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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.

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Jennifer Aguinaldo

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