Development of feed-in tariff for PV in the Kingdom of Saudi Arabia

Abstract

Feed-in tariff (FIT) is the most commonly used strategy worldwide for promoting renewable energy. The FIT strategy mainly consists of three key elements-certain admission to the grid, long-term contracts (10 to 20 years), and reimbursement levels that are founded on the prices of renewable energy production. The most common renewable energy in the Kingdom of Saudi Arabia (KSA) is solar energy, and it can be incorporated into the main grid through a favorable feed-in tariff that will attract investment. This paper aims to review the FIT rates in Germany and the United States, then the design of FIT in these countries to study the results, which helps to determine the most appropriate FIT in the KSA for different regions with regard to investment costs, household electricity consumption, compatibility with the existing grid, period required for return on assets, and long-term benefits. This study will also explain the importance of interest rates for residential investors and the challenge created by the recent tariff increase to 0.18 SAR/kWh. Saudi Arabia has the advantage of being able to use this information to assess the best approach to the economic and environmental impacts of FIT.