Diversifying the Saudi Arabian Electricity Supply: And Its Effect on the Rentier State

Magnus Bigum Gyldenkærne

Student thesis: Master thesis


This thesis concerns the future diversification of the Saudi electricity supply. Volatile global fossil fuel markets and increasing domestic demand for electricity have made the costs of a continued reliance on fossil fuels for near 100% of electricity production economically unsustainable. Applying Schoemaker’s model for Scenario Development, key issues, stakeholders, trends and uncertainties are identified and assessed. Economic factors include the price development in fuel production, assessed by the levelized cost of electricity (LCOE), global fossil fuel fluctuations, electricity demand and subsidies. Political factors include the stability of government, demographics, employment and the presence of religious, conservative values and norms. Political factors are analyzed by applying Rentier State theory, as well as theories on the legitimacy of Middle Eastern regimes. Five artificial scenarios for year 2030 are formulated and assessed, and the correlation between the diversifications of the electricity supply and the overall Saudi economy is also analyzed. The findings show that the most uncertain factors affecting the diversification of the Saudi electricity supply are the global fossil fuel prices and the resolve of the Saudi government and population to fulfill the announced ambitions. Finally, the overall economic diversification and how it will end Saudi Arabia’s status as a rentier state is discussed, and future challenges to the Saudi monarchy are proposed.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
Publication date2018
Number of pages71