Policy Framework for Saudi Arabia's Smart Grid (Challenges: growing population, residential consumption is the main driver, saving fuel for export, subsidized electricity tariffs )Why is Smart Grid needed in Saudi Arabia?Today Saudi Arabia is a country with a population of 29.38 million people. In energy terms it is characterized by a diversified scheme. On the one hand, the natural oil resource is widely available and guarantees the country security in terms of fuel reserves burned for energy production. A surprising increase in population and rapid expansion of the industrial sector along with the overall growth of the economy are putting a strain on existing energy infrastructure in terms of electricity. More specifically, electricity demand is increasing not only due to the above-mentioned reasons, but also due to the high use of air conditioning during summer and rather subsidized electricity prices (EIA, 2013, Riyadh, 2013). It should be noted here that the residential sector is the main driver of electricity consumption. For now, Saudi Arabia has announced the largest electricity production plan among developing countries in the Middle East. The country plans to increase capacity from 55 GW to 120 GW by 2020, while further increases are planned for 2032 to follow rising peak demand (steady growth of 5% is expected). Structure of the electricity marketThe largest electricity supplier is the Saudi Electric Company (SEC). However, there is a second larger electricity generator called Saline Water Conversion Corporation (SWCC). This is a state-owned company and produces most of Saudi Arabia's desalinated water. There are also some privately owned water systems… middle of the paper… water system. Furthermore, T&D operators must propose the “Investment Plan” to the Regulator and Ministry of Water and Electricity (MOWE). • Describes the functional requirements and at least necessary technical properties. These could be performance requirements, measurement and network capabilities, privacy concerns, security, and standards used. • Allows T&D operators to use different suppliers or their own resources and equipment to implement the Smart Metering system. Define priorities in terms of which urban areas will be the first to be connected to the Smart Metering system. This prioritization occurs due to the significant time required to implement a Smart Grid. It is therefore important to proceed in urban areas where consumption is higher, losses are significant and/or there is a need to strengthen the system by adding new lines.