Energy Management: The Path to Our Future

AREC JORDAN Dr. Alexandrina Maria PAUCEANU

Energy Management: The Path to Our Future Distinguished

Ministers,

Officials,

Valued

Corporate Partners and All Other Respected Attendees, My warmest greetings to all, I am delighted to be a guest at such an august gathering. There is a quiet revolution going on in Oman, quiet but formidable. As it looks to the remainder of the 21st century and beyond, it is making decisions that will shape the direction of the nation’s growth for generations to come. Currently, most of Oman’s and GCC countries’ current energy needs are met by oil, and as its oil reserves are predicted to have a remaining lifespan of only 40 years, these countries are facing the pivotal question: what will replace this source of energy when it runs out? The immediate response to this question is that policy is clearly becoming increasingly oriented toward issues of energy management and the cultivation of sustainable energy resources. This paradigmatic shift has been driven by a number of factors. In the summers of 2009 and 2010 for example, Oman was stricken by severe power shortages due largely to a rise in demand that exceeded predictions. In 2010 alone, peak power demand rose 46.5% when compared to 2005. Such imposing statistical realities led the country to make the assessment of alternative sources of power a priority. One of Oman’s first public affirmations of the importance of sustainable energy resources to both national interests and global considerations was its endorsement of the Kyoto Protocol. In 2009, this was followed by the establishment of a Designated National Authority (DNA) to encourage and administer the utilisation of renewable energy. 1


Significantly, Oman is the only country in the region with a dedicated Ministry for Environment and Climate Affairs. With a Royal Decree and a vision promulgated under His Majesty Sultan Qaboos bin Said’s “Vision 2020” policy to produce 10 per cent of its total electricity requirement from renewable energy sources by 2020 was seen by all as an unambiguous message of change. All observers agree that Oman has serious intentions to invest heavily in the development of its renewable energy capacity over the coming years. Subsequently the Authority for Electricity Regulation (AER) commissioned a comprehensive study to identify sources of renewable energy in Oman and the potential use of such sources for electricity production. The results pinpointed the need for solar and wind power development. Oman receives extensive daily solar radiation, higher than many other GCC countries, and as such the use of Photovoltaic Energy has great promise. Scientists have determined that the optimum location would be a solar plant situated at Marmul which would produce an estimated 9,000MWh a year at a cost of US $210m. It was concluded that if this form of power replaced the existing diesel and natural gas generators in the outlying regions, this would result in a drop of 11,000 tons of greenhouse gas emissions a year. The second option in solar power development involves the production of electricity by reflective mirrors concentrating sunlight onto a small central area. This light is then converted to heat, which in turn drives a turbine generating power. It has been estimated that this could potentially yield a total power output which is 680 times more than the total electricity supply in Oman in 2007. The ideal is to combine such technology with desalination plants, which could further reduce the fuel consumption required for this process to 5 per cent of what a 2


conventionally powered plant uses. Oman has already made a first step in this regard, and there is such a plant in Salalah, which covers approx. 70% of electricity and water needs in Dhofar Governorate. Finally, even as Oman is an acknowledged world leader in the field of enhanced oil recovery techniques, it is investing heavily in seeking new ways to replace the current gas extraction method by the use of solar technologies. So where are we now? One project is the indicative in this regard. In mid-January 2012, Terra Nex Financial Engineering AG announced that, in collaboration with the German “Middle East Best Select” (MEBS) Group of Funds, it plans to invest US$2 billion in PV solar power in Oman. One project is a US$200 million solar power manufacturing plant designed to manufacture 120MW of solar panels a year and create over 2,000 direct and indirect jobs. Another primary area of investment has been in the harnessing of wind power. In several studies conducted at Thumrait and Qayroon Hyriti, it has been determined that in the foreseeable future this could be a source of upwards of 15% of Oman’s 2010 electricity production. A 2009 in-depth assessment on Masirah Island examined the feasibility of combining wind power with diesel generation to create a hybrid system. It was determined that such a system could be highly valuable in the rural areas and produce cheaper power than the current system. Technological routes for broad- based implementation are at the center of current research. Succinctly, evidence from recent studies has shown that renewable energy, in particular solar and wind energy, has tremendous potential in Oman. Collaborative efforts have made the cornerstone 10% projection of all energy production produced 3


through sustainable resources by 2020, a viable concept. Experts from a wide range of sectors have repeatedly assessed the sustainable energy field as having the potential to become premier growth industries in the Sultanate within the next decade. To come full circle, let us consider where Oman stands in the discourse of all GCC countries on Energy Management  All Gulf countries are as richly endowed with renewable resources as they are with hydrocarbons.  All Gulf countries have rising energy demand: Gulf countries will require 100 GW of additional power over the next 10 years to meet demand.  Electricity produced from renewables means less oil and gas has to be consumed domestically, freeing them for export or preserving them for the future.  Renewable energy offers Gulf countries a proven, homegrown path to reduce CO2 emissions.  Renewable energy power generation is becoming more cost effective: improving technology and growing competition have seen the cost of renewable energy drop dramatically. If you consider these points in light of what has been the focus within this event, it is clear that Oman also is striving toward a leadership role in sustainable energy production. It understands the imperatives for growth – higher energy demands, limited oil resources, the prospects of cost savings, the damage of CO2 emissions for a people, for a country and more. There is an Omani proverb, “build with silver and cover with gold.” In consideration of all that has been done and all that will be done, there is an imposing new edifice here of ideas and of 4


vision and now it should be enhanced by its own golden cover provided by keen investors with foresight and a vision of their own. Green investment is intelligent investment. According to UNEP's 9th "Global Trends in Renewable Energy Investment 2015,” the past year brought a rebound of green energy investments worldwide with a surge of a solid 17% to $270 Billion. These profitable investments centered on solar and wind energy. Indeed according to one international financial maven, such investments are, “the single most actionable thing we can do with capital today to address both the desire for stable returns as well as the need for low-carbon energy.” The newest development has been the upsurge demand for green Sukuk which is spreading through the Gulf region. Just recently The Climate Bonds Initiative, the Clean Energy Business Council (CEBC) of the Middle East and North Africa, and the Gulf Bond and Sukuk Association launched a Green Sukuk Working Group to identify green energy projects that fall under Shari'ah - suitable categories for potential investors. This is the very epicenter of both energy transformation and impressive capital growth in the Islamic world today. Finally, I would now ask you join this world-changing revolutionary movement -- to partner with the Sultanate in its efforts to stride forward as a visionary and a role model for global political and corporate decision makers, and invest in sustainable energy. It is the wave of the future, it is a wise business choice, it is a statement of investment in the actions of a forward thinking nation, and it is truly an idea whose time has come. Thank you!

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