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Oman targets completion of Direct Power Sales Framework by year-end

‘Bilaterals’: New legal and regulatory framework seen as key enabler in the growth of a future green hydrogen industry in the country
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MUSCAT: A keenly anticipated legal framework designed to enable eligible power generators to sell electricity directly to large customers will be completed before the end of this year, according to Oman’s Authority for Public Services Regulation (APSR).

The Direct Sales Framework – part of efforts to further liberalise the country’s power sector -- is key to accelerating the pace of international investment in Oman’s nascent renewables and green hydrogen industry. It will also support so-called ‘bilateral arrangements’ agreed directly between generators and major customers, bypassing the state-owned monopoly offtaker – the Oman Power and Water Procurement Co (OPWP) – which is currently the sole buyer of all electricity output under the sector law.

Work on a legal and regulatory framework underpinning this new initiative began last year following its green-lighting by the Council of Ministers.

Its actual implementation is envisaged in phases with the Authority planning to undertake a continual assessment of the project with a view to ensuring its “economic feasibility and fulfilment of the regulatory and technical requirements”.

According to the Authority, customers eligible for direct sales of wholesale electricity are typically large industrial customers. “In the first phase, the eligible participants include generators with expired PPA (Power Purchase Agreements) and industrial customers with existing captive production. The group of eligible participants may be extended in due course,” the Authority said.

“The Direct Sales Framework has to account for technical aspects – mainly to ensure that physical connections, dispatch implications, metering data, and settlement implications are all catered for. However, there are also complex commercial and economic implications related to the price signals existing power system users and customers eligible for direct sales perceive,” it further explained.

Besides contributing to system cost savings, the Direct Sales Legal Framework is expected to incentivise investments in large-scale renewable and green hydrogen projects, which the Omani government is banking on to support its transition away from hydrocarbons as the principal engine of the country’s economic development.

A pipeline of green energy projects, underpinned by renewable energy capacity aggregating a world-scale 30 gigawatts (GW), is envisaged for implementation in the Sultanate of Oman over the coming years and decades. While part of the green hydrogen and green ammonia output from these multibillion-dollar investments is proposed to be exported to international markets, the rest is expected to be utilised locally as a planet-friendly fuel resource to support an array of green industries, as well as zero-carbon transportation and mobility solutions.

The Direct Sales Framework is seen as a key enabler in realising the Omani government’s vision to ignite the growth of a future zero-carbon economy in the country.

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