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A major challenge faced power sector in a move to encourage by Oman government development of renewable energy, in meeting the growing especially solar power projects. demand for power in the

country is lack of natural gas. As gas Natural gas allocations to consumers

is used for mega industries to enhance diversification programmes, the authorities are finding it difficult to commit enough gas for new

power projects.

Of late, Oman has decided to cap new allocations of natural gas to the

such as power plants were typically for long term extending over 15 to 20 year-timeframes that present significant challenges in the face of growing domestic gas demand. The power sector consumes around 20 per cent of the Sultanate's total natural gas production, according to


official data. In recent years, the use of energy efficient combined cycle gas turbine technology in new plants is helping efficiency in power generation with a reduction in gas consumption.

Oman's peak average annual growth in power demand for the next seven years within the areas of main inter- connected system (MIS) is projected at 8 per cent, from 5,565 megawatt in 2015 to 9,529 megawatt in 2022, according to a seven-year outlook for power demand released by Oman Power and Water Procurement Company (OPWP).

The OPWP also came out with two other demand scenarios for the seven year period -- the low case scenario projects 6 per cent growth (1,300 megawatt below the expected demand) while in high case scenario, the demand is projected to grow at 10 per cent per annum. Growth rates are somewhat lower than in recent projects due to current economic conditions.

Demand for power is growing mainly due to population driven residential growth, the overall economic growth, developments in industrial estates/ free zones and tourism projects.

The Sultanate's total population touched 4.8 million by end-April 2017. The seven-year projection was determined after consultations with electricity distribution firms, large industries and trend in demand growth in the recent past.

According to the seven-year report, the total contracted capacity of 7,180 megawatt in 2016 will grow to 8,968 megawatt by 2019, before falling back to 7,468 megawatt by 2022 due to contract expirations.

In line with a strategy to reduce use of gas, two state-owned Chinese

power firms -- Hebei Electric Power Design and Research and Ningxia Electric Power Design Institute -- are planning to build a 300 megawatt capacity coal-based power plant in Duqm free zone. The proposed power venture is for supplying electricity

to a range of industries coming up in Oman Chinese Industrial Park. The power firms in April signed a land lease agreement with Oman Wanfang, which is managing 1,172 hectares of land for developing a major China- Oman industrial zone in Duqm.

The capital expenditure of the 300-megawatt project, which will have two power trains each with 150 megawatt capacity, is estimated at $406 million. A feasibility conducted by Hebei Electric Design found that the project will be economical and the plan is to import coal from Indonesia.

Also, several gas-fired power plants are in different stages of planning, tendering and construction. For instance, a tender has been floated to build a 750-800 megawatt capacity gas-fired independent power plant in Misfah, about 30 kilometres from the Muscat International Airport. Several multinational companies have evinced interest in participating in the bid, after Oman Power and Water Procurement Company's (OPWP's) floated a request for qualification (RfQ) tender for developing the project.

As per the plan, the project is expected to be awarded by the fourth quarter of 2017 and will become commercially operational by the first quarter of 2021.

Further, two major power projects -- one each in Ibri and Sohar -- are under implementation. The Ibri project, which will have a generation capacity of 1,509 megawatt, will

start generating power in 2018, and will reach its full capacity generation level in April 2019. The Sohar independent power project, which will have a power generation capacity of 1,720 MW, will start power generation from January 2019. The two gas-fired combined cycle power plants are expected to cost over RO885 million. These two projects represent the single largest procurement by the power sector

of the Sultanate, with expected installed capacity of 3,219MW accounting for approximately 30 per cent of capacity of the Main Integrated System (MIS).

In the Dhofar region, the Salalah 2 independent power project (which is under implementation), will provide 445MW upon completion in January 2018.

Yet another major development is the commissioning of 123 megawatt- Musandam IPP to supply power to the region.

In another move to maintain the power generation capacity, Oman Power and Water Procurement Company (OPWP) is extending concession agreement with power projects whose contracts are expiring within few years.

For instance, OPWP has reached an agreement with the owners of Al Kamil Power for extending contract from 2017 to December 2021. The total contracted capacity of the plant is 280 megawatt, which is expected to be available for further contract extension after 2021.

Likewise, the OPWP and the owners of Barka 1 are considering extension of power and water purchase agreement to December, 2021.

However, the 264 megawatt-Manah

power plant's power purchase agreement will expire in December 2020 and the plant will be transferred to the government. OPWP is considering several options for the continued operation of the plant, including a competitive tender for sale of the asset, backed by a multi- year power purchase agreement with OPWP.

There is also a major focus on enhancing solar energy by establish- ing a large commercial solar project, after freezing the plan for more than three years. The authorities are in the process of selecting a consultant for advising the government on the country's first large-scale solar pro- ject, which will have an envisaged capacity of 200 megawatt and will be on an independent power project (IPP) model.

Preliminary environmental studies were conducted in two sites -- Manah and Adam. Meteorology stations were also set up in these two locations.

The national programme for enhancing diversification, called Tanfeedh, has set a target of 10 per cent contribution from renewable energy projects in the total power mix within ten years.

The country's electricity regulator -- Authority for Electricity Regulation -- is in the process of revising the regulatory framework for renewable energy in an attempt to provide incentives for consumers and bring in technical specifications for such projects. Like several other countries, this will encourage use of rooftop- based solar panel for household power generation by housing units. Renewable energy projects in Oman will help the government to save natural gas, which can be diverted to more productive industries.

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Publication:OER Dossier
Geographic Code:7OMAN
Date:Dec 31, 2017

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