Oman

1. Brief overview of the renewables sector

Since the first economic oil discovery was made in 1962, the oil and gas sector in the Sultanate of Oman has been the driving force of its economy.

Since 2000, gas has been the primary fuel source for energy generation in Oman. However, in recent years the limited gas resources in Oman, coupled with the difficulties of transportation due to the remote locations of gas discoveries as well as the vast distances and land contouring, have caused the government to explore alternative fuel sources for generating electricity. This can be seen With the recent launch of several major renewable energy projects, the sultanate’s monopoly power procurer, the Oman Power and Water Procurement Co (OPWP), expects solar energy, wind power, and waste energy projects to make up 30% of the country’s energy mix by 2030.

This trend in Oman has coincided with the rapidly developing global shift towards renewable energy generation, with the Middle East region at the forefront of this energy diversification.

2. Recent developments in the renewables sector

The Omani government sees an important role for the private sector in order to achieve its Vision 2020 goals towards sustainability and economic development. According to Vision 2020, Oman seeks to reduce its dependence on oil, as well as stressing an increased use of natural and renewable resources. It sets out an objective to privatise electricity, water, and other commodities alongside a target to produce 10% of the country's electricity requirements through renewable energy sources by 2020.

Oman currently aims to diversify the sultanate’s energy resources. Leading this diversification is OPWP, which aims to meet ongoing demand for electricity by procuring 30% of Oman’s power requirements through renewable energy projects by 2030.

According to the OPWP, the expected renewable energy mix by 2030 is for 21% to be generated using solar energy, 6.5% from wind power and 2.5% from waste energy. It is important to note, however, that gas-fired power plants will remain the largest source of energy, expecting to take up around 70% of the total energy mix.

In 2009, the Authority for Electricity Regulation of Oman (AER) also conducted a comprehensive study of the level of solar energy density in Oman. The results of the study demonstrated that the Sultanate of Oman has one of the highest levels of solar density in the world, which the government is now seeking to utilise in order to ensure that power can be generated in a more clean and efficient manner.

Recent projects

The renewables market in the sultanate is still very young with several projects currently in their procurement or construction phase, although there is a definite move towards expanding the renewables sector. The projects under way include a 500 MW solar PV plant to be built in the Wilayat of Ibri by a consortium led by Saudi Arabia’s ACWA Power which will power 30,000 homes by 2021.

The OPWP has recently also issued RFQs for two new solar IPPs – Manah I and Manah II – which will be located in Manah, southwest of Muscat, which will generate a combined 1.1GW of energy.

Having completed a feasibility study, the OPWP is also in the process of procuring a waste to energy IPP, which will have an electricity generation capacity of 125-160MW and would process 1.4 million tonnes of municipal solid waste annually.

Petroleum Development Oman LLC (PDO) has procured a 100MW solar PV plant to be built by Japan’s Marubeni which will supply electricity from May 2020 to PDO for the purposes of its operations in Amin, in the south of Oman.

A trend that is being seen elsewhere in the region is the use of captive solar PV in the construction, operation and maintenance of independent water projects (IWPs). This has already been seen in Oman during the procurement of the Sharqiyah IWP where the winning bidder, Japan’s JGC Corporation, proposed the use of a captive solar PV plant to reduce the electricity consumption required from Oman’s grid.

The AER has issued a licence for a first-of-its-kind solar pilot project in the sultanate. The 303kW solar power plant is located in the province of Al Mazyounah in the southern Dhofar Governorate. The pilot project allows assessments to made of the feasibility of commercial use alongside the challenges that may arise on similar projects. Another renewable project which is set to commence operations this year in Dhofar is Oman’s first wind power project, the first large-scale wind farm in the GCC region which will generate a capacity of 50MW. Once fully commissioned, the wind farm is expected to generate enough electricity to supply 16,000 homes, equivalent to 7% of Dhofar Governorate’s total power demand.

3. Forthcoming developments/opportunities in the renewable sector

Given that the renewables market in Oman is still in its infancy, it is notable that there is no specific renewable energy legislation which governs and regulates the renewables market. Therefore, the Electricity Sector Law promulgated by Sultani Decree 78/2004 remains the key piece of legislation governing energy generation in the sultanate. The AER has recently initiated the development of a regulatory framework for the use of renewable energy, which is expected to be drawn up by the end of this year.

Mary Allan
Mary Allan
Partner
Muscat