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Oman Business News

Renewables to preclude need for new gas-based power projects

Going by expected power demand growth trends, any demand for new generation capacity will be met almost exclusively by renewables over the next seven years, precluding the need for any new gas-based Independent Power Projects (IPPs) during this timeframe.

This paradigm shift in Oman’s power generation space underscores the ambitious role envisaged for renewables — chiefly solar photovoltaic capacity — in the nation’s energy mix, according to an official of Oman Power and Water Procurement Company (OPWP), the sole procurer of electricity generation and related water desalination capacity under the sector law.

More than 11 per cent of power supply will come from renewable energy by 2023, rising to between 25-30 per cent by 2030, said Bushra al Maskari (pictured), Planning Director — OPWP. “Even globally, moving from zero per cent to 30 per cent in less than a decade is astounding,” she remarked in a presentation on energy trends at a forum held in the city recently.

Giving an overview of the methodology behind OPWP’s annual ‘7-year Outlook Statement’ that projects the need for new generation capacity, Bushra noted that electricity demand growth in the Sultanate, which has averaged around 7.5 per cent on an annual basis over the past decade, is projected to decline to around 5 per cent over the next seven years. She attributed the downtrend to the economic situation, as well as Cost Reflective Tariffs (CRT) for large customers, which has prompted a shift in consumption from peak to off-peak hours.

As part of its remit to plan for new capacity procurements, OPWP first assesses the capacity of existing IPPs while also taking into account new renewable energy projects slated for launch over the 7-year horizon.

Also factored in is the potential for electricity exchanges with the GCC Interconnected System via Oman’s existing interconnector with neighbouring UAE. “Their (UAE) summer peak is usually two months after ours, so it’s very economical for us to exchange power during this peak. We import electricity from them during May-June during our peak, and export during June-July.”

Any shortfall in the supply scenario then represents the capacity that OPWP will need to procure, the Planning Director explained.

However, a new procurement methodology due to be rolled out by OPWP will enable existing plants to offer their capacity on a competitive basis, according to the official. “(We make an evaluation) of what existing generators can offer us for an extended number of years versus the need for a new plant, and weigh which of the options is more economical. We will implement this methodology for the first time in 2022, and negotiations and discussions are actually under way right now.”

“If all the existing capacities are able to give us prices lower than new plants, then in the next seven years, we do not foresee the construction of any new gas plants. The only new plants that we expect to come into the system during this period are renewable energy plants,” she stated.
Around 2,500 megawatts of renewables based capacity are envisioned for implementation by 2025, according to OPWP. Besides the 500MW utility-scale solar PV project (Ibri II) currently under construction in Ibri, it includes plans for a further three large-scale solar PV projects in the Main Interconnected System (MIS), two wind projects (MIS Wind 2023 and Duqm Wind 2024) and a first-ever Waste to Energy (WTE) scheme in the MIS.

OPWP has also put in place mitigation measures that will kick in if power demand spikes above, or conversely falls below, the expected trend. In the high-case scenario, these measures may include more exchanges via the GCC grid, as well as the launch of the region’s first Electricity Spot Market in 2020.
  • Power Demand Growth
  • Renewables
  • Independent Power Projects
  • New Generation Capacity
  • Oman
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