POWERING THE GRID

Oman 2015 | ENERGY & UTILITIES | REVIEW: UTILITIES

Oman is developing a number of innovative technologies and processes to address its utilities and water needs in a proactive and forward-looking fashion.

Oman is highly reliant on its oil sector for the bulk of its national revenues and public spending, possessing vast oil reserves, which are utilized to meet its growing domestic need for energy. At the same time, it also boasts significant reserves of natural gas and is a leading exporter; this situation will only increase when the new Omani-Iranian pipeline opens in 2017. According to the research firm Norton Rose Fulbright, Oman in 2012 had proven oil reserves of 5.5 billion barrels and proven natural gas reserves of 30 trillion cubic feet (tcf), although neither resource is as easily accessed or as large as those of its neighbors. Currently, one third of Oman's energy needs are met by oil, but as oil reserves are predicted to have a remaining lifespan of only 40 years—as compared to over 100 years for Abu Dhabi's reserves—the government is faced with the question of what will replace hydrocarbons as this resource begins to dwindle.

Economic growth and increased construction in the country have increased the need for fuel, but by extension, the demand for power and water. The Sultanate is especially focused on assuring water supplies are correctly managed. The government is watchful for potential water shortages, as only 1% of the world's ground water resources are found in Oman. This has led to an emphasis on water sustainability and resource management in this area. Oman invested $3 billion in 13 new power, water, and energy projects in 2012. Moreover, Omani utilities have been focusing on a number of initiatives that include assuring the diversity and security of fuel sources; taking steps to develop renewables as a long-term supply alternative; and focusing on conservation, efficiency, and assessing resource demands.

One of the key players in this arena is the Rural Areas Electricity Company (RAECO), which is owned by Oman's Ministry of Finance; RAECO primarily undertakes projects for electricity generation, transmission, distribution, and supply. It also deals with the critically important desalination projects in the interior of the country. Eng. Hamed Salim Al Maghderi, CEO of RAECO, described his company priorities in the following words: “Over the past three years, the company has also started to consider renewable energy as a solution to the high cost of the fossil fuels being used. Oman is one of the best locations for renewable energy; every day we generate more than 600 GW of power from the sun and all the areas where this company operates are highly suitable to solar plants, while some areas we also have studies on are good sites for wind plants." The company has announced plans to invest $200 million in some 90 MW of renewable power plants by 2019. RAECO is planning to raise power generation capacity by 336 MW with an additional investment of OMR391 million, or $1 billion. Of this 25%, or around 90 MW, of power will derive from renewable energy projects, especially solar energy. The additional power meets the demand of 15,000 residential households and other customers. Currently, the company has around 29,875 customers, which is projected rise to 45,000 by 2019. By RAECO's own estimates, the company is expanding generation capacity by 22% per year and projects that growth in demand for power will vary from 10% to 23% in different regions of the country at different times.

LET THE SUN SHINE

The focus on investment in solar power plants is a natural choice for Oman. According to estimates by the Authority for Electricity Regulation (AER), the Sultanate has the unique advantage of 342 clear sky days per year, whereby the conditions are highly favorable for solar power generation. Oman has a high ratio of “sky clearness" and receives extensive daily solar radiation ranging from 5,500-6,000 Wh/sqm a day to 2,500-3,000 Wh/sqm a day, giving it one of the highest solar energy concentrations in the world. The real question is how best to convert this advantage in sunshine into a power source for Omani citizens and industry to use. Residential consumers account for around half of total electricity consumption in Oman. According to the Ministry of Electricity and Water, between 2005 and 2012 electricity supply to residential consumers rose by 96%, while electricity intensity increased by 32%. Much of this growth is fueled by construction projects across all sectors, but especially in tourism, real estate (both residential and commercial), and infrastructure. While these trends reflect a pronounced and favorable increase in national prosperity, there are also obviously associated costs: the overall state electricity subsidy increased from OMR116.4 million in 2006 to OMR 274.5 million in 2012, of which residential consumers were the major recipients.

WATER AND WIND

The state-owned Oman Power and Water Procurement Company (OPWPC), which is the main buyer of power and desalinated water from independent producers, has taken major steps to increase the desalination capacity of independent water projects to 123.6 million gallons of water per day by 2020. Rainfall in Oman is reasonably high compared to neighboring countries such as Kuwait, Qatar, and Saudi Arabia. Although desalination is an important priority for the Sultanate, the country also relies less on desalination for its drinking water than many of its neighbors. For example, in 2005, Bahrain, Kuwait, and Qatar all had desalination to demand ratios of above 90%. In the same year, Oman's ratio was less than half of this, at 40%. Oman annually produces millions of gallons of water from desalination plants and wells, and rainfall in the southern part of the country is also affected by the annual monsoon. But desalination remains firmly on the government agenda, for both sustainability and water security reasons. Ahmed Al-Ghafri is the CEO of GEO-Resources, a firm that deals directly with desalination solutions for the Sultanate, and explains the situation to TBY in the following fashion; “We do a lot of environmental work to support various development projects. We also cover the water resources in Oman; we do a lot of hydro-geological work and support the ongoing water sustainability programs." As development and construction proceed apace in the Sultanate, both water and environmental sustainability are factored into every major relevant policy decision.

Oman is also blessed with an abundance of potential wind resources, and benefits from a long coastline and extended exposure both to strong summer and winter winds, as well as the wind power provided of the regional monsoon. It has an average wind speed of slightly over 5 m/s and an estimated 2,463 hours of full winds per year, making wind power an economically viable form of renewable energy according to the AER. In 2014, Oman unveiled plans for a 50 MW $125 million wind farm in the southern district of Dhofar, as part of its drive to diversify away from fossil fuels. The project should be active and contributing to the national utilities matrix by 2017.