Oman Power and Water Procurement Company (OPWP) is preparing to launch the commercial operations of the Middle East’s first electricity spot market by the end of 2021.
The development phase of the Market Management System (MMS) required for the electricity spot market has been completed, OPWP said in its annual report.
OPWP, a member of Nama Group, recently announced that it received the Authority for Public Services Regulation’s (APSR) approval for the commencement of market trial phase of the electricity spot market.
The spot market will enable OPWP to purchase the required electricity on a daily basis through the offers received from generation companies. The received offers will determine the daily electricity purchase prices for every half an hour based on the energy offered for trading in the market.
The sultanate’s electricity spot market will operate alongside the existing system of long-term power purchase agreements (PPAs) between OPWP and generation companies.
‘OPWP continues to develop the electricity spot market in conjunction with the industry stakeholders. The relevant acceptance testing of the Market Management System (MMS) will be executed and the market trials will be initiated in the third quarter of 2021. The commercial operation is targeted by end-2021,’ OPWP said in its annual report.
The market trials, as per the company, will allow the participants to test IT systems, staff readiness and business processes, and to confirm that they all work together with other participants in the spot market.
OPWP said the market trials are expected to be conducted for a period between four to six months before the commencement of live operations of the spot market.
The launch of the electricity spot market will mark an important milestone for Oman’s electricity sector.
The spot market is expected to provide a competitive environment for trading of energy in order to reduce the cost of electricity procurement and avoid long term PPAs.
According to OPWP, the spot market will provide an opportunity for the electricity generation companies (whose PPAs with OPWP have expired) to compete and exploit their assets. This market will also provide a platform for self-generators with the ability to sell surplus electricity production in the market.
The electricity spot market, OPWP said, will involve all power generation companies in the Main Interconnected System (MIS) network, with the possibility of expanding the scope to include other electricity networks later after the completion of the project to connect the MIS with the network of Dhofar Governorate.
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