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ID: 125728

Captive power generation in Saudi Arabia—overview and recommendations on policies / Abdul-Majeed, Mohammed Arif; Al-Hadhrami, Luai M; Al-Soufi, Khaled Y; Ahmad, Firoz

Abdul-Majeed, Mohammed Arif	Journal Article
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2013.

Summary/Abstract

The power sector in the Kingdom of Saudi Arabia is undergoing the restructuring process. Moreover, during the last decade the Kingdom has witnessed a phenomenal growth in the load demand, consequently a huge amount of generation is added to the electric utilities to meet the load. Up to now only the electric utility generation was taken in the planning of the electrical sector. The data regarding the captive power generation was not readily available. A survey is conducted regarding the captive power generation in Saudi Arabia based on its utilization pattern, fuel used and amount of excess energy available to the grid. The existing regulatory framework and institutional structure of the Saudi power industry was also reviewed. Based on the information collected in the survey of captive power, key guidelines that may be considered in developing the policy for the captive power generators are presented. Furthermore, these guidelines and later the policies will help promote the investors to come forward in developing the captive power generation in Saudi Arabia.

Key Words

Energy Policies ; Electricity Regulation ; Captive Power Generation

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ID: 136228

Transaction costs driving captive power generation: evidence from India / Ghosh, Ranjan; Kathuria, Vinish

Ghosh, Ranjan	Article
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Summary/Abstract

The 2003 Indian Electricity Act incentivizes captive power production through open access in an attempt to harness all sources of generation. Yet, we observe that only some firms self-generate while others do not. In this paper we give a transaction cost explanation for such divergent behavior. Using a primary survey of 107 firms from India, we construct a distinct variable to measure the transaction-specificity of electricity use. The ‘make or buy’ decision is then econometrically tested using probit model. Results are highly responsive to transaction-specificity and the likelihood of captive power generation is positively related to it. At the industrial level, this explains why food and chemical firms are more likely to make their own electricity. Since the burden of poor grid supply is highest on smaller sized and high transaction-specific firms, the grid access policies need to account for firm-level characteristics if government wants to incentivize captive power generation.

Key Words

India ; Electricity ; Firm ; Transaction Cost ; Captive Power Generation ; Transaction-Specificity

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