7-Year Statement (2014-2020) Page 34 Contingency Reserves Wind project - - - - 50 50 50 PDO Interconnect c 100 100 100 100 100 100 100 Total –Contingency Reserves 100 100 100 100 150 150 150 TOTAL ALL RESOURCES 818 818 818 818 1168 1168 1168 a All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 35°C ambient temperature. b The Salalah 2 IPP is shown at its minimum capacity level of 300 MW, although the project may be contracted in the range of 300 - 400 MW. c Provisional import capability 2.3 ADDITIONAL POWER GENERATION REQUIREMENTS Statutory and Regulatory Requirements Similarly to its role in the MIS, OPWP is required by the Sector Law and its license to ensure the adequacy of generation resources in the Salalah System to meet future power demands. The Sector Law establishes OPWP’s general responsibility to secure sufficient generation resources to meet demand. Although the OPWP license does not stipulate a specific generation security standard for the Salalah System, as it does for the MIS, it requires OPWP to ensure that electricity customers in the Salalah System receive a service generally of equivalent quality to that received by customers in the MIS. This latter requirement implies compliance with the MIS standard of 24 hours LOLH, as a minimum. However, given the more limited level of contingency support available to the Salalah System relative to the MIS, OPWP has in practice applied a more stringent standard, to ensure the required service quality. Future Capacity Requirements OPWP has determined the contracted capacity needed to comply with the security standard in each year during the 2014-2020 period, for each of the three demand scenarios. They are shown in Figure 11. In both the Expected Demand and High Case scenario, additional capacity is required in 2018. The supply deficit is 49 MW under Expected Demand and 157 under the High Case. OPWP plans to add new capacity, the Salalah 2 IPP, in the range of 300 MW to 400 MW to address the projected supply deficits from 2018 to 2020. A plant with capacity in this range is assessed to be the most economical given the Salalah System’s annual load profile and demand uncertainty. The capacity range also enhances competition in procurement, because it allows bidders to consider a range of plant configurations in which multiple major equipment suppliers may effectively participate. The Salalah 2 IPP is expected to provide sufficient capacity to meet demands for the remainder of the forecast period. The next plant addition would likely be required in 2021 or 2022, depending upon demand growth. The High Case scenario also indicates a need for additional capacity in 2017, about 75 MW, but this may be addressed adequately by reserves, or if necessary, supplemented by a modest level of temporary generation. The Low Case suggests a scenario where current contracts may be sufficient until 2019 or 2020, and that the Salalah 2 IPP would be underutilized before then. However, OPWP considers that a deferral of the Salalah 2 IPP would pose a risk of insufficient capacity in the event of a surge in load growth, which can occur even for brief periods with the emergence of large industrial projects.

7 Years Statement 2014-2020 38

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7-Year Statement (2014-2020) Page 34

Contingency Reserves

Wind project - - - - 50 50 50

PDO Interconnectc 100 100 100 100 100 100 100

Total Contingency Reserves 100 100 100 100 150 150 150

TOTAL ALL RESOURCES 818 818 818 818 1168 1168 1168 a All capacities are rated on a net basis (i.e. after allowing for auxiliary consumption inside the plants) at 35C ambient temperature. b The Salalah 2 IPP is shown at its minimum capacity level of 300 MW, although the project may be contracted in the range of 300 - 400 MW. c Provisional import capability

2.3 ADDITIONAL POWER GENERATION REQUIREMENTS

Statutory and Regulatory Requirements

Similarly to its role in the MIS, OPWP is required by the Sector Law and its license to ensure the adequacy of

generation resources in the Salalah System to meet future power demands. The Sector Law establishes

OPWPs general responsibility to secure sufficient generation resources to meet demand. Although the OPWP

license does not stipulate a specific generation security standard for the Salalah System, as it does for the MIS,

it requires OPWP to ensure that electricity customers in the Salalah System receive a service generally of

equivalent quality to that received by customers in the MIS.

This latter requirement implies compliance with the MIS standard of 24 hours LOLH, as a minimum. However,

given the more limited level of contingency support available to the Salalah System relative to the MIS, OPWP

has in practice applied a more stringent standard, to ensure the required service quality.

Future Capacity Requirements

OPWP has determined the contracted capacity needed to comply with the security standard in each year

during the 2014-2020 period, for each of the three demand scenarios. They are shown in Figure 11.

In both the Expected Demand and High Case scenario, additional capacity is required in 2018. The supply

deficit is 49 MW under Expected Demand and 157 under the High Case. OPWP plans to add new capacity, the

Salalah 2 IPP, in the range of 300 MW to 400 MW to address the projected supply deficits from 2018 to 2020.

A plant with capacity in this range is assessed to be the most economical given the Salalah Systems annual

load profile and demand uncertainty. The capacity range also enhances competition in procurement, because

it allows bidders to consider a range of plant configurations in which multiple major equipment suppliers may

effectively participate.

The Salalah 2 IPP is expected to provide sufficient capacity to meet demands for the remainder of the forecast

period. The next plant addition would likely be required in 2021 or 2022, depending upon demand growth.

The High Case scenario also indicates a need for additional capacity in 2017, about 75 MW, but this may be

addressed adequately by reserves, or if necessary, supplemented by a modest level of temporary generation.

The Low Case suggests a scenario where current contracts may be sufficient until 2019 or 2020, and that the

Salalah 2 IPP would be underutilized before then. However, OPWP considers that a deferral of the Salalah 2 IPP

would pose a risk of insufficient capacity in the event of a surge in load growth, which can occur even for brief

periods with the emergence of large industrial projects.