Oman: Sunny prospects for energy

As Oman looks to renewable energy as a way to meet the increasing calls on its national electricity grid, investors are eyeing the Sultanate as a base for the production of technology needed to convert the rays of the sun into energy and profits.

The country has already set itself the ambitious goal of having at least 10% of its electricity needs met through renewable sources by 2020. With Oman’s demand for power growing by up to 12%, in part due to the surge of industrial activity in many regions, combined with higher calls for desalinated water, this will be a formidable task.

With energy costs rising, Oman is considering ways to increase its electricity generation capacity without draining off too much of its natural gas reserves from its lucrative export market or petrochemicals sector.

According to a report recently released by Ernst & Young, Oman has the potential to become one of the leading solar energy nations in the world, with the capacity to meet all of its electricity needs from the sun. In its Renewable Energy Country Attractiveness Indices report, issued in late February, the company’s analysts noted that a number of trial projects were planned.

The Sultanate had also developed a good operating environment for its energy sector, the report said, having been the pioneer of liberalising electricity markets in the region, implementing regulatory reform and privatisation in the mid-1990s.

“Oman also benefits from a well-established public-private partnership regime through which significant international investment has been deployed,” the report said.

The flow of private investment from overseas looks set to increase, with a number of foreign firms having identified Oman’s renewable energy potential, not just for its capacity to incorporate solar and wind power into its mainstream electricity grid but as a base for components production and export.

One of the advantages that Oman has to offer is its extensive network of free trade agreements with countries in the region and beyond, including the US. Being able to access such lucrative markets easily is an appealing incentive to investors, as is the anticipated rise in domestic demand.

Among those looking to capitalise on this potential is Terra Nex, a Switzerland-based global wealth management firm. Working with German-based Middle East Best Select Fund (MEBS), Terra Nex has announced plans to invest up to $2bn in solar energy in Oman, both in the generation segment and in technology development and production, with a proposal to build a series of power stations to generate up to 400 MW of electricity annually.

According to David Heimhofer, the chairman of Terra Nex, Oman has the resources necessary to develop this industry locally, as it already has an established industrial base capable of producing the aluminium frames and silicon for solar panels, both for the local and export markets.

“The intensity of sunlight is quite high in Oman and the same solar panel can produce three times more electricity in Oman than in Hamburg with similar initial investment,” Heimhofer said in an interview with Muscat Daily in early 2012. “Our assessment is that the solar energy projects will be very efficient in Oman and will generate three times higher profits for the investors than in Germany.”

In February, German firm Donauer Solartechnik announced it was setting up an office in Oman to take advantage of the opportunities on offer in the Sultanate and the region. The specialist distributor of solar energy products has said it is already participating in a number of tenders in Oman and Saudi Arabia. Andreas Fornwald, the general manager of international projects at Donauer, believes that the solar market in Oman is “very promising”.

“Besides the outstanding climatic conditions, the convenient infrastructure and the stable political situation, awareness of the importance of climate protection is increasing in politics and society,” he told industry magazine PV. “Oman is eminently suitable as a base for the expansion of our activities in further markets of the Gulf area.”

It is not just the power of the sun that Oman is looking to harness; wind energy is also seen as a viable option to conventional sources. Speaking at a seminar organised by Sultan Qaboos University (SQU) on solar and wind resources assessment at the end of February, Ivan Moya Mallafre of Spain’s National Renewable Energy Research Centre said Oman had the potential to utilise wind energy year-round and that air movement on the coastal strip offered extensive opportunities to develop renewable energy in the Sultanate.

Yassine Charabi, an assistant professor at SQU, said that research has shown there were a number of areas where wind energy facilities could be developed, in particular in the mountains north of Salalah and in the south of the country.

Of course, it will take time for the process of evaluating various proposals for solar- and wind-energy projects, followed by a lengthy design and testing phase, before renewables start to make a significant contribution to Oman’s electricity production capacity. The Sultanate is moving in the right direction, however, to meeting its goal of generating 10% of its electricity needs from renewables.