Landmark deal today on renewable energy pilot

MUSCAT — Oman’s longstanding, but hitherto elusive, ambition to develop a sustainable renewables-based energy industry in the Sultanate achieves a key milestone with the signing today of agreements for the establishment of a first-ever small-scale project.
The Authority for Electricity Regulation, Oman, which has long spearheaded the development of renewables in the Sultanate, has approved a solar project proposed by a private consortium chosen from amongst an array of international developers seeking a foray into the Sultanate’s promising renewables market.
Signing the project agreements will pave the way for the setting up of a 303 kilowatts (KW) solar project at Al Mazyunah in Dhofar Governorate, comprising 151.5 KW of thin film PV modules and 151.5KW of poly-crystalline technology.

Average annual output from the PV system is estimated at 550 megawatt-hours (MWh), which will be evacuated through Rural Areas Electricity Company’s (RAECO), Al Mazyunah system.
The consortium is made up of Astonfield Renewables, a leading provider of renewable energy in emerging markets, and Multitech LLC an investment vehicle of Bahwan Engineering Group (BEG), one of the largest multi-disciplinary engineering construction companies in the Sultanate. RAECO, which is responsible for the distribution and supply of electricity in Al Mazyunah, and other areas of the Sultanate that fall outside of the country’s grid-connected zones, will also sign the agreements as the project off-taker.
In a statement, John Cunneen, Executive Director of the Authority, voiced the hope that implementing the project would provide new impetus to the country’s renewable energy development goals.
“Members of the Authority are delighted the Al Mazyunah project is proceeding and will pave the way for further renewable energy projects. The Authority is committed to advancing the economic and efficient deployment of renewable energy in Oman and believes renewable energy can and will make an important contribution to the future energy security and economic development of the Sultanate,” Cunneen stated.
Although small in scale, the significance of the Al Mazyunah pilot far exceeds its size, the Executive Director noted. “The Al Mazyunah project establishes key principles that will apply to all future RAECO renewable projects. For example: the Authority has financed the development of the Power Purchase Agreement (PPA) and Connection Agreement that will now form part of RAECO tender documentation for renewable project competitions.
The Authority has used public sector analysis to assess the economic benefits of diesel fuel savings (valued at opportunity cost), operating cost savings, reduced emissions and a small capacity benefit, benefits that would not be recognised in conventional appraisals. As the economic value of these benefits exceeds the financial costs of the project (the project has a small positive NPV) the Authority determined that implementing the project will enhance Oman’s welfare,” he stated.
The Al Mazyunah project is the first of several small-scale pilots shortlisted by RAECO for implementation at key locations across its jurisdiction as part of its renewable energy strategy.
Next in line for implementation is a 500KW wind-based pilot project at a RAFO approved site on Masirah Island, a project for which PAEW has already approved RO 500,000 of funding as a strategic investment decision.

(OEPPA Business Development Dept)