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OPWPs 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 WATER ............................................................................................................................... 48
3.1 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

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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 Details of PPAs/PWPAs - MIS ................................................................................................... 14


Table 2 Prospective Contract Extensions, 2017 to 2023 ...................................................................... 18
Table 3 Summary of PPAs/PWPAs DPS .............................................................................................. 30
Table 4 Details of WPAs/PWPAs - Interconnected Zone/Sharqiyah Zone ............................................ 50
Table 5 Details of WPAs - Sharqiyah Zone ............................................................................................ 56
Table 6 Summary of WPAs/PWPAs Dhofar Water Network .............................................................. 60
Table 7 Power Project(s) Procurement Activities in 2017-2018 ........................................................... 70
Table 8 Water Project(s) Procurement Activities in 2017-2018 ........................................................... 73

LIST OF FIGURES

Figure 1 Historical Electricity Demand - MIS ............................................................................................ 9


Figure 2 Electricity Demand Projections MIS ...................................................................................... 12
Figure 3 Contracted Capacity MIS ....................................................................................................... 16
Figure 4 Total Power Generation Resources MIS................................................................................ 21
Figure 5 Future Power Generation Capacity Requirements MIS ........................................................ 23
Figure 6 Historical Electricity Demand DPS ......................................................................................... 27
Figure 7 Electricity Demand Projections DPS ...................................................................................... 29
Figure 8 Total Power Generation Resources DPS ............................................................................... 32
Figure 9 Future Power Generation Capacity Requirements DPS ........................................................ 34
Figure 10 Electricity Demand Projections Ad Duqm ............................................................................. 36
Figure 11 Future Power Generation Capacity Requirements Ad Duqm ............................................... 38
Figure 12 Electricity Demand Projections Musandam Governorate ..................................................... 39
Figure 13 Future Power Generation Expansion Plans - Musandam Governorate ................................... 41
Figure 14 Projected Fuel Requirements MIS ......................................................................................... 43
Figure 15 Gas Required per Unit of Electricity Generation MIS ............................................................ 44
Figure 16 Projected Fuel Requirements DPS......................................................................................... 46
Figure 17 Water Demand Projections Interconnected Zone ................................................................ 49
Figure 18 Desalinated Water Capacity Requirements Interconnected Zone ........................................ 52
Figure 19 Water Demand Projections Sharqiyah Zone ......................................................................... 55
Figure 20 Future Desalinated Water Capacity Requirements Sharqiyah Zone ...................................... 57
Figure 21 Water Demand Projections Dhofar Water Network ............................................................. 59
Figure 22 Future Desalinated Water Capacity Requirement Dhofar Cities Only .................................. 61
Figure 23 Future Desalinated Water Capacity Requirement Dhofar Cities, Jabal, and Sahal ............... 62
Figure 24 Peak Water Demand and Capacity Requirement - Ad Duqm Water Network ........................ 64
Figure 25 Water Supply and Demand Balance - Ad Duqm Water Network............................................. 66
Figure 26 Water Demand Projections Musandam (Khasab City) .......................................................... 67
Figure 27 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

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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.

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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 support 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.

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SECTION 1 POWER

1.1 Main Interconnected System

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.

OPWPs 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 joint power-water facilities, and procures stand-alone desalinated water facilities upon the
direction of PAEW in accordance with Article 78 of the Sector Law.

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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

5,000 Average
Demand (MW)
4,000

3,000

2,000 Peak Demand


1,000 (MW)

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

Average
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Growth (%)

Historical Demand
Average Demand
1,240 1,329 1,430 1,646 1,859 2,028 2,285 2,599 2,684 2,845 3,237 3,364
(MW)
Growth (%) 7.2% 7.6% 15.1% 12.9% 9.1% 12.7% 13.8% 3.3% 6.0% 13.8% 3.9% 9.6%
Peak Demand
2,435 2,544 2,682 3,100 3,581 3,613 4,000 4,455 4,634 5,047 5,565 5,920
(MW)
Growth (%) 4.5% 5.4% 15.6% 15.5% 0.9% 10.7% 11.4% 4.0% 8.9% 10.3% 6.4% 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.
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Demand Projections

OPWPs 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 Sultanates 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 Cost-
Reflective Tariffs (CRT) for large commercial, government, and industrial consumers in 2017. The CRT is time-
differentiated, 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 Governments 5-
Year 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.

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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 account in the assessment of capacity requirements.

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Figure 2 Electricity Demand Projections MIS

MW
12,000 Low Case - Average
Demand
10,020
10,000 Expected Case -
8,960 Average Demand
8,310
8,000
High Case - Average
5,920 Demand
6,000
Low Case - Peak
Demand
4,000
Expected Case - Peak
Demand
2,000
High Case - Peak
0 Demand
Actual 2017 2018 2019 2020 2021 2022 2023
2016

Actual Average
2017 2018 2019 2020 2021 2022 2023
2016 Growth (%)
Expected Case Demand
Average Demand (MW) 3,364 3,580 3,900 4,360 4,670 4,940 5,220 5,480 7%
Distribution Loads 2,980 3,090 3,230 3,430 3,620 3,830 4,070 4,320 5%
Directly-Connected
383 490 670 930 1,050 1,110 1,150 1,160 17%
Loads
Annual Energy (TWh) 30 31 34 38 41 43 46 48 7%
Peak Demand (MW) 5,920 6,060 6,550 7,160 7,580 8,070 8,520 8,960 6%
Change from 2016-2022
35 -169 -214 -310 -504 -748 -1,009 - -
Statement (MW)

Low Case Demand


Average Demand (MW) 3,364 3,490 3,670 3,850 4,210 4,470 4,720 4,910 6%
Distribution Loads 2,980 3,070 3,150 3,240 3,390 3,570 3,750 3,930 4%
Directly-Connected
383 420 520 610 820 900 970 980 14%
Loads
Annual Energy (TWh) 30 31 32 34 37 39 41 43 6%
Peak Demand (MW) 5,920 5,860 6,220 6,690 7,150 7,580 7,950 8,310 5%
Change from 2016-2022
35 165 233 143 127 -75 -316 - -
Statement (MW)

High Case Demand


Average Demand (MW) 3,364 3,810 4,320 4,800 5,150 5,470 5,810 6,160 9%
Distribution Loads 2,980 3,190 3,360 3,580 3,860 4,120 4,420 4,750 7%
Directly-Connected
383 620 960 1,220 1,290 1,350 1,390 1,410 20%
Loads
Annual Energy (TWh) 30 33 38 42 45 48 51 54 9%
Peak Demand (MW) 5,920 6,380 7,100 7,710 8,270 8,820 9,420 10,020 8%
Change from 2016-2022
35 -519 -516 -820 -1,031 -1,360 -1,616 - -
Statement (MW)

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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 terms 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 partys 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 OPWPs 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

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OPWPs 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 Details of PPAs/PWPAs - MIS


Project Name(s)
Project as stated in Contracted Contract Contract
previous 7 Year Project Company Project Status Technology
Namea Capacityb Type Expiry
Statement(s)a

OCGT
Al Kamil Al Kamil Power Co. Natural gas fired
Al Kamil 271 MW PPA Operational 2017
IPP (SAOG) Fuel oil as back-
up
Barka I / Barka CCGT
Barka Power and ACWA Power Barka Natural gas fired
427 MW PWPA Operational 2018
IWPP Desalination Plant (SAOG) Fuel oil as back-
/ Barka I IWPP up
CCGT
Barka II / Barka II
Barka II SMN Barka Power Natural gas fired
Power and 677 MW PWPA Operational 2024
IWPP Co. (SAOC) Fuel oil as back-
Desalination Plant
up
CCGT

Barka III Al Suwadi Power Co. Natural gas fired


Barka III 741 MW PPA Operational Fuel oil as 2028
IPP (SAOC)
secondary fuel
and back-up
Ghubrah / Ghubrah
OCGT/Steam
Power and Al Ghubrah Power
Ghubrah
Desalination Plant / 430 MWc PWPA and Desalination Co. Operational Fuel oil as 2018
IWPP
Ghubrah (SAOC) secondary fuel
Desalination Plant and back-up
CCGT
AD'Dhahirah Under Natural gas fired
Ibri IPP Ibri 1,509 MW PPA 2034
Generation Company construction Fuel oil as back-
up
OCGT
United Power Co. Natural gas fired
Manah IPP Manah 254 MW PPA Operational 2020d
(SAOG) Fuel oil as back-
up
OCGT
Rusail Power Co. Natural gas fired
Rusail IPP Rusail 665 MW PPA Operational 2022
(SAOC) Fuel oil as back-
up
CCGT
Sohar I / Sohar I
Sohar Sohar Power Co. Natural gas fired
Power and 585 MW PWPA Operational 2022
IWPP (SAOG) Fuel oil as back-
Desalination Plant
up
CCGT
Natural gas fired
Sohar II Al Batinah Power Co.
Sohar II 741 MW PPA Operational Fuel oil as 2028
IPP (SAOC)
secondary fuel
and back-up

Sohar IV Shinas Power Under CCGT


Sohar IV 1,710 MW PPA 2034
IPP Company construction Natural gas fired

14
Fuel oil as back-
up
CCGT
Phoenix Power Co. Natural gas fired
Sur IPP Sur 2,000 MW PPA Operational 2029
(SAOC) (Fuel oil as back-
up)
OCGT
Wadi Al Wadi Al-Jizzi Power Natural gas fired
Wadi Al Jizzi 325 MW PPA Operational 2018
Jizzi IPP Co. (SAOC) (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 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 rising up 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 terms 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 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Contracted Capacity Net MW a

Al Kamil IPPb - - - - - - -
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
Barka III IPP 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
Sohar III IPP - - 1,708 1,708 1,708 1,708 1,708
TOTAL 6,897 7,335 8,944 8,680 8,680 7,394 7,394
a All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45C 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 support during
emergencies, and opportunities to trade electricity and coordinate both planning reserves and operating
reserves.

The interconnection is a double circuit link that supports 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 OPWPs recognition of the interconnects contribution to planning
reserve requirements, based on its record of performance and the contractual obligations with the GCCIA to
provide reserves support.

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 support 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 terms). 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 terms 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 Prospective Contract Extensions, 2017 to 2023

2017 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

TOTAL 280 668 668 932 932 2,218 2,218


a
All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45C ambient temperature.
b OPWP 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.

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 Omans 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 Omans first large-scale solar IPP in 2017. Technical advisors have
been engaged to develop tender documents and an appropriate evaluation methodology that assures a cost-
effective 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 joint-task force toward development of wind power plants. PAEWs 2016 Wind
Atlas Report identified several locations for prospective wind plants, and OPWP plans to develop wind
instrumentation stations to support future power development.

Summary

Figure 4 provides a summary of OPWPs 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 (non-
12,000 firm)

10,000
Prospective Capacity
8,000 Contracts

6,000 Capacity Contributions

4,000

2,000 Contracted Capacity

0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023

Contracted Capacity Net MW a

Contracted Capacity 6,897 7,335 8,944 8,680 8,680 7,394 7,394


Capacity Contributions
Non-Firm Resourcesb 380 380 380 380 380 380 380
Prospective Capacity
Contracts
Contract Extensions 280 668 668 932 932 2,218 2,218
Misfah IPP - - - - 800 800 800
MIS Power 2022 - - - - - 800 800
Short-term Resourcesc - TBD TBD TBD TBD TBD TBD
Total Contracted + Capacity
7,557 8,383 9,992 9,992 10,792 11,592 11,592
Contributions + Prospective
Contingency Reserves (non-
firm)
Reserve-Sharing Agreements - - - - - - -
Solar IPP - - - 200 200 200 200
PDO Interconnection 60 60 60 60 60 60 60
GCC Interconnection 400 400 400 400 400 400 400
Surplus Generation
- - - - - - -
Agreements
Total Contingency Reserves 460 460 460 660 660 660 660
All Resources 8,017 8,843 10,452 10,652 11,452 12,252 12,252
a Allcapacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 45C 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 OPWPs 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 short-
term 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
12,000 Procured
Prospective Contract
Extensions
10,000
Misfah IPP

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 2022 2023

2017 2018 2019 2020 2021 2022 2023


Generation Resources MW
Contracted Capacity 6,897 7,335 8,944 8,680 8,680 7,394 7,394
Capacity Contributions 380 380 380 380 380 380 380
Prospective Contract
280 668 668 932 932 - -
Extensions
Misfah IPP - - - - 800 800 800
Capacity to be Procureda - - - - - 1,600 1,600
Total Contracted +
7,557 8,383 9,992 9,992 10,792 10,174 10,174
Prospective

Contingency Reserves (non-


460 460 460 660 660 660 660
firm)
Total - All Resources 8,017 8,843 10,452 10,652 11,452 10,834 10,834
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 6,060 6,550 7,160 7,580 8,070 8,520 8,960


Capacity Required (Demand
+ Margin) 6,450 6,980 7,630 8,070 8,590 9,070 9,540
Deficit (Additional Capacity Required)
Above Current Contracts +
- - - - - 1,296 1,766
Capacity Contributions
Above Current + Extensions - - - - - 1,296 1,766
Above Current + All
- - - - - - -
Prospective
Above Current + All
- - - - - - -
Prospective + Reserves

23
Low Case Scenario
Peak Demand 5,860 6,220 6,690 7,150 7,580 7,950 8,310
Capacity Required (Demand
6,240 6,620 7,120 7,610 8,070 8,470 8,850
+ Margin)
Deficit (Additional Capacity Required)
Above Current Contracts +
- - - - - 696 1,076
Capacity Contributions
Above Current + Extensions - - - - - 696 1,076
Above Current + All
- - - - - - -
Prospective

High Case Scenario


Peak Demand 6,380 7,100 7,710 8,270 8,820 9,420 10,020
Capacity Required (Demand
6,790 7,560 8,210 8,810 9,390 10,030 10,670
+ Margin)
Deficit (Additional Capacity Required)
Above Current Contracts +
- - - - 330 2,256 2,896
Capacity Contributions
Above Current + Extensions - - - - - 2,256 2,896
Above Current + All
- - - - - - 496
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 OPWPs 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 support 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 co-
procurement. 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.

OPWPs 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 joint facilities.

26
Demand for Electricity

Historical Demand

Electricity demand growth in 2016 was slightly lower than the Low Case forecast presented in the previous 7-
Year 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
400 Demand

300
Peak
200 Demand

100

0
2010 2011 2012 2013 2014 2015 2016

Average
2010 2011 2012 2013 2014 2015 2016
Growth (%)
Historical Demand
Average Demand
216 228 259 282 303 336 349
(MW)
Growth (%) 6% 13% 9% 7% 11% 4% 8.4%
Peak Demand (MW) 342 348 389 420 439 495 497
Growth (%) 2% 12% 8% 4% 13% 0.5% 6.5%

3
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

OPWPs 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
1,000 Low Case Average Demand
924
900
765 Expected Case Average Demand
800
700 688
High Case Average Demand
600 497
500
Low Case Peak Demand
400
300 Expected Case Peak Demand
200
100 High Case Peak Demand
0
Actual 2017 2018 2019 2020 2021 2022 2023
2016

Actual Average
2017 2018 2019 2020 2021 2022 2023
2016 Growth (%)
Expected Case Demand
Average Demand (MW) 348 359 382 407 455 483 530 559 7%
Underlying Demand 267 275 293 312 333 357 382 409 6%
Bulk Loads 81 85 89 95 122 126 148 150 9%
Annual Energy (TWh) 3.1 3.1 3.3 3.6 4.0 4.2 4.6 4.9 7%
Peak Demand (MW) 497 505 536 568 627 664 724 765 6%
Change from 2016-2022
-30 -51 -58 -95 -99 -145 -160 n/a
Statement (MW)

Low Case Demand


Average Demand (MW) 348 352 368 384 421 442 480 501 5%
Underlying Demand 267 273 288 302 316 333 349 366 5%
Bulk Loads 81 80 80 82 105 109 131 134 8%
Annual Energy (TWh) 3.1 3.1 3.2 3.4 3.7 3.9 4.2 4.4 5%
Peak Demand (MW) 497 494 518 542 589 615 661 688 5%
Change from 2016-2022
-5 -13 -16 -47 -44 -68 -98 n/a
Statement (MW)

High Case Demand


Average Demand (MW) 348 381 414 456 531 610 655 696 10%
Underlying Demand 267 277 299 322 350 383 418 458 8%
Bulk Loads 81 105 115 134 181 227 236 238 17%
Annual Energy (TWh) 3.1 3.3 3.6 4.0 4.7 5.3 5.7 6.1 10%
Peak Demand (MW) 497 527 574 619 728 805 863 924 9%
Change from 2016-2022
-70 -96 -139 -193 -165 -196 -226 n/a
Statement (MW)

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(s) as
Project stated in Contracted Contract Project Contract
Project Company Technology
Name previous 7 Capacityb Type Status Expiry
Year
Statement(s)a
OCGT
Raysut New
Dhofar Natural gas
Power Station
Raysut IPP 276 MW PPA Generation Co. Operational fired 2033
(NPS) / NPS /
(SAOC)
Raysut IPP (Fuel oil as
back-up)
CCGT

Dhofar Natural gas


Under fired
Salalah II IPP Salalah II IPP 445 MW PPA Generation Co. 2033
construction
(SAOC) (Fuel oil as
secondary fuel
and back-up)
CCGT
Natural gas
Salalah Power 445 MW fired
and Water Sembcorp Salalah
Salalah IWPP Desalination PWPA Power & Water Operational 2027
Plant / Co. (SAOC)
(Fuel oil as
Salalah IWPP
back-up)
68,000 m3/d

a Inorder 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 35C 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 projects 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 support 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

1,000 Salalah II IPP

800

600 Salalah IWPP

400
Raysut IPP
200

0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Contracted Capacity Net 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

Prospective Capacity
Contracts
Wind Project (Non-firm)b - - - 50 50 50 50

Contingency Reserves
PDO Interconnect (Non-
150 150 150 150 150 150 150
firm)c
Total Non-firm Resources 150 150 150 200 200 200 200
TOTAL ALL RESOURCES 871 1,316 1,316 1,366 1,366 1,366 1,366
a All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 35C ambient temperature.
b Date of commissioning and contracted capacity is subject to change.
c 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 OPWPs 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 +
800 Margin

600 Expected Case Peak Demand +


Margin
400

200 Low Case Peak Demand +


Margin
0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Generation Resources Net 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

Expected Case Demand


Peak Demand 505 536 568 627 664 724 765
Peak Demand + Margin 566 601 637 702 744 811 857
Deficit (Additional Capacity Required)
Above Contracted Capacity - - - - - - -

High Case Demand


Peak Demand 527 574 619 728 805 863 924
Peak Demand + Margin 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
Peak Demand + Margin 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 35C 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 joint
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 accounting 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 2018 2019 2020 2021 2022 2023
Actual

2016 Average
2017 2018 2019 2020 2021 2022 2023
Actual Growth (%)
MW
RAECO: Expected Case 26 41 59 70 88 92 98 105 22%
Change from 2016-2022
-7 -1 -11 -24 -19 -23 -25 -
Statement

RAECO: Low Case 26 34 37 39 42 45 48 51 10%


Change from 2016-2022
-4 -1 -15 -23 -26 -28 -30 -
Statement

RAECO: High Case 26 41 59 105 158 162 168 175 32%


Change from 2016-2022
-10 -8 -32 -27 3 -4 -10 -
Statement

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 accounts
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 refinerys 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 2022 2023

2017 2018 2019 2020 2021 2022 2023


Peak Demand 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

Contracted Capacity
Existing RAECO Plant 66 66 66 66 66 66 66

Prospective Capacity
New Capacity (Expected Case) - - 5 25 30 37 45
New Capacity (High Case) - - 45 106 110 117 125

Total Contracted Capacity + New


66 66 71 91 96 103 111
Capacity (Expected Case)
Total Contracted Capacity + New
66 66 111 172 176 183 191
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 out-
turns 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
80 Demand (RAECO)
60 Peak Demand - Low
Case (OPWP)
40

20

0
2016 Actual 2017 2018 2019 2020 2021 2022 2023

2016 Average
2017 2018 2019 2020 2021 2022 2023
Actual Growth (%)
MW
RAECO Expected Case 74 84 96 103 109 117 124 132 9%
Change from 2016-
-15 -17 -21 -23 -25 -27 -30 -
2022 Statement (MW)

OPWP Low Case 74 82 93 97 102 106 111 116 7%


Change from 2016-
-2 -5 -7 -10 -13 -17 -21 -
2022 Statement (MW)

OPWP High Case 74 85 99 108 118 128 138 150 11%


Change from 2016-
-27 -30 -34 -34 -35 -36 -37 -
2022 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 Musandams 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 2023

2017 2018 2019 2020 2021 2022 2023


Peak Demand MW
Expected 84 96 103 109 117 124 132
High Case 85 99 108 118 128 138 150
Low Case 82 93 97 102 106 111 116

Contracted Capacity
RAECO Plants (Current) 88 88 27 27 27 27 27
Musandam IPP a 123 123 123 123 123 123 123

Total Contract Capacity 211 211 150 150 150 150 150

Prospective Capacity
RAECO Plants (New) - - 78 78 78 78 78

Total Contracted Capacity +


Prospective 211 211 228 228 228 228 228
aThe MW figures are at 45 deg. C

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 OPWPs 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 Main Interconnected System

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 HHV GJ Million sm3/d


600 Total Fuel Consumption - Low Case Demand 45
Total Fuel Consumption - Expected Case Demand
Total Fuel Consumption - High Case Demand 40
500 Peak Day Gas Consumption - Low Case Demand (right hand scale)
Peak Day Gas Consumption - Expected Case Demand (right hand scale)
36
35
Peak Day Gas Consumption - High Case Demand (right hand scale) 32
400 29 29 30

25
300
20

200 15

10
100
5

0 0
2016 Actual 2017 2018 2019 2020 2021 2022 2023

2016 Average
2017 2018 2019 2020 2021 2022 2023
Actual Growth (%)
Expected Demand
Gas Consumption (million Sm3/d)
Annual Average 19.4 18.1 18.8 19.3 19.8 20.9 22.1 23.2 3%
Peak Day 28.9 24.4 26.8 26.2 26.9 28.4 30.0 31.6 1%
Diesel Fuel Consumption (million litres) - - - - - - - - -
Total Fuel Consumption (million HHV
277 258 268 275 283 298 315 330 3%
GJ)a
Gas 277 258 268 275 283 298 315 330 3%
Diesel Fuel - - - - - - - - -

Low Case Demand


Gas Consumption (million Sm3/d)
Annual Average 19.4 17.7 17.7 17.1 17.9 18.9 19.9 20.7 1%
Peak Day 28.9 23.5 25.0 24.1 25.0 26.4 27.6 29.1 0%
Diesel Fuel Consumption (million litres) - - - - - - - - -
Total Fuel Consumption (million HHV
277 252 252 244 256 270 284 296 1%
GJ)a
Gas 277 252 252 244 256 270 284 296 1%
Diesel Fuel - - - - - - - - -

High Case Demand


Gas Consumption (million Sm3/d)
Annual Average 19.4 19.2 21.0 21.2 21.9 23.1 24.5 26.0 4%
Peak Day 28.9 26.2 30.0 28.3 29.8 31.4 33.3 35.8 3%
Diesel Fuel Consumption (million litres) - - - - - - - - -
Total Fuel Consumption (million HHV
277 273 299 302 313 330 349 371 4%
GJ)a
Gas 277 273 299 302 313 330 349 371 4%
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 support more efficient dispatch, while OPWP will contribute
advanced system simulation to support economic dispatch decision-making.

Figure 15 Gas Required per Unit of Electricity Generation MIS


Sm3 of gas 400
consumed per MWh
350 Actual
produced
Projection
300
250
200
150
100
50
0
2023
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

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 Projected Fuel Requirements DPS
Million Million
Total Fuel Consumption - "Low Case" Demand
HHV GJ Sm3/d
Total Fuel Consumption - Expected Demand
100 Total Fuel Consumption - "High Case" Demand 6.0
Peak Day Gas Consumption - "Low Case" Demand (right hand scale)
Peak Day Gas Consumption - Expected Demand (right hand scale)
5.0
80 Peak Day Gas Consumption - "High Case" Demand (right hand scale)

4.0
60

3.0
40
2.0

20
1.0

0 0.0
2016 2017 2018 2019 2020 2021 2022 2023

Actual Average
2016 2017 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 3.1 2.8 3.0 3.4 3.7 4.1 4.5 3%
Total Fuel Consumption (million HHV GJ)a 32 37 33 35 39 42 47 51 7%

Low Case Demand


Gas Consumption (million Sm3/d)
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%
Total Fuel Consumption (million HHV GJ)a 32 36 32 34 36 39 43 46 5%

High Case Demand


Gas Consumption (million Sm3/d)
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%

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

46
47
SECTION 3 WATER

3.1 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
midyear 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.
5MISC 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.
6National Centre for Statistics & Information (2014) Population projections, in the Sultanate of Oman, 2015-2040 and
Population Statistics Bulletin. Issue 5.

48
PAEWs 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
1,200 Demand
1,000 Base Case Scenario -
Annual Average
800
Demand
600
High Case Scenario -
400 Peak Demand

200
Base Case Scenario -
0 Peak Demand

Average
2016 Est. a 2017 2018 2019 2020 2021 2022 2023
Growth (%)
Peak Water Demand Thousand m3/d

Base Case Scenario 897 985 1,017 1,067 1,142 1,202 1,244 1,295 5%
Change from 2016-
68 90 56 53 86 110 118
2022 Statement
High Case Scenario 897 1,027 1,082 1,157 1,256 1,339 1,400 1,466 7%
Change from 2016-
68 62 26 21 53 76 83
2022 Statement

Annual Average
Demand
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%
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 Details of WPAs/PWPAs - Interconnected Zone/Sharqiyah Zone


Project Name(s)
Project as stated in Contracted Contract Project Project Contract
previous 7 Year Technology
Namea Capacity Type Company Status Expiry
Statement(s)a

Interconnected Zone
Barka I / Barka 91,200 m3/d PWPA Operational MSF 2018
Power and ACWA Power
Barka IWPP 45,000 m3/d WPA Operational RO 2018
Desalination Plant Barka (SAOG)
/ Barka I IWPP 57,000 m3/d WPA Operational RO 2018

Barka II / Barka II SMN Barka


Barka II
Power and 120,000 m3/d PWPA Power Co. Operational RO 2024
IWPP
Desalination Plant (SAOC)
Barka III
Barka
Desalination Plant Under
Barka IV IWP 281,000 m3/d WPA Desalination RO 2038
/ Barka IV construction
Co. (SAOC)
Desalination Plant
Ghubrah /
Al Ghubrah
Ghubrah Power
Ghubrah Power and
and Desalination 140,200 m3/d PWPA Operational MSF 2018
IWPP Desalination
Plant / Ghubrah
Co. (SAOC)
Desalination Plant

Sohar I / Sohar I
Sohar Power
Sohar IWPP Power and 150,000 m3/d PWPA Operational MSF 2022
Co. (SAOG)
Desalination Plant

Muscat City Muscat City


Ghubrah II
Desalination Plant 191,000 m3/d WPA Desalination Operational RO 2038
IWP
/ Muscat City IWP Co. (SAOC)
Qurayyat
Qurayyat Qurayyat Under
200,000 m3/d WPA Desalination RO 2037
IWP Desalination Plant construction
Co. (SAOC)
Qurayyat
2018
Qurayyat Temporary Plant /
Muscat Water (Potential
Temporary Qurayyat 8,000 m3/d WPA Operational RO
LLC extension
IWP Temporary Water
to 2022)
Project
Sohar III
Myah Gulf
Desalination Plant Under
Sohar III IWP 250,000 m3/d WPA Desalination RO 2038
/ Sohar II construction
Co. (SAOC)
Desalination Plant
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.

OPWPs 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 PAEWs 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
1,200 Extension (RO)

Contracted Capacity
1,000

800 High Case Peak Demand +


Margin
600 Base Case Peak Demand +
Margin
400
Base Case Peak Demand

200
Base Case Annual Average
0 Demand
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 21-
hour 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
Supply Requirements Thousand m3/d
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
High Case Peak Demand + Margin 1,174 1,237 1,322 1,435 1,530 1,600 1,676

Contracted Capacity
Barka IWPP 193 - - - - - -
Ghubrah IWPP 140 - - - - - -
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
Total Contracted Capacity 802 950 1,192 1,192 1,192 1,042 1,042
Peak Yield of PAEW Sources (Non
100 100 119d 119 119 119 119
OPWP)
Reservei over Base Case Peak
-224 -112 91 6 -63 -261 -319
Demand + Margin (Shortfall)
Reservei over High Case Peak
-272 -187 -11 -125 -219 -439 -515
Demand + Margin (Shortfall)

Prospective Capacity Contracts


Barka IWPP Contract Extension
- 102 102 102 102 102f 102f
(RO) e
Ghubrah III IWP g - - - - - 300 300
North Batinah IWP h - - - - - 200 200
Total Water Desalination
902 1,152 1,413 1,413 1,413 1,763 1,763
Resources i
Reservej over Base Case Peak
-224 -10 193 108 39 341 283
Demand + Margin (Shortfall)
Reservej over High Case Peak
-272 -85 91 -23 -117 163 87
Demand + Margin (Shortfall)

a The supply contract includes an option for up to four one-year extensions at the same capacity level
b 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.

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
Peak Water
180
Demand (right
160 hand scale)
140
120
100
80
60
Annual Average
40
Demand
20
0

2016 Average
2017 2018 2019 2020 2021 2022 2023
Estimateda Growth (%)
Thousand m3/d
Peak Water Demand 112 122 130 140 154 165 173 181 7%
Change from 2016-2022
-11 -10 -10 -7 0 5 6
Statement

Annual Average Demand 93 106 112 121 133 142 149 155 8%
Change from 2016-2022
-16 -9 -9 -6 2 5 7
Statement
a Full-year 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 Name(s) as
Project stated in previous Contracted Contract Plant Plant Plant Contract
Namea 7 Year Capacity Type Owner Status Type Expiry
Statement(s)a
Aseelah
Aseelah Under
Temporary 10,000 m3/d WPA Muscat Water LLC RO 2021
Temporary Plant construction
IWP
Sharqiyah
Sur IWP / Sur
Sur II IWP 131,000 m3/d WPA Desalination Co. Operational RO 2029
Desalination Plant
(SAOG)
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.

OPWPs 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
250 Supply Requirements

Aseelah Temporary
IWP
200
Ashkharah IWP

150 Sur II IWP

100 Peak Demand +


Margin

Peak Water Demand


50

Annual Average
0 Demand
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023

Supply Requirements Thousand m3/d

Peak Water Demand 122 130 140 154 165 173 181
Peak Demand + Margin 140 148 160 176 189 198 207

Contracted Capacity

Sur II IWPa 131 131 131 131 131 131 131


Aseelah Temporary
10 10 10 10 - - -
IWPb
Total Contracted
141 141 141 141 131 131 131
Capacity
Reserve over Peak
19 11 1 -13 -34 -42 -50
Demand (Shortfall)
Reserve over Peak
Demand + Margin 1 -7 -19 -35 -58 -67 -76
(Shortfall)

Prospective Capacity Contracts

Aseelah IWP 0 0 0 80 80 80 80
Total Water
141 141 141 221 211 211 211
Desalination Resources
Reserve over Demand 19 18 20 67 46 38 30
Reserve over Peak
1 -7 -19 45 22 13 4
Demand + Margin

PAEW Resources Supply


- 7 19 - - - -
Requirementsc
a Including Sur capacity addition of 48,000 m3/d. The COD is expected in February, 2017
b Expected SCOD for Aseelah Temporary IWP is June 2017.
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 Water Demand Projections Dhofar Water Network
Million m3 Thousand m3/d

140 250
Total Annual Demand - Jabal and
120 Sahal
200
100
Total Annual Demand - Cities
150
80

60 Peak Water Demand - Cities +


100
Jabal and Sahal (right-hand scale)
40
50
20 Peak Water Demand - Cities
(right-hand scale)
0 0
2016 2017 2018 2019 2020 2021 2022 2023

Average
2016 2017 2018 2019 2020 2021 2022 2023
Growth (%)
Peak Water Demand Thousand m3/d
Cities (Network) 96.1 104.2 113.8 123.9 134.6 146.2 158.8 172.6 9%
Jabal and Sahal (Non-
29.5 32.5 35.8 39.5 43.6 48.3 53.4 59.1 10%
network)
Total 125.6 136.7 149.6 163.4 178.2 194.4 212.2 231.7 9%
Change from 2016-
2022 Statement
-23 -23 -22 -20 -19 -18 -17 -

Annual Demand Million m3


Cities (Network) 32.6 35.2 38.5 42.0 45.7 49.5 53.8 58.5 9%
Jabal and Sahal (Non-
10.0 11.0 12.1 13.4 14.8 16.3 18.0 19.9 10%
network)
Total 42.6 46.3 50.6 55.3 60.5 65.8 71.8 78.4 9%
Change from 2016-
2022 Statement
2 3 4 5 6 7 9 -

59
Water Supply Sources

Table 6 Summary of WPAs/PWPAs Dhofar Water Network

Project
Name(s) as
Project stated in Contracted Contract Project Contract
Project Company Technology
Namea previous 7 Capacity Type Status Expiry
Year
Statement(s)a
Salalah Power
and Water Sembcorp Salalah
Salalah IWPP Desalination 68,000 m3/d PWPA Power & Water Operational RO 2027
Plant / Co. (SAOC)
Salalah IWPP
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

300 Dhofar Water 2022

250
Salalah III IWP
200
Salalah IWPP
150

100 Peak Demand +


Margin
50
Peak Demand
0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Supply Requirements Thousand m3/d
Cities Peak Demand 104 114 124 135 146 159 173
Cities Peak Demand + Margin 119 130 142 154 167 181 197

Contracted Capacity
Salalah IWPP 68 68 68 68 68 68 68
Total Contracted Capacity 68 68 68 68 68 68 68
Reserve over Peak Demand
-36 -46 -56 -67 -78 -91 -105
(Shortfall)
Reserve over Peak Demand +
-51 -62 -74 -86 -99 -113 -129
Margin (Shortfall)

Prospective Capacity
Contracts
Salalah III IWP - - - 100 100 100 100
Dhofar Water 2020 - - - - - 100 100
Total Water Desalination
68 68 68 168 168 268 268
Resources
Reserve over Peak Demand
-36 -46 -56 33 22 109 95
(Shortfall)
Reserve over Peak Demand +
-51 -62 -74 14 1 87 71
Margin (Shortfall)

DGW Resources
DGW Well Supply Capacitya 70 70 70 70 70 70 70
DGW Groundwater Supply
51 62 70 0 0 0 0
Requirements
aRepresenting 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 Peak Demand +
Margin
50
Peak Demand
0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Supply Requirements Thousand m3/d
Peak Demand - Cities (Network) 104 114 124 135 146 159 173
Peak Demand - Jabal and Sahal
32 36 39 44 48 53 59
(Non-network)
Total Peak Demand 137 150 163 178 194 212 232
Total Peak Demand + Margin 156 171 187 204 222 243 265

Contracted Capacity
Salalah IWPP 68 68 68 68 68 68 68
Total Contracted Capacity 68 68 68 68 68 68 68
Reserve over Peak Demand
-69 -82 -95 -110 -126 -144 -164
(Shortfall)
Reserve over Peak Demand +
-88 -103 -119 -136 -154 -175 -197
Margin (Shortfall)

Prospective Contracted Capacity


Salalah III IWP - - - 100 100 100 100
Dhofar Water 2022 - - - - - 100 100
Total Water Desalination
68 68 68 168 168 268 268
Resources

62
Reserve over Peak Demand
-69 -82 -95 -10 -26 56 36
(Shortfall)
Reserve over Peak Demand +
-88 -103 -119 -36 -54 25 3
Margin (Shortfall)

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 Peak Water Demand and Capacity Requirement - Ad Duqm Water Network
Thousand m3/d

80

Domestic- Outside
70
SEZAD

60

50 Industrial- SEZAD

40

30 Domestic- SEZAD

20

10 Peak Demand + Margin

0
2017 2018 2019 2020 2021 2022 2023

10
The boundaries of PAEWs reach into the SEZ remain undefined in the long term, in particular with respect to industrial
demand. For the purposes of OPWPs 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
Supply Requirements Thousand m3/d
Peak Water Demand 11 24 32 39 46 53 62
Domestic- SEZAD 8 13 17 16 19 20 21
Industrial- SEZAD 3.5 6 11 18 22 28 36
Domestic- Outside SEZAD - 4.6 4.7 4.7 4.8 4.8 4.8

Peak Demand + Margin 13 28 36 45 52 60 71


Domestic- SEZAD 9 15 19 19 22 23 24
Industrial- SEZAD 4 7 12 21 25 31 41
Domestic- Outside SEZAD - 5 5.3 5.4 5.4 5.5 5.5
Change from previous 7 Year
-4 1 1 4 4 5 -
Statement (2016-2022)

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 Water Supply and Demand Balance - Ad Duqm Water Network
Thousand m3/d
80

70
Expansion of RAECO Plant
60

50 Duqm Desalination Plant


(RAECO)
40
Peak Demand + Margin
30
Peak Water Demand
20

10

0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023

Supply Requirements 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
-4 1 1 4 4 5
Statement (2016-2022)

Contracted Capacity
Duqm Desalination Plant
8 8 8 8 8 8 8
(RAECO)

Prospective Capacity
Expansion of (RAECO) Plant 4 4 4 4 4 4

Total Contracted Capacity 8 12 12 12 12 12 12


Reserve over Peak Demand +
-5 -16 -24 -33 -40 -48 -59
Margin (shortfall)

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)


Million m3 Thousand m3/d
4.0 14.0

3.5 12.0
3.0 Total Annual
10.0 Demand
2.5
8.0
2.0
6.0
1.5 Peak Demand
4.0 (Right-hand scale)
1.0

0.5 2.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023

Average
2016 2017 2018 2019 2020 2021 2022 2023
Growth (%)
Thousand m3/d
Peak Demand 9.0 9.5 10.0 10.5 11.0 11.6 12.2 12.8 5%

Million m3
Total Annual Demand 2.9 2.8 2.9 3.0 3.2 3.3 3.5 3.7 4%

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
PAEW
Temporary
25
Resources
New Khasab
20 IWP

PAEW
15 Resources

10 Peak Demand
+ Margin

5 Peak Demand

0
2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023


Supply Requirements Thousand m3/d
Peak Demand 9.5 10.0 10.5 11.0 11.6 12.2 12.8
Peak Demand + Margin 10.8 11.4 11.9 12.5 13.2 13.9 14.6

Existing Capacity
PAEW Resourcesa 10 10 10 10 10 10 10

Prospective Capacity
New Khasab IWP - - - - 16 16 16
PAEW Temporary Resources - - 0.5 1.0 - - -

Total Capacity 10 10 11 11 26 26 26
Reserve over Peak Demand
0.5 0 0 0 14.4 13.8 13.2
(Shortfall)
Reserve over Peak Demand +
0.8 1.4 1.4 1.5 12.8 12.1 11.4
Margin (Shortfall)
a
PAEW wells and small desalination plants are currently sufficient to meet capacity needs with no margin.

68
69
SECTION 4 PROCUREMENT ACTIVITIES

4.1 Power Projects

Current/Near-Term Procurement Activities

OPWPs 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, supported 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 projects 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 joint project of RAECO and
MASDAR. OPWPs 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 Power Project(s) Procurement Activities in 2017-2018


Award
Project System Capacity RFQ RFP Bids Due COD
Anticipated

Manah
MIS 264 MW Q2, 2017 Q2, 2017 Q3, 2017 Q4, 2017 Q2, 2020a
IPPa
Misfah
MIS 800 MW Completed Q2, 2017 Q4, 2017 Q4, 2017 Q1, 2021
IPP
2022
> 1,600
Power MIS Q3, 2017 Q1, 2018 Q2, 2018 Q3, 2018 Q1, 2022b
MWb
Capacity
Solar >200
MIS Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018 Q2, 2020
IPP MW
Harweel
Wind DPS 50 MW Completed Completed Completed TBD TBD
Farmc

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 OPWPs involvement with the Harweel Wind Farm is principally in the development of the PPA. The project itself is

being developed as a joint 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 members) 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. OPWPs current advisory project will develop an economic evaluation
methodology to support 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

OPWPs 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 support 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
Table 8 Water Project(s) Procurement Activities in 2017-2018
Network/ Award
Project Capacity RFQ RFP Bids Due COD
Zone Anticipated
17.6 Q2,
Aseelah IWP Sharqiyah Zone Completed Completed Completed Q2, 2017
MIGD 2020
Main
Ghubrah III Q1,
Interconnected 66 MIGD Q4, 2017 Q2, 2018 Q4, 2018 Q1, 2019
IWP 2022
Zone
Main
North Q1,
Interconnected 44 MIGD Q4, 2017 Q2, 2018 Q1, 2019 Q2, 2019
Batinah IWP 2022
Zone
Sharqiyah/ Main
Mobile Up to 22
Interconnected TBD TBD TBD TBD TBDC
Water MIGD
Zone
Salalah III Dhofar Water Q1,
22 MIGD Completed Completed Completed Q2, 2017
IWP Network 2020
Dhofar Dhofar Water
22 MIGD TBD TBD TBD TBD 2022
Water 2022 Network
Musandam Q1,
Khasab IWP 3.5 MIGD Completed Q2, 2017 Q4,2017 Q4, 2017
Water Network 2021
Duqm Water 13.2
Duqm IWP Completed Currently on hold
Network MIGD
a 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