The international consultants to the Authority for Electricity Regulation have completed their report on renewables and their potential for Oman’s energy needs. It’s a pretty comprehensive report. A really short summary is copied below from the Oman Observer today. What they don’t say in the paper, of course, is what I think are the really interesting bits from the report on the costs and subsidies in the Oman Electricity market...
Highlights of the study commissioned by the Authority for ElectricityElectricity is currently generated in Oman using domestically produced gas, in gas turbine fired generators. They are very efficient, can be turned on or off relatively quickly, and don’t cost that much to build (compared to say, a coal fired plant). Plus you can combine them with water desalination.
Regulation, Oman on the potential of renewable energy resources
Solar: The level of solar energy density in Oman is among the highest in the world. There is significant scope for developing solar energy resources throughout Oman and solar energy has the potential to provide sufficient electricity to meet all of Oman's domestic electricity requirements and provide some electricity for export. High solar energy density is available in all regions of Oman: areas of highest density are desert areas. Areas of lowest density are coastal areas in the southern part of Oman.
Wind: The study identifies significant wind energy potential in coastal areas in the southern part of Oman and in the mountains north of Salalah. Wind speeds in these areas are comparable to recorded wind speeds at inland sites in Europe where large numbers of wind turbines are installed and operational. Wind speeds are observed to be highest in summer months which coincide with peak periods of electricity demand in Oman.
There’s 3 problems to getting going with renewables in Oman however:
1/ The price of electricity is highly subsidized in Oman, and is sold well below the actual cost of generation. The price of power is hence a very politically sensitive issue.
Update: On average, the report says that the Batinah coast's power is subsidised by 38% (costomers pay on average 16baisa/kWh, average true cost is ~25baisa/kWh). In the remote areas, the subsidy is naturally such higher, over 80%, (customers pay ~14 baisa/kWh, costs ~82baisa/kWh).
2/ The actual cost of existing generation is already quite low, as its based on a gas price of $1.50 per million BTUs [approx the same as 1000 cubic feet of gas (1 MCF)] with no inflation component. While this is more than the Government pays to produce it (that would be around $0.50), that gas could be sold at a much higher price to the LNG plants to supply spot cargoes of LNG, (say around $4/MCF). In Europe and the USA, market gas prices lately have been $8, although right now the US price is over $13/MCF (the highest its ever been).
Update: If the cost of gas to the power companies was was increased to $3, those true costs above would go up another 50%.
Plus, because the gas is sold without any inflation component, and renewable energy is relatively capital intensive, that hurts the economics too.
3/ In theory there could be a partial subsidy for renewables through carbon trading, but the Omani Government has not (yet??) set up the required internationally recognized authorities to allow trading in carbon offsets under the Kyotot protocol (currently worth at least $20 per tonne of CO2 saved). At that price, this could then be used to lower the effective ‘gas price equivalent’ by more than $1.20 per MCF.
Update: I just did some maths, and I figure at the momemnt the Government spends around 120 million rials per year* subsidising the price of power. If you assume gas is actually worth $3, the effective subsidy is roughly double that, say 250 million rials
Wind is the most mature global renewable electricity generator. And in parts of Oman wind would almost be economic right now, although wind can never be a big part of your supply, as it is too unreliable. But, its obvious to anybody that if solar power is to work anywhere, it would work in Oman! Huge amounts of sunshine through a generally clear sky, vast empty areas of flat desert to place solar collectors, and in case anyone didn’t notice, in the summer it gets rather hot anyhow. Using solar to generate electricity has some problems, naturally, because at night its rather dark… but you can get around that by storing heat to use at night in massive insulated hyper-saline tanks. Also, using steam to generate electricity is not very efficient (compared to directly generating it through photovoltaic panels). This system in Spain, already in actual operation, uses a combination of photovoltaic cells and thermal mirrors.
And check out this one in the USA Mojave Desert called Solar 2.
Don't they look totally cool? Of course, they were totally uneconomic when built, but at current oil prices... what a winner. And effectively zero greenhouse gases once built.
So, if the price of gas was calculated at its ‘true’ present and future value, given the conditions in Oman, I’m a big supporter of getting going with solar right now. It certainly makes me feel better about a subsidy compared to the Government's current practice of giving gas away to big businessmen at $0.80 to make methanol and aluminium... Plus, setting up a local industry to manufacture these solar systems would be a great long term regional export business for Oman too I think.
Economic comparisons versus gas fired are only valid if you have enough gas to burn anyhow. Which in the end, we don’t. So long term, this sort of system should be the way to go, if people could actually afford to pay for the electricity it would generate, and I would think much more attractive than going nuclear.
For lots of nice stuff, see Wikipedia Solar power
* The report doesn't say what the Government subsidy actually is. But it states the Oman Power and Water company bought ~11 Terra Watt hrs in 2006 (page 38), at an average subsidy of ~10 biaisa per kWhr (page 42) gives 100 million rial, plus I've thrown in a bit for the rural areas and subsequent inflation in demand.