Oman Power Position _ 7 Year Statement (2017-2023) 4w2sz

OPWP’s 7-YEAR STATEMENT (2017 – 2023)

(Issue 11)

May 2017

OMAN POWER AND WATER PROCUREMENT CO. (SAOC) PO BOX 1388, RUWI PC 112 SULTANATE OF OMAN Tel: +968 24508400 Fax: +968 24399946 www.omanpwp.com

Table of Contents LIST OF TABLES

............................................................................................................................................. 3

LIST OF FIGURES ............................................................................................................................................. 3 GLOSSARY

............................................................................................................................................. 4

OVERVIEW

............................................................................................................................................. 6

SECTION 1

POWER ................................................................................................................................ 8

1.1

Main Interconnected System ................................................................................................ 8 Demand for Electricity ............................................................................................................... 9 Power Generation Resources................................................................................................... 13 Additional Power Generation Requirements ........................................................................... 22 Combining Power Generation & Water Desalination .............................................................. 25

1.2

Dhofar Power System ......................................................................................................... 26 Demand for Electricity ............................................................................................................. 27 Power Generation Resources ................................................................................................... 30 Additional Power Generation Requirements ........................................................................... 33 Combining Power Generation & Water Desalination .............................................................. 34

1.3

Ad Duqm Power System ..................................................................................................... 35 Demand for Electricity ............................................................................................................. 35 Power Generation Resources ................................................................................................... 37

1.4

Musandam Power System .................................................................................................. 39 Demand for Electricity ............................................................................................................. 39 Power Generation Resources ................................................................................................... 40

SECTION 2

FUEL REQUIREMENTS ......................................................................................................... 42

2.1

Main Interconnected System .............................................................................................. 42

2.2

Dhofar Power System ......................................................................................................... 45

SECTION 3 3.1

WATER ............................................................................................................................... 48 Interconnected Zone .......................................................................................................... 48 Demand for Water ................................................................................................................... 48 Water Supply Sources .............................................................................................................. 50 Capacity Target and Prospective Resources ............................................................................ 52

3.2

Sharqiyah Zone ................................................................................................................... 55 Demand for Water ................................................................................................................... 55 Water Supply Sources .............................................................................................................. 56 Capacity Target and Prospective Resources ............................................................................ 56

3.3

Dhofar Water Network ....................................................................................................... 58 Demand for Water ................................................................................................................... 58 1

Water Supply Sources .............................................................................................................. 60 Capacity Target and Prospective Resources ............................................................................ 60 3.4

Ad Duqm Water Network ................................................................................................... 64 Demand for Water ................................................................................................................... 64 Capacity Target and Prospective Resources ............................................................................ 65

3.5

Musandam Water Network ................................................................................................ 67 Demand for Water ................................................................................................................... 67 Capacity Target and Prospective Resources ............................................................................ 68

SECTION 4

PROCUREMENT ACTIVITIES ................................................................................................ 70

4.1

Power Projects ................................................................................................................... 70

4.2

Water Projects.................................................................................................................... 72

2

LIST OF TABLES Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8

Details of PPAs/PWPAs - MIS ................................................................................................... 14 Prospective Contract Extensions, 2017 to 2023 ...................................................................... 18 Summary of PPAs/PWPAs – DPS .............................................................................................. 30 Details of WPAs/PWPAs - Interconnected Zone/Sharqiyah Zone ............................................ 50 Details of WPAs - Sharqiyah Zone ............................................................................................ 56 Summary of WPAs/PWPAs – Dhofar Water Network .............................................................. 60 Power Project(s) Procurement Activities in 2017-2018 ........................................................... 70 Water Project(s) Procurement Activities in 2017-2018 ........................................................... 73

LIST OF FIGURES Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 Figure 13 Figure 14 Figure 15 Figure 16 Figure 17 Figure 18 Figure 19 Figure 20 Figure 21 Figure 22 Figure 23 Figure 24 Figure 25 Figure 26 Figure 27

Historical Electricity Demand - MIS ............................................................................................ 9 Electricity Demand Projections – MIS ...................................................................................... 12 Contracted Capacity – MIS ....................................................................................................... 16 Total Power Generation Resources – MIS................................................................................ 21 Future Power Generation Capacity Requirements – MIS ........................................................ 23 Historical Electricity Demand – DPS ......................................................................................... 27 Electricity Demand Projections – DPS ...................................................................................... 29 Total Power Generation Resources – DPS ............................................................................... 32 Future Power Generation Capacity Requirements – DPS ........................................................ 34 Electricity Demand Projections – Ad Duqm ............................................................................. 36 Future Power Generation Capacity Requirements – Ad Duqm ............................................... 38 Electricity Demand Projections – Musandam Governorate ..................................................... 39 Future Power Generation Expansion Plans - Musandam Governorate ................................... 41 Projected Fuel Requirements – MIS ......................................................................................... 43 Gas Required per Unit of Electricity Generation – MIS ............................................................ 44 Projected Fuel Requirements – DPS......................................................................................... 46 Water Demand Projections – Interconnected Zone ................................................................ 49 Desalinated Water Capacity Requirements – Interconnected Zone ........................................ 52 Water Demand Projections – Sharqiyah Zone ......................................................................... 55 Future Desalinated Water Capacity Requirements– Sharqiyah Zone ...................................... 57 Water Demand Projections – Dhofar Water Network ............................................................. 59 Future Desalinated Water Capacity Requirement – Dhofar Cities Only .................................. 61 Future Desalinated Water Capacity Requirement – Dhofar Cities, Jabal, and Sahal ............... 62 Peak Water Demand and Capacity Requirement - Ad Duqm Water Network ........................ 64 Water Supply and Demand Balance - Ad Duqm Water Network............................................. 66 Water Demand Projections – Musandam (Khasab City) .......................................................... 67 Water Supply and Demand Balance – Musandam (Khasab City) ............................................. 68

3

GLOSSARY AER

Authority for Electricity Regulation, Oman

BTU/scf

British thermal units per standard cubic foot

CCGT

Combined-cycle gas turbine

DGC

Dhofar Generating Company

DGW

Directorate General of Water (Office of the Minister of State and Governor of Dhofar)

DPC

Dhofar Power Company (SAOC)

DPS

Dhofar Power System

GJ

Gigajoule(s)

GPDC

Al Ghubrah Power and Desalination Company (SAOC)

GCCIA

Gulf Cooperation Council Interconnection Authority

HHV

Higher Heating Value

IPP

Independent power project

IWP

Independent water project

IWPP

Independent water and power project

kWh

Kilowatt hour(s)

LOLH

Loss of load hours

m3

Cubic metre(s)

m3/d

Cubic metres per day

MEDC

Muscat Electricity Distribution Company (SAOC)

MIGD

Million imperial gallons per day

MIS

Main Interconnected System

MISC

Majis Industrial Services Company (SAOC)

MJEC

Majan Electricity Company (SAOC)

MOG

Ministry of Oil and Gas

MSF

Multi-stage flash (desalination technology)

MW

Megawatt(s)

MZEC

Mazoon Electricity Company (SAOC)

OCGT

Open-cycle gas turbine

OETC

Oman Electricity Transmission Company (SAOC)

OPWP

Oman Power and Water Procurement Company (SAOC)

PAEW

Public Authority for Electricity and Water

PDO

Petroleum Development Oman (LLC)

PPA

Power purchase agreement

PWPA

Power and water purchase agreement

RAEC

Rural Areas Electricity Company (SAOC)

RO

Reverse osmosis (desalination technology)

4

Sm3

Standard cubic metre(s)

Sm3/d

Standard cubic metres per day

Twh

Terra Watt Hours

5

OVERVIEW This Statement provides a 7-year outlook for power and desalinated water supply in the two main systems of Oman – the Main Interconnected System (MIS) and the Dhofar Power System (DPS) – and the systems of Ad Duqm and Musandam. OPWP prepares the 7-Year Statement annually in accordance with Condition 5 of its license. This is Issue 11, for the period 2017 to 2023; previous issues and additional information are available on the OPWP website at www.omanpwp.com.

Demand for Electricity In the MIS, peak demand is expected to grow at about 6% per year, from 5,920 MW in 2016 to 8,960 MW in 2023. This growth rate, lower than previous forecasts, reflects economic trends and the introduction of cost reflective tariffs to large consumers. Energy consumption is expected to grow at 7% per year. High and Low demand scenarios are also considered. The Low Case projects 5% annual growth and peak demand at 8,310 MW in 2023, close to 650 MW below Expected Demand. The High Case projects 8% annual growth and peak demand at 10,020 MW in 2023, exceeding Expected Demand by about 1,050 MW. In Dhofar, peak demand is expected to grow at 6% per year, from 497 MW in 2016 to 765 MW in 2023. The Low Case considers 5% growth, reaching 688 MW by 2023, about 80 MW below Expected Demand. The High Case projects 9% per year to 924 MW in 2023, exceeding Expected Demand by about 160 MW.

Power Generation Requirements In the MIS, the major developments through 2023 include: (1) extension of contracts at Al Kamil and Barka I to 2021 (subject to approvals); (2) retirement of the Ghubrah and Wadi Jizzi plants in 2018; (3) addition of Ibri IPP, as early power (940 MW) in 2018 and full power (1508 MW) in 2019; (4) addition of Sohar III IPP (1708 MW) in 2019; (5) addition of a solar IPP (at least 200 MW) in 2020; (6) launch of the spot market for electricity trade in 2020; (7) transfer of the Manah IPP to the Government in April 2020; (8) addition of Misfah IPP (800 MW) in 2021; and (9) procurement of at least 1600 MW via a new procurement process that allows existing plants with expiring contracts to compete with prospective new IPPs for contracts beginning in 2022. In the DPS, the Salalah II IPP is on schedule to begin providing 445 MW in January 2018. Musandam IPP is expected to begin operation in May 2017, supplying net firm capacity of about 123 MW.

Desalinated Water Requirements Water demand in the Main Interconnected Zone is projected to increase at 5% per year, from 746 thousand m3/d in 2016 to around 1,065 thousand m3/d in 2023. In the Sharqiyah Zone, water demand is expected to increase at 7%, from 93 thousand m3/d in 2016 to 115 thousand m3/d in 2023. In the Main Interconnected Zone, developments include: (1) addition of Qurayyat IWP (200,000 m3/d, 44 MIGD) in 2017; (2) retirement of Ghubrah IWPP desalination units in March 2018; (3) expected contract extension to 2021 for Barka IWPP (102,000 m3/d, 22 MIGD RO); (4) addition of Barka IV IWP (281,000 m3/d, 62 MIGD) and Sohar III IWP (250,000 m3/d, 55 MIGD) in 2018; (6) addition of Ghubrah III IWP (300,000 m3/d, 66 MIGD) in 2022; (7) new desalination capacity of 200,000 m3/d (44 MIGD) in the North Batinah region, in 2022; and (8) Sohar IWPP contract expiration in 2022.

6

In the Sharqiyah Zone, Sur II IWP expansion of 48,000 m3/d (10.6 MIGD) expansion is now operational. Further developments include: (1) addition of 10,000 m 3/d (2.2 MIGD) temporary water supply at Aseelah in 2017; and (2) addition of Aseelah IWP (80,000 m3/d, 18 MIGD) in 2020. In Dhofar, DGW projects water demand to grow at 9%, and peak water demand to increase from 125,000 m 3/d in 2016 to 231,000 m3/d in 2023. In 2017, OPWP expects to award the WPA for Salalah III IWP (100,000 m3/d, 22 MIGD) for COD in 2020. OPWP and DGW have begun site investigations for a third IWP (100,000 m3/d, 22 MIGD), potentially for service in 2022. In Ad Duqm, PAEW and SEZAD are considering a proposal for water supply by Marafiq; OPWP procurement of a Duqm IWP is currently on-hold. In Musandam, OPWP has initiated procurement of Khasab IWP (16,000 m3/d, 3.5 MIGD), for operation in 2021.

Procurement Activities The main procurement activities for power in 2017 include: (1) Misfah IPP (RFP in Q2), (2) asset sale of Manah IPP (RFQ in Q4), (3) Solar IPP (RFQ in Q4), (4) tender for at least 1600 MW of contract extensions and new capacity for operation in 2022 (RFQ in Q3), and (5) tender for IT systems for the spot market (RFQ in Q4). Beyond 2017, future procurement initiatives may include additional solar or wind IPPs, a gas-fired IPP for service in 2024, and a coal-fired IPP for operation somewhat later than 2024 (pending government approvals). The main procurement activities for water in 2017 include: (1) contract award for Aseelah IWP (Q2); (2) contract award for Salalah III IWP (Q2); (3) Khasab IWP (RFP in Q2); (4) Ghubrah III IWP (RFQ in Q4); (5) North Batinah IWP (RFQ in Q4); and (6) potential RFQ for mobile, temporary water capacity, subject to necessary approvals. OPWP has initiated site investigations for another Dhofar IWP which, if approved, may start procurement in 2018.

Fuel Requirements In the MIS, efficiency improvements in the generation fleet are expected to limit growth in fuel requirements to 3% per year through 2023, despite 7% growth in electricity production. Average gas utilization by the generation fleet (Sm3 consumed per MWh produced) is projected to improve by 28% from 2016 to 2023, although this progress assumes timely approvals and completions for new IPPs and contract extensions. In Dhofar, gas requirements are projected to increase at 7% per year, as power demand grows at 9% per year. OPWP has several initiatives to achieve fuel savings through economic trades. The main project is an MOU with PDO and OETC for a 400 kV transmission line and link with the PDO system, enabling dispatch coordination and economic trading. OPWP also completed an energy exchange with Abu Dhabi Transco in 2016, for a net fuel savings at no cost. Further trading opportunities with GCCIA neighbors are expected in coming years. The availability of domestic gas for future power plants is uncertain in the context of competing gas needs for economic development. OPWP is developing plans in 2017 for a more rapid transition to power supply from solar plants, wind farms, and coal-fired generation, to Government decision-making for the next generation of power capacity development. OPWP will continue to coordinate closely with all relevant entities and authorities in order to ensure a sustainable and secure supply of energy.

7

SECTION 1 1.1

POWER


The Main Interconnected System (MIS) extends throughout the Governorates of Muscat and Buraymi, and most of the Governorates of Al Batinah North, Al Batinah South, Ad Dakhiliyah, Ash Sharqiyah North, Ash Sharqiyah South and Ad Dhahirah, serving around 864,500 electricity customers. The MIS comprises of a number of power generation facilities, owned and operated by various companies; the 400/220/132 kV transmission grid, owned and operated by Oman Electricity Transmission Co. (OETC); and three distribution networks, owned and operated by Muscat Electricity Distribution Co. (MEDC), Mazoon Electricity Co. (MZEC) and Majan Electricity Co. (MJEC). The three distribution network operators also act as “licensed electricity suppliers”, supplying existing and new electricity customers in their respective service areas. The MIS is presently interconnected with the power systems of Petroleum Development Oman (PDO), the Emirate of Abu Dhabi, and is also able to access other Member States of the GCC Interconnection Authority via the Abu Dhabi interconnect. Several of the power generation facilities connected to the MIS produce desalinated water in conjunction with electricity, to meet the regional requirements of “water departments” responsible for supplying water to customers (including the Public Authority for Electricity and Water (PAEW) and Majis Industrial Services Co. (MISC)). Several water-only desalination plants also supply these water departments. OPWP’s role is to aggregate the power and desalinated water requirements of licensed electricity suppliers and water departments, and to economically procure the required power and desalinated water in bulk from generation/production facilities connected to the MIS and water transmission systems. OPWP is required to ensure that sufficient power generation resources are available to meet licensed electricity suppliers’ demands. Wherever beneficial, OPWP co-procures desalinated water to meet the needs of water departments in t power-water facilities, and procures stand-alone desalinated water facilities upon the direction of PAEW in accordance with Article 78 of the Sector Law.

8

Demand for Electricity OPWP evaluates electricity demand at the system level, including transmission and distribution system losses with consumer-level loads. This equates to the output of power generation plants at the power system delivery point(s), excluding the internal power consumption of auxiliary systems. 1 OPWP follows a similar approach with respect to estimating water demand, the output of desalinated water plants, and the consumption of auxiliary systems of combined power and water plants. Historical Demand The power demand in the MIS increased by a modest amount in 2016, when compared to previous years. Peak demand increased by about 6.4% to 5,920MW, while average demand increased by 3.9% to 3,364 MW (corresponding to 29.5 TWh of energy). Looking back over the last 7 years, peak electricity demand in the MIS grew at an average annual rate of about 7.5%, from 3,613 MW in 2010 to 5,920 MW in 2016. Energy consumption (and average demand) has grown by about 8.9% annually during the same period. Single year growth rates have fluctuated widely, influenced strongly by weather and economic growth: annual peak demand growth has ranged from a low of 0.9% to a high of 15.6%. Figure 1 illustrates the growth in peak and average demand in the MIS from 2005 to 2016.

Figure 1

Historical Electricity Demand - MIS

MW 6,000 Average Demand (MW)

5,000 4,000 3,000 2,000

Peak Demand (MW)

1,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

1,240

1,329

1,430

1,646

1,859

2,028

2,285

2,599

2,684

2,845

3,237

3,364

7.2%

7.6%

15.1%

12.9%

9.1%

12.7%

13.8%

3.3%

6.0%

13.8%

3.9%

2,435

2,544

2,682

3,100

3,581

3,613

4,000

4,455

4,634

5,047

5,565

5,920

4.5%

5.4%

15.6%

15.5%

0.9%

10.7%

11.4%

4.0%

8.9%

10.3%

6.4%

Average Growth (%)

Historical Demand Average Demand (MW) Growth (%) Peak Demand (MW) Growth (%)

9.6%

8.5%

1

This approach assures equivalence toward planning the generation supply required to meet consumer demand. However, from the perspective of power system operations, electricity demand and output are monitored at available metering points located at substations and power plants. The system “gross demand” at any point in time is the sum of the metered output at all power generators, although a portion of that generator output must be consumed by plant auxiliary systems. System peak demand is considered as net of plant auxiliaries and any exports to other power systems. The hourly consumption of plant auxiliary systems is not measured directly at some plants and in these cases must be estimated. Consequently, there may be differences in peak demand reports, depending on how auxiliary consumption at each plant is estimated.

9

Demand Projections OPWP’s 7-year electricity demand projections for the MIS have been developed on the basis of: (1) quantitative analysis of weather and macroeconomic demand drivers; (2) consultations with the electricity distribution companies and other relevant entities such as large industries; (3) historical growth trends; and (4) assessment of past forecasts against out-turns. The projections cover energy, average demand, and peak demand requirements. Peak demand is most relevant for purposes of assessing capacity expansion requirements. The projections of energy demand are necessary to identify fuel requirements over the forecast period. The projections are derived principally from scenarios of economic growth in the Sultanate. They are then aligned with analyses of distribution system demands, which are assessed on a “macro” basis by distribution company zone, and certain bulk loads that are assessed on a specific customer basis. Distribution system demand is comprised mainly of residential, service sector (including government and commercial buildings, tourism facilities), and small- to medium-scale industrial demands in all MIS regions. The growth in demand from very large loads (generally large industries and infrastructure projects) comprises both new projects and expansion of existing industrial plants. Industrial projects are located mainly in the Sohar Industrial Port and Sohar Free Zone. Infrastructure projects include, for example, the stand-alone desalination plants and airports. The projections are presented as a range bounded by Low Case and High Case scenarios, and a central Expected Demand forecast. These are summarized in Figure 2. The three scenarios for electricity demand growth are linked to projections of the Sultanate’s economic growth, specifically to the growth trend in Gross Domestic Product (GDP). Since the fall in oil prices in 2014 and 2015, economic growth has slowed. This is expected to have a relatively persistent effect on electricity demand growth. Once economic growth picks up again, the growth rate of electricity demand would follow, though likely with a delay. This has been the trend observed during previous business cycles. The central, Expected Demand scenario projects 7% annual growth in energy demand (i.e., average demand). Peak demand is projected to increase at an annual average of 6% per year, from 5,920 MW in 2016 to 8,960 MW in 2023. Peak demand is expected to grow at a lower rate than energy demand due to the introduction of CostReflective Tariffs (CRT) for large commercial, government, and industrial consumers in 2017. The CRT is timedifferentiated, where the tariff is more representative of the actual cost of supply at the different periods during the year, noting higher costs during peak and summer periods, and lower costs during off-peak and winter periods. Some large customers are expected to shift their demand in response to the new tariff. The Expected Demand projection is lower than that in the previous 7-Year Statement (Issue 10), due to current expectations of economic growth. This scenario assumes GDP growth of about 2.6% in 2017, rising to an average of about 3% for the balance of the forecast period to 2023. This is broadly consistent with the Government’s 5Year Development Plan to 2020. This seven-year projection is only slightly lower than the average GDP growth rate from 2009 to 2016, which was about 3.2%. The Low Case scenario projects energy demand growth at 6%, and peak demand growth at 5% per year (on average), from 5,920 MW in 2016 to 8,310 in 2023. This follows an assumption of more modest economic growth than the Expected Demand scenario, at about 2.1% GDP growth. This is consistent with recent projections of GDP growth for the Sultanate prepared by the International Monetary Fund and World Bank.

10

The High Case scenario projects peak demand to grow at 8% annually, to 10,020 MW in 2023. The energy growth rate is 9% per year. These higher growth rates correspond to more robust GDP growth at about 4% annually by 2020 and onwards. This would be similar to previous business cycle upswings, such as the 7-year period prior to 2011. The three demand projections are reference scenarios assuming normal weather conditions. Extreme weather may occur in any year, potentially increasing or decreasing peak demand up to 400 MW against the projected peak demand. These potential fluctuations are not shown in the demand forecast, as they do not affect the underlying multi-year trend. However, they are taken into in the assessment of capacity requirements.

11

Figure 2

Electricity Demand Projections – MIS

MW 12,000 10,020

10,000

Expected Case Average Demand

8,960 8,310

8,000

Low Case - Average Demand

High Case - Average Demand

5,920 6,000

Low Case - Peak Demand

4,000

Expected Case - Peak Demand

2,000

High Case - Peak Demand

0 Actual 2016

2017

2018

2019

2020

2021

2022

2023

Actual 2016

2017

2018

2019

2020

2021

2022

2023

Average Growth (%)

Average Demand (MW)

3,364

3,580

3,900

4,360

4,670

4,940

5,220

5,480

7%

Distribution Loads Directly-Connected Loads Annual Energy (TWh)

2,980

3,090

3,230

3,430

3,620

3,830

4,070

4,320

5%

383

490

670

930

1,050

1,110

1,150

1,160

17%

30

31

34

38

41

43

46

48

7%

Peak Demand (MW) Change from 2016-2022 Statement (MW)

5,920

6,060

6,550

7,160

7,580

8,070

8,520

8,960

6%

35

-169

-214

-310

-504

-748

-1,009

-

-

Average Demand (MW)

3,364

3,490

3,670

3,850

4,210

4,470

4,720

4,910

6%


2,980

3,070

3,150

3,240

3,390

3,570

3,750

3,930

4%

383

420

520

610

820

900

970

980

14%

30

31

32

34

37

39

41

43

6%

Peak Demand (MW) Change from 2016-2022 Statement (MW)

5,920

5,860

6,220

6,690

7,150

7,580

7,950

8,310

5%

35

165

233

143

127

-75

-316

-

-

Average Demand (MW)

3,364

3,810

4,320

4,800

5,150

5,470

5,810

6,160

9%


2,980

3,190

3,360

3,580

3,860

4,120

4,420

4,750

7%

383

620

960

1,220

1,290

1,350

1,390

1,410

20%

30

33

38

42

45

48

51

54

9%

6,380

7,100

7,710

8,270

8,820

9,420

10,020

8%

-519

-516

-820

-1,031

-1,360

-1,616

-

-

Expected Case Demand

Low Case Demand

High Case Demand

Peak Demand (MW) 5,920 Change from 2016-2022 35 Statement (MW)

12

Trade and Reserves Sharing with Interconnected Systems The MIS is interconnected with the PDO power system through a 132 kV link at Nizwa, and with the power system of the Emirate of Abu Dhabi through a 220 kV link at Mahadha. The UAE interconnect provides Oman with access to the power systems of all the Member States of the GCC Interconnection Authority (GCCIA). These interconnections provide reliability benefits through the sharing of generation reserves, and potential for economic trading. OPWP is working closely with PDO and GCCIA to enable scheduled trading arrangements. The current MIS demand projections do not include power exports or imports; they comprise only the native demands of the MIS.

Power Generation Resources Sources of Power In order to meet demand for electricity in the MIS, OPWP purchases power from a number of sources via power purchase agreements (PPAs), power and water purchase agreements (PWPAs) and other similar agreements. The contractual arrangements for power delivery under these agreements may be differentiated as firm capacity, reserve-sharing, non-firm capacity, and energy-only. These are relevant for generation planning purposes. All of the main power plants in the MIS are contractually committed to provide a specific generation capacity (in MW) upon demand, to be dispatched by the OETC, and to maintain specific availability levels. These are firm capacity contracts, also termed “contracted capacity”. OPWP also purchases power from a number of sources where the contractual arrangements do not provide a guaranteed level of capacity upon demand. They may be termed collectively as “non-firm resources”. They currently include (1) reserve-sharing arrangements with other power systems via interconnection agreements and (2) capacity exchanges/energy purchases from industries with captive power generation facilities, where such industries use their own generators mainly for self-supply. In these cases, no specific capacity is committed to OPWP, and the availability of capacity for use by OPWP at any particular time will generally be subject to the other party’s first use. These resources provide reliability benefits to the MIS, in that capacity is generally available according to pre-arranged schedules or during contingency events. OPWP also expects to have renewable sources of energy (specifically Solar PV and Wind projects) contributing to the power system in the near future. Due to their intermittent, non-dispatchable nature, they currently fall under the non-firm resource category. However, once in operation, their performance may demonstrate a contribution to peak capacity requirements that would justify a capacity credit. This capacity credit may then be used as part of OPWP’s capacity expansion plans in order to meet reliability standard obligations. In addition, there are “prospective resources” that are under consideration by OPWP. For example, power plants that will fall out of contract during this 7-year period are “prospective resources” after their contract expiry, in that they may be offered successfully for re-contracting, subject to regulatory approval. This category also includes new projects that are under evaluation or for which the tendering process has begun but is not complete.

Contracted Capacity 13

OPWP’s present portfolio of contracted capacity for electricity generation in the MIS comprises of thirteen P(W)PAs. A summary of these contracted capacities can be found in Table 1.

Table 1 Project Namea

Project Name(s) as stated in previous 7 Year Statement(s)a

Contracted Capacityb

Details of PPAs/PWPAs - MIS Contract Type

Project Company

271 MW

PPA

Al Kamil Power Co. (SAOG)

Operational

Natural gas fired Fuel oil as backup CCGT

2017

427 MW

PWPA

ACWA Power Barka (SAOG)

Operational

Natural gas fired Fuel oil as backup CCGT Natural gas fired Fuel oil as backup CCGT

2018

Project Status

Technology

Contract Expiry

OCGT Al Kamil IPP

Barka IWPP

Al Kamil

Barka I / Barka Power and Desalination Plant / Barka I IWPP

Barka II IWPP

Barka II / Barka II Power and Desalination Plant

677 MW

PWPA

SMN Barka Power Co. (SAOC)

Operational

Barka III IPP

Barka III

741 MW

PPA

Al Suwadi Power Co. (SAOC)

Operational

Ghubrah IWPP

Ghubrah / Ghubrah Power and Desalination Plant / Ghubrah Desalination Plant

430 MWc

PWPA

Al Ghubrah Power and Desalination Co. (SAOC)

Operational

Fuel oil as secondary fuel and back-up CCGT

2018

Ibri

1,509 MW

PPA

AD'Dhahirah Generation Company

Under construction

Natural gas fired Fuel oil as backup OCGT

2034

Manah IPP

Manah

254 MW

PPA

United Power Co. (SAOG)

Operational

Natural gas fired Fuel oil as backup OCGT

2020d

Rusail IPP

Rusail

665 MW

PPA

Rusail Power Co. (SAOC)

Operational

2022

Sohar I / Sohar I Power and Desalination Plant

585 MW

PWPA

Sohar Power Co. (SAOG)

Operational

Natural gas fired Fuel oil as backup CCGT Natural gas fired Fuel oil as backup CCGT

Operational

Fuel oil as secondary fuel and back-up

Under construction

CCGT

Ibri IPP

Sohar IWPP

Natural gas fired Fuel oil as secondary fuel and back-up

2024

2028

OCGT/Steam

2022

Natural gas fired Sohar II IPP

Sohar II

741 MW

PPA

Al Batinah Power Co. (SAOC)

Sohar IV IPP

Sohar IV

1,710 MW

PPA

Shinas Power Company

Natural gas fired

2028

2034

14

Fuel oil as backup CCGT Sur IPP

Sur

2,000 MW

PPA

Phoenix Power Co. (SAOC)

Operational

Wadi Al Jizzi IPP

Wadi Al Jizzi

325 MW

PPA

Wadi Al-Jizzi Power Co. (SAOC)

Operational

Natural gas fired (Fuel oil as backup) OCGT Natural gas fired

2029

2018

(Fuel oil as backup)

a In

order to avoid confusion in the naming of projects, OPWP has revised project names as indicated in previous 7 Year Statement publications utilizing a unified naming methodology that assigns project names as per the following: 1) Where the site is not yet determined [System Name, Power/Water/Power & Water, Year of Commissioning], 2) where the site has been identified [Region name, Project number, IPP/IWP/IWPP]. These two columns articulate the project names as they will be referenced in this (and future) publications, and the naming of projects as found in previous publications. b Contracted capacities are shown as of summer 2014, at reference condition 50oC.The contracted capacities are reported as net of plant auxiliaries except for Ghubrah IWPP, Rusail IPP, and Wadi Al Jizzi IPP which are contracted at gross capacity. Plant capacities are shown elsewhere in this report as evaluated at 45oC, which is more in line with peak demand conditions, and as net output rather than gross output. c GT1-11 & ST4 at Ghubrah IWPP were retired prior to summer 2014. d Manah IPP will be transferred from the United Power Company to the Government in April 2020, due to the project being developed under a “Build-Own-Operate-Transfer” (BOOT) model.

A summary of the generation capacity that is expected to be provided under these P(W)PAs over the 2017-2023 period is set out in Figure 3. This shows total contracted capacity of 6,897 MW in 2017 ri to 8,944 MW by 2019 before falling back to 7,394 MW by 2022. The expected decrease in contracted capacity is due to a number of contract expirations during the period as detailed amongst the following main developments: 

Ghubrah IWPP: contracted capacity is currently 405 MW. This will reduce to 340 MW when the two steam turbines are retired in April 2018, and all remaining units will be retired on 30 September 2018.



Wadi Al Jizzi IPP: contracted capacity is currently 326 MW. The plant is planned for retirement on 30 September 2018.



Al Kamil IPP: OPWP has finalized negotiations with Al Kamil IPP and is seeking government approval for a contract extension to 31 December 2021 for capacity of 280 MW. The plant is expected to be available for further contract extension after 2021.



Barka IWPP: OPWP has finalized negotiations with Barka IWPP and is seeking government approval to extend the contract from April 2018 to 31 December 2021. The new agreement is expected to provide contracted capacity of 388 MW during normal operation in CCGT mode without MSF water production. The plant is expected to be available for further contract extension after 2021.



Manah IPP: the PPA expires in April 2020, at which time ownership of the plant transfers to the Government. This is due to Manah IPP being developed under a BOOT model. OPWP plans a competitive tender for sale of this asset in order that it may continue to operate under a new PPA. The contracted capacity is 264 MW.



Ibri IPP: the plant is under construction and scheduled to deliver early power capacity of 940 MW from April to October 2018 and full power capacity of 1,508 MW from 1st April 2019.



Sohar IV IPP: the plant is under construction and scheduled to deliver full power capacity of 1,708 MW from 1st January 2019.

15



Sohar IWPP: the PWPA will expire in March 2022. The plant is expected to be available for contracting under a new P(W)PA, although potentially under a power-only operating mode similar to Barka IWPP.



Rusail IPP: the PPA will expire in March 2022. The plant is expected to be available for contracting under a new PPA.

As indicated above, a number of plants will reach the end of their current contract in 2021 and 2022. The owners of these projects will have the opportunity to offer these plants for new long-term PPAs in a competitive tender, which is expected to be issued in 2017.

Figure 3

Contracted Capacity – MIS

MW 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2017

2018

2017

2019

2018

2020

2019

Contracted Capacity

2021

2020 Net MW

2022

2023

2021

2022

2023

a

-

-

-

-

-

-

-

Barka IWPPb

435

-

-

-

-

-

-

Ghubrah IWPP

405

340

-

-

-

-

-

Wadi Al Jizzi IPP

326

326

-

-

-

-

-

Manah IPPc

264

264

264

-

-

-

-

Rusail IPP

689

689

689

689

689

-

-

Sohar IWPP

597

597

597

597

597

-

-

Barka II IWPP

688

688

688

688

688

688

688

Sohar II IPP

754

754

754

754

754

754

754

Al

Kamil IPPb

754

754

754

754

754

754

754

Sur IPP

1,985

1,983

1,982

1,982

1,982

1,982

1,982

Ibri IPP

-

940

1,508

1,508

1,508

1,508

1,508

-

-

1,708

1,708

1,708

1,708

1,708

6,897

7,335

8,944

8,680

8,680

7,394

7,394

Barka III IPP

Sohar III IPP TOTAL a

All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45°C ambient temperature. b Contract extensions to 2021 are currently pending government approvals. c The contract with the current owner will expire at the end of 2020, at which point, ownership of the plant transfers to the Government..

Non-Firm Resources under Contract

16

In addition to the contracted capacity described above, OPWP has contracts with a number of other generation sources, although these contracts are not for firm capacity commitments. They include: 

the 220 kV interconnect with the UAE (Abu Dhabi) power system at Mahadha;



the 132 kV interconnect with the PDO power system at Nizwa; and



surplus generation from industries (and other parties) with captive power generation facilities.

A 220 kV interconnection between the Oman (MIS) and UAE (Abu Dhabi) power systems has been commercially operational since 2012. In December 2014, Oman is a member of the GCCIA, and has access to the other five Member State power systems via this link. Benefits of the interconnection include firm during emergencies, and opportunities to trade electricity and coordinate both planning reserves and operating reserves. The interconnection is a double circuit link that s reliable transfers of up to 400 MW, can carry up to 800 MW in emergencies. The link has provided emergency reserves on a number of occasions, preventing power failures on the MIS. In 2016, AER approved OPWP’s recognition of the interconnect’s contribution to planning reserve requirements, based on its record of performance and the contractual obligations with the GCCIA to provide reserves . In 2016, OPWP completed a power exchange transaction with Abu Dhabi Transco. OPWP imported 200 MW during the peak summer months of May and June, and exported 200 MW during July and August. The exchange was a successful demonstration of energy trading, with a net saving in cost and gas requirements to OPWP. The MIS is connected with the PDO power system at Nizwa via a single 132 kV link with a nominal transfer capacity of around 60 MW. The main purpose of this interconnect is to reserve sharing between the MIS and the PDO system. OPWP, OETC and PDO are currently evaluating a project to expand the capacity of interconnection significantly. Several industries with captive power plants are connected with the MIS and have surplus power that may be purchased by OPWP. OPWP has an agreement with Sohar Aluminium Co. (LLC), whereby Sohar Aluminium exports up to 180 MW to the MIS during the summer, and imports a like amount of energy from OPWP during the winter on an annually determined schedule. 2 The schedule and operations are managed to assure that energy exports balance with energy imports. This arrangement benefits both parties: Sohar Aluminium is better able to schedule the maintenance of its generating units and gains reliability of supply, while OPWP gains an efficient generating resource during the summer and improves the system Load Factor. The agreement with Sohar Aluminium was renewed in 2015 for three years and is expected to be available for future renewal, subject to mutual agreement. Prospective Resources OPWP assesses various prospective resources in order to address the continuous growth in electricity demand and in order to meet the capacity target. These resources include the following: 

Contract extensions;



Planned capacity additions, not yet contracted;

2

The Sohar Aluminium plant has the capability to export up to about 300 MW under supplementary firing, by special arrangement. This capacity level has not been demonstrated on a sustainable basis but is considered as an emergency reserve in case of temporary need.

17



Temporary generation from rented, mobile generators;



Capacity purchases from interconnected power systems or industrial self-generation;



Demand response;



Non-P(W)PA committed capacity under the Spot Market; and



Renewable energy projects

Contract Extensions. Prospective contract extensions correspond to capacity that is scheduled to fall out of contract, but that may be offered to OPWP by the plant owner for a new contract term (subject to satisfaction of relevant regulatory requirements and commercial ). OPWP considers such extensions alongside options to contract for new capacity. In 2016, OPWP finalized negotiations with the owners of Al Kamil IPP and Barka IWPP to extend their respective contracts to 2021: final government approvals are pending. OPWP is also currently developing a new capacity procurement methodology that will allow existing generators and those near their contract expiration, to compete for new long-term contracts. The first procurement initiative to use this new methodology is expected to be for contract beginning in 2022. Table 2 identifies the plants and capacities that are currently scheduled to fall out of contract over the 7-year planning horizon, showing them as prospective contract extensions. All of these plants are currently expected to compete for new P(W)PA contracts. For planning purposes, their current capacity is nominally assumed to be what may be offered for extension. Some of this capacity may not be economically feasible to extend, or the owners may make improvements to expand capacity. Only capacity offers that are competitive with new generation bids are likely to be extended through the procurement process. Manah IPP is a unique case, because the asset transfers to the government at the expiration of the current PPA in April 2020. OPWP plans to offer the plant for sale under a competitive tender, allowing the plant to continue operation under a new PPA.

Table 2 2017

Prospective Contract Extensions, 2017 to 2023

2018

2019

2020

2021

2022

2023

Net MW a Al Kamil IPP

280

280

280

280

280

280

280

Barka IWPPb

-

388

388

388

388

388

388

Manah IPP

-

-

-

264

264

264

264

Rusail IPP

-

-

-

-

-

689

689

Sohar I IWPP

-

-

-

-

-

597

597

280

668

668

932

932

2,218

2,218

TOTAL a

All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45°C ambient temperature. is currently in the process of negotiating with Al Kamil IPP and Barka IWPP in order to extend contract periods to 2021. They will be eligible to bid in a competitive process for new P(W)PAs commencing in 2022. b OPWP

Planned Capacity Additions. OPWP procures new I(W)PP capacity to meet long-term requirements through a competitive process. OPWP plans to issue a tender in Q2 2017 for an IPP at Misfah in Muscat Governorate, with capacity of about 800 MW for COD in 2021.

18

Following regulatory approval of the new procurement methodology, expected in 2017, OPWP plans to procure approximately at least 1,600 MW of capacity for operation beginning in 2022. Out-of-contract generators (indicated in Table 2, except Manah IPP) and prospective new entrants may bid for this capacity. The new IPP portion of this new capacity may be in the range of 800 MW or more, but depends on the level of contract extensions and the outcome of the competition process. Temporary Generation. OPWP currently has no plans to contract for temporary generation during this period. OPWP has rented diesel generators for short periods on occasion to avert the risk of a supply shortage, such as due to project delay. Capacity Purchases from Other Systems. Energy trades or firm capacity purchases from neighboring power systems are important potential contingency resources. OPWP is working with OETC, AER and GCCIA to finalize the access conditions that will facilitate trade agreements with GCIIA Member States. The access conditions will establish rules and procedures that will allow Oman to import or export with the other member states in the region. In 2016, OPWP successfully arranged a trial exchange with the UAE over the 220 kV interconnect in Mahadha. This trial exchange provided the MIS with a firm import of 200 MW during the months of May and June in exchange for a firm 200 MW export to the UAE during the months of July and August. OPWP is also exploring a prospective 400 kV interconnection between Nizwa to Duqm, PDO, and the Dhofar Power System. OPWP, OETC and PDO are working together under a Memorandum of Understanding (MOU) to evaluate costs and benefits of the interconnection, and to define the operating procedures needed to assure that benefits are realized. The expected benefits include fuel savings due to improved dispatch coordination among the power systems, access to areas with renewable energy potential, sharing of spinning reserves (reducing operating costs), and improved grid security. A technical/economic study is scheduled to be complete in Q2 2017, with a recommendation to government for the timing and best route for the project, and projections of economic savings that would be achieved. Demand Response. OPWP successfully completed a proof-of-concept trials in August, 2016 in coordination with the PAEW and Ghubrah II IWP. During the trial, Ghubrah II IWP was shut down for a two-hour period (14:00 to 16:00), leading to a reduction of approximately 25 MW in system demand over the period (50 MWh energy). OPWP expects that Demand Response (DR) can provide a significant and cost-effective resource toward reducing capacity requirements. In 2017, OPWP plans to evaluate tariff-induced demand impacts of the recently introduced Cost-Reflective Tariffs (CRTs). Expansion of the DR program would then begin in 2018. Electricity Spot Market. OPWP submitted the detailed market rules to the AER in January 2017 for regulatory approval. Procurement of IT systems for spot market operations will begin later in 2017. The market is scheduled to begin operational trials in 2019 and commercial operation in 2020. The spot market for electricity will operate alongside the existing system of long-term PPAs and PWPAs. The spot market is expected to increase competition in Oman’s power generation market, and to make available additional capacity that might otherwise not be readily accessible through the existing P(W)PA procurement channel. Renewable Energy. OPWP plans to procure Oman’s first large-scale solar IPP in 2017. Technical advisors have been engaged to develop tender documents and an appropriate evaluation methodology that assures a costeffective project without subsidy. OPWP expect to issue the RFP in Q4 2017, for capacity of at least 200 MW, to be operational by 2020.

19

OPWP and PAEW established a t-task force toward development of wind power plants. PAEW’s 2016 Wind Atlas Report identified several locations for prospective wind plants, and OPWP plans to develop wind instrumentation stations to future power development. Summary Figure 4 provides a summary of OPWP’s current plans for generation resources in the MIS for the period 2017 to 2023, including contracted capacity, prospective contracts, and contingency reserves. As described above, contracted capacity in each year considers only existing, contracted resources up to the end of their current contract period. Prospective resources include planned new capacity and potential contract extensions. In the future, prospective resources may include capacity purchases via the interconnects, Demand Response, or temporary generation. OPWP is currently developing procurement processes that would allow Demand Response and capacity purchases from interconnects and industries to be considered as firm capacity alternatives to temporary generation. The capacity indicated for each year corresponds to the quantity available as of the onset of the summer peak season in May. Contingency reserves comprise of non-firm resources, including reserve-sharing over the interconnects, and industrial surplus generation. This chart suggests a minor reduction in contracted capacity in 2021. Consequently, a new plant of 800 MW is planned to be added by 2021 (“Misfah IPP”) to cover the reduction and also will help to improve the fuel efficiency as the new plant is assumed to be dispatched more than some of the less-efficient open cycle plants currently available in the system. In 2022, OPWP plans to adopt a new capacity procurement process that will allow existing generators with expiring contracts to compete directly with new project bidders for long-term contracts. In parallel, OPWP is also developing an electricity spot market to allow generators without long-term contracts, to sell power into the power system on half hourly basis at a market clearing price.

20

Figure 4

Total Power Generation Resources – MIS

MW 14,000 Contingency Reserves (nonfirm)

12,000 10,000 8,000

Prospective Capacity Contracts

6,000

Capacity Contributions

4,000 Contracted Capacity

2,000 0 2017

2018

2019

2020

2017

2021

2018

2022

2023

2019

2021

2022

2023

Net MW a

Contracted Capacity Contracted Capacity

2020

6,897

7,335

8,944

8,680

8,680

7,394

7,394

380

380

380

380

380

380

380

280

668

668

932

932

2,218

2,218

-

-

-

-

800

800

800

-

TBD

TBD

TBD

TBD

800 TBD

800 TBD

7,557

8,383

9,992

9,992

10,792

11,592

11,592

60 400

-

-

-

-

-

-

60 400

60 400

200 60 400

200 60 400

200 60 400

200 60 400

-

-

-

-

-

-

-

460

460

460

660

660

660

660

8,017

8,843

10,452

10,652

11,452

12,252

12,252

Capacity Contributions Non-Firm Resourcesb Prospective Capacity Contracts Contract Extensions Misfah IPP MIS Power 2022 Short-term Resourcesc Total – Contracted + Capacity Contributions + Prospective Contingency Reserves (nonfirm) Reserve-Sharing Agreements Solar IPP PDO Interconnection GCC Interconnection Surplus Generation Agreements Total Contingency Reserves All Resources a All

capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45°C ambient temperature. b Contributions from non-firm resources include the assessed capacity benefit of reserve-sharing arrangements with the GCCIA over the UAE interconnect (200 MW), and the power exchange with Sohar Aluminium (180 MW). This capacity contribution was approved by the AER in 2016. c TBD: To be determined. This represents potential firm capacity resources that may be contracted if needs arise, or subject to economic benefit. They include Demand Response, capacity purchases (such as import from GCCIA member states), and temporary generation.

21

Additional Power Generation Requirements Statutory and Regulatory Requirements OPWP is required by the Sector Law and its license to ensure the adequacy of generation resources to meet future power demands. The Sector Law establishes OPWP’s general responsibility to secure sufficient generation resources to meet the aggregated demands of licensed electricity suppliers. Further to this, the license issued to OPWP by the Authority for Electricity Regulation, Oman (AER) stipulates a specific generation security standard for the MIS that OPWP must comply with. The generation security standard stipulated by the AER sets a maximum duration of power outage for the system, termed Loss-of-Load Hours (“LOLH”). OPWP must enter into agreements for enough contracted capacity to ensure that expected demand does not exceed available contracted capacity for more than 24 hours in any year. This LOLH measure considers relevant uncertainties such as the reliability of generation units. On a shortterm basis, OPWP must demonstrate to the AER that such agreements are in place. On a long-term basis, OPWP must demonstrate that it has credible plans to put such agreements in place (via the procurement of new capacity or otherwise). Capacity Requirements During the 7-year planning horizon, the 24-hour LOLH standard corresponds to a reserve margin requirement of about 6.5% in the MIS. That is, in each year OPWP should have sufficient contracted capacity to exceed Expected Peak Demand Scenario by at least 6.5%. Figure 5 compares generation resources to capacity targets (peak demand plus 6.5%) associated with each of the three demand scenarios. The table associated with Figure 5 indicates whether additional capacity is needed to meet the target, in the rows marked “Deficit (Additional Capacity Required)”.

22

Figure 5

Future Power Generation Capacity Requirements – MIS

MW

Reserves (non-firm)

14,000 Minimum Capacity to be Procured Prospective Contract Extensions Misfah IPP

12,000 10,000 8,000

Capacity Contributions

6,000

Contracted Capacity

4,000

High Case Demand + Margin

2,000

Expected Case Demand + Margin Low Case Demand + Margin

0 2017

2018

2019

2020

2021

2017

2022

2018

2023 2019

2020

Generation Resources Contracted Capacity Capacity Contributions Prospective Contract Extensions Misfah IPP Capacity to be

Contingency Reserves (nonfirm) Total - All Resources

2022

2023

MW 6,897

7,335

8,944

8,680

8,680

7,394

7,394

380

380

380

380

380

380

380

280

668

668

932

932

-

-

-

-

-

-

800

800

800

-

-

-

-

-

1,600

1,600

7,557

8,383

9,992

9,992

10,792

10,174

10,174

460

460

460

660

660

660

660

8,017

8,843

10,452

10,652

11,452

10,834

10,834

Procureda

Total – Contracted + Prospective

2021

a “Capacity

to be Procured” represents the minimum amount of capacity that may be procured in the 2022 procurement initiation. This may include a combination of a new 800 MW IPP and contract extensions.

Expected Case Scenario Peak Demand Capacity Required (Demand + Margin) Deficit (Additional Capacity Required) Above Current Contracts + Capacity Contributions Above Current + Extensions Above Current + All Prospective Above Current + All Prospective + Reserves

6,060

6,550

7,160

7,580

8,070

8,520

8,960

6,450

6,980

7,630

8,070

8,590

9,070

9,540

-

-

-

-

-

1,296

1,766

-

-

-

-

-

1,296

1,766

-

-

-

-

-

-

-

-

-

-

-

-

-

-

23

Low Case Scenario Peak Demand Capacity Required (Demand + Margin) Deficit (Additional Capacity Required) Above Current Contracts + Capacity Contributions Above Current + Extensions Above Current + All Prospective

5,860

6,220

6,690

7,150

7,580

7,950

8,310

6,240

6,620

7,120

7,610

8,070

8,470

8,850

-

-

-

-

-

696

1,076

-

-

-

-

-

696

1,076

-

-

-

-

-

-

-

6,380

7,100

7,710

8,270

8,820

9,420

10,020

6,790

7,560

8,210

8,810

9,390

10,030

10,670

-

-

-

-

330

2,256

2,896

-

-

-

-

-

2,256

2,896

-

-

-

-

-

-

496

-

-

-

-

-

-

-

High Case Scenario Peak Demand Capacity Required (Demand + Margin) Deficit (Additional Capacity Required) Above Current Contracts + Capacity Contributions Above Current + Extensions Above Current + All Prospective Above Current + All Prospective + Reserves

Capacity Balance in 2017 In 2017, OPWP has contracted capacity of 6,897 MW, which exceeds the capacity target in all three demand scenarios. There is no requirement to procure additional reserves. Capacity Balance in 2018 In 2018, Ibri IPP is contracted to provide around 940 MW of early power during the summer months, bringing the total contracted capacity to around 7,400 MW. The capacity contribution of OPWP’s contractual arrangements with SAC and the GCCIA provide a further 380 MW. These resources are sufficient to meet the capacity targets for all three demand scenarios. However, there are contingencies that may interrupt the Ibri early power delivery, due to delays in connections for supply of gas and cooling water. The planned contract extensions for Al Kamil and Barka IWPP will provide the additional capacity needed to avert the deficit that would be caused by a delay at Ibri IPP. Capacity Balance in 2019 - 2021 In 2019, capacity is expected to be adequate under all three demand scenarios. The Ghubrah IWPP and Wadi Al Jizzi IPP plants are scheduled to retire after the summer of 2018, while the new Sohar IV IPP is scheduled to begin commercial operation in January 2019, followed by Ibri IPP at full power capacity in April, 2019. The new projects are currently on schedule for full power delivery. The net addition brings the total contracted capacity to 8,944 MW in 2019, sufficient to secure capacity requirements under all scenarios through the end of 2020.

24

In 2021, contracted capacity and capacity contributions from sources such as the UAE Interconnect and SAC are sufficient to meet requirements in the Expected Demand and Low Case, but leaves a 330 MW gap in the High Case. The extensions at Al Kamil and Barka IWPP would fully address this gap. OPWP has begun the procurement process for a new 800 MW IPP which would address this gap. It will likely be located in Misfah to the Muscat load center and to displace the dispatch of existing open cycle generation units, achieving substantial fuel savings. Additional Capacity Requirement in 2022 - 2023 From December 2021 to March 2022, four power stations reach the expiry of their P(W)PAs (Al Kamil IPP, Barka IWPP, Rusail IPP, and Sohar IWPP), resulting in a capacity loss of 1,954 MW, while electricity demand continues to grow at a steady pace. With contracted capacity at 7,394 MW in 2022, the need for additional capacity under the Expected Demand scenario is nearly 1,300 MW in 2022, and nearly 1,800 MW in 2023. In addition to the new 800 MW IPP to be procured in 2021, OPWP intends to procure additional capacity to cover the remaining deficit against the capacity target in 2022. At least 1,600 MW would be procured, in order to cover requirements under the High Case scenario. The procurement process will follow the new methodology described earlier, allowing plants with expiring contracts to bid competitively with new-build contenders for new contracts. The actual amount of capacity that will be procured during this period is subject to a number of elements, and OPWP will continue to monitor and adjust the proposed procurement plan as needed in order to meet the capacity target.

Combining Power Generation & Water Desalination In developing its plans for procuring power generation resources, OPWP is required to consider the opportunity for combining power generation with water desalination so as to benefit from economies of co-location and coprocurement. The most recent examples of combined development of power and desalination capacity are the Salalah IWPP in Dhofar (COD in 2011) and the Barka II IWPP (COD in 2009) in the MIS. In both cases, bidders proposed to use RO rather than MSF technology for water desalination, although the procurement specifications did not specify the technology to be used. OPWP expects that future plants will also be proposed to use RO technology due to its economic advantage. OPWP is currently considering that there is a need both for power and water desalination capacity in 2022, and will consider the merits of co-location. An evaluation of sites and infrastructure requirements is underway in 2017.

25

1.2

Dhofar Power System

The Dhofar Power System (DPS) covers the city of Salalah and surrounding areas in the Governorate of Dhofar, serving around 101,449 electricity customers. The DPS comprises two generation facilities, the 220 kV/132 kV transmission grid that is owned and operated by Oman Electricity Transmission Company (OETC), and the distribution network which is owned and operated by Dhofar Power Company (DPC). The DPS is interconnected with the Petroleum Development Oman (PDO) power system via a 132 kV link between Thumrait and Harweel, with transfer capacity up to 150 MW. This interconnection provides important reliability benefits through the sharing of generation reserves. The Directorate General of Water (DGW) is the principal entity responsible for potable water supply and distribution in the Governorate of Dhofar, apart from small, private networks. A single water desalination plant is the principal source of water supply to the DGW transmission system, although DGW also has significant groundwater resources available with sufficient capacity to meet the majority of water requirements, if necessary. OPWP’s role in the DPS is similar to its role in the MIS, which is to economically procure electrical power and desalinated water required by DPC and DGW, respectively, in bulk from generation/production facilities connected to the DPS. OPWP is required to ensure that sufficient power generation resources are available to meet DPC electricity demands. OPWP is also required to procure bulk water supply at the request of water departments including DGW, and, wherever beneficial, to co-procure desalinated water with power generation in t facilities.

26

Demand for Electricity Historical Demand Electricity demand growth in 2016 was slightly lower than the Low Case forecast presented in the previous 7Year Statement (Issue 10). Average demand increased by 4% to 349 MW (corresponding to 3.01 TWh). Peak demand was measured at 497 MW3, an increase of 0.5% over the 2015 peak demand. Figure 6 shows that the average growth rate in annual average demand over the past seven years has been 8.4%, while single-year growth has reached as high as 13%. In addition, growth in peak demand in the DPS has grown at an annual average of 6.5% over the same period. This rapid development rate has been common among all principal consumer sectors.

Figure 6

Historical Electricity Demand – DPS

MW 600 500 Average Demand

400 300

Peak Demand

200 100 0 2010

2011

2012

2013

2014

2015

2016

2010

2011

2012

2013

2014

2015

2016

216

228

259

282

303

336

349

6%

13%

9%

7%

11%

4%

348

389

420

439

495

497

2%

12%

8%

4%

13%

0.5%

Average Growth (%)

Historical Demand Average Demand (MW) Growth (%) Peak Demand (MW) Growth (%)

3

342

8.4% 6.5%

DPC reported the net peak demand for the Dhofar Power System as 497 MW at 15:09 PM on 26th of June, 2016.

27

Demand Projections OPWP’s 7-year electricity demand projections for the DPS have been developed in a similar manner as for the MIS. The projected demand represent the “net system demand”, in that they are inclusive of assumed transmission and distribution system losses but exclude the internal auxiliary consumption of power and desalination plants. They follow a similar methodology as the MIS demand forecasts, including macro-economic growth influences and separate analyses of underlying demand and certain bulk loads, comprising mainly industrial demands, which are assessed on a customer-specific basis. The projections are presented as a range including Low Case, High Case and central Expected Case demand forecast scenarios. All scenarios are based on an assumption of normal weather. The Low Case and High Case scenarios assume contrasting growth levels, with the same underlying assumptions for economic growth as used for the MIS projections. The projections are summarized in Figure 7. Under the Expected Case scenario, peak demand is expected to grow at about 6% per year, from 497 MW in 2016 to 765 MW in 2023. Energy consumption is projected to grow from 3.1 TWh (corresponding to 348 MW average demand) in 2016 to 4.9 TWh (559 MW average demand) in 2023, with an average increase of 7% per year. This projection is lower than that of the previous 7-Year Statement (Issue 10), due to expectations of slower economic growth in the mid-term period. Consistent with assumptions for economic growth used for the MIS, the High Case scenario assumes that underlying demand will grow at a modest rate in the near-term, and begins to grow at greater rates in the medium to long term. On average, this scenario has peak demand growth of 9% per year and energy growth of 10% per year. The difference between the High Case and Expected Case scenarios is greater than that between the Low Case and Expected Case, mainly due to bulk loads. Whereas both Expected Case and the Low Case show relatively steady incremental growth in bulk loads, the High Case also includes several larger bulk load customers that have applied for connections but have not yet received approval or committed to construction. The Low Case scenario projects annual average peak demand and annual energy growth of around 5% per year.

28

Figure 7

Electricity Demand Projections – DPS

MW Low Case Average Demand

1,000

924

900

765 688

800 700 600

Expected Case Average Demand High Case Average Demand

497

500

Low Case Peak Demand

400 300

Expected Case Peak Demand

200 100

High Case Peak Demand

0 Actual 2016

2017

2018

2019

2020

2021

2022

2023

Actual 2016

2017

2018

2019

2020

2021

2022

2023

Average Growth (%)

348 267 81 3.1 497

359 275 85 3.1 505

382 293 89 3.3 536

407 312 95 3.6 568

455 333 122 4.0 627

483 357 126 4.2 664

530 382 148 4.6 724

559 409 150 4.9 765

7% 6% 9% 7% 6%

-30

-51

-58

-95

-99

-145

-160

n/a

348 267 81 3.1 497

352 273 80 3.1 494

368 288 80 3.2 518

384 302 82 3.4 542

421 316 105 3.7 589

442 333 109 3.9 615

480 349 131 4.2 661

501 366 134 4.4 688

-5

-13

-16

-47

-44

-68

-98

n/a

348 267 81 3.1 497

381 277 105 3.3 527

414 299 115 3.6 574

456 322 134 4.0 619

531 350 181 4.7 728

610 383 227 5.3 805

655 418 236 5.7 863

696 458 238 6.1 924

-70

-96

-139

-193

-165

-196

-226

n/a

Expected Case Demand Average Demand (MW) Underlying Demand Bulk Loads Annual Energy (TWh) Peak Demand (MW) Change from 2016-2022 Statement (MW)

Low Case Demand Average Demand (MW) Underlying Demand Bulk Loads Annual Energy (TWh) Peak Demand (MW) Change from 2016-2022 Statement (MW)

5% 5% 8% 5% 5%

High Case Demand Average Demand (MW) Underlying Demand Bulk Loads Annual Energy (TWh) Peak Demand (MW) Change from 2016-2022 Statement (MW)

10% 8% 17% 10% 9%

29

Power Generation Resources Sources of Power The DPS has two sources of contracted generation capacity in operation and a third under construction, as well as one source of contingency reserves. Contracted Capacity The DPS is comprised of the following power generation resources which are contracted capacity. A summary of these contracted capacities can be found in Table 3.

Table 3

Summary of PPAs/PWPAs – DPS

Project Name


Raysut IPP

Raysut New Power Station (NPS) / NPS / Raysut IPP

276 MW

Salalah II IPP

445 MW

Contracted Capacityb

Contract Type

Project Company

Project Status

Technology

Contract Expiry

OCGT

Salalah II IPP

PPA

PPA

Dhofar Generation Co. (SAOC)

Operational

Dhofar Generation Co. (SAOC)

Under construction

Natural gas fired

2033

(Fuel oil as back-up) CCGT Natural gas fired

2033

(Fuel oil as secondary fuel and back-up) CCGT

Salalah IWPP

Salalah Power and Water Desalination Plant / Salalah IWPP

Natural gas fired

445 MW PWPA

68,000

m3/d

Sembcorp Salalah Power & Water Co. (SAOC)

Operational

2027 (Fuel oil as back-up)

a In

order to avoid confusion in the naming of projects, OPWP has revised project names as indicated in previous 7 Year Statement publications utilizing a unified naming methodology that assigns project names as per the following: 1) Where the site is not yet determined [System Name, Power/Water/Power & Water, Year of Commissioning], 2) where the site has been identified [Region name, Project number, IPP/IWP/IWPP]. These two columns articulate the project names as they will be referenced in this (and future) publications, and the naming of projects as found in previous publications. b All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 35°C ambient temperatures output.



Raysut IPP, owned and operated by Dhofar Generation Company (DGC), under a PPA with OPWP. It is located in Raysut and comprises eight OCGT units with a total net capacity of 276 MW.



Salalah IWPP, owned and operated by Sembcorp Salalah Power and Water Company under a PWPA with OPWP. The Salalah IWPP is a CCGT plant comprising five gas turbines and two steam turbines with

30

combined net capacity of 445 MW. It is located in the Marbat/Taqah region, and began operations in 2012. 

Salalah II IPP, owned by Dhofar Generation Company (DGC), and currently under construction. The plant will operate under a PPA with OPWP when it is completed in January 2018. It is located in Raysut at a site adjacent to the Raysut IPP, and is contracted to provide capacity of 445 MW.

Prospective Contract RAECO, in partnership with MASDAR of Abu Dhabi, is developing a 50 MW wind farm project which will operate under a PPA with OPWP. The project has been tendered but is currently on hold and awaiting approval. The wind farm, which is expected to be comprised of around 25 wind turbines will be located near Harweel. Considering the potential intermittency of this resource, it is not currently considered as firm capacity. This position may be altered with experience of the project’s electricity output. It is currently considered in supply plans to reach COD in 2020. Contingency Reserves An interconnection with the PDO Power System (via a 132 kV link between Thumrait and Harweel) was completed in 2012. Its purpose is to reserve-sharing between the two systems, providing improved reliability by allowing each system access to unused reserve in contingency scenarios. The nominal transfer capacity of the interconnection is around 150 MW. The transfer capacity of the interconnection is not considered for resource adequacy purposes (such as LOLH calculations), but rather as contingency reserves.

31

Summary Figure 8 provides a summary of power generation resources for the DPS.

Figure 8

Total Power Generation Resources – DPS

MW 1,600 1,400

Non-firm Resources

1,200 Salalah II IPP

1,000 800

Salalah IWPP

600 400

Raysut IPP

200 0 2017

2018

2019

2017

2020

2018

2021

2019

Contracted Capacity

2022

2023

2020 Net

2021

2022

2023

MWa

Raysut IPP

276

276

276

276

276

276

276

Salalah IWPP

445

445

445

445

445

445

445

Salalah II IPP

-

445

445

445

445

445

445

Total Contracted Capacity

721

1,166

1,166

1,166

1,166

1,166

1,166

-

-

-

50

50

50

50

150

150

150

150

150

150

150

Prospective Capacity Contracts Wind Project (Non-firm)b

Contingency Reserves PDO Interconnect (Nonfirm)c Total Non-firm Resources TOTAL ALL RESOURCES a

150

150

200

200

200

200

871

1,316

1,316

1,366

1,366

1,366

1,366

All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 35°C ambient temperature.

b Date c

150

of commissioning and contracted capacity is subject to change.

Provisional import capability

32

Additional Power Generation Requirements Statutory and Regulatory Requirements Similarly to its role in the MIS, OPWP is required by the Sector Law and its license to ensure the adequacy of generation resources in the DPS to meet future power demands. The Sector Law establishes OPWP’s general responsibility to secure sufficient generation resources to meet demand and the OPWP license establishes the generation security standard as 24 LOLH. OPWP has concluded that, on the basis of simulation studies of the DPS, a reserve margin of about 12% over peak demand is necessary to achieve the 24 LOLH standard, considering the size of the system, characteristics of generation resources, and limited access to security reserves. This establishes the capacity target for each of the three demand scenarios over the 7-year planning horizon, shown in Figure 9. Capacity Balance in 2017 Contracted capacity is projected to be sufficient to meet the capacity target associated with all three demand scenarios in 2017. Capacity Balance from 2018 to 2023 Salalah II IPP is scheduled to begin commercial operation in January 2018. From 2018 to 2023, contracted capacity is projected to meet the capacity target under all three demand scenarios.

33

Figure 9

Future Power Generation Capacity Requirements – DPS

MW

1,400 Contracted Capacity

1,200 1,000

High Case Peak Demand + Margin

800 600

Expected Case Peak Demand + Margin

400

Low Case Peak Demand + Margin

200 0 2017

2018

2019

2020 2017

2021

2022

2018

2023 2019

2020

Generation Resources

Net

2021

2022

2023

MWa

Contracted Capacity

721

1,166

1,166

1,166

1,166

1,166

1,166

Contingency Reserve (non-firm)

150

150

150

200

200

200

200

Total Resources Capacity

871

1,316

1,316

1,366

1,366

1,366

1,366

Peak Demand

505

536

568

627

664

724

765

Peak Demand + Margin

566

601

637

702

744

811

857

Expected Case Demand

Deficit (Additional Capacity Required) Above Contracted Capacity

-

-

-

-

-

-

-

High Case Demand Peak Demand

527

574

619

728

805

863

924


590

643

693

816

902

966

1,035

Deficit (Additional Capacity Required) Above Contracted Capacity

-

-

-

-

-

-

-

Low Case Demand Peak Demand

494

518

542

589

615

661

688


554

580

607

660

688

740

770

-

-

-

-

-

-

-

Deficit (Additional Capacity Required) Above Contracted Capacity a

All capacities are rated on a net basis (i.e after allowing for auxiliary consumption inside the plants) at 35°C ambient temperature.

Combining Power Generation & Water Desalination As in the MIS, OPWP is required to consider the opportunity for combining power generation with water desalination in the DPS, so as to benefit from economies of co-location and co-procurement. As needs for additional water desalination and power generation capacity are confirmed, OPWP will continue to assess the potential for economic benefits that may result from co-location and co-procurement.

34

1.3

Ad Duqm Power System

Demand for Electricity Historical Demand Historically, all requirements to the growing demand for electricity in Ad Duqm have been within the jurisdiction of RAECO. Considering the relatively small energy requirements of these areas, and the distance from the MIS & DPS, they have been met most economically by utilizing diesel-fired generators, located close to the areas of consumption. Demand in this region has been largely dominated by residential and small commercial consumers. This, however, is expected to change rapidly due to the recent and continuing development of large commercial, tourism, and industrial projects. Demand Projections The development of the Special Economic Zone Authority of Duqm (SEZAD) will contribute substantial economic and population growth. The demand for electricity in Ad Duqm is expected to grow significantly as SEZAD realizes its ambitious development plans to transform Ad Duqm into a world class investment and leisure endpoint. The first phase of the SEZAD Master Plan anticipates electricity demand will reach 650 MW by 2025. However, the actual pace of growth is highly uncertain and depends on many factors relating to global markets, investment levels, and government incentives. For the purposes of electricity demand projections, OPWP reports demand projections as obtained from RAECO. These demand projections reflect domestic and small industrial/commercial development. Marafiq, a t venture establishment between Takamul Investment Company and Semcorp Utilities, are currently in the process of developing a 300 MW CCGT plant in order to meet the electricity demand of projects belonging to the Oman Oil Company within Duqm SEZ, and are as such, not included as part of this forecast. The demand projections are portrayed in Figure 10 and reflect three different scenarios ing for different assumptions. These scenarios are: the Expected Demand, the Low Case, and the High Case scenarios. Demand relating to consumers that have yet to secure connection agreements with RAECo are not included as part of the projections. The RAECO forecast shows a reduction in demand of about 20% in comparison to the previous 7 Year Statement (Issue 10), which reflects relatively low 2016 out-turns compared to the forecast as well as revised expectations for the pace of growth.

35

Figure 10

Electricity Demand Projections – Ad Duqm

MW 200 180 160 140 Peak Demand- High Case

120 100

Expected Peak Demand

80 60

Peak Demand- Low Case

40 20 0 2016 2017 Actual

2018

2016 Actual

2019

2017

2020

2018

2021

2022

2019

2023

2020

2021

2022

2023

Average Growth (%) 22%

MW RAECO: Expected Case Change from 2016-2022 Statement

26

41

59

70

88

92

98

105

-7

-1

-11

-24

-19

-23

-25

-

RAECO: Low Case Change from 2016-2022 Statement

26

34

37

39

42

45

48

51

-4

-1

-15

-23

-26

-28

-30

-

RAECO: High Case Change from 2016-2022 Statement

26

41

59

105

158

162

168

175

-10

-8

-32

-27

3

-4

-10

-

10%

32%

Under the Expected Demand scenario, peak demand is expected to grow at an average rate of 22% per year, from 26 MW in 2016 to 105 MW in 2023. The Expected Demand scenario is developed by RAECO and s for normal historical demand and population growth within the area and the interlinked area. In addition, this scenario includes demand related to committed and ongoing projects within the Ad Duqm area, such as Duqm Port and a cement factory. The High Case scenario takes into consideration the forecasted demand within the Expected Case scenario in addition to two projects whose applications with RAECO are currently under process. This scenario assumes that the demand from these two projects will develop in 2019 and 2020. The High Case scenario anticipates an average growth rate of 32% in peak demand, increasing from 26 MW in 2016 to 175 MW in 2023. The Low Case is developed by extrapolating normal historic growth at Ad Duqm and the interlinked areas. This scenario assumes a lower materialization rate of larger commercial and industrial consumers and does not include demand from ongoing projects. This scenario has an average growth rate in peak demand of 10%, from 36

26 MW in 2016 to 51 MW in 2023. Peak demand forecasts are found to be lower than previous figures, with respect to the previous 7 Year Statement (Issue 10), across most years and scenarios. These projections do not include the large influx of industrial demand associated with SEZAD development plans. It is currently anticipated that the refinery and petrochemical complex being developed by Oman Oil Co. and others will include captive power generation to serve their own requirements. SEZAD plans large-scale industrial projects, diverse economic development and associated residential and commercial requirements over the next 30 years. The demand growth rate within the zone is expected to accelerate rapidly as key industries become established. OPWP will attend closely to the development pace and implications for electricity demand.

Power Generation Resources Sources of Power The RAECO system serving Ad Duqm and its surrounding areas is currently supplied by Ad Duqm power station, a 66 MW diesel-fired power plant which is also owned and operated by RAECO. Prospective Contracts and Additional Requirements RAECO has consulted with the AER with regards to identifying potential avenues to secure electricity supply to meet the growing demand under the different demand forecast scenarios. These options include the expansion of the existing power plant, procurement of rental diesel generators, construction of a new fuel oil or gas-fired power plant, power purchase from Marafiq, and power purchase from OPWP (subject to the completion of the North-South Interconnect project, which would also provide an interconnect with the Ad Duqm demand area, through Haima). It is noted that under the Low Case demand scenario, the capacity available from the existing RAECO power plant is sufficient to meet the demand over the coming 7 years. However, if demand were to trend along either the Expected Case or the High Case, additional capacity will be needed as early as 2019. This capacity is defined as “New Capacity” in Figure 11, and represents the capacity required to meet the demand, in addition to an assumed 15% reserve margin. The proposed 400 kV transmission link to the MIS and PDO, which is being assessed by OPWP, OETC and PDO, would provide more options for power supply. Ad Duqm would gain access to power generation resources in the MIS system. The earliest that this interconnect may be made available is assumed to be 2021, and as described earlier, if demand starts to trend as per the Expected or High Case, RAECO will be required to facilitate alternative means to meet the supply as early as 2019, without the assistance of the North-South Interconnect project. Meeting the increase in demand, in these scenario, can be accommodated through temporary generation, such as rental diesel units, or possibly as a temporary capacity purchase from the refinery’s captive power plant, subject to surplus capacity being available. Ad Duqm could also become a location for a large power station, able to access other major load centers until large-scale demand develops locally. Once Ad Duqm develops as a major industrial and economic center, it will require this link to provide for grid stability and security.

37

Figure 11

Future Power Generation Capacity Requirements – Ad Duqm

MW 250

200 New Capacity (High Case) New Capacity (Expected Case)

150

Existing RAECO Plant High Case

100

Expected Demand Low Case

50

0 2017

2018

2019

2020

2021

2017

2022

2018

2023

2019

Peak Demand

2020

2021

2022

2023

MW

Expected Case

41

59

70

88

92

98

105

Low Case

34

37

39

42

45

48

51

High Case

41

59

105

158

162

168

175

66

66

66

66

66

66

66

-

-

5 45

25 106

30 110

37 117

45 125

66

66

71

91

96

103

111

66

66

111

172

176

183

191

Contracted Capacity Existing RAECO Plant Prospective Capacity New Capacity (Expected Case) New Capacity (High Case) Total Contracted Capacity + New Capacity (Expected Case) Total Contracted Capacity + New Capacity (High Case)

38

1.4

Musandam Power System

Demand for Electricity Demand Projections The Musandam Governorate expects future developments aimed to boost touristic, economic, and commercial activities. The Expected Demand scenario as shown below was developed by RAECO. 2016 out-turn demand was about 17% less than the previous forecast, and this has led to an overall reduction in projected demand relative to that reported in the previous 7-Year Statement (Issue 10). OPWP prepared Low Case and High Case scenarios on the basis of alternate assumptions of annual growth rates for underlying demand, materialization of identified bulk consumers, and expectations for the coincidence of bulk consumers’ peak demand with the peak demand on the Musandam power system. Observation of outturns against these forecasts, and further details of specific projects, are expected to allow refinement of the forecast methodology in future OPWP Statements. The three demand scenarios are shown in Figure 12.

Figure 12

Electricity Demand Projections – Musandam Governorate

MW 160 140 120

Peak Demand High Case (OPWP)

100

Expected Peak Demand (RAECO)

80 60

Peak Demand - Low Case (OPWP)

40 20 0 2016 Actual 2017

2018

2019

2020

2021

2022

2023

2016 Actual

2017

2018

2019

2020

2021

2022

2023

Average Growth (%)

74

84

96

103

109

117

124

132

9%

-15

-17

-21

-23

-25

-27

-30

OPWP Low Case Change from 20162022 Statement (MW)

74

82

93

97

102

106

111

116

7%

-2

-5

-7

-10

-13

-17

-21

OPWP High Case Change from 20162022 Statement (MW)

74

85

99

108

118

128

138

150

11%

-27

-30

-34

-34

-35

-36

-37

-

MW RAECO Expected Case Change from 20162022 Statement (MW)

-

-

Under the RAECO Expected Demand forecast, peak demand is expected to grow from 74 MW in 2016 to 132 MW in 2022, an average increase of 9% per year.

39

The Low Case scenario assumes a growth rate of 7% for peak demand, increasing only to 116 MW in 2023 The High Case scenario assumes a quicker materialization of bulk consumers, as well as increased tourism and fishery activities. Peak demand is projected to grow by an average of 11% per year, from 74 MW in 2016 to 150 MW in 2023.

Power Generation Resources Sources of Power RAECO owns and operates six power stations distributed near to load centers in the Musandam Governorate. They are all diesel-fired generators, with combined installed capacity of about 88 MW. With the exception of three diesel generator units with a total capacity of around 27 MW, the majority of units are nearly the end of their technical life. As such, these units are expected to be decommissioned once other sources of capacity are made available. Musandam IPP is nearing the end of its construction, and will be operated by a consortium led by Oman Oil Company under a PPA with OPWP, for supply to RAECO. The IPP will provide a minimum net firm capacity of 123 MW, with expected COD in May, 2017. The project will use reciprocating engines fueled primarily by natural gas. Prospective Contracts and Additional Requirements Figure 13 illustrates Musandam’s supply/demand balance. The Musandam IPP contributes sufficient capacity to secure all three demand scenarios through 2023. It will enable RAECO to reduce its reliance on diesel generators, yielding a substantial savings in fuel costs. RAECO is also planning to bring online a new power station with a capacity of around 78 MW to be integrated into the 132 kV grid. The current plan is to bring these units online once total aggregate demand increases beyond 100 MW, which, as per RAECOs demand forecast, is expected to be in 2019.

40

Figure 13

Future Power Generation Expansion Plans - Musandam Governorate

MW 250

RAECO Plants (New)

200

RAECO Plants (Current)

150

Musandam IPP High Case Peak Demand

100

Expected Peak Demand 50 Low Case Peak Demand 0 2017

2018

2019

2020

2021

2022

2017

2018

2019

Expected High Case Low Case

84 85 82

96 99 93

Contracted Capacity RAECO Plants (Current) Musandam IPP a

88 123

Total Contract Capacity

2021

2022

2023

103 108 97

2020 MW 109 118 102

117 128 106

124 138 111

132 150 116

88 123

27 123

27 123

27 123

27 123

27 123

211

211

150

150

150

150

150

-

-

78

78

78

78

78

211

211

228

228

228

228

228

Peak Demand

Prospective Capacity RAECO Plants (New) Total Contracted Capacity + Prospective aThe MW figures are at 45 deg. C

2023

41

SECTION 2

FUEL REQUIREMENTS

Natural Gas Availability OPWP consults with MOG on a regular basis, in order to confirm the future availability of natural gas for power generation (and associated water production) and to co-ordinate planning across the different systems currently under OPWP’s jurisdiction. While MOG has recently approved gas allocations to the next two IPPs that OPWP plans to procure, MOG has also indicated that future natural gas supply is constrained. Should further required natural gas allocations not be available to the power and water sector, then (in addition to pursuing fuel-efficiency improvement options) OPWP would likely need to: 

bring forward plans to procure new generation capacity based on a fuel other than natural gas, such as renewable energy and coal projects;



discuss with the Government the feasibility of importing natural gas specifically for use in power generation (and associated water production); and/or

OPWP will continue to consult closely with the relevant authorities with regard to all of these matters.

2.1


2016 Fuel Consumption The primary fuel resource for power generation and associated water production in the MIS is natural gas, supplied to power and desalination plants by the Ministry of Oil & Gas (MOG). Total gas consumption at the main power and desalination plants in 2016 was about 7.01 billion Sm3, equivalent to 19.4 million Sm3/d, about 4% less than in 2015. The peak daily natural gas consumption in 2016 was 28.8 million Sm3, around 4.3% higher than in 2015. The reduction of 4% growth in natural gas requirements contrasts with the 4% increase in electricity generation over the same period. This significant improvement stems mainly from transmission grid upgrades that enabled better access to the most efficient generation plants.

Projected Fuel Requirements OPWP has projected fuel requirements of the MIS over the 2017-2023 forecast horizon for each of the three demand scenarios, as shown in Figure 14. Overall fuel consumption is expected to increase at an average rate of about 3% per year over the next seven years. Under the Low Case demand scenario, fuel consumption increases at an average of 1% per year, whilst in the High Case demand scenario, it grows at an average rate of 4% per year. In each of the three scenarios, the rate of growth in fuel consumption is well below that of electricity demand.

42

Figure 14

Projected Fuel Requirements – MIS Million sm3/d

Million HHV GJ Total Fuel Consumption - Low Case Demand Total Fuel Consumption - Expected Case Demand Total Fuel Consumption - High Case Demand Peak Day Gas Consumption - Low Case Demand (right hand scale) Peak Day Gas Consumption - Expected Case Demand (right hand scale) Peak Day Gas Consumption - High Case Demand (right hand scale)

600

500

400

45 40

36 32 29

29

35 30 25

300 20 200

15 10

100 5 0

0 2016 Actual

2017

2018

2019

2016 Actual

2020

2021

2022

2023

2017

2018

2019

2020

2021

2022

2023

Average Growth (%)

-

18.1 24.4 -

18.8 26.8 -

19.3 26.2 -

19.8 26.9 -

20.9 28.4 -

22.1 30.0 -

23.2 31.6 -

3% 1% -

277

258

268

275

283

298

315

330

3%

277 -

258 -

268 -

275 -

283 -

298 -

315 -

330 -

3% -

19.4 28.9

17.7 23.5

17.7 25.0

17.1 24.1

17.9 25.0

18.9 26.4

19.9 27.6

20.7 29.1

-

-

-

-

-

-

-

-

1% 0% -

277

252

252

244

256

270

284

296

1%

277 -

252 -

252 -

244 -

256 -

270 -

284 -

296 -

1% -

19.4 28.9 -

19.2 26.2 -

21.0 30.0 -

21.2 28.3 -

21.9 29.8 -

23.1 31.4 -

24.5 33.3 -

26.0 35.8 -

4% 3% -

277

273

299

302

313

330

349

371

4%

277 -

273 -

299 -

302 -

313 -

330 -

349 -

371 -

4% -

Expected Demand Gas Consumption (million Sm3/d) Annual Average Peak Day Diesel Fuel Consumption (million litres) Total Fuel Consumption (million HHV GJ)a Gas Diesel Fuel

19.4 28.9

Low Case Demand Gas Consumption (million Sm3/d) Annual Average Peak Day Diesel Fuel Consumption (million litres) Total Fuel Consumption (million HHV GJ)a Gas Diesel Fuel

High Case Demand Gas Consumption (million Sm3/d) Annual Average Peak Day Diesel Fuel Consumption (million litres) Total Fuel Consumption (million HHV GJ)a Gas Diesel Fuel a

Based on natural gas HHV of 1,050 BTU/scf

43

Gas Utilization Continuing improvements in the efficiency of power supply have held back the growth rate in fuel requirements. Since 2005, through the introduction of progressively more efficient generation plants, the average fuel consumption per unit of electricity production in the MIS has dropped from 374 Sm3/MWh in 2005 to 245 Sm3/MWh in 2016, an improvement of 34.5% in natural gas utilization. Over the next seven years, OPWP expects that an increasing share of power generation will be provided by the most efficient plants, contributing to a further 28% improvement in MIS natural gas utilization by 2023 as indicated by Figure 15. Another significant contributor is the shift from MSF to RO technology for water desalination. This is expected to allow some of the combined power and water plants to be operated less intensively in favor of the newer and more efficient power-only IPPs. OPWP and OETC continue to cooperate for continuous improvement in generation dispatch operations, to take full advantage of the newer, more efficient, generation plants while honoring the network security constraints that assure reliable supply of power. OETC is in the process of developing a 400 kV transmission backbone and new dispatch control technology that together will more efficient dispatch, while OPWP will contribute advanced system simulation to economic dispatch decision-making.

Figure 15

Gas Required per Unit of Electricity Generation – MIS

Sm3

of gas 400 consumed per MWh 350 produced

Actual Projection

300 250 200 150 100 50

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

0

44

2.2

Dhofar Power System

2016 Fuel Consumption Both power generation plants in the Dhofar Power System (DPS) use natural gas as a fuel source. Total natural gas consumption in 2016 was 821 million Sm3 (equivalent to 2.24 million Sm3/d), about 3% lower than in 2015, whereas electricity production grew by 0.5%. This reflects an improvement in natural gas utilization, due to improved dispatch of the DPS plants. The peak daily natural gas consumption was 3.6 million Sm3 in 2016 compared to 3.0 million Sm3 in 2015. The 20% spike in peak consumption in 2016 was due to maintenance that took place in Salalah IWPP during the month of May, during which Raysut IPP OCGTs were dispatched to cover the load.

Projected Fuel Requirements OPWP has prepared projections for the fuel requirements of the Dhofar Power System over the 2017-2023 period for each of the three demand scenarios, and illustrates this in Figure 16. The projections are based on the following key assumptions: 

Salalah II IPP is assumed to begin commercial operation on schedule in January 2018;



the 50 MW wind farm at Harweel is assumed to begin commercial operation in January 2020, with an average daily yield factor of about 30%; and



no “commercial” imports or exports over the PDO interconnection are assumed to occur.

Overall fuel consumption is expected to increase at an average rate of about 7% per year in the Expected Demand scenario. Under the Low Case demand scenario, fuel consumption increases at an average of 5% per year, whilst in the High Case demand scenario, it grows at an average rate of 10% per year. The impact of the addition of the Salalah II IPP in 2018 is particularly evident in all scenarios, showing declines in the average and peak natural gas consumption in 2018.

45

Figure 16 Million HHV GJ 100

Projected Fuel Requirements – DPS Million Sm3/d

Total Fuel Consumption - "Low Case" Demand Total Fuel Consumption - Expected Demand Total Fuel Consumption - "High Case" Demand Peak Day Gas Consumption - "Low Case" Demand (right hand scale) Peak Day Gas Consumption - Expected Demand (right hand scale) Peak Day Gas Consumption - "High Case" Demand (right hand scale)

80

6.0 5.0 4.0

60

3.0 40

2.0 20

1.0 0.0

0

2016

2017

2018

2019

Actual 2016 2017

2020

2021

2022

2023 Average

2018

2019

2020

2021

2022

2023 Growth (%)

Expected Demand Gas Consumption (million Sm3/d) Annual Average

2.2

2.6

2.3

2.5

2.7

2.9

3.3

3.6

7%

Peak Day

3.6 32

3.1

2.8

3.0

3.4

3.7

4.1

4.5

3%

37

33

35

39

42

47

51

7%

Annual Average

2.2

2.6

2.2

2.4

2.5

2.7

3.0

3.2

5%

Peak Day

3.6

3.0

2.7

2.9

3.2

3.4

3.8

4.1

2%

32

36

32

34

36

39

43

46

5%

Annual Average

2.2

2.7

2.4

2.7

3.1

3.7

4.1

4.4

10%

Peak Day

3.6

3.2

3.0

3.3

3.9

4.5

5.0

5.6

7%

Total Fuel Consumption (million HHV GJ)a

32

39

35

39

45

52

58

63

10%

Total Fuel Consumption (million HHV

GJ)a

Low Case Demand Gas Consumption (million Sm3/d)

Total Fuel Consumption (million HHV

GJ)a

High Case Demand Gas Consumption (million Sm3/d)

a

Based on natural gas HHV of 1,050 BTU/scf

46

47

SECTION 3 3.1

WATER

Interconnected Zone

In the northern regions of the Sultanate, OPWP provides desalinated water to two “water departments”: PAEW and MISC. Their respective service areas and requirements for desalinated water are defined as follows: 

PAEW – in respect of the demand for potable water in the Governorates of Muscat, Al Buraymi, Al Batinah North, Al Batinah South, Ad Dakhiliyah, Ad Dhahirah, Ash Sharqiyah North and Ash Sharqiyah South; and



MISC – in respect of backup supply to the MISC desalination plant, for process water used by industry in the Sohar Industrial Port area.

PAEW and MISC provide the water demand projections in respect of the following geographic zones: 

The “Interconnected Zone” includes the potable water demands of the Governorates of Muscat, Al Batinah North, Al Batinah South, Buraymi, Ad Dakhiliyah, and Ad Dhahirah4 which are served by PAEW, and the process water demand of the Sohar Industrial Port area which is served by MISC.5 The existing principal sources of desalinated water for this zone are Ghubrah IWPP, Ghubrah II IWP, Barka IWPP and Barka II IWPP, and Sohar IWPP.



The “Sharqiyah Zone” includes the potable water demands of the Ash Sharqiyah North and Ash Sharqiyah South Governorates, excluding Masirah wilayat. The existing principal source of water for this zone is the Sur II IWP.

Demand for Water The projected peak water demand for the Interconnected Zone is shown in Figure 17. Peak demand represents the daily demand (inclusive of network losses) during the week of highest demand of the year. PAEW has provided two demand scenarios – Base and High – which together capture the uncertainty in demand growth. Both forecast scenarios are driven fundamentally by population growth, distribution network expansion, and growth in per-capita water consumption. The PAEW demand forecasts derive from a 2014 population forecast6 published by the National Center for Statistics and Information (NCSI) complemented by a mid–year 2015 update. The PAEW forecast for 2017 to 2023 exceeds the previous year forecast by about 10% in the Base Case and by somewhat less in the High Case. The differences are due mainly to higher-than-expected demand out-turns in 2016. The annual growth after 2016 is relatively unchanged compared to the previous forecast.

4

The current scenario considers a connection to Dhahirah in 2020 and it is expected to be supplied from the Main Interconnected Zone, while keeping limited production from the Masarrat well field, when both the new Sohar-Dhahirah transmission and Sohar IV IWP come in operation. 5

MISC has provided OPWP with a demand projection through 2023. MISC is currently supplying its customers from its own RO plant which was commissioned in December 2011. During the 7-year period from 2017 to 2023, OPWP is requested to provide desalinated water to Majis customers in case of plant outage at the Majis RO plant. 6

National Centre for Statistics & Information (2014) Population projections, in the Sultanate of Oman, 2015-2040 and Population Statistics Bulletin. Issue 5.

48

PAEW’s Base and High Case scenarios differ primarily in assumptions for the near-term pace of population growth. The High Case scenario assumes higher near-term (until 2020) growth reflecting a continuation of the strong population growth trend witnessed in the past years. It projects average annual growth of about 7% over the forecast horizon to 2023. The High Case scenario is relevant considering the repeated upward revisions to water demand forecasts in recent years, as actual demand has outstripped previous projections. It aims to establish a plausible upper bound to water demand in order to plan for adequate supply.

Figure 17

Water Demand Projections – Interconnected Zone

Thousand m3 1,600 1,400

High Case Scenario Annual Average Demand

1,200 1,000

Base Case Scenario Annual Average Demand

800 600

High Case Scenario Peak Demand

400 200

Base Case Scenario Peak Demand

0

2016 Est. a

2017

2018

2019

Peak Water Demand

2020

2021

2022

2023

Average Growth (%)

1,295

5%

1,466

7%

Thousand m3/d

Base Case Scenario

897

985

1,017

1,067

1,142

1,202

1,244

Change from 20162022 Statement

68

90

56

53

86

110

118

High Case Scenario

897

1,027

1,082

1,157

1,256

1,339

1,400

Change from 20162022 Statement

68

62

26

21

53

76

83

Base Case Scenario

746

816

838

877

939

989

1,024

1,065

5%

High Case Scenario

746

848

888

947

1,028

1,095

1,145

1,197

7%

Annual Average Demand

a

Full-year water demand for 2016 is based on the actual outturn consumption up to the month of October, 2016

49

Water Supply Sources The supply sources available to meet water demand include existing water desalination plants, new desalination plants under construction or procurement, and PAEW sources. The resources that are under contract with OPWP through PWPAs and WPAs to provide desalinated water production in the Interconnect Zone are summarized in Table 4.

Table 4 Project Namea

Details of WPAs/PWPAs - Interconnected Zone/Sharqiyah Zone


Contracted Capacity

Contract Type

Project Company

Project Status

Technology

Contract Expiry

Operational

MSF

2018

Operational

RO

2018

Operational

RO

2018

Interconnected Zone

Barka IWPP

Barka I / Barka Power and Desalination Plant / Barka I IWPP

91,200 m3/d

PWPA

45,000

m3/d

WPA

57,000

m3/d

WPA

ACWA Power Barka (SAOG)

Barka II / Barka II Power and Desalination Plant

120,000 m3/d

PWPA

SMN Barka Power Co. (SAOC)

Operational

RO

2024

Barka III Desalination Plant Barka IV IWP / Barka IV Desalination Plant

281,000 m3/d

WPA

Barka Desalination Co. (SAOC)

Under construction

RO

2038

Operational

MSF

2018

Operational

MSF

2022

Operational

RO

2038

Under construction

RO

2037

Barka II IWPP

Ghubrah IWPP

Ghubrah / Ghubrah Power and Desalination Plant / Ghubrah Desalination Plant

140,200 m3/d

PWPA

Al Ghubrah Power and Desalination Co. (SAOC)

Sohar IWPP

Sohar I / Sohar I Power and Desalination Plant

150,000 m3/d

PWPA

Sohar Power Co. (SAOG)

Ghubrah II IWP

Muscat City Desalination Plant / Muscat City IWP

191,000 m3/d

WPA

Qurayyat IWP

Qurayyat Desalination Plant

200,000 m3/d

WPA

Qurayyat Temporary Plant / Qurayyat Temporary Water Project Sohar III Desalination Plant Sohar III IWP / Sohar II Desalination Plant Qurayyat Temporary IWP

Muscat City Desalination Co. (SAOC) Qurayyat Desalination Co. (SAOC)

8,000 m3/d

WPA

Muscat Water LLC

250,000 m3/d

WPA

Myah Gulf Desalination Co. (SAOC)

Operational

RO

2018 (Potential extension to 2022)

Under construction

RO

2038

a In

order to avoid confusion in the naming of projects, OPWP has revised project names as indicated in previous 7 Year Statement publications utilizing a unified naming methodology that assigns project names as per the following: 1) Where the site is not yet determined [System Name, Power/Water/Power & Water, Year of Commissioning], 2) where the site has been identified [Region name, Project number, IPP/IWP/IWPP]. These two columns articulate the project names as they will be referenced in this (and future) publications, and the naming of projects as found in previous publications.

OPWP’s contracted sources of desalinated water for the Interconnected Zone include the following: 50



Ghubrah IWPP: owned and operated by Ghubrah Power and Desalination Company under a PWPA with OPWP. The Ghubrah IWPP comprises five MSF units with a current capacity of 140,200 m3/d (31 MIGD). The PWPA will expire in September 2018. All desalination units are expected to be decommissioned at that time.



Barka IWPP: owned by ACWA Power Barka and operated under a PWPA with OPWP. The Barka IWPP was originally contracted with a desalination capacity of 91,200 m3/d (20 MIGD) using MSF technology, and has added RO capacity of 45,000 m3/d (10 MIGD) in 2014 and 57,000 m3/d (12.5 MIGD) in 2016. The supply contracts for Barka IWPP are scheduled to expire in April 2018. OPWP is currently finalizing negotiations with Barka IWPP to extend the contract from expiring in 2018 to 31 December 2021. The new agreement is expected to provide contracted desalinated capacity of the RO plants, while the MSF units are intended to remain on standby, and to be utilized as a contingency reserve. Further extension of Barka IWPPs RO units beyond 2021 is considered prospective and may be made available during future procurement activities.



Barka II IWPP: owned by SMN Power Barka and operated under a PWPA with OPWP. The Barka II IWPP has a capacity of 120,000 m3/d (26 MIGD) using RO technology.



Sohar IWPP: owned by Sohar Power Company and operated under a PWPA with OPWP. Sohar IWPP has a desalination capacity of 150,000 m3/d (33 MIGD), using MSF units. The PWPA will expire in March 2022.



Ghubrah II IWP: owned by Muscat City Desalination Company and operated under a WPA with OPWP. The plant has contracted desalination capacity of 191,000 m3/d (42 MIGD) using RO technology.



Qurayyat IWP: awarded in December 2014 to the Qurayyat Desalination Company, will be operated under a WPA with OPWP with contracted capacity of 200,000 m3/d (44 MIGD), using RO technology. It is currently expected to begin commercial operation in Q4, 2017.



Barka IV IWP: awarded in November 2015 to Barka Desalination Company, will be operated under a WPA with OPWP with contracted capacity of 281,000 m3/d (62 MIGD), using RO technology. It is currently expected to begin commercial operation on schedule in Q2, 2018.



Sohar III IWP: awarded in November 2015 to Myah Gulf Desalination Company, will be operated under a WPA with OPWP with contracted capacity of 250,000 m3/d (55 MIGD), using RO technology. It is currently expected to begin commercial operation in Q3, 2018.



Qurayyat Temporary IWP: owned by Muscat Water LLC, and operated under a WPA with OPWP with contracted capacity of 8,000 m3/d (1.8 MIGD), using RO technology. The contract is for two years and allows for extension for another four years. This project provides water supply to Qurayyat town until supply is available from PAEW’s Wadi Dayqah project.

In addition to the foregoing sources that are under contract to OPWP, PAEW has its own sources of water available in the Interconnected Zone that offset the need for water desalination capacity. These include (1) well fields in Muscat and other regional wells7, (2) a mobile RO plant that is currently located at Ghubrah, with capacity of 23,000 m3/d (5 MIGD), (3) a contract for supply of 11,000 m3/d (2.4 MIGD) from the MISC RO plant

7

Well production from these sources is projected to be reduced from the 2015 maximum capacity of 66,500 m3/d to 42,000 m3/d by 2019, in line with national policy to provide for the recharge of aquifers. These capacities refer to peak yields. Production from wells is less during non-peak periods.

51

in Sohar, valid up to 2017, (4) Al Masarrat well field which is expected to supply 10,000 m3/d beginning in 2018, and (5) the Wadi Dayqah surface water reservoir, which is expected to provide capacity of 67,000 m3/d (15 MIGD) beginning in 20198. The production capacity from these sources is shown in aggregate by year in Figure 18.

Capacity Target and Prospective Resources The expansion plan for water desalination capacity aims to meet peak demand, plus a 14.3% margin for supply security. The reserve margin is a provision for temporary failure of the transmission network or desalination plant.9 This represents a system security measure that is analogous to the generation security standard used to assess power generation capacity requirements. Figure 18 provides a summary of annual water supply requirements and supply sources in the Interconnected Zone.

Figure 18

Desalinated Water Capacity Requirements – Interconnected Zone

Thousand m3/d 2,000

PAEW Resources

1,800

North Al Batinah IWP

1,600

Ghubrah III IWP

1,400 Barka IWPP Contract Extension (RO)

1,200

Contracted Capacity

1,000 800


600

Base Case Peak Demand + Margin

400

Base Case Peak Demand

200 Base Case Annual Average Demand

0 2017

2018

2019

2020

2021

2022

2023

8

The Wadi Dayqah project has peak capacity of 90,000 m3/d, but average capacity is assessed at 67,000 m3/d. A portion of the project is intended for agricultural use. In an emergency, the peak capacity may be utilized for potable water, but normal operation even during peak demand periods considers the capacity at 67,000 m3/d for potable water demand. 9

PAEW established the security standard, in accordance with international practice, to be that the 24-hour peak demand on the system should be available for supply within a 21-hour period. The 24-hour peak capacity requirement available in a 21hour period corresponds to (24/21) x peak demand = 1.143 x peak demand, hence a 14.3% reserve margin.

52

2017

2018

2019

2020

2021

2022

2023

Thousand m3/d

Supply Requirements Base Case Scenario Peak Demand

985

1,017

1,067

1,142

1,202

1,244

1,295

High Case Scenario Peak Demand

1,027

1,082

1,157

1,256

1,339

1,400

1,466

Base Case Peak Demand + Margin

1,126

1,162

1,219

1,305

1,374

1,422

1,480


1,174

1,237

1,322

1,435

1,530

1,600

1,676

Barka IWPP

193

-

-

-

-

-

-

Ghubrah IWPP

140

-

-

-

-

-

-

Contracted Capacity

Qurayyat Temporary IWP

a

8

8

-

-

-

-

-

Sohar IWPP

150

150

150

150

150

-

-

Barka II IWPP

120

120

120

120

120

120

120

Muscat City IWP

191

191

191

191

191

191

191

Barka IV IWP

-

281

281

281

281

281

281

Qurayyat IWP

-b

200

200

200

200

200

200

Sohar III IWP

-

-c

250

250

250

250

250

802

950

1,192

1,192

1,192

1,042

1,042

100

100

119d

119

119

119

119

-224

-112

91

6

-63

-261

-319

-272

-187

-11

-125

-219

-439

-515

-

102

102

102

102

102f

102f

-

-

-

-

-

300

300

-

-

-

-

-

200

200

902

1,152

1,413

1,413

1,413

1,763

1,763

-224

-10

193

108

39

341

283

-272

-85

91

-23

-117

163

87

Total Contracted Capacity Peak Yield of PAEW Sources (Non OPWP) Reservei over Base Case Peak Demand + Margin (Shortfall) Reservei over High Case Peak Demand + Margin (Shortfall) Prospective Capacity Contracts Barka IWPP Contract Extension (RO) e Ghubrah III IWP g North Batinah IWP h Total Water Desalination Resources i Reservej over Base Case Peak Demand + Margin (Shortfall) Reservej over High Case Peak Demand + Margin (Shortfall) a

The supply contract includes an option for up to four one-year extensions at the same capacity level Qurayyat IWP is contracted to be in service in time to meet the 2017 peak, however, COD is expected to be delayed until Q4 2017. c Sohar III IWP is contracted to be in service by April 2018, however, current progress implies a delay of at least 3 months, with COD being achieve after the 2018 peak. d Adjustments in PAEW resources include, but are not limited to, the removal of a temporary RO plant in Ghubrah and the addition of capacity from the Wadi Dayqah project. e OPWP is currently discussing the allocation of MSF capacity for standby (reserve capacity in case of emergency) with PAEW. This capacity is not included in the graph. f OPWP has finalized negotiations with Barka IWPP and is seeking government approval to extend the contract up to 2021. Further extension beyond this is considered prospective and may be made available during future procurement activities. g The capacity is required to supply demand in Muscat Zone. h The capacity is required to supply demand in Sohar Zone. i Excluding Barka I IWPP MSF capacity. j Reserves here include capacity from PAEW resources. b

53

Figure 18 demonstrates that water supply will face challenges during peak demand periods of 2017. Supply is adequate to meet average demand requirements, but not during days with the highest demand levels in the Muscat demand region. During peak demand periods in the Muscat demand region, PAEW plans to utilize contingency reserves from existing wells to meet the demand requirements. These contingency reserves are available and sufficient to meet peak demand for short periods. Supply resources are expected to be sufficient to meet peak demand in the Sohar and Barka demand regions. In 2018, supply is expected to be adequate to meet peak demand under both scenarios, due to a net increase in capacity: the Barka IV and Sohar III IWPs are scheduled to be completed, the Barka IWPP RO units are planned to be extended, while the Ghubrah IWPP is scheduled to retire. In 2019 and 2020, supply is adequate to meet capacity targets under both demand scenarios. In 2021, contracted supply is no longer sufficient to meet the capacity target for High Case demand, though it would meet the Base Case peak demand. New capacity is required to serve the Muscat demand zone, OPWP is planning to procure new desalination capacity of 300,000 m3/d in 2022 to be located at Al Ghubrah, adjacent to the existing Ghubrah IWP. A further extension of the Barka IWPP RO units, from 2022 onward, will also be considered. In 2022, new capacity is also required to serve growing demand in the North Batinah and Ad Dhahirah Governorates. OPWP plans to procure an IWP with capacity of 200,000 m3/d at a site on the North Batinah coast, for COD in 2022. In summary, OPWP is considering the following capacity additions, referred to as prospective contracts: 

Barka IWPP contract extension. The water supply agreements with ACWA Power Barka expire in April 2018. Contract extension agreements to December 2021 have been finalized and are expected to be approved by government soon. During the extension period, the main source of water supply would be 102,000 m3/d (22.5 MIGD) from RO units. The MSF capacity (91,200 m 3/d, 20 MIGD) would be maintained as standby capacity, and operated only under conditions of emergency need such as a plant outage. Further extension of Barka IWPPs RO units beyond 2021 is considered prospective and may be made available during future procurement activities.



Ghubrah III IWP in 2022. Additional capacity is to be procured in the Muscat region by 2022. OPWP expects to commence the procurement process for Ghubrah III IWP, with a capacity of around 300,000 m3/d (66 MIGD) by Q4, 2017, and to be located adjacent to the existing Ghubrah II IWP.



North Batinah IWP in 2022. Additional capacity will be required in the North Batinah region in 2022, with capacity 200,000 m3/d (44 MIGD). It would serve demand growth in the North Batinah-Dhahirah region, and would allow the water desalination capacity from Sohar IWPP MSF units to retire.



Mobile Water Desalination Capacity. In 2016, PAEW requested OPWP to prepare for procurement of up to 100,000 m3/d (22 MIGD) of mobile water desalination capacity plants. These plants may be mounted either on land transport vehicles or sea-going barges, providing mobility to various sites according to need. PAEW is awaiting Government approval prior to authorizing OPWP to issue a Tender, which could occur in 2017.

54

3.2

Sharqiyah Zone

Demand for Water The PAEW forecast of water demand for the Sharqiyah Zone is shown in Figure 19. PAEW found that demand in 2016 was less than the forecast by about 10%, and now projects a relatively constant growth pattern through 2023. The average growth for both peak is at around 7%, whereas annual average demand is expected to grow at 8% over the 7-year horizon.

Figure 19

Water Demand Projections – Sharqiyah Zone

Thousand m3/d 200 180 160 140 120 100 80 60 40 20 0

Peak Water Demand (right hand scale)


2016 Estimateda

2017

2018

2019

2020

2021

2022

2023

Average Growth (%)

181

7%

155

8%

Thousand m3/d Peak Water Demand

112

122

130

140

154

165

173

Change from Statement

-11

-10

-10

-7

0

5

6


93

106

112

121

133

142

149

Change from 2016-2022 Statement

-16

-9

-9

-6

2

5

7

a Full-year

2016-2022

water demand for 2016 is based on the actual outturn consumption up to the month of October, 2016

55

Water Supply Sources The supply sources available to meet water demand include existing water desalination plants, new desalination plants under construction or procurement, and PAEW sources. The resources that are under contract with OPWP through WPAs to provide desalinated water production in the Sharqiyah Zone are summarized in Table 5.

Table 5

Details of WPAs - Sharqiyah Zone

Project Namea


Contracted Capacity

Contract Type

Plant Owner

Plant Status

Plant Type

Contract Expiry

Aseelah Temporary IWP

Aseelah Temporary Plant

10,000 m3/d

WPA

Muscat Water LLC

Under construction

RO

2021

Sur II IWP

Sur IWP / Sur Desalination Plant

131,000 m3/d

WPA

Sharqiyah Desalination Co. (SAOG)

Operational

RO

2029

a In order to avoid confusion in the naming of projects, OPWP has revised project names as indicated in previous 7 Year Statement publications utilizing a

unified naming methodology that assigns project names as per the following: 1) Where the site is not yet determined [System Name, Power/Water/Power & Water, Year of Commissioning], 2) where the site has been identified [Region name, Project number, IPP/IWP/IWPP]. These two columns articulate the project names as they will be referenced in this (and future) publications, and the naming of projects as found in previous publications.

OPWP’s contracted sources of desalinated water for the Sharqiyah Zone include the following: 

Sur II IWP, owned and operated by Sharqiyah Desalination Company with a capacity of 131,000 m3/d (18 MIGD), using RO technology, under a WPA with OPWP. This includes the recent 48,000 m3/d expansion, which was completed in Q1 2017.



Aseelah Temporary IWP, awarded in January 2016 to Muscat Water LLC, will be operated under a WPA with OPWP with a contracted capacity of 10,000 m3/d (2.2 MIGD), using RO technology. This plant is expected to begin commercial operation in June 2017. The contract is set to expire in 2021, but has an option for contract renewal up to two years.

In addition to the capacity under contract to OPWP, PAEW has wells at several locations. These wells may be utilized, to a limited degree, for water supply when desalinated water capacity is not sufficient to meet demand.

Capacity Target and Prospective Resources The capacity target for the Sharqiyah Zone is a margin of 14.3% over peak demand, similar to the method used to calculate the capacity target for the Interconnected Zone. Figure 20 compares the capacity target to the sum of supply sources. The figure demonstrates that contracted capacity is sufficient to meet peak demand through 2019, but that new capacity is needed by 2020. The previous 7-Year Statement identified this requirement, and procurement was initiated in 2016 for an IWP with capacity of 80,000 m3/d (18 MIGD), to be located at Aseelah. OPWP expects to award the project in Q2, 2017. The project will be developed to achieve COD in Q2, 2020. From 2020 onwards, total contracted capacity is expected to meet the capacity target requirements.

56

Figure 20

Future Desalinated Water Capacity Requirements– Sharqiyah Zone

Thousand m3/d

PAEW Resources Supply Requirements

250

Aseelah Temporary IWP

200

Ashkharah IWP 150

Sur II IWP

100

Peak Demand + Margin Peak Water Demand

50


0 2017

2018

2019

2017

2020

2018

2021

2022

2019

2023

2020

2021

2022

2023

Thousand m3/d

Supply Requirements Peak Water Demand

122

130

140

154

165

173

181


140

148

160

176

189

198

207

131

131

131

131

131

131

131

10

10

10

10

-

-

-

141

141

141

141

131

131

131

19

11

1

-13

-34

-42

-50

1

-7

-19

-35

-58

-67

-76

0

0

0

80

80

80

80

141

141

141

221

211

211

211

19

18

20

67

46

38

30

1

-7

-19

45

22

13

4

-

7

19

-

-

-

-

Contracted Capacity Sur II IWPa Aseelah Temporary IWPb Total Contracted Capacity Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall) Prospective Capacity Contracts Aseelah IWP Total Water Desalination Resources Reserve over Demand Reserve over Peak Demand + Margin PAEW Resources Supply Requirementsc a

Including Sur capacity addition of 48,000 m3/d. The COD is expected in February, 2017 is June 2017.

b Expected SCOD for Aseelah Temporary IWP c PAEW

wells supply are considered only as an emergency supply in the near term

57

3.3

Dhofar Water Network

Demand for Water The Directorate General of Water (DGW) in the Office of the Minister of State and Governor of Dhofar has provided OPWP with the water demand projection for the Governorate of Dhofar, shown in Figure 21. It includes the aggregated potable water demands of the wilayats of Salalah, Taqah and Marbat. DGW has reduced the forecast of peak water demand relative to the previous OPWP 7-Year Statement (Issue 10), considering the outturn water consumption for 2016. Actual peak demand in 2016 was less than forecast by about 15%. However, average demand was about 5% greater than forecast. DGW has differentiated the forecast into two demand groups: (1) Cities of Salalah, Taqah, and Mirbat, which comprise demand served by the existing water distribution network; and (2) Jebel/Sahel, which comprise demand in Jebel and Sahel areas that are not currently connected to the network. The Jebel/Sahel demand is currently served by local wells and by tankers. DGW has plans to expand its network to supply the Jebel/Sahel communities during the forecast period. These expansion plans are under study and subject to government approvals. The average projected growth rate is higher than the previous projections representing 9% growth per year for peak and annual demand over the forecast period. The wilayat of Salalah comprised around 81% of the total water consumption in 2016. This share is projected to decline slightly over the next 7 years due to higher growth rates in the wilayats of Marbat and Taqah. The respective growth rates for the wilayats of Salalah, Marbat and Taqah are 8%, 13%, and 14% per year during this period.

58

Figure 21 Million

Water Demand Projections – Dhofar Water Network Thousand m3/d

m3

140

250 Total Annual Demand - Jabal and Sahal

120 200 100

Total Annual Demand - Cities 150

80 60

Peak Water Demand - Cities + Jabal and Sahal (right-hand scale)

100

40 50

Peak Water Demand - Cities (right-hand scale)

20 0

0 2016

2017

2018

2019

2016

2020

2017

2021

2018

2022

2023

2019

2022

2023

Average Growth (%)

96.1

104.2

113.8

123.9

134.6

146.2

158.8

172.6

9%

29.5

32.5

35.8

39.5

43.6

48.3

53.4

59.1

10%

125.6

136.7

149.6

163.4

178.2

194.4

212.2

231.7

9%

-23

-23

-22

-20

-19

-18

-17

-

Million m3

Annual Demand Cities (Network) Jabal and Sahal (Nonnetwork) Total Change from 20162022 Statement

2021

Thousand m3/d

Peak Water Demand Cities (Network) Jabal and Sahal (Nonnetwork) Total Change from 20162022 Statement

2020

32.6

35.2

38.5

42.0

45.7

49.5

53.8

58.5

9%

10.0

11.0

12.1

13.4

14.8

16.3

18.0

19.9

10%

42.6

46.3

50.6

55.3

60.5

65.8

71.8

78.4

9%

2

3

4

5

6

7

9

-

59

Water Supply Sources Table 6

Summary of WPAs/PWPAs – Dhofar Water Network

Project Namea


Contracted Capacity

Contract Type

Project Company

Project Status

Technology

Contract Expiry

Salalah IWPP

Salalah Power and Water Desalination Plant / Salalah IWPP

68,000 m3/d

PWPA

Sembcorp Salalah Power & Water Co. (SAOC)

Operational

RO

2027

a In

order to avoid confusion in the naming of projects, OPWP has revised project names as indicated in previous 7 Year Statement publications utilizing a unified naming methodology that assigns project names as per the following: 1) Where the site is not yet determined [System Name, Power/Water/Power & Water, Year of Commissioning], 2) where the site has been identified [Region name, Project number, IPP/IWP/IWPP]. These two columns articulate the project names as they will be referenced in this (and future) publications, and the naming of projects as found in previous publications.

Salalah IWPP, owned by Sembcorp Salalah Power and Water Company and operated under a PWPA with OPWP, is the only source of desalinated water for the Dhofar water network (see Table 6). The Salalah IWPP has a capacity of around 68,000 m3/d (15 MIGD), using RO technology, and was commissioned in 2012. In addition to this desalination capacity, DGW uses a network of groundwater sources to meet the balance of water demand. DGW estimates that the groundwater supplies have a total capacity of around 100,000 m3/d to 110,000 m3/d (including 70,000 m3/d in the cities). DGW plans to utilize the desalination plants production to meet the peak demand while using the wells capacity to meet the reserve requirements only. This is also consistent with national policy to limit ground well production in order to replenish aquifers.

Capacity Target and Prospective Resources Figure 22 provides a summary of the demand/supply balance for the next 7 years. Figure 22 shows both peak demand and a capacity target developed using the same 14.3% reserve margin standard as the Interconnected Zone and Sharqiyah Zone in the northern regions of the Sultanate. Current water demand exceeds contracted desalination capacity, although well capacity is sufficient to meet the balance of demand and reserve target. The Salalah III IWP is expected to be awarded in Q2 2017 and to be operating in 2020. DGW has requested OPWP to procure additional desalination capacity to bridge the supply as groundwater capacity is planned to be utilized for contingency reserves, such as in the case of outages in desalination units, and for the planning reserve margin over peak demand. Until additional water desalination capacity may be acquired, DGW will access groundwater capacity to meet the supply gap. Thereafter, the intention is to maintain sufficient water desalination capacity to meet peak demand and to use groundwater resources only for planning and contingency reserves.

60

Figure 22

Future Desalinated Water Capacity Requirement – Dhofar Cities Only

Thousand m3/d 400 DGW Wells 350 Dhofar Water 2022

300 250

Salalah III IWP

200 Salalah IWPP

150 100


50

Peak Demand 0 2017

2018

2019

2020

2017

2021

2018

2022

2019

Supply Requirements

2023

2020 Thousand

2021

2022

2023

m3/d

Cities Peak Demand

104

114

124

135

146

159

173

Cities Peak Demand + Margin

119

130

142

154

167

181

197

Salalah IWPP

68

68

68

68

68

68

68

Total Contracted Capacity Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall)

68

68

68

68

68

68

68

-36

-46

-56

-67

-78

-91

-105

-51

-62

-74

-86

-99

-113

-129

-

-

-

100

100

100

100

-

-

-

-

-

100

100

68

68

68

168

168

268

268

-36

-46

-56

33

22

109

95

-51

-62

-74

14

1

87

71

70

70

70

70

70

70

70

51

62

70

0

0

0

0

Contracted Capacity

Prospective Capacity Contracts Salalah III IWP Dhofar Water 2020 Total Water Desalination Resources Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall) DGW Resources DGW Well Supply Capacitya DGW Groundwater Supply Requirements a

Representing the wells capacity inside the cities only. Total DGW wells capacity has an approximate supply range of 100,000 m3/d to 110,000 m3/d.

61

Figure 23 shows the demand-supply balance considering non-network water demand as well: from the Jebel/Sahel areas. It illustrates that desalinated water supply and ground water are not sufficient to meet peak water demand in 2018, until the Salalah III IWP reaches COD in 2020. DGW intends to limit the use of groundwater to the supply of contingency reserves in all demand zones. OPWP and DGW have begun site investigations for a prospective Dhofar Water 2022 project that would provide sufficient capacity that desalinated water would be available to serve both Cities and Jebel/Sahel demand. The project is nominally specified with a capacity of 100,000 m3/d, subject to MOF approval. This capacity would meet DGW total demand requirements through to the end of the forecast period, although the requirement will be studied further to assure that the timing aligns with commitments for network expansion. OPWP will proceed with the project if found necessary by DGW. The commercial operation date is nominally specified as 2022; an earlier or later date may be accommodated subject to site selection and requirements for the DGW connection infrastructure.

Figure 23

Future Desalinated Water Capacity Requirement – Dhofar Cities, Jabal, and Sahal

Thousand m3/d 400

DGW Wells

350 300

Dhofar Water 2022

250

Salalah III IWP

200 Salalah IWPP

150


100 50

Peak Demand

0 2017

2018

2019

2020

2017

2021

2018

2022

2019

Supply Requirements

2023

2020

2021

2022

2023

Thousand m3/d

Peak Demand - Cities (Network) Peak Demand - Jabal and Sahal (Non-network) Total Peak Demand

104

114

124

135

146

159

173

32

36

39

44

48

53

59

137

150

163

178

194

212

232

Total Peak Demand + Margin

156

171

187

204

222

243

265

Salalah IWPP

68

68

68

68

68

68

68

Total Contracted Capacity Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall)

68

68

68

68

68

68

68

-69

-82

-95

-110

-126

-144

-164

-88

-103

-119

-136

-154

-175

-197

Salalah III IWP

-

-

-

100

100

100

100

Dhofar Water 2022 Total Water Desalination Resources

-

-

-

-

-

100

100

68

68

68

168

168

268

268

Contracted Capacity

Prospective Contracted Capacity

62

Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall)

-69

-82

-95

-10

-26

56

36

-88

-103

-119

-36

-54

25

3

DGW Resources DGW Well Supply Capacitya 105 105 105 105 105 105 105 DGW Groundwater Supply 88 103 105 36 54 0 0 Requirements a Total wells supply is shown as 105,000 m3/d, considering an approximate capacity range of 100,000 m3/d to 110,000 m3/d. This range includes wells capacity within the cities (70,000 m3/d) and supply outside the cities.

63

3.4

Ad Duqm Water Network

Demand for Water PAEW has provided OPWP with the water demand projections for Ad Duqm Zone, based on estimates made by the Special Economic Zone Authority of Duqm (SEZAD). PAEWs’ responsibilities extend within SEZ in which the authority provides services as needed10. SEZAD plans and executes all the projects and developments within the SEZ. Therefore, PAEW and OPWP considered the forecast produced by SEZAD based on their plan for 2017-2023. Figure 24 shows the water demand forecast for Ad Duqm Zone disaggregated into three demand sectors: domestic demand in the SEZ, industrial demand in the SEZAD, and domestic demand outside the SEZ. The industrial projects have the largest contribution to total water demand growth within the SEZ, although domestic demand is projected to grow most rapidly in the near term. In 2018, the demand is expected to increase significantly upon completion of a new transmission line connecting Haima with the Duqm water supply. The projection for domestic demand outside of Duqm includes water demand from Haima and communities along the length of the pipeline, including Abu Madhabi and Al Ajaiz. This water demand must be addressed by water sources in Duqm when the transmission line is commissioned in 2018.

Figure 24 Thousand

Peak Water Demand and Capacity Requirement - Ad Duqm Water Network

m3/d

80

Domestic- Outside SEZAD

70 60

Industrial- SEZAD

50 40

Domestic- SEZAD

30 20


10 0 2017

2018

2019

2020

2021

2022

2023

10

The boundaries of PAEW’s reach into the SEZ remain undefined in the long term, in particular with respect to industrial demand. For the purposes of OPWP’s Statement, the SEZAD water demand through 2022 is considered as part of the overall water demand to be addressed by PAEW supplies. The water demand of the oil refinery and related petrochemical projects are not included, as they are expected to develop their own water supply capacity.

64

2017

2018

2019

2020

2021

2022

2023

Thousand m3/d

Supply Requirements Peak Water Demand Domestic- SEZAD Industrial- SEZAD Domestic- Outside SEZAD

11 8 3.5 -

24 13 6 4.6

32 17 11 4.7

39 16 18 4.7

46 19 22 4.8

53 20 28 4.8

62 21 36 4.8

Peak Demand + Margin Domestic- SEZAD Industrial- SEZAD Domestic- Outside SEZAD Change from previous 7 Year Statement (2016-2022)

13 9 4 -

28 15 7 5

36 19 12 5.3

45 19 21 5.4

52 22 25 5.4

60 23 31 5.5

71 24 41 5.5

-4

1

1

4

4

5

-

Capacity Target and Prospective Resources The Ad Duqm Zone is currently served by a desalination plant owned by RAECO in Ad Duqm town, with capacity of 8,000 m3/d (1.7 MIGD), and a number of local water sources. RAECO expects to expand the plant to produce an additional 4,000 m3/d (1 MIGD) in 2018. Figure 25 compares the desalination capacity target with available water sources, demonstrating that the planned expansion of the RAECO plant in 2018 will contribute towards meeting the rising demand, however, a rapidly growing supply deficit emerges in through to 2023. The principal source of growth in this period is in domestic demand. Additional supplies may need to be made available if the anticipated demand growth is to be met. OPWP initiated a procurement process in 2016, in response to PAEW request, for a new Duqm IWP with a capacity of 60,000 m3/d (13.2 MIGD). This would be sufficient to meet the capacity target 11 from the scheduled 2020 COD up to 2023. However, the project is currently on hold, as PAEW is now considering another supply option. PAEW and SEZAD are considering a proposal to arrange for water desalination, transmission and distribution of both industrial and domestic water with Marafiq, which is currently contracted to provide utility services to the Duqm refinery and related industrial complex. The figure illustrates that there is an urgent need to develop new water supply sources, to avoid a considerable shortfall that would occur if the projected demand materializes.

11

Similar to capacity targets in other regions, the capacity target in Ad Duqm zone is the forecasted peak water demand as provided by SEZAD in addition to a 14.3% margin.

65

Figure 25 Thousand

Water Supply and Demand Balance - Ad Duqm Water Network

m3/d

80 70 Expansion of RAECO Plant 60 Duqm Desalination Plant (RAECO)

50 40


30 Peak Water Demand

20 10 0 2017

2018

2019

2020

2017

2021

2022

2018

Supply Requirements

2023

2019

2020

2021

2022

2023

Thousand m3/day

Peak Water Demand

11

24

32

39

46

53

62

Peak Water Demand + Margin

13

28

36

45

52

60

71

Change from previous Statement (2016-2022)

-4

1

1

4

4

5

8

8

8

8

8

8

8

4

4

4

4

4

4

Contracted Capacity Duqm Desalination (RAECO)

Plant

Prospective Capacity Expansion of (RAECO) Plant Total Contracted Capacity

8

12

12

12

12

12

12

Reserve over Peak Demand + Margin (shortfall)

-5

-16

-24

-33

-40

-48

-59

66

3.5

Musandam Water Network

Demand for Water PAEW has provided OPWP with the water demand projections for the Khasab City area of the Musandam Zone. These projections are shown in Figure 26. PAEW expects that the peak demand will grow by 5% per annum for the next 7 years.12

Figure 26

Water Demand Projections – Musandam (Khasab City) Thousand m3/d

Million m3 4.0

14.0

3.5

12.0

3.0

10.0

2.5

Total Annual Demand

8.0

2.0 6.0

1.5

4.0

1.0

Peak Demand (Right-hand scale)

2.0

0.5 0.0

0.0 2016

2017

2018

2016

2019

2017

2020

2018

2021

2019

2022

2020

2023

2022

2023

Average Growth (%)

11.6

12.2

12.8

5%

3.3

3.5

3.7

4%

2021

Thousand m3/d Peak Demand

9.0

9.5

10.0

10.5

11.0 Million m3

Total Annual Demand

2.9

2.8

2.9

3.0

3.2

12

The annual demand in 2017 would decrease in comparison to 2016 actual water demand in Khasab City due to the replacement of the water network infrastructure leading to a reduction of water losses and consequently decreasing the total demand of water. The demand would then increase by 5% annually through 2023. 67

Capacity Target and Prospective Resources The Musandam Zone is currently served by small desalination plants, one in Kumzar (450 m3/d) that is owned and operated by RAECO, three PAEW plants with combined capacity of about 3,500 m3/d, and wells. At PAEW request, OPWP initiated procurement in 2016 for a new IWP to serve Khasab City, with capacity of about 16,000 m3/d (3.5 MIGD). The RFP is expected to be released in Q2 2017. Khasab IWP is expected to commence operation in 2021. Figure 27 compares the desalination capacity target with the prospective water sources. The prospective IWP would have sufficient capacity to meet demand and reserve margin from 2021 onwards, allowing PAEW to eliminate well production for aquifer recharge.

Figure 27

Water Supply and Demand Balance – Musandam (Khasab City)

Thousand m3/d 30

20

PAEW Temporary Resources New Khasab IWP

15

PAEW Resources

10


5

Peak Demand

25

0 2017

2018

2019

2020

2017 Supply Requirements Peak Demand Peak Demand + Margin

2021

2018

2022

2019

2023

2020 Thousand

2021

2022

2023

m3/d

9.5

10.0

10.5

11.0

11.6

12.2

12.8

10.8

11.4

11.9

12.5

13.2

13.9

14.6

10

10

10

10

10

10

10

Prospective Capacity New Khasab IWP

-

-

-

-

16

16

16

PAEW Temporary Resources

-

-

0.5

1.0

-

-

-

10

10

11

11

26

26

26

0.5

0

0

0

14.4

13.8

13.2

0.8

1.4

1.4

1.5

12.8

12.1

11.4

Existing Capacity PAEW Resourcesa

Total Capacity Reserve over Peak Demand (Shortfall) Reserve over Peak Demand + Margin (Shortfall) a

PAEW wells and small desalination plants are currently sufficient to meet capacity needs with no margin.

68

69

SECTION 4 4.1

PROCUREMENT ACTIVITIES

Power Projects

Current/Near-Term Procurement Activities OPWP’s current and near-term procurement activities for power projects include the following, and are summarized in Table 7: 

Manah IPP. OPWP is currently evaluating the options available toward continuing operations at the Manah IPP after asset ownership transfers to the government in April 2020. OPWP expects to issue a tender in 2017 for sale of the asset, ed by a PPA with OPWP.



Misfah IPP. OPWP plans to procure around 800 MW for January 2021 COD as a new IPP in Misfah, via the existing procurement methodology. The project’s RFP is expected to be released to market in Q2, 2017.



Additional Power Generation Capacity for 2022 COD. OPWP plans to procure at least 1,600 MW of generation capacity for operation in 2022, in a procurement process that will begin in 2017. This tender will proceed under a new procurement methodology that allows existing, out-of-contract plants to compete for new P(W)PAs with bidders for new IPP plants.



Solar IPP. OPWP has engaged advisors to assist the specification and procurement of solar PV project(s) with installed capacity of at least 200 MW. The RFQ is expected to be issued in Q4 2017, and project award by Q3 2018, for 2020 COD.



Harweel Wind Farm. The 50 MW wind farm is being developed as a t project of RAECO and MASDAR. OPWP’s involvement has been to develop the PPA under which the project would sell power to OPWP. The EPC contract for the project has been tendered, and award is pending a decision by the developers.

Table 7

Project Manah IPPa Misfah IPP 2022 Power Capacity Solar IPP Harweel Wind Farmc

Power Project(s) Procurement Activities in 2017-2018

System

Capacity

RFQ

RFP

Bids Due

Award Anticipated

COD

MIS

264 MW

Q2, 2017

Q2, 2017

Q3, 2017

Q4, 2017

Q2, 2020a

MIS

800 MW

Completed

Q2, 2017

Q4, 2017

Q4, 2017

Q1, 2021

MIS

> 1,600 MWb

Q3, 2017

Q1, 2018

Q2, 2018

Q3, 2018

Q1, 2022b

MIS

>200 MW

Q4, 2017

Q1, 2018

Q2, 2018

Q3, 2018

Q2, 2020

DPS

50 MW

Completed

Completed

Completed

TBD

TBD

70

a

The procurement activity refers to the existing Manah IPP, tendering for continued operation under a new PPA commencing in May 2020. Procurement dates listed here are subject to approval. b The capacity refers to the aggregate value of multiple awards. They are expected to include new P(W)PAs for existing plants that fall out of contract in 2021 and 2022, as well as new IPP capacity. All project awards would have COD by May 2022, although new P(W)PAs with existing plants may start earlier in the year following expiry of current contracts. C OPWP’s involvement with the Harweel Wind Farm is principally in the development of the PPA. The project itself is being developed as a t project of RAECO and MASDAR.

Future Procurement Activities From 2019 to 2023, OPWP anticipates the following procurement activities: 

New MIS IPP(s). More capacity is likely to be required in 2024 in the MIS; the procurement process would begin around 2019. Similarly, OPWP would expect to initiate a subsequent procurement process in 2022 to meet new capacity needs in 2027. Plants with contracts that expire during these periods may participate in those competitions.



Demand Response. OPWP expects Demand Response (DR) to become an economical and effective resource toward meeting capacity requirements, and in the pursuant of such, successfully carried out a trial Demand Response event in 2016. A DR procurement process is expected to be developed in this period.



Capacity and Energy Trades with Neighboring Power Systems. OPWP has no explicit plans to procure capacity from neighboring systems (such as GCCIA ) during this period. OPWP is currently developing the capability for such trades in case of need, such as by specifying access conditions and contracting arrangements in advance. These preparations would facilitate a capacity import in potential scenarios such as a lengthy unplanned outage at a power station, construction delay of a new IPP, or unexpectedly high demand growth.



Capacity Purchase through the Spot Market. OPWP plans to launch the spot market around 2020, and is currently developing the commercial mechanisms intended to incentivize generators to offer capacity outside of the P(W)PA model. While capacity development through P(W)PAs will continue, OPWP expects the spot market to provide a parallel route for capacity procurement.



Renewable Energy Projects. OPWP’s current advisory project will develop an economic evaluation methodology to continued utility-scale renewable energy development beyond the initial solar MIS Solar PV IPP, which is being launched in 2017.

With regards to the DPS, OPWP has no further plans for power procurement beyond the Salalah II IPP, scheduled for 2018 COD, as it is expected to provide sufficient capacity to meet the generation security standard for several years beyond 2023. However, the Dhofar region has promising wind energy resources, and as the Sultanate develops a renewable energy policy in the near future, there may be further wind project development from 2020 onwards. In addition, OPWP has no further plans for power procurement in the Ad Duqm and Musandam Zones.

71

4.2

Water Projects

Current/Near-Term Procurement Activities OPWP’s current and near-term procurement activities for water projects include the following, and are summarized in Table 8: 

Aseelah IWP. A new desalination plant is planned at Ashkharah in the Sharqiyah region, with capacity of 80,000 m3/d (17.6 MIGD). In the previous 7 Year Statement (Issue 10), it was anticipated that this project would be developed in two phases to provide access to Early Water. However, PAEW has confirmed that there Early Water no longer required, and as such, this project will be developed in a single phase with an expected COD in Q2, 2020. OPWP obtained bids for the project in Q4 2016, and plans to award by Q2 2017.



Ghubrah III IWP 2022. OPWP expects to begin the procurement process in Q4 2017 for new IWP capacity of 300,000 m3/d (66 MIGD) at Ghubrah, for COD in 2022.



North Batinah IWP in 2022. OPWP expects to initiate procurement in 2017 for new IWP capacity of 200,000 m3/d (44 MIGD) in the North Batinah region, for COD in 2022. The RFP is expected to be released in Q4 2017.



Mobile Water Desalination Capacity. In 2016, OPWP conducted a market assessment to a PAEW request to tender for up to 100,000 m3/d (22 MIGD) of mobile water desalination capacity. Such plants may be modular in nature and mounted either on land transport vehicles or sea-going barges. They would address water supply contingencies such as temporary shortages. If PAEW receives MOF approval, OPWP may begin procurement in 2017.



Salalah III IWP. Procurement of the Salalah III IWP continued in 2016, and OPWP expects to award the project in Q2 2017. The Salalah III IWP will have capacity of 100,000 m3/d (22 MIGD) and is scheduled to start commercial operation in January, 2020.



Dhofar Water 2022. OPWP has initiated a study for the Dhofar Water 2022 project, which may have a capacity of 100,000 m3/d (22 MIGD), subject to MOF and regulatory approvals. The required commercial operation date may be around 2022, which would imply that initial procurement stages would begin in 2017.



Khasab IWP, with capacity of 16,000 m3/d (3.5 MIGD) using RO technology, is under procurement, with anticipated COD in Q1 2021. Bidder prequalification began in Q4 2016, and the RFP is expected to be released during Q2 2017.



Duqm IWP. OPWP issued an RFQ for the Duqm IWP, with capacity of 60,000 m3/d (13.2 MIGD), and bidders were pre-qualified pending RFP release. The project is currently on hold pending government review.

72

Project

Table 8 Water Project(s) Procurement Activities in 2017-2018 Network/ Award Capacity RFQ RFP Bids Due Zone Anticipated

Aseelah IWP

Sharqiyah Zone

Ghubrah III IWP

Main Interconnected Zone Main Interconnected Zone Sharqiyah/ Main Interconnected Zone

North Batinah IWP Mobile Water

COD

17.6 MIGD

Completed

Completed

Completed

Q2, 2017

Q2, 2020

66 MIGD

Q4, 2017

Q2, 2018

Q4, 2018

Q1, 2019

Q1, 2022

44 MIGD

Q4, 2017

Q2, 2018

Q1, 2019

Q2, 2019

Q1, 2022

Up to 22 MIGD

TBD

TBD

TBD

TBD

TBDC

Salalah III IWP


22 MIGD

Completed

Completed

Completed

Q2, 2017

Q1, 2020

Dhofar Water 2022


22 MIGD

TBD

TBD

TBD

TBD

2022

Khasab IWP

Musandam Water Network

3.5 MIGD

Completed

Q2, 2017

Q4,2017

Q4, 2017

Q1, 2021

Duqm IWP

Duqm Water Network

13.2 MIGD

Completed

a

Currently on hold

COD may vary by location

Future Procurement Activities From 2019 to 2023, OPWP anticipates the following procurement action for the Interconnected Zone and Sharqiyah Zone: 

New Main Interconnected and Sharqiyah Zones IWP(s). Additional desalination capacity may also be required for operation in 2024 for the Interconnected Zone. Similarly, additional capacity for the Sharqiyah Zone may be required around the same period. Such projects would imply procurement activities should start around 2019.

73

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