Energy in Oman 2 nd May 2018 Date: Classification: Brian Wood, - - PowerPoint PPT Presentation

Date: Classification:

Viability of Solar Energy in Oman

2nd May 2018 Brian Wood, Director for Oman Solar Forum 2018

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Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Introduction to OPWP

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Government Owned

OPWP is a fully government

• wned company.

It is also a subsidiary of the Electricity Holding Company and part of Nama Group.

Regulated

OPWP was established by the Law for Regulation and Privatisation

• f

the Electricity and Related Water Sector (Sector Law). The functions and duties of OPWP are predominately listed in the Sector Law and regulated by the Authority for Electricity Regulation (AER).

Transfer of Duties

The Sector Law transferred the following duties from the Ministry of Housing, Electricity and Water:

• Electricity & Related Water:

Nama Group companies;

• Water: Public Authority for

Electricity & Water (PAEW); and

• Housing:

Ministry

• f

Housing.

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

OPWP: Functions and Duties as Single Buyer

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Capacity

Secure new capacity and

• utput of power to meet

all reasonable demand

Forecast & Plan

Forecast and plan to meet demand growth and assure the reliability of supply

Private Sector

Meet the requirements for new capacity through financing, ownership and

• peration

by private sector investors

Competition

Procure through fair and transparent competition with no discrimination

Tariffs

Establish bulk supply tariffs for power and water that reflects the cost of supply

Economic Purchase

Procure capacity and energy at economic, benchmark prices

Support

Provide consultation and technical support to PAEW and

• ther

government entities

Health & Safety

Give due consideration to the health and safety of the general public and OPWP employees

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

There are 3 main systems in Oman: There are also other standalone systems:

Electricity System Structure

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MIS DPS

Duqm Musandam Main Interconnected System (MIS) Dhofar Power System (DPS) Musandam System Duqm System PDO System

PDO

6500 MW 70%

Peak Demand % of Total Demand

570 MW 7% 1400 MW 21% 85 MW 1% 30 MW <1%

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Power Flow Map

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Generators OETC MEDC Mazoon Majan Customers

Distribution Transmission

DPC

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Electricity Demand Projections- MIS

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• 6% per year expected demand growth
• 9,010 MW peak demand by 2024
• Nearly 300 MW below previous forecast due mainly to CRT

impacts

• Scenarios for demand uncertainty:
• 4% per year Low Case
• 8% per year High Case

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Power Plants Under Contract, Construction or Development

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• Progress on economic viability of solar PV

– 2008: OPWP proposed pilot utility-scale projects – 2011: Solar monitoring sites, data collection – 2016: AER given authority for RE economic standards and regulatory development for roof-top PV installations – 2017: OPWP solar PV feasibility study/economic methodology; AER regulatory guidelines

• Fuel Diversification Policy (late 2017)

– RE target at 10% of electricity production by 2025 – Up to 3,000 MW of coal-fired capacity by 2030

• Wholesale Electricity Spot Market (starts 2020)
• North-South Interconnect Project

Major Developments for RE Viability in Oman

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Solar Potential in Oman

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• Solar irradiation levels are high throughout

the country, increasing toward the south

– Ranging from 2000 to 2500 kWh/m2

• Electricity demand is concentrated in

northern Oman

• Transmission access currently constrains solar

development toward the south

– Transmission capacity is currently 60 MW to MIS and 150 MW to DPS – Local electricity demand is currently low except in the PDO concession area – PDO is developing some large projects – Isolated grids have high electricity costs

• The North-South Interconnect project aims to
• pen access to RE development in the south

– 400 kV Line with capacity exceeding 1000 MW – If approved, may be available from MIS to PDO and Duqm by 2023

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Wind Potential in Oman

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• Oman has excellent potential for wind energy

development

– Numerous onshore sites have average wind speeds of 8-10 m/s – OPWP is launching a wind monitoring project in 2018 – Offshore development may also have large potential

• The first wind farm is under construction

– 50 MW, located at Harweel in Dhofar – COD expected in 2020 – To be operated under a PPA between OPWP and RAECO

• Hourly wind data from Thumrait suggest a profile that

complements solar (i.e., mainly at night), but more intermittent

• Wind generation potential is concentrated in southern

Oman

– Best in coastal Dhofar and Thumrait – 2nd Best in Duqm, inland Al Wusta – Some potential in Sharqiyah

• Large-scale development needs transmission access

to demand centers

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

OPWP RE Development Plan

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2018 2019 2020 2021 2022 2023 2024 MW Dhofar I Wind IPP

• 50

50 50 50 50 Ibri II Solar IPP

• 500

500 500 500 Solar IPP 2022

• 500

500 500 Solar IPP 2023

• 500

500 Solar IPP 2024

• 500

Dhofar II Wind IPP

• 150

150 Wind IPP 2023

• 200

200 Wind IPP 2024

• 200

Waste to Energy 1

• 50

50 Total Capacity

• 50

550 1,050 1,950 2,650 Capacity Contribution

• 150

300 500 650

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Features of OPWP RE Procurement

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• Tendering process rather than an open auction or FIT

arrangement

• Features of OPWP’s procurement process

– Pre-arranged land access – Pre-arranged transmission access – Transparent procurement process – PPA-based, secure off-taker, well-recognized by lenders

• OPWP envisions annual procurement rounds

– Single or multiple awards for individual tenders – Technology not prescribed, though subject to Minimum Functional Specification (MFS) – Initial project(s) may be specified as Solar PV, but CSP and storage may come in the future

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Development Target and Mitigation Plans

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• OPWP’s RE development plan is flexible, and responsive to market

conditions and development constraints

– 2000 MW (total) of solar projects to be installed by 2024 – 500 MW projects are initially considered (per procurement) – Subsequent market assessments may allow for larger projects – A mix of solar and wind projects benefits dispatch

• Solar and wind project procurement to proceed separately

– If development hurdles occur for wind, then OPWP may accelerate the pace/quantity for solar

• OPWP expects solar PV tariffs to be less than the economic

benchmark price of fossil-fueled generation

– Based on initial feasibility study – Considers the economic value of gas, emissions benefits, etc. – If project experience proves this, OPWP may develop projects beyond the 10% policy target, on an economic basis

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

OPWP Project Development Process

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Project Preparation

1. Handover from PE to PD

• 4. Site Selection

2. Project Scope Workshop

• 5. Appointment of Advisors

3. MOF Budget Approval

Project Definition

1. Project Definition Paper

• 3. Risk Matrix

2. Competition Paper

• 4. Preliminary Environmental Assessment

Pre-Qualification

1. Prepare RfQ Documents

• 3. Announce Pre-Qualified Bidders

2. Tender for RfQ

Request for Proposal

1. Power Purchase Agreement

• 5. Electrical Supply Agreement

2. Water Purchase Agreement

• 6. Usufruct Agreement

3. Project Founders Agreement

• 7. Consolidation of RfP documents

4. Natural Gas Supply Agreement

Tender

1. Release of tender documents

• 3. Evaluation

2. Tender Period

• 4. Execution

Closure and Handover

1. Project Development Closure 2. Handover to PI

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Stakeholders and Agreements in Project Development

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OPWP

PPA

Project Company IPP

PFA EHC Successful Bidder NGSA MOG ECA LTSO ESA DISCo Usufruct MOH WCA PAEW

Establishing Project Company (MOCI)

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Tendering Schedule

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Projects Proposed Timeline -> 2017 2018 2019 2020 2021 2022 2023 Solar IPP1 (Ibri 500MW) Solar IPP2 (500 MW) Solar IPP3 (500 MW) Solar IPP4 (500 MW) Wind IPP2 (Dhofar 150 MW)

Construction Procurement

Construction Procurement Construction Procurement Construction Procurement Construction Procurement

RFQ

Issue to Selection: 4-5 mos

RFP

Issue to Bid Submission: 4-5 mos

Award

3-4 mos after Bid Submission

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

Parallel Paths for Solar Development

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• Tendering processes

– OPWP: 2000 MW in annual 500 MW tenders from 2018 to 2021 – PDO: Amin project (100 MW) – RAECO: 40 MW total from 11 sites (pending approval)

• Cost Reflective retail tariffs also establish a benchmark

– Hourly price ranges from RO 20 to RO 75 per MWh – Applies to industrial, commercial and government consumers

• Private development: rooftop solar, industry initiatives

– Enabling agency contracts with DISCos – AER regulation – Sahim program

• Spot market as backstop

– Solar projects can register and participate as “price takers” – Compensates all generation output into the market

Oman Power and Water Procurement Company SAOC ش هاـــــيــمـلاو ةـــــقاــطـلا ءارــــشـل ةــــيـناـمـعـلا ةـــــكرـشـلا.م.ع.م

OPWP Sees a Bright Future for Renewables

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• 10

20 30 40 50 60 2017 2018 2019 2020 2021 2022 2023 2024 Electricity Generation (Million MWh) Renewable Energy Plants Clean Coal Plants Gas-fired Plants

• By 2024, RE projects from OPWP alone would provide for 12% of

electricity output

– About 2/3 – 3/4 of that would be solar projects

• Another 2%-5% may come via other development channels
• By 2030, RE projects may provide 20% of generation or more

Gas-fired Plants 83% Renewable Energy Plants 12% Clean Coal Plants 5%

2024 Fuel Shares

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For A Diverse and Robust Power System

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THANK YOU