The Effect of Solar Photovoltaic Plant Participation on Different Market Structures in the Saudi Electricity Grid

Saudi Arabia is in the process of deregulating the electricity by introducing an electricity market, as the single Saudi Electricity Company will be divided into several competitive companies. The Saudi government is also investing heavily in renewable energy, especially after the adopting the country's 2030 vision, which is commitment of installing 9.5 GW of renewable energy by 2030. Currently in most of the world most renewable resources are subsidized or paid a feed-in tariff. As renewable resource construction increases, subsidies will become unsustainable. Some European countries have already cut these subsidies. Hence renewables will eventually participate in energy markets the same way as conventional generators. Electricity market structures differ in details but can generally fit in two major electricity market pricing schemes: the Marginal Pricing (MP) scheme and the Pay-as-Bid (PAB) scheme. And each scheme can be divided in to two schemes depending on the phase it deals with transmission line congestion (total of 4 schemes). Also the participation strategy for generators and Solar Power Plants (SPP) differs depending on the market scheme. This paper will evaluate the effect of SPP bidding in the Saudi grid on the SPP's profit, generators' profit, consumers' surplus, and the system social welfare. This evaluation will assume one SPP is added at different proposed locations on the Saudi grid. This simulation will compare all four-market schemes and will evaluate the effect of using international fuel prices. The best scheme will be recommend. Finally, the effect increasing SPP penetration will be evaluated.