How well positioned is Oman to meet increased power demand?
Oman's interconnected power system is in a great position because of the way the sector is set up in terms of load, generation, and our annual plans that project increases in demand going forward. Oman Power and Water Procurement Company (OPWP) publishes seven-year statements containing its future projections that help determine when we need new generation plants. In terms of installed capacity and projects for the near future, we are doing well.
What are the primary challenges in distributing electricity to rural parts of Oman?
The entire country is now connected with electricity. Through the main interconnected system and the rural areas system, we have 99.9% coverage. The job is done in terms of coverage; it is now just a matter of maintaining it by ensuring we have adequate capacity in the system. The main challenge is to optimize costs in rural areas. There is a great deal of dependency on diesel for generation, and electricity companies in rural areas are working on alternative solutions. These might include the use of renewables under a hybrid model, or interconnection with the main system where it is economically feasible. However, these proposals present challenges in themselves. In the case of renewables, energy sources are not all available all of the time so it is necessary to create hybrid systems integrating renewable and conventional generation sources. And in the case of rural connections to the main system, sometimes an area is just too far away to connect, and the cost of infrastructure is not justified by the savings in diesel costs.
Which of the Nama Group companies is most involved in the integration of renewables into the system?
Most of Nama Group is involved in some way, though OPWP has been tasked by the government to help ensure that by 2025, 10% of the electricity consumed in Oman will be from renewables. This has given us the mandate to enhance the utilization of renewables in the grid. OPWP as the main power procurement arm in Oman has already kicked off a number of projects, and there are others in the pipeline aimed at achieving this capacity. It is doing wind and solar projects, and there is another project lined up based on obtaining energy from waste recycling. The second company focused on this agenda is the Rural Area Electricity Company (RAECO). The regulator in Oman has also introduced a scheme to encourage people to place solar panels on their rooftops. This scheme is making progress, and all our distribution companies are involved, as they are required to support people who want to install solar systems.
What technologies are being introduced to make the distribution system more efficient?
Our focus at the moment is on automated meter reading, such as smart meters. This is together with pre-pay meters and using IoT technology to help us with data analytics that will make the system more efficient. Smart meters are for customers who consume more than 150MW per year. This includes commercial, industrial, and government accounts, though it does not include residential accounts.
How have the cost-reflective tariffs changed the power model in Oman?
Cost-reflective tariffs have had an impact on consumers' consumption behavior. The entire purpose of the cost-reflective tariff is to reduce peak load. All utilities providers worldwide invest large sums of money to meet peak-hour demand, and if that peak demand can be lowered, it saves money and reduces the strain on the system. As a result of cost-reflective tariffs, we have already seen consumers shifting power consumption away from those times. The strategy is beginning to work, though it takes time for consumers to understand and adopt this new approach. They have to adjust their machinery and optimize their behavior to shift away from peak consumption because it now hits them economically if they consume during peak times.
What benefits have come from the expansion of IPPs and IWPPs in Oman?
The main benefit has been the attraction of foreign investment. Without these billions in foreign investment, the government would have to put the cash upfront to do these projects. Then, there are the benefits of efficiency and optimal designs because private operators are in it to make money so they ensure these operations are efficient. However, to maintain performance, there are penalties if they do not reach standards set by the government. We have not been disappointed, and moving forward this will be the way to go for such service.
How does Nama Group limit interruptions to power supply?
We want to make sure we meet demand without interruptions. We carefully monitor indications of any disruptions in public electricity supply. We also work hard to keep electricity losses in the system as low as possible, especially commercial losses. We have been driving that now for more than 10 years. We have come down from 25% losses to 8.3% today, in part because of upgrades to our systems. We have an investment program for the next three to four years for transmission and distribution activities. It is important that we are able to attract new investors to generate electricity or funds from banks and other financial institutions that can lend us part of the money we need for the further development of the electricity network in Oman.