Power firms nearing contract period can seek renegotiation
OPWP is currently developing a new capacity procurement methodology that will allow existing generators and those near their contract expiration, to compete for new long-term contracts.
MUSCAT: Several Independent Power Projects (IPPs), which are completing their contractual period in the next few years, will be renegotiated for new contract terms by the Oman Power and Water Procurement Company (OPWP).
These power projects include the Al Kamil independent power project and the Barka independent water and power project. Last year, OPWP had finalised negotiations with the owners of Al Kamil IPP (280 megawatt) and Barka IWPP (388 megawatt) for extending the contracts to 2021, which are subject to final government approval.
OPWP is currently developing a new capacity procurement methodology that will allow existing generators and those near their contract expiration, to compete for new long-term contracts.
For planning purposes, their current capacity is nominally assumed to be what may be offered for extension.
“All these plants are currently expected to compete for new power and water purchase agreement contracts,” OPWP said in its seven-year outlook statement.
Some of this capacity may not be economically feasible to extend, or the owners may make improvements to expand capacity. Only capacity offers that are competitive with new generation bids are likely to be extended through the procurement process.
OPWP said the Manah IPP is a unique case, because the asset transfers to the government at the expiration of the current Power Purchase Agreement (PPA) in April 2020. “OPWP plans to offer the plant for sale under a competitive tender, allowing the plant to continue operation under a new power purchase agreement,” noted the seven-year outlook. The contracted capacity is 264 megawatt (MW). In fact, following regulatory approval of the new procurement methodology, expected in 2017, OPWP plans to procure approximately at least 1,600 MW of capacity for operations beginning in 2022. The new IPP portion of this new capacity may be in the range of 800 MW or more, but depends on the level of contract extensions and the outcome of the competition process.
Also, energy trades or firm capacity purchases from neighbouring power systems are important potential contingency resources.
OPWP is working with Oman Electricity Transmission Company (OETC), the Authority for Electricity Regulation (AER) and the Gulf Cooperation Council Interconnection Authority (GCCIA) to finalise the access conditions that will facilitate trade agreements with GCIIA member states. The access conditions will establish rules and procedures that will allow Oman to import or export with the other member states in the region. “In 2016, OPWP successfully arranged a trial exchange with the United Arab Emirates gas for future power plants is uncertain in the context of competing gas needs for economic development, according to a seven-year outlook released by OPWP.
Oman Power and Water Procurement Company will continue to coordinate closely with all relevant entities and authorities in order to ensure a sustainable and secure supply of energy, said the report. over the 220 kV (kilowatt) interconnect in Mahadha. This trial exchange provided the MIS (main inter-connected system) with a firm import of 200 MW during the months of May and June in exchange for a firm 200 MW export to the UAE during the months of July and August,” said the sevenyear outlook report.