A further chapter in the ongoing liberalisation of the power sector in the Sultanate of Oman shortly begins with the formal launch of the Electricity Spot Market – enabling licensed generators for the first time to offer their surplus capacity at the most competitive rate.
Its imminent launch – the first in the Middle East – follows nearly six months of market trials by the Oman Power and Water Procurement Company (OPWP) which, in addition to its statutory role as the power procurer, is also the Market Operator of the new platform.
As a first step in the roll-out of the Electricity Spot Market, OPWP as the Market Operator unveiled a dedicated website (oemo.om) to enable generators to compete for the opportunity to offer their capacity in line with specific guidelines governing the operation of the Electricity Spot Market.
Earlier, OPWP had described the spot market as an “important milestone” for the Omani electricity sector. “The market is expected to provide a competitive environment for trading of energy in order to reduce the cost of electricity procurement and avoid long term power purchase agreements (PPAs). The market will provide an opportunity for the electricity generation companies who have expired PPAs with OPWP to compete and exploit its assets. It will also provide a platform for self-generators with the ability to sell surplus electricity production in the market,” OPWP – part of Nama Group - explained.
When brought online, the electricity spot market will be open for all generation companies operating in the Main Interconnected System (MIS) network to participate. But upon the completion of the ongoing North-South Interconnection Project, linking the MIS with the network of Dhofar Governorate, other generators will be able to participate as well.
“Under the spot market, expiring plants are able to submit cost reflective offers for energy on a daily basis, and they are all paid the same price (System Marginal Price). The benefits of introducing the spot market include increasing the residual value of the plants after their contracts expire and ensuring that plants with higher efficiency are prioritised in dispatch. Generators holding PPAs when the market operations are initiated are also required to submit offers into the market. However, they are settled and invoiced as per PPAs,” the Market Operator further added.
Significantly, investors in solar and wind projects can also offer to sell their uncontracted output via the Spot Market and thus optimise the return on their investments. Conversely, large consumers, for their part, can keep a tab on spot market quotes and opt for suppliers offering the best tariffs – an option that can be exercised when the market is further liberalised through the legalisation of ‘bilaterals’.