BUDDING SEEDS

Oman 2018 | GREEN ECONOMY | REVIEW

Green energy programs are still in the early stages; the anticipated arrival of several large solar and wind projects should begin to reshape the Omani energy industry.

Hydrocarbons will not stop being the foundation of the Omani economy anytime soon, but the Sultanate has begun to take meaningful steps toward adding new sources of renewable energy to its economic mix. Oman's geography gives it significant solar and wind generation potential, and the government has been aggressive in forming new investment deals with experienced firms to take advantage of these opportunities. 2017 has seen Oman sign a number of agreements to bring major wind and solar plants online, projects that promise to open up new opportunities for economic growth and bode well for the Sultanate's future energy independence.

Oman well recognizes that its current energy policies are not conducive to long-term growth. Although the Sultanate's oil and natural gas reserves are significant, they are not large enough to allow for domestic consumption and exports at current growth rates; at present, 97.5% of Oman's power comes from natural gas, and with consumption accelerating due to a population that is projected to grow by 2.4 million by 2040, gas imports are only expected to increase, placing new pressure on Oman's coffers. To resolve its looming energy problems, the government has examined a host of technologies and ultimately decided to focus its energies on wind and solar power generation. Oman's geography makes it a natural fit for these technologies; its dry climate and location near the equator give it one of the highest solar densities in the world, and its long coastline and exposure to strong seasonal monsoon winds mean it has tremendous wind energy potential.

SOLAR

The rapidly falling price of solar energy has made it an appealing option for Middle Eastern countries, and Oman is no different. Though the sector is still very much in its early states, the last few years have seen the Omani government sign its first major agreements for large-scale solar projects. In 2014, Swiss firm Terra Nex signed a USD2-billion project to develop 400MW of solar energy across the Sultanate, the first such deal in Oman's history. Through mid-2017, Oman's government was working to prepare the tender for a 200-MW photovoltaic solar plant, the first step toward adding a large-scale solar plant. Projected to be operational by 2020, the project is part of the Omani power utility to add more than 1,600MW of solar energy. The Omani government's challenge in moving toward renewable technologies is more than just signing deals for large projects, however; industry officials recognize that they will need to change household consumption habits to make a difference. Oman's policy of heavy electricity subsidies has resulted in soaring electricity use, but the government believes that smaller photovoltaic units might hold the potential to reshape the sector, keeping energy costs down and reducing emissions. Small photovoltaic cells have already begun to gain a foothold as a way to power heaters and other small household equipment, and plans are in place to develop new subsidies for these residential photovoltaic projects, which government officials estimate have the potential to generate more than 1.4GW of renewable energy if implemented nationwide.

WIND

As with solar, 2017 has seen the nascent wind power industry come to the forefront with the announcement of a number of major projects. The USD200-million Harwheel project, the first large-scale wind farm in the Sultanate, is currently under construction. Once operational, the 200,000-sqm farm is expected to generate 50MW, half of Dhofar Governorate demand during the winter. Construction and engineering is being provided by a consortium of international companies that include an Abu Dhabi renewable energy company, General Electric, and Spanish renewable energy firm TSK—a mark of Oman's global reach and ability to leverage preexisting free trade connections into sustainable development. One of the disadvantages of wind energy as compared to solar is its inconsistency and land-use needs, but Oman's sparsely populated southern and eastern regions make it a good fit for the technology. Moreover, Oman receives its strongest winds during the summer when energy demand is at its highest, making the seasonal nature of wind flows less of an issue. Studies have estimated that installations in southern Oman could provide 15% of Oman's energy needs, but it remains to be seen how aggressively the Omani government will move to add capacity in the face of low traditional energy prices.