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PV Demand Analysis of the Belt and Road Initiative: Oman of Western Asia

Oman Country Profile

Oman, with a population of 4.6 million, depends on oil resources economically. In 2017, its agreement to the Organization of Petroleum Exporting Countries’ (OPEC) oil production cut deal and financial stringency has dragged down the nation’s economy, leading to a GDP growth rate of -0.273%. However, thanks to successful investment promotion in the special economic zone, the amount of foreign direct investment (FDI) flowing into Oman reached US$ 180 million in 2017, a 10% rise compared to 2016. Since both oil prices and output have gradually become stabilized in 2018,  the world is expecting an economic turnaround for Oman.

Since Oman’s economy has been dominated by oil production, the nation has been exposed to higher economic risk. Fitch, the international credit rating agency, assigned Oman a rating of BBB-,  reflecting a negative economic outlook.

Oman has a desert climate. The nation’s average daily solar radiation reaches 5.5-6kWh/m2 in summer and 2.5-3kWh/m2 in winter. By 2017, the cumulative PV installation is 8MW.

Renewable Energy Development in Oman

Up to 96% of Oman’s energy comes from natural gas and the remaining 4% from fossil fuels (Diesel). The country plans to source 10% of electricity from renewables by 2025.

To achieve the goal, Oman’s government plans to add 2.6GW of combined renewable energy installation generated from solar, wind, and waste projects by 2024. Of which, solar energy is a major development project, which is expected to reach 2.1GW of PV installation, taking up 80% of the total installation goal. Solar power is also expected to satisfy 30% of the demand for main power systems.

Oman PV policy

If things go as planned, Oman will witness the fastest growth of renewables from 2021 to 2024.

Oman's PV Policy and Demand

1. Roof-top Project - SAHIM

SAHIM is divided into two phases. Initiated in March 2018, the first phase aims to add 1GW of roof-top installation.

Targeting at 3kW-5kW roof-top project, the second phase plans to open 3,000 residential projects for tender in the first half of 2019. The combined installation is expected to reach 9MW-15MW. All projects must complete grid-connection by the end of 2023.

2. Utility-Scale Auctions

As mentioned, Oman plans to launch four tenders with 500MW installed capacity for each, amounting to 2GW in total.

In January 2018, the Oman Power and Water Procurement Company (OPWP) held the first auction for utility-scale projects with a total installation of 500MW in Ibri. A budget of US$ 500 million will be allocated to the construction. Shortlisted projects are shown in the below graph:

Oman PV Tender

The result will  be announced in early 2019. The winning companies must complete  grid-connection by the end of June 2021.

According to the auction timetable, there will be a total of 2GW utility-scale project demand between 2021 to 2024 with an average annual demand of 500MW. Since all projects must be connected to the grid by 2021, module demand will begin to emerge in late 2019.

In addition to utility-scale auctions launched by the Omani government, some state-owned enterprises have also engaged in solar PV development (see table below).

Oman PV IPP item

Oman-China Trade: Module Imports and Exports

1.  Analysis of China's Export Performance with Oman

According to PV InfoLink’s customs database, China’s module exports to Oman reached 135MW in 2018, showing an increase of 335% year-on-year (YoY) growth rate compared to 2017. Since the government is still planning the utility-scale auction, PV InfoLink assumes the 135MW quota is for roof-top projects and state-owned independent PV plants. In addition, Oman’s peak season comes in the end of first quarter, the second, and the fourth quarters while low season starts in the third quarter, in which demand is relatively low.

Oman PV  China module shipment

2. China-Oman Mono & Multi Module Shipment

According to PV InfoLink’s customs export database of 2018, Oman has higher demand for multi modules, representing 78% of China’s total exports to Oman. Mono modules, on the other hand, accounted for 22% of the total.

Oman PV Module proportion of multi Mono

Conclusion

The economy in Oman has been hampered by fluctuations in oil prices for years. Currently, 96% of the nation’s electricity demand comes from natural gas and 4% from fossil fuel. To achieve energy diversity, Oman has put more efforts toward developing renewable energy in recent years. By 2025, the nation plans to reach 10% renewable energy share.

The highlight of Oman’s PV policy is the utility-scale auction with a total of 2GW capacity,  projects of which are expected to connect to the grid by 2025. The first 500-MW auction will announce the winners in early 2019, and the winning projects are likely to complete grid-connection by mid 2021.

Module shipment in 2018 was significantly higher than that in 2017. Although the total shipment is not too substantial, Oman has witnessed stronger demand. After holding all utility-scale auctions in 2019 through 2024, module demand is expected to increase even more.

*PV InfoLink will hold a seminar titled “2H19 PV Market Trends and Outlook” in Shanghai on June 3. Welcome to join us for more market insights and technology trends.

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