Oman’s power sector targets further fuel efficiency gains this year

Building on a 2.82 per cent improvement in fuel utilisation per unit of electricity last year, Oman Power and Water Procurement Company (OPWP), the sole off taker of electricity and desalinated water output, is targeting a further 2 per cent uptick in fuel efficiency in 2021 as well.

While seemingly modest in percentage terms, these annual improvements in fuel utilisation translate into several millions of Omani riyals worth of gas savings in a sector that depends almost entirely on commercially valuable natural gas for electricity generation and water desalination.

These savings, in turn, help bring down electricity production costs, as well as the hefty grant borne by the government to subsidise the sector.

More importantly, the saved natural gas volumes can be channelled towards productive industries and other projects that can contribute to GDP growth, value creation and employment generation.

Significantly, fuel efficiency has improved incrementally – year on year – since the unbundling and restructuring of the power sector in 2014, according to OPWP. Gas consumption per unit of power generation has fallen on average by 6.1 per cent in the Main Interconnected System (MIS), which covers much of the northern half of the Sultanate. In the Dhofar Power System (DPS), which covers Dhofar, the corresponding rate of improvement in gas utilisation is 5.1 per cent since 2014.

In volumetric terms, gas consumption by power and water desalination plants totalled around 6.37 billion standard cubic metres (Sm3) in 2020, corresponding to 17.4 million Sm3/day.

It was less by about 2.82 per cent compared to 2019 figures, following a marginal 1 per cent decline in electricity production amid the pandemic and the accompanying economic downturn.

Aiding the improvement in fuel efficiency last year were the relatively brand new Sohar III Independent Power Project (IPP) and Ibri IPP. In operation for the entirety of 2020, gas consumption by these modern plants was far less (per unit of electricity) than their older peers.

In the Dhofar System, gas consumption amounted to about 710 million Sm3 (equivalent to 2.18 million Sm3/day) in 2020, which was about 11 per cent lower than in 2019.

Electricity production slumped by around 8 per cent last year amid the pandemic.

“OPWP is planning to achieve around 2 per cent improvement in fuel utilisation by end 2021,” said the state-owned offtaker, a member of Nama Group, in its newly released 2020 Annual Report.

“Through the introduction of new more efficient power plants, OPWP has steadily improved system efficiency and the utilisation of gas. Total gas consumption in the MIS in 2020 was about 6.4 billion Sm³, compared to about 6.6 billion Sm³ in 2019, a decrease of 3 per cent gas consumption during this period.”

“Over the past seven years (2014 – 2020), the gas consumption in MIS and DPS has decreased at an average annual rate of 1.8 per cent. Thus, fuel utilisation rate (Sm3/MWh) has improved at an annual average rate of more than 6.0 per cent over the last seven years,” OPWP added.