Overview
Oman has committed to net zero emissions by 2050. The government is looking to expand its electricity-generation capacities through renewable independent power projects (IPP), with plans to derive at least 30 percent of electricity from renewables by 2030, mainly through onshore wind and solar projects. State-owned PDO which aims to slash its emissions to 50 percent of 2019 levels by 2030, is an early pioneer in large-scale solar power projects in Oman. Oman’s integrated oil and gas company OQ is also seeking international partners to replace 40 percent of its three-gigawatt power consumption with renewable energy projects.
Commercial operations of Oman’s largest utility-scale solar photovoltaic, independent power project, Ibri 2, started in January 2022. Oman Power and Water Procurement Company (OPWP) awarded the project to a consortium of Saudi and Kuwaiti firms, for which Beijing-based Asian Infrastructure Investment Bank (AIIB) loaned $60 million. The project is AIIB’s first renewable energy financing project in Oman and the region. Another solar project, led by French developer EDF Renewables and its consortium partner Korea Western Power (KOWEPO), broke ground September 2023 for 500-megawatt solar photovoltaic power plant. Oman has embarked on several other projects in line with targets for 2030, including a wind farm in Dhofar, a solar IPP in Manah, 11 solar-diesel hybrid facilities, and the Sahim (Contribute) initiative to install small-scale solar panels on residential and commercial buildings.
The Ministry of Transport, Communications, and Information Technology (MTCIT) announced in its 2023 plan that Oman will phase out fuel-operated vehicles and ensure that 79 percent of vehicles in the country by 2035 are electric. According to the ministry’s estimates, Oman will have at least 22,000 new electric vehicles (EV) by 2040. From July 2023, Oman implemented customs and tax incentives and facilities to encourage the acquisition of EVs and achieve zero neutrality in the transportation sector.
Oman’s clean energy development is not limited to traditional renewable sources. In October 2022, MEM unveiled a Green Hydrogen Strategy and announced the formation of Hydrogen Oman (Hydrom), a subsidiary of state-owned Energy Development Oman, to oversee development in the sector. Oman is targeting $140 billion of investment in the green hydrogen industry and hopes to achieve production of 1 million tons per year by 2030. Oman has also set up a new government entity, the Oman Sustainability Center, to oversee its carbon neutrality plans.
In November 2022, Hydrom initiated a process of hydrogen concession bid rounds under which investors pitched projects in return for land for its development. Hydrom awarded five large-scale green hydrogen projects in June 2023 to companies including BP (UK), DEME (Belgium), and a consortium including Shell (UK/Netherlands) representing a total investment of more than $30 billion and a total production of 750-kilotons per annum (KTPA) from 18-gigawatts of renewable energy capacity at the sites. In June 2023, Hydrom opened registration for the second round of auctions. Bidding will start in September 2023, with awards in early 2024.
Leading Sub-Sectors
Green hydrogen, solar IPPs, wind, and solar power projects are leading sub-sectors in Oman’s renewable energy sector, and they have created opportunities for U.S. businesses in the sale of equipment and services, technology transfer, research and development, and privatization of government assets.
Opportunities
Oman’s state-owned entities are set to issue tenders, presenting opportunities for existing providers of clean energy technology and financiers of large infrastructure projects.
In June 2023, Hydrom launched a second round of public auctions for green hydrogen blocks in Oman. Companies can submit investment proposals to develop large-scale green hydrogen projects over three land blocks in the Dhofar region. Companies interested in bidding can register through the Hydrom website.
Four new wind-based Independent Power Projects (IPPs), a mid-size solar PV-based IPP, and a Waste-to-Energy scheme will become available for procurement via competitive tenders with issuance of RFQs during the third quarter of 2023, according to Nama Power & Water’s 7-Year Outlook Statement (2023-2029).
OQ Alternative Energy, the green energy investment unit of OQ Group, also has plans to develop a portfolio of renewable energy projects with a total capacity of around two-gigawatts.
Resources
Green Hydrogen Summit: December 2023