Operational trials for electricity spot market to begin in 2020

Full-fledged operations of the spot market expected to start by end of next year

The sultanate’s Authority for Electricity Regulation (AER) is planning to initiate the operational trials for the proposed electricity spot market during the middle part of 2020, with an aim to launch the full-fledged spot market by the end of next year.

According to the AER’s latest annual report, which is posted on its website, the regulator aims to complete the market regulations soon, thereby making a way to initiate trials in mid-next year. ‘The spot market trials and system testings are expected to commence during the middle part of 2020, with the market fully operational approximately six months later,’ AER said in the report.

The report said that at present the authority does not consider the market ready for the introduction of electricity spot market in the country. However, it believes that with a number of steps taken to liberalise the sector, including the introduction of new licence conditions and preparation of new regulations, might help the country in preparing for further liberalisation of the power sector.

‘The programme of work to develop a [compulsory] spot market that will enable licensed production facilities to sell power to Oman Power and Water Procurement Co (OPWP) at a price set by a market-based mechanism continues,’ AER said.

The AER report further revealed that currently the authority is participating actively in detailed discussions relating to market rules and by developing the associated regulatory instruments. As a part of this process, new licence conditions were also introduced in December last year.

The AER, however, clarified that the spot market has been designed to provide the necessary economic signals to support further investment in Oman’s power generation sector, without the underpinning requirement for long-term power purchase agreements with OPWP. ‘OPWP would therefore continue to act as the single buyer of all electricity sold through the market, even if some sales would not be supported by long-term power purchase agreements.’

The authority clearly stated in the report that it will review all conditions while assessing the potential impact on Oman’s economy and power sector before finalising the draft.