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*Energy Policy*

**Chapter 3**

**Abstract**

**1. Introduction**

the World Bank statistics.

**43**

in Saudi Arabia

*Faisal Fahad Al-Musa*

Energy Savings Analysis of a

Recommended Residential Air

Conditioning Incentive Program

Over the past couple of decades, the kingdom's annual per capita electricity consumption has been steadily growing by around 7%. One of the key causes for such a high growth is the intensive use of non-energy-efficient equipment, which was dominating the Saudi market. In 2017, the residential sector consumed around 143 TWh, which represents around 48% of the country's total electricity consumption. The aim of this study is to assess the feasibility of an air conditioning incentive program for citizens from energy and economic sides. This chapter is a detailed study

where program gains from energy and economic standpoints were based on

**Keywords:** energy efficiency, energy savings, air conditioning, HVAC, subsidy program, incentive program, residential, Saudi Arabia, KSA

substituting participants' old air conditioning units with new units that are better in performance. The proposed program was designed over an 8-year period with three scenarios where the government will take care of all the capital cost, 75%, and none of the capital cost in these scenarios. The results of this study indicated that an accumulated savings of up to 17.11 TWh by 2025 with NPVs above \$13 billion can be achieved in all scenarios. Moreover, it was estimated that the program will add an average of \$0.5 billion per year to the kingdom's GDP over the duration of the program.

The Kingdom of Saudi Arabia is one of the nations that are blessed with plenty of energy resources, specifically fossil fuels in the form of oil and gas. In addition, it has a huge potential for renewable application which has not been leashed at full capacity yet. This wealth of energy resource was one of the main factors to have and maintain low energy prices for decades in all the sectors, namely, industrial, transportation, or buildings. For instance, the average electricity price was around \$0.03/KWh for long time which is considered one of the lowest worldwide. Over the past years, the kingdom's per capita electricity consumption was rising swiftly with an average annual rise of 7% where the year 2000 electricity consumption was 5640 KWh per capita compared to a world's average of 2384 and the 2014 numbers were 9444 KWh per capita compared to the global average of 3127 as per
