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Oman prepares for wave of IPP awards

3 December 2025

 

Contract activity in Oman’s power sector slowed in 2025, yet the sultanate is entering the new year with its diversification plans advancing and procurement for independent power projects (IPPs) gathering pace.

In the renewables segment, progress continued in September with the award of the sultanate’s fourth large-scale solar IPP. The 500MW Ibri 3 solar IPP was awarded to a consortium of Abu Dhabi Future Energy Company (Masdar), Korea Midland Power and local firms Al-Khadra Partners and OQ Alternative Energy.

The project also incorporates a 100MWh battery system, making it Oman’s first utility-scale solar-and-storage development.

Ibri 3 accounted for almost 60% of the power contract awards in 2025. While this reflects a quieter year for investment, it also highlights the transition taking place in the market, with attention shifting towards grid reinforcement and preparations for a series of IPPs expected to advance over the coming period.

The inauguration of the 500MW Manah 1 and Manah 2 solar IPPs earlier in the year added further capacity, building on the operational Ibri 2 plant, which came online in 2021.

Wind procurement also continues to advance. In November, Nama Power & Water Procurement Company (Nama PWP) signed a 20-year power purchase agreement with a joint venture of Singapore’s Sembcorp Utilities and OQ Alternative Energy for the Dhofar 2 wind IPP.

The 125MW plant is scheduled to begin operations in the third quarter of 2027 and will add capacity to the Dhofar Power System (DPS), where Oman’s first commercial wind farm, the 50MW Dhofar project, already operates.

In the DPS, peak demand is anticipated to grow by 5% a year, from 612MW in 2022 to 837MW in 2029. The Sadah wind IPP, which will add around 99MW to the system once operational, is expected to move forward in the coming months.

Overall, the direction of the sector remains aligned with national plans to increase renewable energy’s share of electricity generation to 30% by 2030 and expand steadily thereafter.

Oman’s renewable energy programme is expected to expand considerably by 2030, with about 4.5GW of solar IPPs and around 1GW of wind farms planned across multiple sites.

Increasing wind power

The wider wind programme includes the Duqm and Mahoot wind IPPs, which are moving forward and will have a combined generation capacity of more than 600MW. In October, Nama PWP issued a supervisory consultancy services tender for the Duqm project.

Several awards are expected in the near term. Jalan Bani Bu Ali, a wind IPP of about 100MW, and the 280MW Al-Kamil Wal Wafi solar photovoltaic IPP are among four IPPs currently under bid evaluation.

While Oman continues to scale up renewable capacity, the need for firm generation remains. Peak demand in Oman’s Main Interconnection System (MIS) is expected to grow at an average of 3.4% a year over the current planning period, reaching about 8,350MW in 2029, up from 6,628MW in 2022. 

Demand in the MIS is likely to continue rising through the decade, supported by industrial growth, population increases and development in economic zones such as Duqm.

Nama PWP aims to meet this requirement with two major thermal schemes: the $1.53bn gas-fired Misfah IPP and the $753m Duqm IPP. The state offtaker has received three bids for the development and operation of the plants, which together will supply 2,400MW and are scheduled to begin delivering early power by April 2028.

Developing the grid

Similar to previous planning cycles, grid development remains a priority. In September, the GCC Interconnection Authority signed a $500m interim financing agreement with Sohar International Bank to support the development of the direct Oman-GCC electricity interconnection.

The project involves constructing a 400-kilovolt double-circuit line stretching approximately 530km between the Al-Sila station in the UAE and a new Ibra substation in Oman.

Once completed, the link will enhance regional power exchange capability, improve reserve margins and support the integration of intermittent renewable power.

These regional works complement domestic transmission upgrades, including the continued expansion of the Rabt North-South Interconnection. The first phase, completed in 2023, connected the MIS with the Duqm Power System.

Construction works are ongoing on the second phase, which is expected to reinforce the 400kV backbone southwards toward Dhofar.

New technologies are also emerging in Oman’s power programme. Ibri 3 represents the first deployment of utility-scale battery storage in the sultanate, setting a precedent for integrating storage with future renewable projects. 

In parallel, Nama PWP and Oman Environmental Services Holding Company (Beah) are preparing to tender the main contract for a 100MW waste-to-energy (WTE) project in Barka.

Estimated to cost almost $1bn, the scheme would be Oman’s first major WTE facility and reflects broader efforts to embed circular-economy principles into the national infrastructure programme.

Water sector

The water sector recorded a solid year, with about $1bn in contract awards, although activity remained below 2024 levels.

In March, China National Electric Engineering Corporation (CNEEC) won the main contract for a $200m deep-sea desalination project, heading a list of smaller wastewater and transmission packages awarded across 2025.

Following the commissioning of the Barka 5 independent water project (IWP) and continued construction on the Ghubrah 3 IWP, planning attention has shifted to the next cycle of capacity.

The next major scheme expected to move forward is a $150m desalination plant in Dhofar, with a planned capacity of 22 million imperial gallons a day.

Rising water demand in Sharqiyah and Dhofar continues to guide long-term planning with more than $800m-worth of water transmission and treatment schemes set to be awarded in the near to medium terms.

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Mark Dowdall

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