Oman to allow bilateral power pacts, introduce energy efficiency ‘credits’

Ambitious strategy: Slate of initiatives unveiled by the Ministry of Energy and Minerals to accelerate energy efficiency goals and boost energy market competition

Eager to add new momentum to the country’s nascent energy conservation efforts, the Ministry of Energy and Minerals has unveiled a slate of initiatives designed to further liberalise the electricity sector and pave the way for further market competition – moves ultimately aimed at driving energy efficiency across the board.

They include new regulation authorising bilateral electricity deals between large consumers and generators, bypassing for the first time the longstanding offtaker, the Oman Power and Water Procurement Company; the mandatory appointment of Energy Efficiency Officers to oversee conservation measures by large consumers; and the planned introduction of a credit trading system to monetise energy efficiency gains.
Delivering the keynote address at an Energy Efficiency Conference organised by OQ, the global integrated energy group of the Sultanate, Salim bin Nasser al Aufi, Under-Secretary of the Ministry, said the planned moves seek to build on recent government-led reforms of the energy sector.
They include the rollback of subsidies for electricity supply and the enlargement of the target base covered by Cost-Reflective Tariffs (CRT).
Notable among the anticipated changes to the energy landscape in the Sultanate is a plan to legalise direct power purchase agreements between major consumers and electricity producers – dubbed as ‘bilaterals’.
“The Authority for Public Services Regulation (APSR) is currently working on regulations governing bilaterals for large consumers,” said the Under-Secretary.
“Thus, for example, you are a refinery in Suhar or Duqm, and there is a producer of electricity wherever that you want to connect with, you can negotiate a price directly.
OPWP will no longer be mandated to buy electricity in order to give it to a large consumer, such as an industry.
This new regulation is coming very soon – hopefully within the next few months.”
In tandem with this initiative, the regulator is also discussing with Oman Electricity Transmission Company (OETC) an agreed tariff that will be added to the price agreed in a bilateral arrangement.
“Once we get the transmission tariff in place, the generator can go to the transmission company and start negotiating a transmission cost. After all, there are times when the transmission network is not fully utilised,” Al Aufi noted.
Also on the drawing board is a proposal to make it mandatory for large consumers to appoint Energy Efficiency Officers (EEOs) whose brief is to chalk out and implement measures to make energy consumption more efficient across the organisation.
“The idea, once we decide who constitutes a major consumer, is for such organisations to designate a certified individual to serve as EEO. Their job is to put in place programmes, mechanisms and measures to reduce consumption in the organisation or building based on a certain baseline.”
Significantly, the Ministry is also contemplating the introduction of a credit system – broadly based on the international carbon credit model – to incentivise energy efficiency efforts in the Sultanate.
Under the proposal, a company or organisation that has achieved certifiable gains in lowering its consumption beyond an agreed target can convert these gains into credits.
These credits can be traded with, or sold to, those that fail to meet their reduction targets – thus creating a marketplace for trading in Energy Efficiency credits similar to carbon credit trading, the Under-Secretary said.
Wednesday’s conference, which was a physical and online hybrid event, also featured speeches and presentations by, among others, Dr Salim al Huthaili, CEO of Alternative Energy at OQ; Mahmood al Wahaibi, Urban and Infrastructure Planning Expert – Ministry of Housing and Urban Planning; and specialists representing Petroleum Development Oman, BP Oman, Total, OQ, Clean Energy Business Council (CEBC), Ejaad, Sultan Qaboos University, Schneider Electric and Hasa Energy.