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Oman’s Power Sector: Focus on grid expansion to support RE [free access]

March 12, 2020

The Middle Eastern country, Oman, located at the southeastern coast of the Arabian Peninsula with a population of around 5.1 million, is predominantly dependent on gas-fired power generation to meet its energy needs. However, to reduce its carbon footprint, the country is now looking to reduce its dependence on fossil fuel and add renewable energy (RE)-based capacity to diversify its power generation. In addition, Oman’s electricity demand is expected to increase at a compound annual growth rate (CAGR) of 5 per cent over the period of next 4-5 years and reach 10,453 MW by 2023-24, majorly due to rapid population growth and an expanding economy.

 

In hindsight, Oman Power and Water Procurement (OPWP), which is the single buyer of power and water from all independent power producer (IPP)/independent water and power plant (IWPP) projects, has established an RE development plan for 2019-25 as part of its mandate to undertake long-term generation planning. Under this, a target has been set to produce 16 per cent of the country’s electricity through RE-based sources by 2025, and further increasing the share to about 30 per cent by 2030.

 

To fully reap the benefits of the upcoming RE capacity, the country’s high voltage grid developer, Oman Electricity Transmission Company (OETC), plans to invest around OMR477 million by 2023, to establish a robust grid network. Furthermore, the investment in grid expansion will also be directed towards minimising grid congestion, interconnecting isolated regions, meeting increased power demand, and connecting new power plants to the grid. Lastly, the focus will also be laid on transforming the grid to accommodate 400 kV voltages in the existing transmission system in northern Oman, which currently operates at only 220 kV and 132 kV.

 

Oman’s power sector privatisation programme

In 2017, the country initiated a programme to privatise its power sector. Under the plan, five power sector utilities of Nama Holding—transmission utility OETC and four distribution companies, namely Muscat Electricity Distribution Company (MEDC), Majan Electricity Distribution Company (MJEC), Mazoon Electricity Distribution Company (MZEC) and Dhofar Power Company (DPC)—are to be privatised.

 

Nama Holding, formerly known as the Electricity Holding Group, holds shares in nine state-owned companies involved in the generation, transmission, distribution and supply of power, and is wholly owned by the Ministry of Finance. Nama also owns 99.99 per cent share in OPWP.

 

The aim of the privatisation is to attract Foreign Direct Investment (FDI), utilise international technical skills and technology, improve customer services, increase resource utilisation efficiency, and reduce the unit cost of electricity supply.

 

By 2019, Oman became the first ever country in the Middle East to privatise its power transmission utility OETC, by selling its 49 per cent stake worth USD1 billion to Chinese transmission and distribution operator, State Grid Corporation of China (SGCC).

 

For MEDC, the privatisation process is expected to happen during the second quarter of 2020. Around 14 non-binding bids have been submitted for the distribution company. The privatisation drive for the remaining distribution utilities is also expected to take place in 2020.

 

Power sector overview

Oman’s power system is segregated into three isolated systems—the main interconnected system (MIS), which covers the northern half of the country; the Dhofar power system, which covers the southern Dhofar region; and the rural power system.

 

Figure 1: Oman’s electricity industry structure

  

 

Source: Global Transmission Research

 

By the end of 2019, it has been estimated that Oman had an installed generation capacity of 11,544 MW, increasing at a CAGR of 10 per cent from 2015 to 2019. Of the total installed capacity, 90 per cent is under the MIS, while the remaining 10 per cent is under the Dhofar power system. Though majority of the existing generation capacity is gas-based, renewable-based capacity is now being gradually added to the generation mix.

 

During 2019, the 1,509 MW Ibri and 1,710 MW Sohar III IPP, gas-fired power plants were commissioned in MIS. In addition, during the same year, a 50 MW wind farm was commissioned in the Dhofar region.

 

Figure 2: Growth in Oman’s installed capacity (MW)

  

Note: Data for 2019 has been estimated based on projects that were reported to be commissioned during the year. 

Source: Authority for Electricity Regulation; Global Transmission Research

 

As per Global Transmission estimates, by the end of 2019, Oman’s transmission network comprised of 7,396 circuit km of line length in comparison to 7,210 circuit km of line length in 2018 at the 132 kV, 220 kV and 400 kV voltage levels, representing an annual growth rate of 3 per cent. More than 90 per cent of the total transmission network is under the MIS region.

 

Around 60 per cent (4,407 circuit km) of the existing line length is at 132 kV, 23 per cent (1,703 circuit km) at 220 kV and 17 per cent (1,287 circuit km) at 400 kV. The country’s transformer capacity at the transmission level increased from 27,696 MVA in 2015 to 53,297 MVA in 2019, representing a CAGR of 18 per cent during the period. It has been estimated that there were around 96 high voltage grid stations by the end of 2019.

 

Some of the major projects commissioned during 2019 were the—400/132 kV Qabel and Saih Al Makarim and 132/33 kV Samad and Sinaw grid stations; and 132/33 kV Samad–Sinaw and 400 kV Sohar III IPP–Sohar Free Zone lines.

 

In addition to the domestic transmission network, Oman’s grid is interconnected with the transmission system of the United Arab Emirates (UAE), via a 220 kV line from the Mahadah (Al Wasit) grid station to Al Foah. Through this interconnection, Oman is also connected to its neighboring countries through the Gulf Connecting Countries (GCC) Interconnecting Authority’s (GCCIA) grid interconnection system, which facilitates the transmission of power among the six connected countries, namely, Kuwait, Saudi Arabia, Qatar, Bahrain, the UAE and Oman. The connection between Oman and the UAE was established in 2011.

 

Figure 3: Growth in Oman’s transmission network

 

 

Note: Data for 2019 has been estimated based on projects that were reported to be commissioned during the year.

Source: OETC; Global Transmission Research

 

Upcoming plans and investment

Under the OPWP’s RE development plan, the country will focus on increasing the share of RE-based sources, mainly from solar, wind and waste-to-energy (WTE). OPWP has set a target of generating 16 per cent of the total power from RE-based sources by 2025, which will further increase to 30 per cent by 2030. To achieve this, OPWP will competitively tender RE-based projects to be developed by private sector entities.

 

As per the RE plan, around 3 GW will be added by 2025, of which around 85 per cent (2.6 GW) is solar-based, 10 per cent (300 MW) is wind-based and 5 per cent (160 MW) is WTE-based. Some of the key projects planned include the 500 MW Ibri II and 1,000 MW Manah solar PV IPP power plants; 200 MW Duqm wind power plant and 160 MW Barka WTE plant. In addition to this, the 700 MW Misfah IPP combined cycle power plant is planned to be commissioned by 2022.

 

To this extent, future transmission investments in Oman are largely directed towards—developing grid infrastructure to evacuate power from the planned RE generation plants, meeting future load growth, expanding transmission network capacity in order to maintain and improve the reliability of the existing grid network, reducing interruptions, and benchmarking its transmission network performance to international standards.

 

Of the OMR477 million under its 2019-23 investment capital expenditure programme, OETC broadly plans to utilise it for the addition of around 800 km high voltage transmission lines, 12-15 grid stations (GSs) and 8,200 MVA of transformer capacity. Of this, OMR216 million will be invested in establishing infrastructure for evacuating power for generation power plants, OMR245 million for comprehending load growth, OMR10 million for non-load related projects and OMR5.6 million in establishment of common assets.

 

One of the major upcoming projects is the North–South Oman Interconnector Project, which aims to connect the country’s south and north electricity grids. Phase 1 of the project, which is valued at OMR100 million, includes the establishment of the—400/132/33 kV Duqm GS, 400/132 kV Nahada, Barik and Suwayhat GSs, 400/33 kV Mahout GS, and around 380 km of 400 kV overhead lines (OHLs) interconnecting the GSs connecting Duqm to Izki via Mahout. The project aims to meet the power supply-demand of Tanweer and Duqm, and to make provision for transmission access to areas with potential RE development. Several engineering, procurement and construction (EPC) tenders for the same were invited during the first month of 2020.

 

In addition, tenders for other key projects such as the—400/132 kV Jefnen GS, 220/132 kV Misfah GS, 220/132 kV Airport Heights GS, 132/33 kV WTE Barka IPP GS, 400/132 kV Rustaq GS, 400 kV Manah GS and 132/33 kV Saih Al Kairat GS; and approximately 240-km-long, 400 kV and 100-km-long, 132 kV OHLs—are expected to be launched in 2020.

 

The table below mentions some of the key planned projects.

 

Table 1: Key planned transmission projects

Project

Voltage (kV)

Technical parameters

Scheduled commissioning

North–South Oman Interconnector Project (Phase I)

400/132

~380 km

2023

Duqm GS

 400/132

4x125 MVA

2023

New Izki–Misfah line

400

100 km

2020

Rustaq–Wadi Bani Auwf–Nakhal line

132

2x125 MVA, 86 km

2020

Khaborah Interconnection Station (KIS)

220/132

2x500 MVA

2020

Halban grid station

132/33

4x125 MVA

2021

Saih Al Khairat GS

132/33

2x125 MVA, 88 km

2022

New Rusail grid station (Phase 1)

400/132

2x500 MVA

2022

Upgradation of Sur GS

 132/33

2x125 MVA

2023

Source: OETC; Global Transmission Research

 

Also, the utility is undertaking intiatives to digitalise its grid network. In 2019, Swedish-Swiss ABB was awarded a contract for installing a high-reliability grid communications technology solution for protecting OETC’s critical digital electrical infrastructure. The utility has also engaged Belgian OTN Systems to construct an XTran telecommunication backbone for its grid network. Under this, a new 10G network, based on Multiprotocol Label Switching-Transport Profile (MPLS-TP), will be constructed for more than 30 substations, as well as the load dispatch centre and backup centre.

 

Conclusion

The privatisation move is expected to benefit Oman’s power sector by creating a competitive electricity industry in the coming years. The country is also looking to move towards an energy-sustainable future with development of RE-based capacity. In line with this, plans have been laid out to undertake requisite investments that ensure the creation of an efficient and strong interconnected grid network.