Incremental reductions in energy losses across the North Oman electricity transmission and distribution system have delivered savings cumulatively valued at a staggering RO 758 million since 2005, when the industry was restructured, according to the sector regulator.
A system of incentives and penalties in place since the sector’s landmark unbundling and restructuring more than a decade ago has contributed to gradual improvements by transmission and distribution licensees in bringing down the quantum of electricity lost due to various technical and non-technical factors.
Then, energy losses attributed to a mix of technical and non-technical factors ate up nearly a quarter of all electricity output entering electricity systems in the Sultanate. In 2016, that figure slumped to 9.2 per cent — down from 10.0 per cent in 2015 — in trend with a year-on-year improvement in loss reductions championed by the Authority for Electricity Regulation Oman (AER) and Nama Group, the holding company of government-owned generation, procurement, distribution and supply entities.
Posting the biggest gains was the Main Interconnected System (MIS), covering much of the northern half of the Sultanate, with energy losses of 9.2 per cent in 2016, down from 10.0 per cent a year earlier, the Authority said in its newly published Annual Report 2016. However, Dhofar Power Company (DPS), which serves much of Dhofar Governorate, registered a slight increase in energy losses at 12.7 per cent in 2016, up from 12.2 per cent a year earlier. The Rural Areas Electricity Company (RAECO), which mainly covers areas unserved by the MIS and DPS grids, also suffered a sizable increase in energy losses at 14.7 per cent in 2016, significantly up from the previous year’s figure of 10.7 per cent.
Energy losses, which are a normal occurrence in electricity systems around the world, are attributed to a number of technical factors. A significant part of the loss occurs when electricity is transmitted over long distance over high voltage and medium voltage transmission cables to serve a wider network on low voltage distribution lines. Theft, inaccurate billing, and unbilled consumption are also contributory factors.
According to the regulator, reductions in energy losses continue to deliver important savings to the sector and the economy. “The significant losses reductions achieved since the sector restructuring in 2005 reflects the application of a clear incentive based price control mechanism and the constructive responses of licenses. Losses reductions are of considerable economic value in terms of achieved and future cost savings,” the Authority said.
If the cost saving of a 1 MWh reduction in losses is RO 10, the reduction in MIS losses from 10.0 per cent in 2015 to 9.2 per cent in 2016 returned benefits of around RO 4.5 million, it explained, noting that the amount balloons to RO 45.5 million if assessed against 2004 losses of 24.6 per cent.
Likewise, “the cumulative value of MIS losses reductions since 2004 is a little under RO 28.2 million, and in present value terms the benefit of MIS losses reductions in 2016 is around RO 42 million, using a discount rate of 6 per cent (RO 758 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.
Electricity supply in 2016 reached 30.4 TWh (terawatt-hours), 5 per cent higher than in 2015 and 220 per cent higher than in 2005. The number of customer accounts increased by 73,245, or 7.9 per cent 927,184 in 2014 to 1,000,429 in 2016. Since the sector’s restructuring, the number of electricity accounts jumped 88.7 per cent.