Bid & Tender
New Solar Scheme to Slash Power Subsidy in Oman

Date : Jun 23, 2017

Homeowners in Oman will soon be able to help cut government power subsidies by selling solar power back to the national grid.

 

The new solar scheme will eventually mean the current half a billion rial annual power subsidy can be slashed as solar supplies increase, according to the Authority for Electricity Regulation.

 

“This will definitely reduce the subsidy because customers will be generating electricity for their own usage and reduce their dependency on the grid,” said Qais Al Zalwani, Executive Director at the AER.

 

According to Budget 2017, the government of Oman shells out nearly half a billion rials on subsidies for electricity. Using solar rooftop systems to power homes is the first step to reducing these subsidies, he added.

 

Under the innovative Sahim plan – meaning ‘take part’ –consumers can buy subsidised power from the government but sell their excess solar power at market rates, according to the Authority for Electricity Regulation.

 

In peak times, solar power providers could rake in five times as much as they pay for electricity.

 

The initiative will help lower electricity bills, increase earnings by feeding power back to the grid, lower carbon emissions due to the use of solar energy and help reduce government subsidies, according to Al Zakwani.

 

“The government is paying half a billion in subsidies.

 

“We expect the electricity subsidy bills for the government to be reduced due to the Sahim initiative where people can install their own PVs (photovoltaic panels) and feed it back to the grid when not in use.

 

“Residents can make money with this by supplying it back to the grid. For example during the peak hours where the cost is the highest at 67bz per unit, if a homeowner decides to not use his electricity at all, they can earn that money. While the electricity costs 12bz a unit he can use the electricity, so he is making a lot of profit.

 

“If a customer sells 100 units of electricity to the grid through a contract with MEDC at an average rate of 18bz per unit, the person will earn OMR1.8 for it. This is more than how much he will pay when he uses 100 units from a conventional source as it costs only 10bz per unit.

 

“The tariff is always higher than 10bz at any time of the day. The tariff for feeding it back to the grid ranges from 12 to 67bz,” Al Zakwani said.

 

“This is surely going to help the government finances, not to mention the significant reduction in CO2,” Alkesh Joshi, Director of Tax at EY, said.

 

At international rates, a 1kW solar panel system will cost $2000 (OMR760) to buy and install.

 

There are two phases to the Sahim plan, and the regulator is in talks with companies and investors to fund the process, according to Al Zakwani.

 

“We are speaking to a number of funds that would invest in this project to ensure large scale deployment.

 

“A lot of customers don’t want to wait for this. We have a lot of large corporate owners we are in talks with.”

 

Oman ranks as one of the highest in the world in terms of solar energy potential. Solar energy experts believe it is one of the best sources of power generation for the Sultanate.

 

“The idea is pretty good to have a regulation like this. Oman is a country with a huge amount of sunlight every year. It is only practical to have solar energy produce power here,” Swapnil Singhai, After Sales and Marketing Manager at Solar Systems Oman said.

 

“We have been doing a lot of residential projects in the country and we had a lot of queries on rooftop solar panels. This initiative is exactly what we wanted,” Maaz Firdous, a consultant at Al Iskaan Engineering said.

 

Ahmed Al Balushi, a resident, said that this measure is excellent as he plans to build his house next year and will certainly have solar panels for electricity generation.

 

“When a customer generates electricity through a solar energy system and sells excess back to the grid, the excess will be paid to the customers and government will remain indifferent in terms of subsidy. The Customer is being incentivised by the government through a financial transaction that would have been otherwise paid to the conventional power plants and there is no additional subsidy,” Qais Al Zakwani, Executive director and member at the Authority for Electricity regulation explained.

 

A customer who installs a small scale solar energy harnessing system to produce electricity at home can reduce the electricity bill as a certain amount of power will be obtained from this system. Moreover, if the owner has excess power during certain times of the day, he will have the ability of feeding the excess power back to the grid through an agreement with the licensee, which he will be compensated for.

 

“When a customer sells excess units of electricity to the grid he is compensated through a contract with licensed supplier. The tariff in the contract is the same tariff that would be paid to conventional power producers and ranges from 12 to 67bz/kWh depending on the time of the day. This is more than the 10bz/kWh he is charged currently for using electricity. ,” Al Zakwani said.

 

"We highly support renewable energy initiatives in Oman as this provides a sustainable source of energy reducing our dependence on fossil fuels. Moving towards alternative green energy sources will also reduce our impact on climate change," Suaad Al Harthi, Program Director at ESO said.