Abstract
Distributed Energy Resources (DER) are being increasingly utilized in the residential sector of the Kingdom of Saudi Arabia (KSA) and is expected to grow even further in the future. This growth increases the flexibility potential of the Saudi power system and suggests a need to maximize the engagement of the end-users to enhance the efficiency of power supply. To this aim, reforming the electricity tariffs can be a powerful tool to improve the efficiency of the network usage for the residential sector while taking into account the integration of DER. Although significant efforts have recently been made in Saudi Arabia to augment end-user rates towards fully cost-efficient levels. The current flat-rate charges does not reflect the excessive cost of electricity production during the peak times. The focus of this paper is to explore how tariff levels could be calculated so as to increase the overall welfare, by minimizing the generation cost of electricity and maximizing the utility function of the demand, which will be applied for different penetration levels of DER.