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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oman power systems losses hit all-time low in 2018

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Oman’s power sector continues to register gains in its ongoing efforts to reduce transmission system losses that eat away at least a tenth of total electricity output before it reaches customers.


System losses attributable to a combination of technical and non-technical factors are a common occurrence in electricity grids around the world. In the Sultanate, these losses accounted for as much as 25 per cent of electricity production in 2004, just before the sector was restructured and opened to privatization.


In 2018, average system losses reported across all major networks in the Sultanate slumped to an all-time low of 8.4 per cent, down from 9.2 per cent a year earlier, according to the Authority for Electricity Regulation (AER) Oman.


All three major power systems serving the general population in the Sultanate notched significant gains in paring system losses. The Main Interconnected System (MIS), which covers much of the northern half of the Sultanate, posted 8.4 per cent in system losses last year, down from 8.8 per cent a year earlier, the regulator stated in its 2018 Annual Report issued here this week.


Dhofar Power System, serving customers in Salalah and the wider governorate, saw system losses declining to 9.3 per cent in 2018, down from 115 per cent in 2017. The Rural Areas Electricity Company (RAECO), which supplies electricity to remote areas falling outside of the domains of the MIS and Dhofar Power systems, reported a hefty fall in losses to 11.7 per cent last year, down from 16.3 per cent in 2017.


“The significant losses reductions achieved since the sector restructuring in 2005 reflect the application of a clear incentive based price control mechanism and the constructive responses of licensees,” said the regulator in its report.


Savings garnered in value terms as a result of these loss mitigation efforts cumulatively add up to around RO 800 million if computed against the 2004 benchmark, according to the Authority.


“Losses reductions are of considerable economic value in terms of achieved and future cost savings,” it said. “If the cost saving of a 1 MWh reduction in losses is RO 9 (which approximates to the average variable MIS generation cost), the reduction in MIS losses from 8.8 per cent in 2017 to 8.4 per cent in 2018 returned benefits of around RO 1.3 million (the benefit is RO 47.9 million if assessed against 2004 losses of 24.6 per cent).


The cumulative value of MIS losses reductions since 2004 is RO 296.6 million, and in present value terms the benefit of MIS losses reductions in 2018 is around RO 22 million, using a discount rate of 6 per cent (RO 798 million if assessed against 2004 losses of 24.6 per cent).


These figures take no account of investment savings in generation and network infrastructure, which would significantly increase the value of losses reduction benefits,” the Authority added.


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