Oman is reconsidering using coal for power generation for the second time, having dropped previous plans to use the fuel due to environmental concerns.

According to utility sources in the sultanate, Muscat is carrying out initial inhouse feasibility studies about the possibility of using coal for a major power plant at the town of Duqm as part of efforts to diversify the country’s power generation resources.

The Oman Oil Company (OOC) is reported to be the client for the scheme, and if the inhouse studies are approved, a consultancy contract is expected to be issued to the market. The decision to consider coal marks a u-turn for the sultanate, which originally announced plans to use the fuel for a Duqm generation facility in 2008.

In 2009, an advisory team of Australia’s WorleyParsons, as technical adviser, and KPMG, financial adviser, was selected for a proposed 1,000MW coal-fired independent water and power project (IWPP) at Duqm, and in 2010, in a fuel selection study produced by the UK’s Mott MacDonald for OPWP, coal was ranked as the most economic feedstock after gas. However, the coal-fired option was subsequently dropped due to environmental concerns.

The coastal town of Duqm is not currently connected to the sultanate’s Main Interconnected System (MIS) grid, and only has a population of about 8,000. However, the government is developing a major industrial zone and port at Duqm, which will greatly increase the demand for electricity in the coming years.

Muscat’s decision to reconsider coal follows Dubai’s decision to invite bids for the contract to develop a 1,200MW coal IPP at Hassyan, with bids due in March. While the decision to pursue the coal option in the Gulf has attracted criticism from some quarters due to the carbon emissions produced when used for power generation, the fuel can offer a cheap alternative.

“The price of coal continues to drop. It is cheap and reduces pressure on gas supplies, so from that side it makes sense,” says a regional source at a major European power firm.

While Oman has the capacity to produce more than 10 million tonnes of liquefied natural gas (LNG), rising consumption has resulted in the country, similarly to the UAE, having to import gas from Qatar through the Dolphin Energy gas pipeline.

Muscat is also looking to integrate renewable energy into its power sector in the coming years. In October, Oman’s Rural Affairs Electricity Company (Raeco) announced it was planning to develop a 50MW wind farm, in partnership with Abu Dhabi’s Masdar, in the southern governorate of Dhofar.

In its 2014-20 seven-year report, state utility the Oman Power & Water Procurement Company (OPWP) revealed that it is planning to develop one or more solar plants as IPPs with a capacity of 200MW by 2018.

The planned projects will form part of Oman’s planned generation programme to meet rising peak power demand, which has averaged about 8 per cent in recent years, largely due to population and economic growth.

The majority of the expected demand will be met by gas-fired plants. Much of the planned capacity will come from the planned Sohar 3/Ibri IPP, a planned IPP over two sites which will have a total capacity of between 2,600MW and 2,8500MW. In August 2014, OPWP received prequalification entries from 11 developer groups wishing to bid for the IPP contract.

In the southern area of the country, OPWP is planning to develop the 300-400MW Salalah 2 IPP to supplement the existing 445MW Salalah IWPP, which began commercial operation in May 2012.  The utility received bids from three groups in October, and is still evaluating proposals.

In December, Finland’s Wartsila has been awarded the engineering, procurement and construction (EPC) contract to build the 120MW Musandam independent power project (IPP) in the northern region of the country.

The IPP is being developed by Musandam Power Company, a new entity established by a consortium led by OOC and including South Korea’s LG International Corporation to develop the power plant. The project power company will develop the facility under the supervision of OPWP.

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