In recent years the focus of renewable energy projects in Oman has been to focus on deriving energy from onshore wind and solar plants.
Arif MawanyHead of Corporate Commercial - Oman
Aida Al JahdhamiAssociate,Innovation & Patents
Energy demand in the Sultanate of Oman has increased rapidly over a number of years as a consequence of a growing population and development of industrial areas. Real total gross domestic product growth has increased to 5% annually and has been accompanied by an 8% increase in the demand for electricity in recent years . Oman’s thirst for energy has led Oman’s National Energy Strategy to identify that the country’s power demands require a greater mix of energy contributors to enhance energy and economic security and at the same time reduce Oman’s carbon footprint. In line with Oman’s 2040 vision, the National Energy Strategy aims to derive at least 30% of the country’s power requirements from renewable energy sources by 2030. In recent years the focus of renewable energy projects in Oman has been to focus on deriving energy from onshore wind and solar plants.
Oman’s leading exploration and development company is Petroleum Development Oman (PDO) and its early foray into solar power came from launching the large scale solar photovoltaic modules in existing concession areas to provide power for PDO’s offices. The initiative was estimated to save approximately 3.1 million cubic meters of gas annually. In addition PDO and its subsidiary Energy Development Oman (EDO) announced an intention to launch a new 100MW Solar PV IPP with the vision of supplying clean energy to oil and gas facilities clean in the North of Oman. The solar generation is integrated with battery storage which will not only offer approximately 30 MW of power capacity but also offset approximately 200,000 - 300,000 tonnes of carbon dioxide emissions annually.
Other initiatives for launching solar power project include Oman’s main utility buyer establishing ‘MIS Solar IPP 2025’ to increase capacity of the 500MW solar photovoltaic independent power project (IPP) at Ibri, which was officially launched at the beginning of 2022. The IPP will compromise 1.4 million solar panels which will extend over 13 million square meters and the output of the plant will be able to supply approximately 33,000 to 50,000 homes with electricity and offset approximately 340,000 tonnes of carbon dioxide emission per year. The Government of Oman has also announced the intention to develop two solar projects in Manah to increase power supply over the coming years.
The government of Oman puts much of its focus in Solar Power and Wind Power projects.
Oman’s commitment to implementing clean energy initiatives is evident from a focus on deriving usable energy from wind. The creation of a joint venture between the Rural Areas Electricity Company and UAE based Masdar led to an award of an EPC contract to build the first large scale wind farm in South Oman on a 1,900 hectare site, which is estimated to generate 50MW of energy to supply 16,000 homes.
Other initiatives undertaken for wind power projects include the Government’s strategy in expanding large scale projects. This includes a 100MW project to be developed in North Al Sharqiyah with the intention of commencing operations during the third quarter of 2025.
In the Duqum region, at least two wind power plants have been planned to generate between 160 to 200MW to accompany Dhofar Winder IPP, which is Oman’s first ever wind park to be connected to the main grid.
Oman’s focus in recent times has been on a desire to become a key component in the green hydrogen sector. In line with Oman Vision 2040, decisions have been taken by the Government of Oman to rapidly develop this sector in Oman, including the creation of a legal framework to regulate this sector with the oversight of the Ministry of Energy and Minerals.
The legislative framework regulating renewable energy in the Sultanate of Oman is Royal Decree No. 78 of 2004, the Law for the Regulation and Privatisation of the Electricity and Related Water Sector (“Sector Law”) and the authority responsible for overseeing renewable energy projects is the Ministry of Energy and Minerals.
In accordance with the Sector Law, the main participants of encouraging renewable energy growth in the Sultanate of Oman includes the Authority for Public Services Regulation (“APSR”) and Oman Power and Water Procurement Company (“OPWP”). The Sector Law provides that APSR is responsible for issuing regulations relating to renewable energy that are required to implement the state’s policies. OPWP, a government owned authority, is responsible for ensuring sufficient flow of electricity and water to meet demand in the Sultanate of Oman and by following the regulations of APSR, procures renewable energy projects through a process of tendering to domestic and international companies in the renewable energy space.
The legislative framework that regulates the clean energy sector is also covers health and safety rules and the rules relating to the electrical standards imposed on licence holders. The Authority for Electricity Regulation (“AER”) assumes responsibility for ensuring the safe and secure development of the electricity and water sector and conducts regular audits to assess the policies, plans, processes and procedures of licence holders. A technical team conducts incident investigations into safety related incidents with the public prosecutor becoming involved if required.
The AER is also responsible for monitoring the efficiency of capital investments as part of general capital expenditure control. Technical reviews are undertaken at the beginning of a project and continue throughout its life to ensure technical and procurement efficiency is maintained. In addition, the AER is also responsible for monitoring abuse of market power by enforcing economic purchase conditions, approving price structures of intra-sector transactions and using retail price index controls. Consumers are at risk of escalation of electricity prices in a market where the market players are, at least currently, state owned entities with significant market share in the sector and the AER plans to closely monitor this area to create a level playing field for operators and consumers alike.
Policy decisions indicate that there is a keenness for Oman to become a central component for the production of various forms of clean energy. Trade talks and conferences have been held between the Government of Oman and countries seeking to take advantage of growth in the renewable energy sector and evidence of Oman successfully implementing and managing the operation of key projects is already apparent in the green energy, green electricity and renewable energy space.
For further information,please contact Arif Mawany or Aida Al Jahdami.
Published in November 2022
