Study on Renewable Energy Resources, Oman - authority for ...

Renewable Energy Resources in Oman
Our analysis indicates
that the cost of electricity generation using fossil fuel
technology, at present
fuel prices, is lower than the cost of electricity
produced
using renewable energy technologies. There are however
several factors that
might reduce the observed differences in fossil fuel and renewable energy costs:
• increases in the cost of fossil fuels;
• reductions in the capital cost of renewable technologies resulting from
more widespread application (economics of sale)
and advances in techni-
cal progress (noting that technical progress might also reduce the cost of
fossil fuel technology); and
• adjusting the cost of fossil fuel generation to reflect the 'environmental
damage' of emissions (these costs could be directly ascribed as a benefit
to renewable energy technologies).
Fig 2.2 presents differentials in the cost natural gas and renewable (wind, solar
thermal and solar PV)
based electricity production at a range of gas prices.
Fig. 2.2 Differences in
gas costs and solar & wind energy production costs
At the present gas price in Oman
of 1.5 USD/MMBtu electricity produced using
renewablee resources is considerably more costly than gas based electricity, Solar
PV and Solar Thermal is significantly more costly.
At a gas price of 6 USD/MMBtu the cost of electricity from wind turbines is
marginally
lower than
that of electricity generated using
natural gas. If we as-
sume the opportunity cost of natural gas is 3.0 USD/MMBtu and add a depletion
premium of 3% p.a., the cost of
electricity produced by wind turbines and gas
plant is broadly similar.
The cost of electricity producedd using solar energy resources is
higher than gas based
electricity at all gas prices.
significantly
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