Oman to chart road map for electricity spot market

MUSCAT: The country’s sole electricity offtaker Oman Power and Water Procurement Company (OPWP) has announced the appointment of a Project Manager to formulate a road map paving the way for the introduction of a Spot Market for Electricity Pricing in the Sultanate — the first such initiative in the Gulf region.

John Mather, a specialist in the design and operation of wholesale electricity markets in the UK and Australia, will head a multidisciplinary team of experts from OPWP as well as Oman Electricity Transmission Company (OETC), in the preparation of a framework for an Electricity Spot Market in the Sultanate, said OPWP in a statement.

The Project Manager is also tasked with developing a detailed set of rules governing the operation of the proposed Spot Market for approval by the sector regulator, The Authority for Electricity Regulation — Oman (AER).

“OPWP will soon be issuing a tender to engage suitably qualified consultants to codify the Market Rules. These Market Rules will be similar to those that operate in wholesale electricity markets around the world,” the wholly government-owned subsidiary of The Electricity Holding Company (Nama Group), said. A road map spelling out anticipated dates for achieving milestones in the rollout of this strategy will be developed as well, it added.

With the appointment of the Project Manager, a landmark initiative by OPWP to open up the electricity sector to competition, as well as cross-border energy trading, is expected to become a reality in the coming years. OPWP has a 2017 timeline to trial the introduction of a Spot Market System for Electricity in the Sultanate, with full-fledged operations targeted by 2020.

According to the utility, the proposed spot market will provide an alternative route for producers to sell power to the state-owned company outside of a standard Power Purchase Agreement (PPA). Qualified producers will be able to participate in a spot market and receive prices determined on a day-to-day basis in accordance with specified market rules.

Market rules are proposed to be generally modelled on those that have been developed in other countries, with certain modifications to reflect the particular characteristics of the power (and water) sector in Oman — one important factor being that the proposed market will not involve multiple purchasers of generation.

Significantly, a Spot Market for Electricity has the potential to deliver an array of benefits, according to Ahmed al Jahdami, CEO – OPWP. For one, it provides a mechanism to access ‘uncontracted’ generation capacity — which is essentially capacity that is no longer subject to a Power Purchase Agreement (PPA) (for example, through expiry of an existing contract) or capacity that may be available from time to time at contracted facilities. Secondly, it enhances time-of-day/year capacity availability incentives.

At a policy-planning level, a Spot Market provides an objective basis for OPWP to evaluate contract renewal, life extension and plant configuration options, said Al Jahdhami. Additionally, it provides an objective basis for the government to evaluate strategies for renewable energy and energy efficiency. More importantly, it prepares Oman for participation in electricity markets across the GCC bloc, he noted.

In addition to its principal role as the single buyer of electricity in Oman, OPWP will also assume the role of Market Operator when the Spot Market is a reality. It will participate in the spot market as the offtaker of electricity traded at spot prices.


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