Greater interconnection in OmanDecember 20, 2018
Ali Nasser Al Hadabi, CEO of Oman Electricity and Transmission Company (OETC), talks to TOGY about measures to increase competitiveness, Oman’s capacity to attract financing for power projects and how OETC ensures quality in subcontracted work. State-held OETC owns and operates Oman’s main transmission network.
• On renewables: “Oman has good potential for renewable energy; however, [studies] highlight that it is effective only in the middle part of the country. Uncertainties in weather conditions pose a major challenge in developing renewable energy because it is intermittent. Sand storms are one of the significant problems the country suffers from; these have a negative impact on the production of electricity from solar energy. These types of obstacles push us to find a balance between different energy feedstock for power generation, and among these are natural gas and renewables.”
• On regional energy trading: “As of now, energy trading is only in place between Oman and the UAE. The Gulf Cooperation Council interconnection Authority (GCCIA) supports us only in the case of an emergency. While no firm capacity transactions are currently in place, OPWP is working with us and Authority for Electricity Regulation and GCCIA to finalise the access conditions that will facilitate trade agreements. Energy trades or firm capacity purchases from neighbouring power systems are important potential contingency resources.”
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What initiatives are you taking to become more competitive and increase efficiency?
OETC has undertaken several major strategic business change initiatives and achieved formal certification such as ISO27001: Information Security Management System, ISO14001: Environmental Management Systems, OHSAS 18001: Health and Safety Management Systems and ISO 55001: Asset Management. ISO certifications for main business processes indicates good operating procedures in place.
OETC risk management processes are aligned with a corporate ISO31000-based risk management framework. Also, we are in the process of implementing an integrated management system (IMS) which will involve the introduction of ISO 9001 and the integration of the existing ISO-compliant management systems.
We are committed to the introduction of modern but proven technology which delivers reduced costs, improved safety or service levels. Currently, we are in the process of implementing major new technological innovations such as wide area monitoring (wam), intelligent metering and protection relays, asset condition monitoring including intelligent systems for information processing and predictive maintenance, smart grid technology and an energy management system (EMS) which will have a significant impact on OETC operations.
Also, we are establishing a 400-kV system to be the backbone in the MIS [Main Interconnected System] and extending a 220-kV system so that bulk power can be transmitted at these voltages rather than 132 kV in order to avoid overloads, improve voltages and reduce power losses.
Being a monopoly provider of electricity transmission services in the MIS and Dhofar regions, we do not operate in a competitive environment. However, we are benchmarking our efficiency with international utilities to increase all-round performance throughout OETC operations.
One of our strategic objectives for Y2018-2022 is operational excellence, under which we target being consistently in the high service/low cost quadrant as per ITOMS assessment frameworks. Also, we are working towards the theme “best in class costs efficiency,” wherein our operating costs are monitored with other similar utilities.
Achieving excellence in our operational and business support process will enable us to manage our asset base efficiently, deliver the necessary network improvements efficiently and provide service levels that meet the demands of our stakeholders.
What specific measures are you taking to develop the national workforce?
One of our objectives is upgrading the skills of the Omani workforce and developing human resources, which we have adapted from the 2020 Vision. Also, we follow the three principles of the national objectives: i.e., additionality, sustainability and responsibility. OETC currently has two programmes [in this regard], namely Naqla and our internship programme.
We have signed an agreement, Naqla, for five years with the Ministry of Education [MOE] to train school students who are in Grade 10/11. A batch of students will be nominated by the MOE during their summer vacation and will be visiting our premises. We are grouping the students into small groups and they will be [matched] with dedicated staff who will train and educate them on our business operations.
The students will be covering all our business activities on a rotational basis. One day is allotted for them to visit our grid stations, where they will come to know about transmission equipment. At the end of their training, the groups were asked to present what they learned and to our surprise, they exceeded our expectations.
Our internship programme is for college students who are in their fourth or fifth year, who will be trained on our business activities. The trainees are [matched] with staff and they will be made familiar with our activities. At the end of their training, they are assessed by the trainers. Also, OETC supports college students in their projects when they come up with new initiatives or models.
In addition, OETC is aligned to the National Objectives as described in the Oman Authority for Partnership for Development (OAPFD) Regulation, wherein OETC emphasises its contractor as applicable to sign PFD agreements with them.
How capable are the subcontractors in Oman’s power sector?
We have a good list of main contractors and subcontractors and they are performing very well. However, the main contractors are facing problems in getting the resources they need. So they are forced to engage more subcontractors and some of them are not delivering to the expected level of quality.
So, we started focusing on this area and wanted to reduce dependency on those subcontractors. By doing so, the requirements shall guide them to improve their capability and competency. Also, we are in the process of developing a criteria set for subcontractors’ qualification. They will need to go through the qualification process and if they are found satisfactory, they can work with us. Otherwise, we advise them to strengthen their weak areas about which we are concerned.
Given your previous experience with financing, what do you think of Oman’s capacity to find financing for the development of power projects?
When we went for Tranche 2, investors from the US were ready to invest in our country. Regardless of the economic situation in Oman, the sector is heavily regulated and transparent. Therefore, investors are willing to put capital into the system.
During Tranche 1 and Tranche 2, we have asked for USD 1 billion and USD 500,000, respectively. In both the cases, our requests were overpriced by six to seven times the amount sought. Besides this, the banks within Oman are ready to support the power sector with loans and to facilitate financing from abroad.
What training initiatives do you have for the development of the workforce?
Our human resources are our most critical asset. Through their efforts we achieve our objectives, fulfil our mission, deliver our vision and meet the expectations of our stakeholders.
Our strategic objective is to achieve PCMM [People Capability Maturity Model] Level 3 status and its implementation is in progress with the foundation project HIMAM, wherein all staff have individual development plans (IDPs). This plan consists of three levels: 70% is on-the-job training; 20% is coaching and mentoring; and the remaining 10% is through external training.
Our KPIs [key performance indicators] on human resources are improving staff competency by closing the gaps as identified in their individual development plan. We have an agreement with NICD [Nama Institute for Competency Development] to do the training for our staff.
In addition to this structure of training plan, we nominate our staff to attend regional and international conferences such as CIGRE/GCC and encourage them to participate and present technical papers in the symposia. Also, we have a merit plan for staff: Those who are qualified and selected by a committee can join a local or international university to enhance their academic credentials related to our business activities.
Operational staff are being provided with technical training by consultants locally here from conceptual design until commissioning. Manufacturers provide operational and maintenance training. Also, our staff are trained at manufacturers’ [sites] from equipment design until completion.
Another initiative that we are currently looking into is developing internal trainers for our staff. We are trying to improve on-the-job training because we believe experience is the most important form of training. We have achieved a very important milestone of standardising technical specifications, standard operating procedures (SOPs) and policies, wherein as all staff can read and understand them clearly the time required for execution is reduced.
As all our system operation works are performed through SOP/method statements wherein each activity needs to be assessed for its risk, we are providing them the risk and HSE training deemed appropriate.
What obstacles do you see to developing renewable energy for power generation in Oman?
Oman has good potential for renewable energy; however, [studies] highlight that it is effective only in the middle part of the country. Uncertainties in weather conditions pose a major challenge in developing renewable energy because it is intermittent. Sand storms are one of the significant problems the country suffers from; these have a negative impact on the production of electricity from solar energy.
These types of obstacles push us to find a balance between different energy feedstock for power generation, and among these are natural gas and renewables.
What challenges and solutions do you foresee with the planned decommissioning of power plants in some areas of the country?
Two power plants (Al Ghubra Power & Desalination Company [GPDCO] and Wadi Al Jizzi Power Company), which are subsidiaries of NAMA Holding, are in the process of decommissioning.
It is a challenge for us as these open-cycle power plants were providing reactive power to the system, and once they are phased out there will be a lack of reactive power in the capital area. One of our vital plans for the future is to reinforce the network in Muscat or to introduce new technology to provide reactive power.
Also, these two power plants comprise small-generation open-cycle units, wherein our dispatch section could manage the spinning reserve (SR) on the network to its optimum level. Improvements in the management of SR significantly contributed to a more than 8% reduction in specific gas consumption. However, with its absence, it would be difficult for us to maintain the SR at the optimum level.
OPWP [Oman Power and Water Procurement Company] has planned to construct a new open-cycle power plant in Muscat. Open-cycle generation units are not as efficient as the combined cycle, but they help during peak load periods where start-up and the machine switchover can happen within a short duration of time. In the absence of open cycle, we need to run big combined-cycle units which requires a longer time to heat up, plus the maintenance is significant in addition to the spinning reserve impacts.
Also, improvement in fuel consumption per MWh is one of our KPIs, wherein we [have targeted] 1% increase on a year-on-year basis (2018/2017). However, this would be difficult in the coming years with large-generation combined-cycle units.
What types of initiatives are being pursued to promote further market integration on a regional level?
The sultanate’s northern power grid – the Main Interconnected System – is connected with the power system of the neighbouring emirate of Abu Dhabi via a 220-kV link at Mahadha. This key link provides access to the power system of the five other GCC member states. Overseeing the interconnection between the member states is the GCC Interconnection Authority (GCCIA), of which Oman is a member.
As of now, energy trading is only in place between Oman and the UAE. The GCCIA supports us only in the case of an emergency. While no firm capacity transactions are currently in place, OPWP is working with us and Authority for Electricity Regulation and Gulf Cooperation Council interconnection Authority (GCCIA) to finalise the access conditions that will facilitate trade agreements. Energy trades or firm capacity purchases from neighbouring power systems are important potential contingency resources.
In addition to the above, locally here we are working together with OPWP and PDO and have undertaken a feasibility study to explore a prospective 400-kV interconnection for MIS-Duqm-PDO-Dhofar power system. The expected benefits include fuel savings due to improved dispatch co-ordination [among] the power systems, access to areas with renewable energy potential, sharing of the spinning reserve and improved grid security.
What implications does the phasing in of renewable energy have for the country’s power system?
The government’s fuel diversification strategy calls for 10% of power generation to come from renewables (solar and wind) by 2025. Renewable energy do not emit greenhouse gases in electricity generation and is environmentally friendly, and it is good for our country. However, the principal uncertainty in renewable energy is insecurity owing to meteorological conditions, which means supply does not correspond with demand and results in more balancing needs and impacts frequency and voltage control.
Ensuring both secure continuity of supply (reliably meeting peak power demands) and its quality (voltage and frequency control) means that the actual potential for wind and solar input to a system is limited. We should be able to dispatch power on short notice. Frequent cycling of fossil fuel-powered generators can result in increased wear and tear on the units and a decrease in efficiency.
The intermittency of wind and solar generation at capacity factors of around 30% and 20%, respectively, means that integration measures become critical. Beyond that level, storage and demand management are required.
When wind does not blow, back-up capacity such as quick-start gas is needed. When it does blow, and displaces power from other sources, it may reduce the profitability of those sources and may increase delivered prices.
A serious grid integration problem with solar is that cloud cover can reduce output by 70% in the space of one minute. In grid management terms, this is not dispatchable. Therefore, the energy system needs backup capacity from the on-demand sources to bridge these periods.
Also, while renewable energy resources are available in many areas, the best resources are located at a distance from load centres, thus increasing connection costs.
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