Oman Energy and Water Conference May 2016

Transcription

1 Oman Energy and Water Conference 2016 May 2016

2 Market Structure and Regulatory Framework Al Suwaidi Power Company SAOC Al Batinah Power Company SAOC SMN Barka Power Company SAOG Al Rusail Power Company SAOC Direction of payments Water Departments pay PWP for bulk purchases of desalinated water charged at a cost reflective Bulk Supply Tariff (BST); Water BST includes the PWP s costs of water procurement activities Water Departments Subsidy Wadi Jizzi Power Company SAOC United Power Company SAOG Al Kamil Power Company SAOG Al Ghubrah Power & Desalination Company SAOC Oman Power & Water Procurement Company SAOC PWP pays Production Facilities for Capacity and Output in accordance with terms of PPA/PWPA Ancillary Services Discos pay PWP for bulk purchases of electricity charged at a cost reflective Bulk Supply Tariff (BST); Electricity BST includes PWP s costs of electricity procurement activities Muscat Electricity Distribution Company SAOC Majan Electricity Company SAOC ACWA Barka SAOG Oman Electricity Transmission Company SAOC Mazoon Electricity Company SAOC Sohar Power Company SAOC Phoenix SAOC Muscat Desal. SAOC Production Facilities & Others pay OETC for Connection to Transmission System Discos pay OETC for Connection to OETC s Transmission System (Distribution business) Use of OETC s Transmission System (Supply business) Dhofar Power Company SAOC Customers Dhofar Generation Co SEMBCORP SAOC Sharqiyah Desalination 2 Future Projects All intra sector transactions: (i) regulated & (ii) cost reflective (no direct subsidy)

3 Ownership Structure in the Electricity Sector

4 Growth Trend in the Electricity Market

5 Growth Trend in the Desalinated Water Market 5

6 Key Challenges for the Sector Provide adequate capacity to meet rapid growth trends Manage increasing gas needs, considering the best economic use of domestic resources Align needs for new plants with national policy for land use and environmental protection Improve coordination among counterparts, to assure efficiency in infrastructure development Take advantage of technological developments while minimizing risks to capacity adequacy and cost control 6

7 Managing Gas Consumption for Electricity Efficiency improvements have reduced the per-unit consumption of gas by 31% since 2005 New high-efficiency turbines Increasing share of combined cycle plants Displacement of older plants Improvements in economic dispatch 22-25% additional efficiency improvement in gas utilisation from 2015 to 2021, due to Additional combined cycle plants Displacement of MSF water desalination While economic development has driven a high 10% annual growth rate in electricity generation, efficiency improvements have held the annual growth rate in gas consumption by the power sector to 6%

8 Coordinate with Counterparts and Neighboring Systems for Best Economic Advantage Strategic Project 1: 20-Year Plan/Land Bank 20-year capacity requirements Coordination with MOH for land use planning Coordination with OETC, OGC for infrastructure planning, for optimum investment plans Streamlined planning process to improve project time Strategic Project 2: Trade via GCCIA Interconnector Improved grid stability via access to emergency reserves Economic trades for lower cost resources Firm capacity trade as contingency resource Strategic Project 3: MIS-PDO-Duqm-Dhofar Interconnector Reduced gas use for spinning reserves Coordinated dispatch among systems for fuel savings Improved grid stability for Duqm and Dhofar Optimization of capacity planning Grid access to renewable energy potential in Al Wustah

9 Improve Procurement Competitiveness and Economic Efficiency in Supply Strategic Project: Develop an Electricity Spot Market Improve incentives for efficient generation and dispatch Gain access to new supply sources, in addition to P(W)PAs, via an efficient, market-driven process Reduce prices and improve risk allocation Timeline for Spot Market Development : High level design developed with AER support : Detailed market rules being developed, for AER approval : Development of IT systems and Market Operations organization : Market Trial followed by Market Operational Launch

10 Electricity Market Evolution Pre Present 2020: Proposed Spot Market

11 Renewable Energy Development while Managing Cost Exposure Preparation for Renewable Energy (RE) Development Resource Options Studies: OPWP conducts studies of RE costs and cost projections to assess RE vs. conventional resource competition Solar Data Collection: OPWP operates solar instrumentation sites to collect and publish information for assessing solar power output Dhofar Wind Project: OPWP is finalising a Power Purchase Agreement with RAECO for a 50 MW project in Dhofar RE Policy Development RE projects are currently competitive with diesel-fired generators, such as in RAECO supply areas. Projects are under development. In areas with access to gas for generation, RE projects must be competitive on the basis of the economic price of gas. AER and OPWP are coordinating to develop an appropriate evaluation methodology.

12 Provide Adequate Capacity for Varying Demand OPWP must procure sufficient generation capacity to meet peak demand: the highest demand in the year Much of installed capacity is underutilized: Average summer load is more than double the average winter load On any given day, peak demand is much higher than minimum demand Generally the higher cost generation operates only during peak periods in summer 12

13 Demand Management International Trends: Many countries provide incentives for consumers to alter the demand profile, to reduce the need for new generation capacity or to reduce electricity consumption Often less costly than generation supply Energy Efficiency (EE) Improvement: Reduces overall energy consumption, though not necessarily evenly over the demand profile Approaches include tariff reform, EE labels for consumer appliances, EE building codes, etc. Impacts often take years to achieve AER is leading program planning for the sector Demand Response (DR): Targets load reduction for a specific time period Typically shifts consumption to another time period, with no net effect on total consumption OPWP is developing DR with large industries 13

14 OPWP s Demand Response Target Observations: The load duration curve indicates a target for load reduction Similar to most power systems, peak demand conditions on Oman s Main Interconnected System last a short time 500 MW was needed only 100 hours in MW was needed only 10 hours The equivalent of an entire power plant, a large investment, is needed to meet extreme peak conditions which occur on only a few days each year 14

15 OPWP s Demand Response Opportunity Opportunity: If customers can reliably reduce their load for only a few hours on peak days, OPWP could avoid contracting for additional generation capacity Only around 10 instances of demand reduction may be needed to achieve at least 300 MW of demand response Key elements of successful DR programs: 24-hour advance notice of demand reduction instruction to customer Commitment to limited number of DR events in a year (e.g., less than 20) Limited duration of reductions, to minimize disruption to customer Transparent remuneration 15

16 OPWP s DR Initiative 2015: Initial evaluation 2016: Program development Design elements for pilot program Proof of Concept trials Assessment, refinement of program design Regulatory approval 2017: Program implementation Recruitment of participants Evaluation of results 2018: Program expansion 16

17 Thank you.