the four had arrived at an ideal answer — solar energy, the security of the grid, and a clean environment. Then their brother Sterling, the banking and finance specialist, brought them back to earth with an unexpected financial problem: the punishing cost of carbon capture equipment.

To my mind, none of them was wrong. Each solution holds together perfectly well when you examine it on its own. The contradiction only appeared when all four sat at the same table.

So let us leave this house together and move from that round table to the Saudi electricity sector.

By 2030, the Kingdom is targeting a balanced generation mix: roughly 50% renewable and 50% natural gas. With expansion plans aiming to raise renewable capacity alone to around 130 GW in the coming few years, there will still be a pressing need to retain a large fleet of gas plants as a core pillar.

Solar — for all its ability to produce a substantial share of electricity across the year — cannot on its own meet the grid's full operating requirements in the evening peak hours.

At first glance, the three published figures look familiar: the scale of demand, and the target mix. And the idea Ray and Heaven agreed on becomes clear — solar will carry the daily generation load and take gas's share, without removing gas plants from the grid altogether. They stay as a reserve, stepping in only when needed.

But take those figures apart and an entirely new number emerges, one that reveals the real operating hours of the gas plants across the year. That number changes the calculation completely: it shows that the Kingdom's new gas plants will spend extended stretches of the year on standby, not running.

And here lies the problem Sterling raised at the family table. The sharp fall in operating hours is the main reason banks and investors will not finance expensive carbon capture technology — because that equipment needs to run at full capacity throughout the year to capture and sell carbon in large enough volumes to recover its costs and turn a profit.

The paradox arrived in that unplanned conversation on Clare's lips: we may build new gas plants purely to guarantee their availability when needed, and then treat their not running as a supposed success for the environmental and economic system.

This divergence between Ray, Heaven, Clare and Sterling at the dinner table is what I call system gaps — the complex problems that do not necessarily appear within any single project, but emerge clearly at the points where projects meet.

We may end up with good policy, excellent project design, and strong financing, only to discover in the end that each party built its plans on assumptions and targets whose fulfilment is economically and operationally at odds with the success of the others.

So we sometimes overreach in looking for who got it wrong — was it Ray, Heaven, Clare, or Sterling? — when the problem lies in a set of correct decisions that we never tested for what happens when they run together.

The more important question: what happens when all four are right?

That is precisely what we set out to test, with numbers, in this week's Argaam Intelligence research on system gaps in the Saudi electricity sector.

Click here to read the full study
 

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