Commercial guidelines being drafted for electricity spot market

LANDMARK INITIATIVE: Generators can sell power into the power system on a half-hourly basis at a market clearing price

Procedures governing the operation of an electricity spot market, due to come into operation in 2020, are currently under compilation, according to the Oman Power and Water Procurement Company (OPWP).

The landmark initiative, which promises to herald a new era of competition and liberalization in the Sultanate’s electricity sector, will operate alongside the existing system of long-term power supply agreements secured by the state-run utility with various independent power projects (IPP) in operation around the Sultanate.

“The spot market is expected to increase competition in Oman’s power generation market, and to make available additional capacity that might otherwise not be readily accessible through the existing (power purchase agreement) procurement channel,” said OPWP in an update on this landmark initiative.

Significant headway has already been made in preparing the groundwork for the introduction of an electricity spot market. A detailed framework underpinning this initiative has been submitted to the Authority for Electricity Regulation (AER), the sector’s regulator, for regulatory approval. IT systems for spot market operations are planned to be procured later this year, according to the utility. Operational trials are scheduled to commence in 2019 with full commercial activities planned the following year.

Aside from increasing the potential for competition in Oman’s power generation market, the spot market also provides a mechanism for generators to make available additional capacity that might otherwise not be readily accessible.

This may include capacity associated with generators whose long-term supply contracts have expired, or capacity in excess of contractually guaranteed capacity that plant owners have built into their facilities or that may be available under certain operating conditions.

Power producers will be able to sell electricity into the power system on a half-hourly basis at a market clearing price, OPWP stated.

Longer-term, the spot market is expected to give further impetus to the growth of energy trading with other countries of the GCC via the power interconnects with member states. Oman is a member of the GCC Interconnection Authority (GCCIA), which regulates power trading activities across the bloc.

OPWP — a member of Nama Group — is also preparing to adopt a new capacity procurement process that will allow existing generators with expiring contracts to compete directly with new project bidders for longterm contracts.

The new procurement process will be rolled out in 2022.