meed-logo

line1 line2 line3
SIGN IN / REGISTER

Oman pursues utility and grid expansion

5 December 2024

 

Expanding renewable energy and water production capacity and interconnecting disparate grids have been key priorities for Oman’s main utility stakeholders, especially over the past two years.

These efforts support a stated objective for renewable energy to account for 30% of Oman’s electricity generation capacity by 2030 – or an intervening milestone of about 3,000MW by 2027 – while ceasing to procure new thermal capacity.

“As in every other GCC state, the role of renewables is enshrined in Oman’s overall energy production mix target,” notes a UAE-based infrastructure consultant.

In addition to the longer-term renewable energy target, the sultanate expects new wind and solar projects to contribute to almost 11% of electricity production by 2025, according to the state offtaker Nama Power & Water Procurement Company’s (Nama PWP) latest seven-year statement covering 2023-29.

The milestones appear manageable. While Oman’s operational renewable energy capacity, mainly from the Ibri 2 solar independent power project (IPP), is only around 500MW, a further 1,000MW is under construction through the Manah 1 and Manah 2 solar IPPs.

The tendering process is also under way for around 1,000MW of wind IPP schemes.

In September, Nama PWP invited firms to bid for a contract to develop and operate the first two wind farms it is procuring under an IPP framework.

Located in South Sharqiyah Governorate, the Jalan Bani Bu Ali wind IPP will cater to Oman’s Main Interconnection System (MIS). It will have a capacity of 91MW-105MW and a commercial operation target of Q1 2027.

The second scheme is the Dhofar wind IPP, catering to the smaller Dhofar Power System (DPS). It will have a capacity of 114MW-132MW and will be operational in Q2 2027.

Three other wind schemes will be tendered over the following months, bringing the total capacity of wind IPPs to be developed in Oman over the next two to three years to over 1,000MW.

Nama PWP is also expected to issue the request for proposals for the 500MW Ibri 3 solar IPP scheme shortly.

Expiring capacities

While Muscat has said it does not plan to procure further thermal power generation capacity in the foreseeable future, it successfully extended the contracts for several expiring thermal power generation and water desalination capacities earlier this year.

These agreements collectively secured over 1,500MW of electricity and 200,000 cubic metres a day (cm/d) of desalinated water for up to nine years.

The contract renewals follow the expiry or expected expiry of the power- or power and water-purchase agreements for the following plants:

  • Barka 1 independent water and power project (IWPP): 427MW (installed power generation capacity) / 101,000 cm/d (desalination capacity)
  • Barka 2 IWPP: 703MW / 120,000 cm/d
  • Rusail IPP: 184MW
  • Manah IPP: 179MW

According to Saudi utility developer Acwa Power, the Barka 1 plant’s power and water purchase agreement extension is valued at $356m.

It includes extending the operation of the power plant for eight years and nine months, starting from 1 June 2024, and the water desalination plant for three years from 1 September 2024. When it began operations in 2003, the facility contributed 6% of Oman’s electricity and 24% of its desalinated water.

Nama PWP said “efficient utilisation of gas consumption will continue to improve” over the 2023-29 planning horizon.

Peak demand forecast

Peak demand in the MIS is expected to grow at an average of approximately 3.4% a year over the seven-year planning period, reaching about 8,350MW in 2029, up from 6,628MW in 2022.

In the DPS, peak demand is anticipated to grow 5% a year, from 612MW in 2022 to 837MW in 2029.

Oman has been implementing key projects to improve the efficiency of its electricity grids, addressing growing peak demand and intermittent renewable power.

In 2023, Oman Electricity Transmission Company completed works on the $966m, 400-kilovolt (kV) first phase of the North-South Interconnection project – known as Rabt – enabling Oman’s MIS to connect with the Duqm Power System.

The project is expected to stimulate the development of the Special Economic Zone at Duqm (Sezad) and the development of renewable energy projects in the Al-Wusta Governorate. The next phase to expand the Rabt project is expected by 2026.

Oman’s second direct link to the GCC regional electricity grid is also planned to come onstream the same year.

The 400kV Oman Direct Link project will extend the Gulf Cooperation Council Interconnection Authority’s (GCCIA) 400kV transmission network to enable direct interconnection with Oman.

According to energy consultancy firm Energoprojeckt, which is advising the GCCIA on this project, a new 400kV double circuit overhead line connection, with a total route length of 528 kilometres, will be constructed from the existing 400kV GCCIA Silaa substation in the UAE to the existing 400/220kV Ibri substation in Oman.

Oman’s first link with the GCCIA became operational in November 2011. It comprises a 200kV line connecting the Mahadha grid station in Al-Wasit, Oman, to the Al-Oha grid station in Al-Ain, UAE.

Water sector

The sultanate’s water sector has been similarly buoyant. Contract awards for desalination and treatment capacity and the construction of water transmission pipelines are approaching record highs.

According to MEED Projects data, close to $1bn-worth of contracts are in the bid evaluation stage, including the estimated $100m package for the wastewater network facilities on Masirah Island, as well as several water pipeline, desalination and dam projects across the sultanate.

Oman’s Barka 5 independent water project (IWP) reached commercial operations in August, its owner and operator, Madrid-headquartered GS Inima, announced. Oman’s eighth IWP scheme has a design capacity of 100,000 cm/d.

The project, which uses reverse osmosis technology, will serve 800,000 people in the sultanate’s most populated areas: Muscat, Dakhiliyah and Batinah.

GS Inima, in a consortium with local contractor Sogex and Saudi Arabia’s Aljomaih, won the contract to develop another IWP in Oman, the 300,000 cm/d Ghubrah 3 IWP, in 2020. The project is expected to reach financial close soon.

Peak water demand in the sultanate’s MIS is expected to increase by an average of 2% annually, from 1,172,000 cm/d in 2022 to 1,387,000 cm/d in 2029.

A higher growth rate of 5% annually is expected in the sultanate’s Sharqiyah zone, and 7% is projected in Dhofar.

Other upcoming projects

In addition to Nama PWP’s plans, state-backed Petroleum Development Oman (PDO) is procuring renewable energy capacity to support its target of 30% of its power capacity coming from renewable sources by 2026 and 50% by 2030.

PDO floated a tender for two 100MW wind projects in April 2023. It is understood that PDO is in discussions with Abu Dhabi Future Energy Company (Masdar) for the contract to develop the Riyah-1 and Riyah-2 wind projects.

PDO has also appointed a team comprising Beijing-headquartered Power Construction Corporation of China (PowerChina) and its subsidiary, Huadong Engineering Corporation (HDEC), to undertake the engineering, procurement and construction (EPC) work for the two wind projects.

PDO plans to develop its second solar photovoltaic project near Saih Nihayda, next to Qarn Alam airport, in the northern region of Oman. The project is expected to come onstream late next year, nearly five years after its first 100MW Amin solar project began operating.

https://image.digitalinsightresearch.in/uploads/NewsArticle/13017866/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Oman opens bids for 1GW battery storage advisory role

    4 June 2026

    Oman’s Authority for Public Services Regulation (APSR) has opened technical bids for a consultancy contract supporting a planned 1,000MW/four-hour battery energy storage system (bess) project.

    The tender seeks independent regulatory, technical and commercial validation services for the scheme. The project is planned with a rated capacity of 1,000MW and a storage duration of four hours, equivalent to 4,000 megawatt-hours (MWh) of energy storage.

    According to a tender board notice, technical bids were opened on 25 May.

    Thirteen companies submitted proposals including:

    • Afry Management Consulting (Sweden)
    • CESI Middle East (Italy)
    • DNV Dubai Branch (Norway)
    • Engineering Systems Group (Kuwait)
    • ILF Consulting Engineers (Austria)
    • Innovision Engineering Consultancy (UAE) 
    • Mott MacDonald (UK)
    • Sargent & Lundy Abu Dhabi (US)
    • Surbana Consultants Dubai Branch (Singapore)
    • Tractebel Engineering Consultancy (Belgium)
    • TUV Rheinland (Germany)
    • Universal Consulting Engineering (Egypt)
    • WSP International (Canada)

    As previously reported, APSR issued the request for proposals in April as part of wider plans to increase the share of renewable energy in the sultanate.

    The sultanate’s first utility-scale solar photovoltaic (PV) plant integrated with battery energy storage (Ibri 3) entered construction at the beginning of the year, comprising a 500MW solar PV plant and a 100MWh bess system.

    Last month, state offtaker Nama Power & Water Procurement Company signed a power-purchase agreement with local firm O-Green for Oman’s first round-the-clock renewable energy project.

    The company is also seeking consultants to provide separate environmental, social and governance and legal advisory services.

    Renewable energy is expected to increase from 4% of the generation mix in 2024 to 30% by 2030, driving the push for more utility-scale storage projects.

    Over roughly the same period, demand is forecast to double, reaching 10 terawatt-hours by 2031.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17106014/main.jpg
    Mark Dowdall
  • Building around the strait

    4 June 2026

    Commentary
    Colin Foreman
    Editor

    The closure of the Strait of Hormuz has turned a lingering, and previously unlikely, threat into reality in 2026. The shutdown of the maritime chokepoint, which is about 33 kilometres wide at its narrowest point, has plunged the global economy into crisis, with fuel prices spiking and fears of energy shortages growing. While diplomatic efforts are under way to resolve the disruption, the GCC’s geographic Achilles heel remains.

    The closure has also highlighted the importance of alternative logistics and energy corridors. Saudi Arabia’s East-West pipeline has enabled the export of 7 million barrels a day of oil from the Gulf coast across the kingdom to the Red Sea, while the UAE has rapidly scaled up operations at Fujairah and directed Adnoc to accelerate development of its 520km West-East pipeline.

    Others have had fewer options. Geographically constrained states such as Kuwait recorded zero crude exports in April, reflecting their near-total dependence on shipping oil through the Strait of Hormuz.

    For the projects market, the crisis is already having, and will continue to have, a significant impact. Ongoing projects are struggling with disrupted supply chains and resulting cost escalation, while future spending is likely to be diverted towards schemes that improve the GCC’s access to markets outside the Gulf.

    For the projects market, the crisis is already having, and will continue to have, a significant impact

    For oil and gas exports, proposed pipeline routes would run south from Kuwait through Saudi Arabia and the UAE and into Oman, enabling shipments from expanded ports on the Arabian Sea. For goods entering the region, the GCC railway scheme has taken a step forward, with procurement starting in May.

    These projects will cost tens of billions of dollars and will take years to complete, which means the events of 2026 will shape the region’s infrastructure priorities for the coming decade.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here

     

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105852/main.gif
    Colin Foreman
  • Fitch cuts global airport outlook on Iran war

    4 June 2026

    Fitch Ratings has revised its global airport sector outlook to ‘deteriorating’ from ‘neutral’, warning that disruption linked to the Iran conflict is creating a more challenging operating environment for airports and airlines and clouding traffic visibility into 2026.

    In a note issued on 3 June, Fitch said the conflict has increased uncertainty over “regional airspace availability, airline operations and travel demand”, with implications for route stability and the quality of traffic flows. While most airport operators’ traffic and earnings have remained broadly stable so far this year, the ratings agency expects a softer macro backdrop, a less favourable passenger mix and weaker non-aeronautical revenues to increase sector risks over the next 12 to 18 months.

    The revised outlook is particularly relevant for the Gulf, where major airports have built business models centred on international connectivity, long-haul flying and transfer traffic. Fitch said the disruption is particularly affecting airports with exposure to transfer passengers and internationally connected airline networks — categories that include the region’s largest hubs.

    Hub exposure

    Although the agency did not name Gulf airports specifically, its analysis implies that hubs reliant on long-haul corridors and complex network connectivity are more exposed to “rerouting risk, changing airline capacity decisions and weaker visibility on international demand”. For Gulf operators, that risk is compounded by the potential for further airspace restrictions and ongoing uncertainty around the availability of key flight paths linking Asia, Europe and parts of Africa.

    At the same time, the agency noted that some “Asia-Pacific airports have benefited from the redistribution of transit and long-haul traffic” away from disrupted Gulf hubs. Any sustained diversion of connecting passengers would be material for Gulf airports because duty-free, retail and food and beverage spending is typically stronger among international transfer travellers than point-to-point passengers.

    Fitch’s change of outlook also reflects a broader slowdown in the sector’s growth trajectory. Global passenger growth was strong in 2025 and early 2026, but the pace has started to cool from the post-pandemic recovery period. Fitch pointed to the International Air Transport Association’s latest projection of “4.9% passenger traffic growth in 2026”, a deceleration versus 2025, with early-2026 monthly data showing the slowdown already under way.

    Fitch also warned that non-aviation revenues could come under pressure, particularly where passenger mix shifts away from high-spending travellers. The agency expects a “low single-digit decline in nominal retail revenue for European airport operators” this year, highlighting how quickly discretionary spend can soften when operating conditions turn more volatile.

    Fuel availability and pricing is another risk. Fitch said there is rising uncertainty about jet fuel availability, especially in Europe due to disruption to Middle East supply, potentially increasing airline costs and encouraging capacity reductions. The agency expects fuel reserves to cover the summer months in Europe, even if the Strait of Hormuz remains effectively closed, but warned that winter operations could be more challenging if disruption persists.

    Higher airfares and fuel surcharges could also weigh on near-term demand, Fitch added — a headwind for Gulf airports that have benefited in recent years from strong leisure demand and the restoration of long-haul travel.

    Fitch expects airport performance to become more uneven, with point-to-point leisure airports typically better positioned than large hubs reliant on transfer traffic and international corridors. The ratings agency cited European examples, contrasting airports such as Barcelona or Venice with Heathrow and the Paris airports.

    The same dynamic could play out in the Middle East: airports with a large share of local origin-and-destination demand may be relatively insulated compared with major connecting hubs whose business models depend on stable long-haul routings and predictable network planning by global airlines.

    The risks for the Gulf’s aviation sector were highlighted again on 3 June when Iranian drones struck Terminal 1 at Kuwait International airport, causing significant structural damage. The incident was the third major drone strike on the hub in recent months. On 1 April, a drone strike hit fuel tanks managed by Kuwait Aviation Fuelling Company, sparking massive fires. On March 28, another multi-drone raid severely damaged the airport’s primary radar systems.

    Other airports in the region have been damaged since the conflict began, including Dubai International airport, Zayed International airport in Abu Dhabi and Hamad International airport in Doha.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105933/main.jpg
    Colin Foreman
  • Iran conflict curbs migrant labour flows to Gulf

    4 June 2026

    The International Labour Organisation (ILO) has flagged early signs that the conflict involving Iran is affecting the Gulf’s labour market. Speaking to CNBC, the ILO’s acting deputy chief, Sher Verick, said departures of migrant workers from sending countries have fallen sharply this year.

    “We don’t yet have numbers about those leaving the Gulf, but what we have are numbers that show that the departures of migrant workers from sending countries are significantly down,” Verick said. “For example, in the Philippines, the departures year on year are down by 78%.”

    Verick said disruptions in the Middle East are preventing workers from travelling to take up jobs and earn income, with knock-on effects for remittances that support household consumption, education and healthcare in sending countries. He added that the ILO would be watching for data on return flows from the Gulf back to Asian sending markets.

    Job risks

    The ILO has also assessed the share of jobs most exposed to conflict-related disruption. “Globally, we see around 15% of employment in that high exposure category, but this is much higher in the Middle East, at over 50%, and in Asia Pacific at around 22% of employment,” Verick told CNBC.

    Sectors most affected include transport, given reliance on fuel and other energy sources, and manufacturing due to supply chain exposure. Tourism-linked activities are also vulnerable, while agriculture is affected by disruption to fertiliser supply and pricing.

    A report by Fitch in early June said the conflict is placing several sectors across the GCC under severe operational and financial strain. Industries including aviation, hospitality, chemicals and residential real estate development face heightened vulnerabilities.

    Airlines are grappling with route disruption and higher fuel costs, while the hospitality sector has seen weaker occupancy amid security concerns and travel disruption. Regional chemical producers face higher feedstock prices, and residential real estate developers risk slower investment, which could dampen employment in construction – a sector that relies heavily on migrant labour.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105894/main.gif
    Colin Foreman
  • Read the June 2026 MEED Business Review

    4 June 2026

    Download / Subscribe / 14-day trial access

    For decades, the Strait of Hormuz has served as a critical artery of the global energy system. Despite being only 33 kilometres wide at its narrowest point, this strategic maritime passage has traditionally handled around one-sixth of global oil consumption and nearly one-third of worldwide liquefied natural gas trade.

    Following Iran’s effective closure of the strait in 2026, Gulf states have been compelled to rapidly identify and develop alternative transport corridors. This effort extends beyond safeguarding oil exports from the region to ensuring the continued flow of food, consumer products and industrial supplies that underpin the Gulf’s economies. Read more here. 

    June’s market focus is on Iraq, which is entering mid-2026 with the largest project pipeline in its post-2003 history, encompassing more than $420bn in planned and ongoing investments. However, the country faces an exports collapse that could challenge its ability to deliver this ambitious programme.

    This edition also includes our Top 100 report – an annual ranking published by MEED that identifies the 100 largest publicly listed companies in the Middle East and North Africa based on their market capitalisation.

    In the latest issue, we explore why the UAE’s Opec departure fulfils multiple ends; investigate why insurers will only cover a fraction of war damage to oil and gas facilities; analyse Saudi Arabia’s real estate ownership reforms; and examine the first trade deal between the GCC and a G7 nation.

    We hope our valued subscribers enjoy the June 2026 issue of MEED Business Review. 

     

    Must-read sections in the June 2026 issue of MEED Business Review include:

    > AGENDA: Gulf races to reroute trade

    > EXPORT ROUTES: Regional war boosts oil and gas pipeline project activity

    > CURRENT AFFAIRS: UAE’s Opec departure fulfils multiple ends

    INDUSTRY REPORT:
    MEED Top 100
    > Middle East stocks recover unevenly

    > OIL & GAS: Insurers will only cover a fraction of war damage to oil and gas facilities

    > LEADERSHIP: Building the infrastructure that makes net zero possible

    > LEGAL: Saudi Arabia’s foreign property ownership milestone 

    > TRADE TALKS: UK-GCC trade deal talks conclude

    > IRAQ MARKET FOCUS: 
    > COMMENT: Iraq’s reform window narrows
    > GOVERNMENT: Al-Zaidi takes Iraq’s premiership under US shadow
    > BANKING: Financial challenge tests Iraq’s resolve
    > ECONOMY: Iraq enters era of resilience, reform and rising risks 
    > OIL & GAS:     Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    > MEED COMMENTS: 
    >     Institutional capital sees past conflict risk
    > Gulf conflict fails to slow Dubai’s projects push
    > Oman steps up hydrogen plans
    > Bidders assess partnership strategy for utilities projects

    > GULF PROJECTS INDEX: Gulf Projects Index resumes growth trajectory

    > APRIL 2026 CONTRACTS: Middle East contract awards

    > ECONOMIC DATA: Data drives regional projects

    > OPINION: Hoping for a long, cool summer

    > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17088038/main.gif
    MEED Editorial