Public Authority for Electricity Water Electricity and Water

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Electricity and Water Sector in Oman 2 nd Oman Economic Forum 25 -26 April 2010 BY: AHMED SALEH AL JAHDHAMI G. M – POLICY & STRATEGY 1 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Agenda l Introduction about PAEW l Water sector in Oman l Electricity Sector l Renewable Energy 2 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water PAEW strategic objectives � To secure the production of potable water in the Unrelated Water Sector in accordance with the Oman standards and proportionate to the expansion of development and population growth. � To activate the Government's policy in respect of securing electricity supply to the greatest portion of society. � To activate and consolidate Government policy in respect of the development of both the unrelated water and the electricity and related water sectors and to promote them and utilise technology in these two areas. � To encourage the private sector to invest in both the unrelated water and the electricity and related water sectors. � To develop human resources in the Authority. 3 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water PAEW Water Coverage Area 4 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water PAEW’s water supply system Muscat Governorate Regional areas l Population: 785, 000 l Population: 1, 550, 000* l 150 km of transmission pipeline l 1, 500 km of transmission pipeline l 2, 100 km of distribution pipeline l 2, 900 km of distribution pipeline l Approximately 123, 000 consumer l Approximately 66, 000 consumer accounts in 2008 Note: * Excluding Dhofar region and Sohar Wilayat 5 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water PAEW’s water supply system �Seawater desalination represents 70% of the total drinking water production, of which 10% is produced by PAEW through approximately 30 RO �Wells provide 30% of the total water supply in the country (less than 10% in Muscat) � 90% of the water is distributed through pipes and 10% through tankers 6 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Growth in Water Demand Supply Source – “Demand forecast study for areas served by PAEW”, MM Project no. 259030, November 2009 7 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water PAEW’s Water Projects Under Construction Transmission projects Networks Projects R. O. Projects Total Contract Value Million R. O Muscat Governorate Nil Expansion of Qurm & Wadi Al Kabir Resrv. Nil 25. 0 Qurn Al Alam 84. 5 Qurayat Al Dakhilia Region Phase II Samail - Izki Nizwa - Bahla Al Awafia Nizwa - Adam Jabal Al Akhdar Batina Region Expansion of Barka Reservoirs Phase II Musnna Network Nil 105. 5 Nil 16. 0 South Al Batinah Wilayats Al Wusta Region NIl 8 Doqum Network Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Oman Electricity Market Structure Direction of payments Al Rusail Power Company SAOC Wadi Jizzi Power Company SAOC United Power Company SAOG Al Kamil Power Company SAOG Al Ghubrah Power & Desalination Company SAOC AES Barka SAOG Sohar Power Company SAOC Water Departments pay PWP • for bulk purchases of desalinated water charged at a cost reflective Bulk Supply Tariff (BST); • Water BST includes the PWP’s costs of water procurement activities Oman Power & Water Procurement Company SAOC PWP pays Production Facilities for • Capacity and Output in accordance with terms of PPA/PWPA • Ancillary Services Discos pay PWP for • bulk purchases of electricity charged at a cost reflective Bulk Supply Tariff (BST); • Electricity BST includes PWP’s costs of electricity procurement activities Muscat Electricity Distribution Company SAOC Majan Electricity Company SAOC Mazoon Electricity Company SAOC Oman Electricity Transmission Company SAOC Production Facilities & Others pay OETC for • Connection to Transmission System Subsidy Water Departments Discos pay OETC for • Connection to OETC’s Transmission System (Distribution business) • Use of OETC’s Transmission System (Supply business) Customers Others All intra sector transactions: (i) regulated & (ii) cost reflective (no direct subsidy) Public Authority for Electricity and Water April 25 9

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Electricity Sector Ministry of Finance 100 % 0. 01 % Private Investors Public Shareholding Electricity Holding Company SAOC 99. 99 % Oman Power and Water Procurement Company SAOC Rural Areas Electricity Company SAOC Wadi Jizzi Power Company SAOC Ghubrah Power and Desalination Company SAOC Oman Electricity Transmission Company SAOC Majan Electricity Company SAOC Mazoon Electricity Company SAOC Muscat Electricity Distribution Company SAOC 65 % AES Barks SAOG 35 % 65 % Al Kamil Power Company. SAOG 35 % 60 % United Power Company SAOG 40 % 65 % Dhofar Power Company SAOG 35 % 65 % Sohar Power Company SAOC 35 % 100% Rusail Power Company SAOC 100 % Barka II Power Company SAOC Key: Remains in Government ownership Slated for privatisation 10 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Expected Power and Energy demand - MIS 6000 30000 Energy GWh 5000 25000 Ad Duqm area development New tourism projects New industrial projects "Normal" growth 20000 3000 15000 2000 1000 5000 0 GWh MW 4000 0 2008 2009 2010 2011 2012 Public Authority for Electricity and Water 2013 2014 April 25 2015 11

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Expected Power and Energy Demand – Salalah System 600 3500 Energy Gwh New tourism projects Bulk loads / new industrial projects 500 3000 "Normal" growth GWh 2500 MW 400 2000 300 1500 200 100 500 0 0 2008 2009 2010 2011 2012 Public Authority for Electricity and Water 2013 April 25 2014 2015 12

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Privatization Trend in Electricity and Related water Sector (MW of generation capacity) 3500 3000 100 per cent 2. 4 billion USD 1. 7 billion USD Private Sector Ownership Private Sector Investment Foreign Private Sector Investment Barka II 2500 Rusail Sohar 2000 Salalah Barka 1500 Al Kamil Manah - phase 2 1000 Manah - phase 1 500 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 April 25 Public Authority for Electricity and Water April 25 13

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Future Key challenges �Double Digit Growth �Subsidized electricity permitted tariff �Fuel availability & cost Uncertainty Public Authority for Electricity and Water April 25 14

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Fuel Diversity Strategy �Minimize reliance on single source �Proposed strategy Ø Ø Ø Natural gas Government CCGT(Energy Efficiency) Renewable Energy Study potential for Coal Study potential for Nuclear Public Authority for Electricity and Water April 25 15

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Renewable Energy in Oman � The Government of Oman has clearly stated its support for the implementation of renewable energy initiatives in Oman � A ministerial committee has been established to oversee and coordinate efforts � The Authority for Electricity Regulation (AER) commissioned a study to investigate the potential for renewable energy projects in the electricity sector. The full study is available on AER web site www. aer- oman. org � The Public Authority for Electricity and Water is taking steps to implement solar and wind energy projects, to coordinate efforts to identify the need for research and development and to identify the need for policy and other support mechanisms Public Authority for Electricity and Water April 25 16

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Study on Renewable Energy Resources - 2008 Objectives: �To provide an overview of renewable sources of energy in Oman & the potential use of renewable energy for electricity production �To provide a platform for developing renewable energy policies for Oman Findings: �Significant potential from: Solar &Wind �Limited potential from: Biogas, Geothermal &Wave Public Authority for Electricity and Water April 25 17

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Large Scale Solar Power Project Feasibility Study • Market structure and regulatory framework Competition Process • Tendering process • Selection of optimum location • PPA structure • Confirmation of current power capacity Public Authority for Electricity and Water April 25 18

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water RE way forwarded Policy & Strategy 1. Developing Policy for R. E development 2. R & D Policy Project Implementation 1. Pilot Projects (RAECO) 2. 100 – 200 MW Solar Plant (Grid Connected) 3. Wind Monitoring Program 3. Regulatory review 4. Wind farm 5. Green Buildings Capacity Building R&D 1. R. E Desalination 2. Hybrid Solutions 3. Solar Cooling Human Resources Industrial 1. Row material extractions 2. Manufactur ing added value 4. Focused research on specific technologies 1. University Program 2. Engineering and O & M Skills 3. Reservoir & Development 4. Utilities experience Benchmark/Knowledge sharing Public Authority for Electricity and Water April 25 19

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Key Strategic Initiatives undertaken by PAEW � Energy Balance & Fuel Diversity: � Developing Long term electricity Plan � Diversifying Sources of Fuel � Promoting fuel efficiency – conversions to CCGT � Renewable Energy & Efficiency Initiatives: � Large Scale Solar Plant � Pilot Projects � Energy Efficiency & Conservation � Research & Development 20 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Why Oman? �Investment Climate � Continues to be attractive � 100 per cent private ownership � 100 per cent foreign ownership permitted �Market Liberalization � Proven market structure � Transparency of subsidy � Demonstrated commitment to liberalization �Independent Regulatory Framework � Robust and tested legislation � Transparent, non discriminatory, public interest regulation �Demand Growth � Consistent 6 – 8 per cent demand growth � Regular investment opportunities 21 April 25 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water Investment in Water Electricity Sector Ø PAEW expect to spend RO 1. 3 billion in the next 5 years Ø water transmission projects, Ønetwork projects and Ødesalination plants Ø Electricity sector expected to spend approx RO 1 billion during next 5 years on ØConstruction of new transmission lines and upgrading existing facilities Øconstructing new substations and expansion of the existing distribution network ØSystem enhancement projects to meet security of supply standards set by Regulator Ø BOO Projects for Generation : ØSalalah IWPP ( 445 MW) – expected COD July 2011 ØSohar-2/Barka-3 ( 1300 -1500 MW ) – expected COD 2012 Tendering phase Ø ~ 2000 MW additional Generation capacity by 2015 22 Public Authority for Electricity and Water April 25

ﺍﻟﻬﻴﺌﺔ ﺍﻟﻌـﺎﻣﺔ ﻟﻠﻜﻬـﺮﺑﺎﺀ ﻭﺍﻟﻤﻴـﺎﻩ Public Authority for Electricity & Water THANK YOU 23 Public Authority for Electricity and Water April 25