Movements towards liberalizing the electricity sector in the Sultanate of Oman - Energy

Officials are seeking to further liberalize the electricity sector in the Sultanate of Oman, by enabling the supply of electricity between generators and major consumers, without resorting to the Oman Power and Water Procurement Company.

The Public Services Regulatory Authority revealed proposals that would – for the first time – enable large electricity consumers to secure their needs directly from generators, thus bypassing the current sole buyer, the Oman Power and Water Procurement Company.

The proposals, once finalized and approved, are expected to pave the way for renewable energy-based generators to provide “green” electricity to interested industrial or commercial customers operating for low or zero-carbon commitments, the Oman Observer platform reported.

Self-supply of electricity

The proposals are outlined in a recent advisory paper by the Public Services Regulatory Authority on the “Access Fee Methodology for Self-Supply or Direct Access”, which introduces new mechanisms for the electricity supply in Oman outside the scope of the single-buyer model under which the market is currently regulated.

The Public Services Regulatory Authority paper proposes a set of tariff mechanisms based on the type of transmission network usage of bilateral and electricity transmission agreements in the Sultanate of Oman.

One mechanism is “self-supply”, which applies to customers who use electricity without access to the transmission system.

The authority explained – in its paper -: “Specifically, this includes customers who use the electricity they generate (or “self-generate”), and access it by establishing a wired connection on site, or private.”

Electricity in the Sultanate of Oman
One of the power lines – archive

direct access to electricity

The other mechanism is direct access, which applies to customers who use electricity supplied directly by an off-site generator via the transmission system, without going through the spot market or the electricity purchase agreement with OPWP.

The authority said: “Direct access generators may wish to transfer electricity to the existing electricity transmission network to serve their customers, and direct access also provides an option for customers wishing to generate their own electricity off-site and transmit it for themselves, via the transmission system instead of private wires.”

“It is against this background that the Public Services Regulatory Authority has commissioned the Oman Electricity Transmission Company to design a system access fee (or ‘transmission’), which allows customers to generate their own electricity off-site and transmit it to themselves using the transmission network,” she added.

It also clarified that these fees “also allow licensed production facilities to transfer electricity to entities other than the Oman Power and Water Procurement Company using the transmission network.”

Electricity in the Sultanate of Oman

In the single-buyer model, the generators serve the market under long-term power and water purchase agreements with the state-owned Oman Power and Water Procurement Company, a member of the Nama Group.

Starting on January 1, 2022, this model was modified slightly after the introduction of the wholesale electricity market (spot market); This allows generators whose PPAs have expired to sell their production in the spot market to the Oman Power and Water Procurement Company.

However, with renewable energy sources selected to play an increasingly important role in electricity generation in the future, DEWA is preparing guidelines to enable “bilateral” and “transfer” agreements between generators and major customers.

Bilateral agreements refer to the arrangements agreed by the generator to supply electricity directly to a large consumer, outside the jurisdiction of OPWP, as the sole buyer.

The term “Transmission” refers to the arrangements agreed with the Oman Electricity Transmission Company, the monopoly owner and operator of the country’s transmission network, to supply the customer with electricity from the generator.

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