Projects of Policy and Regulation Sector

Legal, Regulatory, and Contractual Arrangements for Transition to a Principal Buyer and Wholesale Power Market in Saudi Arabia

Organization: DHInfrastructure

Description

The Government of Saudi Arabia asked the World Bank for advice on contractual, legal, and regulatory arrangements to transition to a single-buyer and, eventually, a wholesale power market model.

Service Provided

DHInfrastructure presented to the Government a range of options to manage existing take-or-pay-type power purchase agreements (PPA) and pipeline PPAs, including the potential for introducing a vesting contracts regime to aid in the market transition. We also presented a range of energy capacity and ancillary services products that can be introduced in the proposed market and outlined important prerequisite reforms (pricing, institutions, and regulatory) that need to be made in order to transition to a competitive wholesale market. Finally, we presented options for managing increasing distributed generation within the reform context.