Oman - PowerOman - Power

Overview

In 1996, Oman became the first Arab country to turn exclusively to the private sector for a major power project. The Manah project has been a successful and profitable operation, and the plant was expanded from 90 MW to 270 MW in early 2000. The success of the Manah project led to several other Build, Own, Operate (BOO) power projects. In April 2018, Oman announced its intention to build the country’s first 1,200MW capacity coal-fired independent power project (IPP). 

At the same time, the power industry in Oman is in a transitional period given lower oil revenues, and the rising need for cost efficiencies since energy consumption is expected to grow 7 percent per year. Oman plans to introduce a spot market for electricity, as an alternative route for power producers to sell electricity to the state-owned procurement company outside a long-term power purchase agreement (PPA). Oman is also on the verge of a shift towards renewable energy with planned projects for solar plants and wind farms. Oman’s official objective is to reach 10 percent of consumed energy from renewables by 2030, and aims to add 3-4 GW of renewable generation capacity by then. Nama, Oman’s Electricity Holding Company, has appointed a consortium of advisers to assist in the privatization of a number of its subsidiaries.

The Oman Power and Water Procurement Company (OPWP), the single buyer of power for all IPP projects, provided a seven-year outlook for power and desalinated water supply in the two main systems of Oman – the Main Interconnected System (MIS) and the Dhofar Power System (DPS). In the MIS, peak demand is expected to grow at about 6 percent per year, from 5,920 MW in 2016 to 8,960 MW in 2023. This growth rate is lower than previous forecasts and reflects economic trends such as the introduction in 2017 of an estimated 10,000 cost reflective tariffs to “large” power consumers. In Dhofar, peak demand is expected to grow at 6 percent per year, from 497 MW in 2016 to 765 MW in 2023.

Leading Sub-Sectors
Overview
In 1996, Oman became the first Arab country to turn exclusively to the private sector for a major power project. The Manah project has been a successful and profitable operation, and the plant was expanded from 90 MW to 270 MW in early 2000. The success of the Manah project led to several other Build, Own, Operate (BOO) power projects. In April 2018, Oman announced its intention to build the country’s first 1,200MW capacity coal-fired independent power project (IPP). 

Opportunities
Companies specializing in power plant construction, power generation equipment, and power plant operations and processes should find opportunities in Oman. With its growing population and need for expanded power generation, Oman has made privatization of future power projects a priority, and the government forecasts significant demand increases for power and water in the coming years.
According to OPWP’s 7-year statement, in the MIS, the major developments through 2023 include: (1) extension of contracts at Al Kamil and Barka IWPP to 2021 (subject to approvals); (2) retirement of the Ghubrah and Wadi Jizzi desalination plants in 2018 (completed in June 2018); (3) addition of the Ibri IPP as early power (940 MW), expected to be completed in 2019, and full power (1508 MW) in 2019; (4) addition of Sohar III IPP (1708 MW) in 2019; (5) addition of a solar IPP (at least 200 MW) in 2020; (6) launch of the spot market for electricity trade in 2020; (7) transfer of the Manah IPP to the Government in April 2020; (8) addition of Misfah IPP (800 MW) in 2021; and (9) procurement of at least 1600 MW via a new procurement process that allows existing plants with expiring contracts to compete with prospective new IPPs for contracts beginning in 2022.

In the DPS, the Salalah II IPP began providing 445 MW in November 2017. The Musandam IPP also began operations at the end of 2017, supplying net firm capacity of about 123 MW.
OPWP has invited bidders to tender for its first large-scale solar IPP, which includes identifying a suitable location, develop tender documents and deliver a cost-effective procurement methodology for a utility-scale solar photovoltaic (PV) power project of up to 500 MW under the BOO model. The country has already experimented with smaller rollouts in remote areas.
The state-owned Petroleum Development of Oman (PDO) is an early pioneer in large-scale solar power projects in Oman. In 2015, PDO launched the 7 MW pilot for the U.S.-based GlassPoint Miraah concentrated solar power project. In 2017, PDO announced plans to float an invitation to tender for up to five 20 MW solar projects in concession areas, mainly scattered between Bahja and Marmul, but there have been no tenders on those projects since then. In March 2018, PDO completed the installation of 19,500 PV cells in their Muscat compound to generate 6 MW of electricity.
Oman is currently moving forward with plans to establish a 1.7 MW capacity pilot wind-based power project on Masirah Island, off the Sultanate’s eastern seaboard. Gulf Renewable Energy, a subsidiary of U.S.-based Southern Energy Partners, was selected to implement the pilot.
The success of these initiatives will be dependent on the timely revamp of the sector’s regulatory policies, fiscal incentives, and public financing. 

Web Resoruces

Oman Power and Water Procurement Company
Nama
Authority for Electricity Regulation
Rural Areas Electricity Company SAOC (RAECO)
Oman Energy And Water Conference Exhibition