Imperial College London
Faculty of Natural science
Centre for Environmental Policy
A study of the challenges and opportunities to adopting renewable energy in Oman
By
Aaisha Al-Sarihi
Supervisor: Dr Judith A. Cherni
A thesis submitted for the degree of Doctor of Philosophy and Diploma of the Imperial College (DIC), in the Centre for Environmental Policy
2018
1 Declaration of Own work
I, Aisha Al-Sarihi, declare that this thesis
A study of the challenges and opportunities to adopting renewable energy in Oman
is entirely my own work and that where any material could be constructed as the work of others, it is fully cited and referenced and/or with appropriate acknowledgement given.
Signature:
Name of student: Aaisha Al-Sarihi
Name of supervisor: Dr Judith A. Cherni
2 Copyright Declaration
‘The copyright of this thesis rests with the author and is made available under a Creative Commons Attribution Non-Commercial No Derivatives licence. Researchers are free to copy, distribute or transmit the thesis on the condition that they attribute it, that they do not use it for commercial purposes and that they do not alter, transform or build upon it. For any reuse or redistribution, researchers must make clear to others the licence terms of this work’
3 Acknowledgements
First and foremost, thanks to almighty Allah for giving me wisdom, strength, good health, perseverance and patience to complete the PhD.
Thanks to Dr Judith A. Cherni for supervising this PhD. The structure of this thesis would not be the same without her continuous feedback and comments. Thanks for all the intellectual criticism, guidance and support in times of PhD blues.
The Omani Ministry of Higher Education is acknowledged for the fully funded scholarship to undertake this PhD research. Acknowledgement and gratitude are due to all the interviewees who spared time in their busy schedule to take part in the research interviews.
I owe gratitude for my PhD fellows at the Centre for Environmental Policy. Thanks to Hafiz Bello and Rambrandt Koppelaar for their intellectual support and for being willing to discuss my work on different occasions. Thanks are due to Nick Hughes for sparing the time to discuss the first paper I drafted out of my PhD thesis. Susanne Raum, Lee Pearson and Geraldine Brennan, my senior PhD fellows, thanks for the positive and motivational words.
A loving-thank you to my parents, and siblings. Special thanks go to Omar. The interviews would not be possible without your help during the fieldwork. Thanks Ahmed for always believing in me. Ahoud, thanks for sparing me the time in your busy schedule to either hosting or visiting me.
Last but not the least, I would like to thank the team, at the Middle East Centre of the London School of Economics and Political Science, who hosted me to research the Challenge of Climate Change Policy in the GCC. Thank you so much for being very supportive during the final months of writing-up my PhD thesis.
4 Abstract
Despite its hydrocarbon-wealth, holding nearly 30% of proven world crude oil and around a fifth of global natural gas resources, the members of Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE – are faced by unprecedented challenges including vulnerability to oil price shocks, energy security, and high per capita carbon emissions. Whereas new energy technologies such as solar and wind could represent an opportunity for the region to tackle such challenges, there remain numerous difficulties and barriers that have impeded such development. Nonetheless, there have been few initiatives to develop renewable energy (RE) particularly in Oman. Yet, investors, researchers and government have paid insufficient attention to the investigation and development of RE sources that could be fit for the needs of this country. The current study assesses the degree of success of those few initiatives, and explores the extent to which social, political and economic factors have contributed to such delay in adopting RE.
A closer look at the various levels of interaction between RE initiatives and their surrounding environment has been achieved through the analysis of primary and secondary, quantitative and qualitative data and semi-structured interviews. These data have been discussed and interpreted using strategic niche management, multi- level perspective and rentier state theory approaches. Rentier state theory proved particularly useful to uncover interactions between RE initiatives and their political and economic contexts. An exhaustive analysis of the drivers, barriers and policy related to the uptake of RE in Oman has moreover been obtained by applying grounded theory to the data gathered through semi-structured interviews.
Oman’s political trajectory has been dominated by high hydrocarbons subsidies, a fragmented energy policy, absence of RE regulatory framework, informal institutions and excessively centralised top-down decision-making system with vested interest in hydrocarbons persisted in power. The current study points at the importance of employing multiple approaches to understand previous and current economic and policy trends as well as inform future policy formation and action. Integration of those various levels of analysis shed new light on the technical, social, political and economic factors that influence the uptake of RE in Oman.
5 Table of Contents
Declaration of Own work ...... 2 Copyright Declaration ...... 3 Acknowledgements ...... 4 Abstract ...... 5 Table of Contents ...... 6 List of Figures ...... 9 List of Tables ...... 11 Abbreviations ...... 12 CHAPTER 1 Introduction ...... 14 1.1 Introduction ...... 14 1.2 Motivation ...... 14 1.3 Aim and objectives ...... 19 1.4 Thesis contents ...... 20 CHAPTER 2 Understanding the adoption of renewable energy technologies (RETs) ...... 23 2.1 Introduction ...... 23 2.2 Linear approaches to new technology adoption ...... 25 2.2.1 A focus on technological improvement ...... 26 2.2.2 Interaction between technology and society ...... 30 2.2.3 Socio-technical transitions ...... 32 2.3 System thinking to approach RETs ...... 35 2.3.1 Transition management approach (TM) ...... 36 2.3.2 Strategic niche management approach (SNM) ...... 39 2.4 System innovation frameworks to address interactions: technology, society and policy ...... 48 2.4.1 Technological innovation system approach (TIS) ...... 49 2.4.2 Advantages and limitations of TIS ...... 55 2.4.3 Systemic multi-level perspective approach (MLP) ...... 57 2.4.4 Dimensions of the MLP approach: niche, regime and landscape ...... 59 2.4.5 Advantages and limitations of the MLP framework ...... 64 2.4.6 Rentier state theory to address the political economy gap...... 67 2.4.7 Rentier strategies and actors ...... 68 2.5 Thesis approach ...... 70 2.5.1 Socio-techno-economic-political framework (STEP) to analyse RETs adoption in hydrocarbon-rich states ...... 71 2.5.2 The need for country-specific data ...... 76 2.6 Conclusions ...... 77 CHAPTER 3 Research Methodology ...... 79 3.1 Introduction ...... 79 3.2 The selection of Oman as a case study...... 80
6 3.2.1 RE project cases and renewables-related research in the case study ...... 83 3.3 Literature review ...... 84 3.4 Primary data collection – Interviewing ...... 86 3.4.1 Unstructured Interviews (Group I): Exploratory research ...... 88 3.4.2 Semi-structured interviews (Group II): RE projects...... 89 3.4.3 Semi-structured interviews (Group III): Energy experts ...... 92 3.5 Secondary literature – Systematic review and political strategies ...... 95 3.5.1 Systematic literature review: Oman only ...... 96 3.5.2 Secondary literature on political strategies ...... 97 3.6 Analysis of primary data – Interviews ...... 98 3.6.1 Analysis of semi-structured interviews (group II): Grounded theory...... 99 3.6.2 Analysis of semi-structured interviews (group III): Grounded theory ...... 100 3.7 Analysis of secondary data ...... 102 3.7.1 Quantitative analysis of systematic review of publications on RE implementation in Oman ...... 102 3.7.2 Analysis of secondary data on political strategies - Process-tracing method...... 103 3.8 Thesis approach, integrated analysis of primary and secondary data...... 104 3.9 Conclusions ...... 107 CHAPTER 4 Oman: hydrocarbons and renewable energy ...... 109 4.1 Introduction ...... 109 4.2 Oman’s historic dependence on hydrocarbons ...... 110 4.2.1 The discovery of oil and gas and the shaping of Oman’s economy ...... 110 4.2.2 Hydrocarbons influence on Oman’s electric power system (1970s–2014) ...... 113 4.3 Oman’s energy policy and hydrocarbon path-dependency ...... 118 4.3.1 Predominance of state-owned enterprises ...... 118 4.3.2 Provision of hydrocarbon subsidies ...... 122 4.3.3 Government monopoly in the energy sector...... 126 4.4 Energy challenges in Oman ...... 128 4.4.1 Oil and gas reserves and price shocks ...... 129 4.4.2 Increasing domestic energy demands ...... 131 4.4.3 Environmental impacts of the rise of hydrocarbons use ...... 135 4.5 The rise of renewable energy in Oman ...... 138 4.5.1 First governmental study on RE resources ...... 139 4.5.2 Regulation of RE in Oman ...... 145 4.5.3 Nascent regulatory framework for RE in Oman ...... 148 4.6 Conclusions ...... 150 CHAPTER 5 Assessment of renewable energy (RE) projects in Oman ...... 153 5.1 Introduction ...... 153 5.2 RE projects (1995-2015) ...... 154 5.2.1 Governmental, national oil company, private and academic projects ...... 155 5.3 Changes in academic interest towards RE...... 159 5.3.1 A focus on techno-economic aspects ...... 161 5.3.2 A shift towards policy aspects ...... 164 5.4 Similarities and differences between RE projects ...... 168 5.4.1 Motivations shaping the five RE initiatives ...... 168 5.4.2 Technical, economic, social and policy challenges ...... 172 5.5 Conclusions ...... 177 CHAPTER 6 Drivers, barriers and policy options for adopting RE in Oman’s energy regime ...... 180 6.1 Introduction ...... 180
7 6.2 Drivers for RE deployment in Oman ...... 181 6.3 Barriers to RE uptake in Oman’s energy regime...... 183 6.3.1 Institutional barriers ...... 184 6.3.2 Market barriers ...... 189 6.3.3 Technical barriers ...... 192 6.3.4 Cultural barriers ...... 194 6.4 Opportunities for RE adoption in Oman ...... 196 6.4.1 Significance of RE barriers ...... 197 6.4.2 Policy options to overcome barriers: demand side...... 198 6.4.3 Policy options to overcome barriers: supply side ...... 201 6.5 Conclusion ...... 204 Chapter 7 The paradox of RE development in Oman...... 206 7.1 Introduction ...... 206 7.2 RE projects and socio-technical regime: limited role to drive the transition ...... 208 7.2.1 Divergence of visions ...... 212 7.2.2 A focus on technical and economic learning processes ...... 213 7.2.3 Evolving but immature network of actors ...... 215 7.3 Economic-political strategies and RE projects ...... 221 7.3.1 Material strategies: influencing public debate through media framing...... 223 7.3.2 Defensive strategies ...... 224 7.3.3 Strategic use of institutional resources: prioritisation of hydrocarbon-based technologies ...... 227 7.4 Success and failure of RE projects: explaining the paradox...... 228 7.4.1 Interplay between RE projects and national energy regime ...... 229 7.4.2 Heterogeneity of RE projects ...... 232 7.5 Conclusions ...... 234 CHAPTER 8 Conclusions ...... 237 8.1 Introduction ...... 237 8.2 Concluding remarks ...... 237 8.2.1 Uncoordinated technological niches ...... 238 8.2.2 Persistence of structural constrains ...... 240 8.2.3 National economic and political constrains ...... 242 8.3 Thesis contributions...... 243 8.4 Thesis limitations and future work ...... 249 8.5 Policy recommendations ...... 252 8.5.1 Strengthen the role of RE projects ...... 253 8.5.2 Systematic consideration of RE barriers ...... 255 8.5.3 Involving different actors in decision-making process ...... 257 8.6 Conclusions ...... 258 References ...... 260 Appendix A. Interview questions...... 275 Appendix B: Publications, conference proceedings and selected talks during the PhD ...... 281
8 List of Figures
Figure 2.1 Technology Life Cycle: S-Curve...... 27 Figure 2.2 Four phases of transition ...... 38 Figure 2.3 Multiple levels as nested hierarchy...... 59 Figure 2.4 The dynamic of socio-technical change in the multi-level perspective approach...... 64 Figure 3.1 Location of Oman in the GCC region. Map shows Yearly Global Horizontal Irradiation for the year 2005 in kWh/m2...... 82 Table 4.1. Oil and gas production in Oman 1980–2013...... 112 Figure 4.2 Share of economic sectors in Oman’s GDP in 2011 and 2014...... 113 Figure 4.3 Overview of principal regulated transactions in Oman’s electricity market...... 117 Figure 4.4 Average electricity price in the GCC, USA, UK and Australia in 2015...... 123 Figure 4.5 Gulf States GDP and oil prices...... 131 Figure 4.6 Changes in natural gas consumption by sector in Oman in 2000 and 2014...... 132 Figure 4.7 Trends in electricity consumption per sector in Oman, 1995–2011...... 133 Figure 4.8 Energy-mix for power generation in Oman in 2011,...... 134 Figure 4.9 Worldwide countries with highest per capita carbon emissions (GCC States are highlighted in red)...... 136 Figure 4.10 Historical overview of total CO2 (including Land-Use Change and Forestry) (MtCO₂) in Oman (1990 – 2014)...... 137 Figure 4.11 GHG Emissions by Sector - Oman – 2014...... 138 Figure 4.12 Annual average solar insolation (kWh/m2 per day) for the six weather stations in Oman (1987–1991)...... 140 Figure 4.13 Annual mean wind speed at 10 m and 80 m above ground level for 2005– 2006 at five meteorological stations in Oman...... 142 Figure 5.1 Evolution of scientific publications in renewable energy and pilot projects between 1995 and 2015...... 160 Figure 5.2 Number of publications with a focus on renewbale energy policy and number of ’policy’ mentions per year between 1995 and 2015...... 165 Figure 6.1 Drivers for renewable energy uptake in Oman as reported by 12 interviewees (Group III, 2014)...... 182 Figure 6.2 Institutional barriers to deployment of renewable energy in Oman. Source: Survey (Group III, 2014)...... 188 Figure 6.3 Market factors that impede introduction of renewable energy technologies in Oman. Source: Survey (Group III, 2014)...... 192 Figure 6.4 Technical barriers to renewable energy development in Oman. Source: Survey (Group III, 2014)...... 194 Figure 6.5 Cultural barriers for wide-scale development of renewable energy in Oman. Source: Survey (Group III, 2014) ...... 196 Figure 6.6 Ranking of barriers: hydrocarbons subsidies, lack of policy framework, RETs cost, institutional structure, readiness of national grid, as reported from interviewed stakeholders, (Group III, 2014) ...... 198
9 Figure 7.1 Interaction between RE projects, Oman's socio-technial regime and economic-political regime, and the resulting heterogeneity between RE projects...... 234
10 List of Tables
Table 2.1 STEP analytical framework: key theoretical concepts, authors, relevant dimensions/indicators, advantages and limitations...... 75 Table 3.1 Interviews with energy experts by sector, Oman, 2012-2014...... 87 Table 3.2 Exploratory interviews conducted in Oman (Group I), February 2012 and May 2013 ...... 89 Table 3.3 Interviewees (Group II) representing five selected renewable energy projects in Oman, February – March 2014...... 91 Table 3.4 Details of energy experts who were interviewed between February and March 2014, Group III, Oman...... 94 Table 3.5 STEP analytical framework, relevant dimensions, guiding questions, and data sources and analysis methods...... 106 Table 4.1 Estimated costs of RE technologies compared to natural gas power generation-based technologies in the GCC (2014)...... 125 Table 5.1. Renewable energy developments in Oman (author’s aggregation), 1995- 2015...... 158 Table 5.2 Techno-economic, social and political challenges faced by five RE initiatives in Oman. Source: Survey (Group 1), 2014...... 176 Table 7.1 Relating the concepts and approaches, their analytical dimensions and guiding questions for the study of renewable energy in Oman to the sources of information using the STEP framework, 2016...... 211 Table 7.2 Key findings of the study of challenges and opportunities to adopt renewable energy in Oman using the STEP framework, 2016...... 230
11 Abbreviations
AER Authority for Electricity Regulation AFED Arab Forum for Environment and Development AT Alternative Technology BAU business-as-usual CCGT Closed Cycle Gas Turbine CCS carbon capture and storage technologies CDM Clean Development Mechanisms
CO2 Carbon Dioxide CPV concentrator photovoltaic CSP Concentrated Solar Power DNA Designed National Authority DNI Direct Normal Irradiance EOR Enhanced Oil Recovery FF Fossil fuels GCC Gulf Cooperation Council GDP Gross Domestic Products GHG Greenhouse Gas Emissions GT Grounded theory GWh Gigawatt-hours IPCC Intergovernmental Panel on Climate Change IPP Independent Power Project ISCC integrated solar combined cycle kW kilowatt LCOE Levelised Cost of Energy LNG Liquefied Natural Gas m meter MECA Ministry of Environment and Climate Affairs MENA Middle East and North Africa MIS Main Interconnected System MLP Multi-level perspective mmBTU one million British Thermal Units MSCF Million Standard Cubic Feet NCSI National Centre for Statistics and Information OCGT Open Cycle Gas Turbine OECD Organisation for Economic Co-operation and Development OPWP Oman Power and Water Procurement Company OR Omani Rial PDO Petroleum Development Oman
12 PPA Power Purchase Agreement PV Photovoltaics R/P Reserve to production R&D Research and Development RAECO Rural Areas Electricity Company RE Renewable Energy RETs Renewable Energy Technologies RST Rentier state theory SNM strategic niche management TIS Technological Innovation System TM Transition management TRC The Research Council WCED World Commission of Environment and Development y year
13 CHAPTER 1 Introduction
1.1 Introduction
Renewable energy technologies applied to hydrocarbon-rich countries offers an opportunity to tackle challenges such as energy security, carbon emissions and meeting the goals set by the Paris Climate Accord. Yet, hydrocarbon abundance has been a factor in restricting the attention of investors, researchers and governments to develop alternative energy sources particularly renewable technologies such as solar and wind.
Despite the abundance of natural resources, the Gulf Cooperation Council (GCC) —
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — have continued to rely on oil and gas to meeting increasing domestic energy demands.
Renewable energy accounted for less than 1% of the total installed power capacity in
2016 (IRENA, 2016). This thesis develops an analytical framework to examine the factors and conditions behind the limited adoption of renewable energy in Oman, which is a member of the GCC.
1.2 Motivation
Global energy supply, dominated by fossil fuels (coal, oil and gas), have contributed significantly to the historic increase in anthropogenic greenhouse gas (GHG) emissions and, thus, the observed increase in global average temperature (IPCC,
14 2013). Global warming, along with energy security, have triggered a search for new ways of producing energy, preferably less pollution-generating options. One promising technology option is renewable energy (RE). RE, if implemented properly, can provide wider economic, environmental and social benefits such as employment, creation of new sources of income, energy supply, and reduction of negative impacts on environment and health (Edenhofer et al., 2012). Yet, RE did not account for more than 13.4% of the World Total Primary Energy Supply in 2015, but since 1990, nonetheless, the energy supply from RE sources has grown at an average annual rate of 2.0% (IEA, 2016). This constant growth seems to indicate that the real issue is no longer the generation potential of RE technologies but how this potential can be realised and substantially contribute to a transformation of the energy sector. To go beyond the current share of 13.4% of the World Total Primary Energy Supply in
2015, this thesis addresses a range of challenges to RE technology diffusion particularly in the oil-rich GCC states, which are conflicted between the promotion of economic targets and RE.
At the end of 2017, the GCC states posed nearly 30% of the proven world crude oil and nearly 22% of global natural gas reserves (BP, 2018). Oil and gas remain the most important fuel in the GCC energy sector, accounting for nearly 99% of the total energy-mix. During the 2000s, regional energy consumption grew at an average of
5% per annum, faster than India, China and Brazil (IRENA, 2016). To meet increasing demands for energy, GCC countries have imported almost 10% of their natural gas needs since 2013 (El-Katiri, 2013). Due to heavy reliance on hydrocarbons, the GCC per capita emissions of CO2 were the world highest in 2014 (World Resource
15 Institute, 2014). Oman, for example, was ranked 13th globally in terms of per capita
CO2 emissions (World Bank, 2013b). Despite the abundance of renewable energy resources (Jalilvand, 2012; Knies, 2008), the total installed capacity of RE in 2016 did not exceed 1% of the total installed power capacity in the GCC (IRENA, 2016). This
1% has been largely aimed at research and administration applications and started as early as 1980s. Examples of these applications include Solar Village in Saudi
Arabia, Masdar City in Abu Dhabi, Mohammed bin Rashid Solar Park in Dubai, Kuwait
Institute for Scientific Research’s renewable energy pilot projects and the pilot 7 MW solar thermal Enhanced Oil Recovery plant in Oman (Alnaser & Alnaser, 2011).
Over the last three decades, academics, practitioners, policy-makers and investors, have been devoted to addressing the technical and economic challenges associated with renewable energy technologies adoption in the GCC. Attention towards other challenges such as policy, regulatory and legal frameworks for renewables of RETs adoption in the GCC has been paid only over the last decade (see for example
Masdar, 2011; Ferroukhi et al., 2013; El-Katiri & Husain, 2014; Abdmouleh, Alammari
& Gastli, 2015; IRENA, 2016; Lilliestam & Patt, 2015; Bachellerie, 2012; and El-Katiri,
2014). This thesis conducts an analysis of ongoing RE developments and their surrounding environment to identify the factors that held back the adoption of renewable energy technologies in Oman, which is a member of the GCC. This thesis assesses: (a) the characteristics of renewable energy projects in order to identify the technical, economic, social and political challenges that face their development, (b) the internal social factors, such as actors’ networks, learning processes and visions, that lead to the success or failure of such projects and, (c) how project
16 implementation is influenced by other factors, such as technical, economic, market, policy and cultural, existing in the national energy regime with which such projects interact.
Available research methods have addressed the challenges towards renewable energy technology adoption from various perspectives. For instance, it has been proposed that the process of technological uptake and adoption involves three stages: invention, innovation and diffusion (Schumpeter, 1934), in which the uptake of technology is influenced by technological improvements and cost reductions.
While advances in knowledge and technology is important for their diffusion, this approach sets the standards high for the developing countries, which in most cases are extensively reliant on foreign technologies (Crespi & Zuniga, 2012), such as the
GCC states (Alfahhad, 2013). This three stages approach, however, neglects the importance of other factors that influence the diffusion of technologies, such as social, institutional and political factors. In recognition of mutual interdependence between technology and society, attempts have been made to capture RE technological uptake from a system perspective. These include strategic niche management (SNM) (Kemp, Schot & Hoogma, 1998a; Raven & Geels, 2010), in which
‘niches’ act as an application domain for new technologies (Hoogma, 2002), where actors are predicted to aggregate learning from local projects and disseminate best practices for broader societal changes (Seyfang et al., 2014).
While ‘niches’ is a relevant notion for the representation of ongoing RE developments in the GCC, SNM does not address the interaction between the new
17 technology application domain and factors existing in the surrounding environment such as technical, market, economic and political factors. A relevant approach that represent such interaction is the multi-level perspective approach (MLP). It places stronger emphasis on the importance of the interplay between niches and two other analytical levels – socio-technical regimes, and landscape (which represents the influence of external factors that affect societal change, such as oil price shocks and climate change ) – in order to promote a successful uptake of new technologies
(Geels, 2002c). These perspectives, however, are limited because they have been applied largely in developed countries (Geels, 2011, 2014), with only a few examples from developing countries (Ulsrud et al., 2011; Laak, Raven & Verbong, 2007;
Berkhout et al., 2010), and they are hardly applied to oil-exporting countries
(Rosenbloom & Meadowcroft, 2014; Moe, 2015), whose state structures rely heavily on oil and gas export revenues. In particular, SNM and MLP approaches pay insufficient attention to the role of ‘power’ and ‘politics’ to influence the uptake of alternative energy technologies.
This thesis develops and applies the multi-faceted framework, which takes into account social and political dimensions along with techno-economic dimensions and possible interactions between them, to the case of Oman which is a middle income and an oil-exporting country. Further, Oman is part of the GCC and is broadly similar to the other GCC states in terms of economic and political structures, allowing the possibility to extend the generalisability of the case study observations to some extent. Given the arising energy challenges, including increasing domestic energy demands, high per capita carbon emissions and limited oil and gas reserves
18 compared to other GCC states, the provision of additional energy such as renewables becomes ever more important for Oman. Lastly, although the interest to develop renewable energy in Oman goes back to 1990s, renewable energy total installed capacity is less than 1% of the total installed power capacity (Author’s calculations).
1.3 Aim and objectives
This thesis aims to investigate technical, economic, social and political factors and conditions that have held Oman, a particularly hydrocarbon rich country, back from adopting and promoting modern, renewable energy technologies in spite of its abundant natural resources, rising per capita carbon emissions, and regional energy security challenges. To address this aim, the objectives of this thesis are:
1. Examine the predominant energy policy practices and trends of RE adoption
in hydrocarbon-rich Oman.
2. Develop a suitable multi-level analytical framework that identifies and
establishes links between social, economic and political factors and RE
technologies in Oman.
3. Undertake a thorough study of existing renewable energy projects in Oman.
4. Identify the major and specific challenges to renewable energy adoption at
Oman’s national energy regime.
5. Draw policy guidelines to accelerate the uptake of renewable energy in
Oman.
19
1.4 Thesis contents
Chapter 1 provides the background to the research problem, articulates the significance of this research and addresses its aim and objectives. It points out for the need of comprehensive approaches to better understand the factors – and their crucial interactions at multi-levels - that influence the adoption of renewable energy technologies in Oman.
Chapter 2 places the research problem in the context of existing literature. It conducts a comparative review of theoretical approaches of socio-technical transition and rentier state theory to inform identifying and establishing links between technical, economic, social and political factors and RE technology, for application to the case study, Oman. It highlights the importance to shift the attention from the focus on techno-economic dimensions to include economic, political and social dimensions to better understand the delay of RE adoption in hydrocarbon-rich states such as Oman. The socio-techno-economic-political framework (STEP), and its usefulness to address the multifaceted challenges of RE adoption, at technological niche, socio-technical regime and political economy, is presented.
Chapter 3 details the research methodology employed. It justifies the selection of both Oman as the case study and the choice of specific pilot RE projects in the same
20 country. It describes the multiple data sources used for this research. It draws on primary and secondary, quantitative and qualitative data. Semi-structured interviews
– with representatives of selected RE projects and energy experts at the national energy regime – are used to generate qualitative data on drivers, barriers and opportunities for RE adoption in Oman. The data analyses methods are presented including grounded theory, the use of strategic niche management (SNM), multi- level perspective (MLP) and rentier state theory (RST) to analyse technological niches, socio-technical regime and political economy aspects offered by the STEP analytical framework presented in Chapter 2.
Chapter 4 draws on existing secondary data sources to analyse the historical and current practices related to energy supply and demand in Oman. It explains how hydrocarbons have played a fundamental role in shaping Oman’s political economy and energy policy. It also discusses the status of renewable energy in Oman over the last two decades.
Chapter 5 draws upon two sources: systematic review of literature focused only on
RE development in Oman -i.e. publications which have addressed the theme of RE in
Oman- and the primary information collected through interviews with stakeholders representing five selected RE projects, i.e. technological niches. The chapter identifies the motivations for establishing RE projects as well as the challenges facing the development of these projects in the context of perpetual official-governmental support for the oil economy.
21 Chapter 6 provides an analysis of particular drivers, barriers and policy options to renewable energy adoption in Oman’s energy regime as these emerged from 12 semi-structured interviews conducted with energy experts from various decision- making sectors, i.e. government, state-owned electricity companies, national oil company, private investors and academics. Country-specific knowledge, on challenges and opportunities for renewable energy adoption in Oman, is revealed.
Chapter 7 establishes interaction between renewable energy projects, i.e. technological niches, and Oman’s energy regime, i.e. socio-technical regime.
Drawing on the socio-techno-economic-political approach (STEP) proposed in
Chapter 2, the extent to which the development of RE projects have put pressure over the national energy regime is analysed using SNM approach. The influence of energy regime on RE projects is then analysed using RST, which is integrated to the
MLP. The chapter then integrates these analyses to generate new insights on the degree of success of renewable energy projects.
Chapter 8 concludes by highlighting the main thesis findings, reveals thesis contribution to the existing knowledge, provides an acknowledgement of its limitations as well as discusses policy implications for RE adoption in Oman.
22 CHAPTER 2 Understanding the adoption of renewable energy technologies (RETs)
2.1 Introduction
In Chapter 1, it was argued that it is worthwhile to conduct an analysis of existing RE projects and their surrounding environment to improve the understanding of factors that held back the adoption of renewable energy technologies in Oman from actual practices. Therefore, this chapter puts the research problem in the context of existing literature by reviewing the approaches used to study social, economic and political conditions that promote or discourage the integration of RE technologies.
Thus, this chapter pursues the second objective of this thesis, which is to develop a suitable multi-level analytical framework that identifies and establishes links between social, economic and political factors and RE technologies in Oman.
A starting point for approaching this research problem was to find an appropriate level of analysis that recognises the adoption of new technologies. In this thesis, two types of literature relating to new technology adoption: linear and system thinking approaches. Linear approaches tend to conceptualises technological diffusion as invention, innovation and diffusion. This conceptualisation, however, sets the standards high for developing countries, which are highly reliant on technology imports rather than in-house technology innovation and research and development
(R&D) advancements. Also, such approaches undermine the importance of other, non-technical factors with which technology interacts. Therefore, system thinking
23 approaches which address the interplay between technology and society to achieve technological diffusion have been reviewed.
Two types of system thinking approaches are reviewed: initiative-based learning approaches (i.e. transition management [TM], strategic niche management [SNM]) and system innovation frameworks (i.e. Technological Innovation System [TIS] approach, multi-level perspective [MLP] approach). Initiative-based learning approaches are concerned with studying (a) the characteristics of renewable energy projects, and (b) the internal factors that lead to the success or failure of such projects. System innovation frameworks are concerned with studying how project implementation is influenced by other factors existing in energy regime with which such projects interact. Although details differ between these approaches, they broadly consider the process of technology adoption not just in terms of development of individual ‘artefacts’ but also as a process of interacting with factors in wider economic, social, cultural and political structures of the energy regime.
In addition, to complement the aforementioned system thinking approaches, the rentier state theory (RST) was reviewed to address the political economy gap, which has been undermined by these approaches. Finally, Grounded theory (GT), although it is not a conceptual framework but a method to analyse data, is alluded to here for its relevance to the generation of country-specific data. The discussion of each approach aims to identify useful concepts, strengths and weaknesses to address the problem examined by this thesis. Consequently, the review of the different literatures acts as the necessary foundation to the proposed analytical framework
24 that is used to assess the factors behind limited adoption of RE technologies in
Oman.
2.2 Linear approaches to new technology adoption
Attempts have been made to investigate how an experimental introduction of new technologies in niche markets can benefit the diffusion of new technologies. This section provides a discussion of the first type of literature related to new technology diffusion: linear approaches.
Technology has been defined as manufactured objects, such as tools and containers, whose purpose is to either enhance human capabilities or enable humans to perform tasks they could not perform otherwise (e.g. with a pot, one can transport larger amounts of water than one can with one’s hands). Engineers call such objects
‘hardware’. Anthropologists speak of ‘artefacts’ (Grübler, 2003). In other words, the study of ‘technology’ is the study of arts and crafts. The English term ‘technology’ is derived from the Greek term technologia, which is a combination of techno, meaning
‘craft’, and logia, literally meaning ‘saying’ but generally interpreted as an
‘understanding of doing something’ (Venuvinod, 2011, 15).
With this understanding, the purpose of technology is to serve human needs and wants by providing corresponding functionalities. These functionalities can concern physical needs – such as water, air, food, clothing, shelter and safety – or human social needs – like business, government, communication, justice and education.
Therefore, earlier attempts to enhance technological diffusion and adoption have focused on the improvement of individual technologies. The following subsection
25 discusses the S-curve model as an example of a linear approach used to enhance technological diffusion.
2.2.1 A focus on technological improvement
In the first half of the twentieth century, the economist Joseph Schumpeter offered the first attempt at analysing the process of technological diffusion and adoption. He identified three stages in the technological diffusion process: invention, innovation and diffusion. Invention represents the first demonstration of an idea, innovation refers to the first commercial application of an invention in the market, and diffusion is the spreading of the technology or process throughout the market (Schumpeter,
1934).
The diffusion process is represented by an S-shaped curve (Figure 2.1), in which the uptake of an innovative process or technology starts slowly with the focus on market positioning, then gathers momentum and achieves rapid diffusion before slowing down as saturation is reached, at which point the focus shifts to incremental improvements and cost reductions (Greenacre, Gross & Speirs, 2012; Schumpeter,
1934).
The S-curve measures the improvement in a product or process against the time or engineering effort invested in the particular technology (Foster, 1986). The S-curve is
26 ‘an inductively derived theory of the potential for technological improvement, which suggests that the magnitude of improvement in the performance of a product or process occurring in a given period of time or resulting from a given amount of engineering effort differs as technology becomes more mature’ (Christensen, 1992, p. 334).
Figure 2.1. Technology Life Cycle: S-Curve. Source: Christensen (1992).
The technological improvement S-curve can be summarised as a three-stage progression involving starting up slowly, gathering momentum and finally diminishing returns (Greenacre, Gross & Speirs, 2012). This progression often is referred to as the ‘linear model of innovation’; the model suggests that advances in scientific understanding determine the rate and direction of innovation. That is, the optimal way to increase the output of new technologies is to increase the input of new innovations by simply putting more resources into R&D (Nemet, 2007).
27 The technological diffusion approaches that follow such a linear progression are useful to the research pursued in this thesis as they provide a high degree of abstraction focusing on the dynamics of technology diffusion. They are limited , however, in their ability to offer a comprehensive theoretical underpinning because they do not address the role of the other factors –social, institutional and political – with which new technology interact.
Earlier discussions emphasised the importance of advances in knowledge via R&D support. In this analysis, the process of technological change was determined by advances in scientific understanding achieved via increased investment in R&D. Yet, for developing countries in particular, it has been widely asserted that technology transfer has a more significant impact than in-house R&D (Bell & Pavitt, 1997; Crespi
& Zuniga, 2012a). Previous research indicates that the introduction of new products and processes to the firm or national market may represent a more significant proportion of innovations in developing countries than it does in developed countries (Casanova & Castellucci, 2011), and that the majority of endogenous R&D focuses on incremental (rather than radical) developments (Furtado, Scandiffio &
Cortez, 2011). In this context, Gerschenkron (1962) explained that ‘latecomer’ countries adopting an already mature technology ‘leapfrog’ the early phases of its development, installing a more sophisticated infrastructure from the outset.
This is especially true in the context of technological adoption in the oil-rich states of the Arab States of the Gulf, which are the focus of this thesis. These countries rely extensively on foreign technologies for economic and industrial development
28 (Alfahhad, 2013). The abundant financial resources raised from oil revenues enable
Gulf States to acquire the latest technologies worldwide. The acquired technologies are concentrated in six major fields: communications, medical services and equipment, petrochemical and chemical industries, military equipment, civil aviation, and water and power stations (Alfahhad, 2013).
RETs are no exception; the Gulf States’ interest in building and developing a technological base started late, featuring limited efforts and a modest pace. The limited technological innovation in the Gulf States is reflected in the limited funding allocated to R&D activities. The 2013 R&D investment in Gulf countries averaged
0.3% of the gross domestic product (GDP), compared with 2%–3% in industrialised countries (United Nations Educational, Scientific and Cultural Organization
[UNESCO], 2013). This figure (0.3%) is far less than the minimum percentage (1%) needed for an effective science and technology base specified by UNESCO (Al-
Roubaie & Al-Zayer, 2006).
Accordingly, many of the challenges that developing countries face during technological diffusion and adoption arise from difficulties in technology transfer.
Significant domestic technology expertise is required to select the most appropriate technologies for adoption, absorb associated explicit and tacit knowledge, and adapt technology to local operational conditions (Office of Technology Assessment, 1984).
Thus, the value of imported technological innovations is dependent on the skills and
29 absorption capacity of domestic actors (Crespi & Zuniga, 2012; Office of Technology
Assessment, 1984).
In Oman and the Gulf States, RETs are not produced locally; at the time of writing, there is no RETs manufacturing industry. Rather, RETs are transferred to these countries through the importation of both the technologies themselves and the
‘know how’ needed to enable adoption of these technologies. Thus, the linear model of technological diffusion discussed previously does not offer a comprehensive theoretical underpinning to the discussion of RE technology uptake in these countries. An alternative framework is needed to address the different factors (other than the degree of scientific input) with which transferred RE technologies interact.
In summary, although linear approaches provide a rationale for particular patterns of technological diffusion, they are limited in their ability to explain the causal mechanisms that underlie such patterns. Hence, to better understand the sources of technological diffusion, the next section will explore in more detail the interaction between technology and society. To do so, the section will provide a definition of
‘technology’ and show how the conceptualization of technology has changed to reflect on the interaction between technology and society.
2.2.2 Interaction between technology and society
30 As previously discussed, technology has been defined as manufactured objects, such as tools and containers, whose purpose is to either enhance human capabilities or enable humans to perform tasks they could not perform otherwise.
However, artefacts must be created before they can be utilized by humans; they must be invented, designed and manufactured. This requires a larger system that includes ‘hardware’ (such as machinery or a manufacturing plant) and ‘software’
(know-how, or human knowledge and skills) (Grübler, 2003). Our understanding of the interactions between technology and its surrounding systems implies a close relationship between technology and society. Advances in technology influence and eventually change society. In other words, as the needs of society change, new needs are created, giving rise to more technology (Venuvinod, 2011).
This relationship between humans and technology was first addressed by Veblen in his Theory of the Leisure Class, published in 1899 (Grübler, 2003). This understanding of technology implies a circular interaction between technology and society. In other words, technology is shaped by society, and society, in turn, is shaped by the technology that is produced and used.
Traditional solutions for improving individual technologies have been insufficient to fulfil societal ambitions such as sustainable development. Current societal problems pose enormous challenges that necessitate deeper changes across the societal system instead of focusing merely on the improvement of individual technology, given the complex interactions between technology and society. For instance, in his
31 textbook The System Approach (1983), Churchman asked why a number of problems to which we believe we have a technical solution nonetheless remain unsolved, including global health and food supply problems, war and peace, and clean water and air. His answer highlights a limited understanding of the interconnectedness among these problems.
Solving societal problems involve changes in a variety of elements, including technology, regulation, user practices and markets, cultural meaning and infrastructure (Elzen et al., 2004; van den Bergh & Bruinsma, 2008). Hughes (1986), for example, stressed that the technical portion cannot be separated from the social portion, suggesting that societal systems are changed by technology, but most importantly, technology itself is shaped by society. Geels (2002) also argued that technological changes involve not only changes in technology but also changes in user practices, regulations, industrial networks, infrastructure and symbolic meaning or culture. System changes that involve interplay between technology and society are called socio-technical transitions, which will be discussed in more detail in the following sub-section.
2.2.3 Socio-technical transitions
Other attempts to capture system transformations from a systematic perspective refer to the concept of transformation as socio-technical transition. Within the socio- technical research, ‘transition’ refers to large-scale transformations within society or important subsystems during which the structure of the societal system is
32 fundamentally changed (Rotmans, Kemp & Van Asselt, 2001). Socio-technical transitions differ from technological transitions in that they include changes in user practices and institutional (e.g. regulatory and cultural) structures, in addition to the technological dimension (Markard, Raven & Truffer, 2012).
Unlike the linear transformation approach, Loorbach (2007) and Rotmans and
Loorbach (2008) defined such transitions in the context of societal systems as, ‘a process of structural change in a societal system from one relatively stable system state to another that is a result of co-evolution of economic, cultural, technological, ecological and institutional, political, networks, and even individual behaviour at different scale’. These structural changes in the system may take a very long time to materialise (e.g. one or two generations).
In the socio-technical context, ‘transitions’ have the following characteristics: they involve developments that take place within different spheres – economic, technological, political, environmental and social – which affect each other; they involve various actors from different groups; they are radical enough in nature to require a shift from one configuration to another; they are inherently complex and uncertain due to the existence of multiple actors and the attendant radical shifts; and this complexity and uncertainty, in turn, make transitions long-term processes
(Rotmans, Kemp & Van Asselt, 2001).
Consequently, a socio-technical transition is a set of processes that leads to a fundamental shift in a socio-technical system (Geels & Schot, 2010; Kemp, 1994). As described by Markard et al., ‘transitions involve far-reaching changes along different dimensions: technological, material, organizational, institutional, political, economic,
33 and socio-cultural’ (2012, p. 956). They involve a broad range of actors and typically unfold over considerable time-spans (e.g. 50 years and more). During such a transition, new products, services, business models and organisations emerge, partly complementing and partly substituting existing ones. Technological and institutional structures change fundamentally, as well as the perceptions of consumers regarding what constitutes a particular service (or technology).
To summarize, technology should not be treated as a discrete, isolated category or object that concerns only one artefact; it cannot be separated from the economic and social context out of which it evolves and which is responsible for its production and its use. In turn, the social and economic context is shaped by the technologies that are produced and used. Technology is systematic. There is interdependence between a given piece of technology and other technologies, and between technology and its surrounding environment (e.g., societal, economic and regulatory contexts). Technology influences and is influenced by its surrounding environment.
These mutually interdependent socio-technical systems cannot be analysed in terms of single technologies, but rather in terms of the mutual interactions among all the concurrent technological, institutional and social changes.
The following section discusses two types of systemic thinking approaches that enhance the understanding of interaction among technology and the social, economic and political contexts. These are: initiative-based learning approaches (i.e. the TM and SNM approaches) and system innovation frameworks (i.e. the TIS approach and MLP approach).
34 2.3 System thinking to approach RETs
RETs are characterised as being structurally ‘disruptive’ and radical to conventional generation technologies (Foxon et al., 2005; Tsoutsos & Stamboulis, 2005), which makes the task of RET deployment a matter that goes beyond simple ‘technology substitution’. Rather, RETs pose challenges to an established electricity system as a whole at various levels, from organisational structures and market institutions to grid operations (Markard & Truffer, 2006).
Hughes (1986), for example, asserted that the technical part cannot be separated from the social part as society systems are changed by technologies and technologies are changed by society. Geels (2002) suggested that technological change not only involves changes in technology but also changes in user practices, regulations, industrial networks, infrastructure, and symbolic meaning or culture.
This highlights the importance of addressing the interplay between technology and society to achieve technological change and shifting attention from linear to system thinking. Such an approach seems precisely relevant to understand the delayed uptake of RE in the states of the Gulf Cooperation Council. This section and section
2.4 outline the current research and classifies the literature in two key themes: initiative-based learning approaches and system innovation frameworks, respectively. Detail to each approach’s concepts, as well as its strengths and limitations to address the problem of RE adoption in the Arab States of the Gulf is provided.
35 Because this thesis aims to achieve a closer look at the RE projects and evaluating their potential role to promote large-scale integration of RE in Oman, one aspect that needs to be conducted is the assessment of strengths and weaknesses of RE projects (see section 1.2). Two approaches are argued to be relevant to carry out such analysis: TM approach and SNM approach. Both approaches deal with the emergence and diffusion of new technologies. They push forward the ideas of active interventions to facilitate the diffusion of new technologies. Their origins, relevance, limitation and advantages to address this thesis’s problem are discussed, as follows:
2.3.1 Transition management approach (TM)
Transition management approach (TM), which can be used to understand technological diffusion, was originally developed by Dutch researchers including
Kemp, Geels, and Loorbach (2001). They initially used the model in 2001 in the
Fourth National Environmental Policy Plan (NMP4) to address societal transitions involving ‘system innovation’ in important societal domains, including energy
(Rotmans & Loorbach, 2008). Their approach aimed to develop new modes of governance to deal with complex societal systems faced by persistent problems, such as issues involving energy and anthropogenic climate change, agricultural problems associated with animal diseases like bird flu and mad cow disease, mobility problems due to traffic congestion, and air pollution and water management, including major flood and drought periods (Loorbach, 2007).
They emphasize that persistent problems require gradual changes in the structures of complex systems involving multiple levels and actors (Rotmans & Loorbach, 2008).
36 A TM approach takes into account a very long-term horizon, a multitude of actors with different perspectives, different scales, and uncertain future development
(Loorbach, 2007; Geels, 2002a) and explores the feasibility of changing systems gradually through transformation processes which may require a restructuring of existing structures, institutions, cultures, and practices in order to produce greater benefits. As a policy model, it aims to tackle persistent, structural sustainability problems that remain unsolved by traditional short-term policy approaches in systems such as energy, construction, mobility, and agriculture (Loorbach, 2007).
In the TM approach, visions of the future play an important role in outlining long- term goals. The model suggests engaging diverse societal actors and establishing policy-networks or so-called transitions arenas, such as public-private networks, to overcome persistent societal problems. The model suggests conducting ‘transition experiments’ to learn about and test alternative energy practices and technologies.
Loorbach (2007) suggested that transition processes can be represented by four phases, which can be embodied by an S-shaped curve as illustrated in Figure 2.2. The phases differ in speed and nature of change as follows:
37
Figure 2.2. Four phases of transition, adapted from Loorbach (2007).
• In the predevelopment phase, there is very little visible change at the societal
level, but a great deal of experimentation takes place.
• In the take-off phase, the process of change is initiated, and the state of the
system begins to shift.
• In the breakthrough phase, structural changes take place in a visible way through
an accumulation of socio-cultural, economic, ecological, and institutional
changes that interact with each other. During this phase, collective learning,
diffusion, and embedding processes take place.
• In the stabilisation phase, the speed of societal change decreases and a new
dynamic equilibrium is reached.
These four phases are useful for explaining the uptake of RETs in the GCC in the long- term. However, the TM approach offers a policy prescription that aims to influence structural change in socio-technical systems alongside system optimisation through
38 a set of coherent policy initiatives. While this policy model is useful for guiding RE uptake in the Gulf States, it does not offer a detailed analysis of which factors contribute to the success or failure of each transition phase. For example, the pre- development phase is relevant to this thesis as it concerns the role of RE projects in influencing the large-scale uptake of renewables in the GCC. However, as the approach stands, it does not examine the strengths and weaknesses of RE projects to learn what actions are necessary to reach the take-off phase. To address this limitation, concepts from the strategic niche management approach are discussed in the following section.
2.3.2 Strategic niche management approach (SNM)
Strategic niche management (SNM) is a research model and policy tool that acknowledges the crucial role of niches in facilitating the gradual uptake of new technologies by existing regimes. Niches act as ‘incubation rooms’, providing a protected space in which innovations are shielded from mainstream market selection (Kemp, Schot & Hoogma, 1998a; Kemp, Rip & Schot, 2001). Niches can be defined as ‘a discrete application domain (habitat) where actors are prepared to work with specific functionalities, accept teething problems such as higher costs, and are willing to invest in improvements of new technology and the development of new markets’ (Hoogma, 2002). Niches can consist of new technologies, rules and legislation, organizations, projects, concepts, or ideas (Loorbach, 2007). Protection is needed because new technologies can be expensive, underdeveloped, or not fully aligned with established infrastructure and/or user preferences, practices, and
39 expectations. Protection can be achieved through public policy (e.g. investments grants) or through strategic investment by firms.
In this approach, technologies are considered part of a broad and complex system in which technological artefacts interact with the whole system of scientific knowledge, engineering practices, production process technologies, product characteristics, skills and procedures, established user needs, regulatory requirements, institutions, and infrastructure (Hoogma, 2002). SNM advocates the creation of socio-technical experiments in which the various stakeholders are encouraged to collaborate and exchange information, knowledge, and experience, embarking on an interactive learning process that facilitates the incubation of the new technology (Caniels &
Romijn, 2008). SNM is based upon the core concepts of learning-by-doing and doing- by-learning, in which insights are gleaned from socio-technical experiments as to whether the experimental practice can replace the incumbent practices in a ‘regime’
(Raven & Geels, 2010). SNM theory predicts that niche-level actors and networks will aggregate learning from local projects, disseminating best practices and encouraging innovation diffusion (Seyfang et al., 2014). As Kemp et al. argue:
‘Without the presence of a niche, system builders would get nowhere … apart from demonstrating the viability of a new technology and providing financial means for further development, niches help building a consistency behind a new technology, and set in motion interactive learning processes and institutional adaptation ... that are all-important for the wider diffusion and development of the new technology.’ (1998: 184)
The ‘niche’ concept is relevant to the emerging RE activities in the GCC, and to Oman in particular because the focus of this thesis is to examine the characteristics of RE
40 projects by assessing their strengths and weaknesses. Unlike the TM approach, SNM offers tools that can be used to analyse the early stages of technological adoption.
The following discussion presents the internal processes involved in niche formation and the factors that determine niche success or failure.
Niche formation processes
The framework of SNM assumes that, if niches are constructed appropriately, they act as building blocks for broader societal changes towards sustainable development
(Schot & Geels, 2008). In a range of empirical socio-technical experimental studies on topics such as sanitation (Hegger, Van Vliet & Van Vliet, 2007), biomass (Raven,
2005), public transport (Woei, 2007), electric vehicle transport (Hoogma, 2000), and energy (Verbong & Geels, 2008; Woei, 2007), SNM scholars have studied the conditions under which niches become influential (i.e., attain the potential to diffuse their best practices into wider society). As a result, three internal processes for the successful development of a technological niche have been distinguished (Schot &
Geels, 2008; Kemp et al., 1998):
• Learning processes concern various aspects, including the use of new
technology, how to overcome technology malfunctions, market and user
preferences, cultural and symbolic meaning, infrastructure and maintenance
networks, industry and production networks, regulations and government
policy, and societal and environmental effects (Kemp et al., 1998; Schot and
Geels, 2008). Most importantly, learning processes contribute more to niche
41 development if they are directed not only at the accumulation of facts and
data (i.e. first-order learning), but also at cognitive frames and assumptions
(i.e. second-order learning) (Schot & Geels, 2008).
• The articulation of expectations or vision provide guidance and direction for
internal innovation activities and also aim to attract attention and funding
from external actors. Expectations are expressed on three different levels.
First, expectations are expressed concerning the technology; these
expectations are problem oriented and relate to technological specifications
(Van Lente, 1993). Technological expectations include issues arising from up-
scaling, cost reduction, or the characteristics of a specific technology. Second,
the field or sector level involves expectations expressed on the meso or
regime level. These expectations are function oriented, and more qualitative.
They can deal, for example, with the use of fuel cells in transport sector as a
means of reducing emissions. Finally, expectations can be formulated on a
general or macro societal level. These expectations deal with broad factors
such as the hydrogen macro-economy (in case of fuel cells) or dealing with
the changing energy landscapes in internal markets.
• Building social networks and the enrolment of additional actors has the
potential to expand social reach and mobilise commitments and resources to
contribute to niche development (Kemp et al., 1998). disempowered
42 Within SNM, the interactions between these three processes, i.e. learning processes, actors networking and visioning, seems to have allowed researchers to better grasp the success or failure of new technology introductions. When niche practices become sufficiently influential, these three processes could become robust enough to guide wider institutional changes (Geels, 2002a; Geels, 2002b; Raven, 2005;
Raven, 2006). These three processes provide a strong foundation to form the basis of the empirical application of SNM in this thesis to examine the strengths and weaknesses of RE projects and their role in influencing the large-scale uptake of renewables in Oman.
In addition to the three internal niche formation processes, Caniels and Romijn
(2008) identified five conditions that might facilitate the creation of niche experimentation in the application of SNM frame. These are:
• The creation of sheltered spaces for incubation (Caniels and Romijn, 2008)
• Possibility for continuous evaluation and incremental improvement by means of
broad stakeholder interaction processes (ibid)
• ‘[T]he new technology must … exhibit temporal increasing returns or learning
economies’ (Kemp et al., 1998. pp: 187).
• New technology should still be open to development in different directions,
allow evolutionary variation and selection processes (Caniels and Romijn, 2008).
• The new technology should be ‘already attractive to use for creation applications
in which the disadvantages of the new technology countless and the advantages
are highly valued’ (Kemp et al. 1998).
43
The other conditions that might facilitate the creation of niche, as stated by Caniels and Romijn (2008), include regime instability. Regime instability can happen when the problems experienced in the dominant regime cannot be solved within the parameters set by that regime to facilitate the emergence of alternative technologies (Kemp et al. 1998). The instability of regime can create local opportunities for experiments as the actors develop visions and expectations linked to the regime instability (Raven 2005). As the stability of the regime decreases the regime actors become interested in the niche and start to expect that the niche will promise to resolve regime instability. In cases of very high instability, regime actors adopt the niche as a problem solver (Raven 2005). An empirical case study that can illustrate the above process of regime instability is the introduction of a new type of bread made from a traditional type of grain variety that was re-introduced in a region of the Netherlands: ‘Agricultural and food safety crises as well as the institutionalization of food quality debates within the dominant regime … created room for the emergence of new approaches to food production and marketing’
(Wiskerke 2003,pp: 445-446).
Obstacles to niche upscaling
As described by Kemp et al. (1998) through their case study of new transport technologies, different factors can undermine the utilisation of more sustainable energy practices or new technologies developed at the niche level. These include
44 technological factors, governmental policy and regulatory framework, demand factors, infrastructure and maintenance factors, and undesirable social and environmental effects associated with the new technologies.
Technological factors: One of the major features of the new technologies, especially when they are in the early phases of development, is that they are often not well developed to meet the needs of users, or are expensive because they are produced on a small scale. The other most important factor that might impede the introduction of a new technology is that the new technology does not fit with the established systems. The use of the new technology might require complementary technologies, which are not widely available or are expensive to supply.
Governmental policy and regulatory framework: Government policy might also be a barrier to the diffusion of new technologies. The lack of appropriate policy is one of the major challenges that prevent investors from risking investment in RE technologies when they perceive a lack of governmental support. Governmental policies can provide clear views to guide technology developers, planners, manufacturers and investors towards development of RETs. In some other instances, the existence of a policy framework can also restrict the development of new technologies. For example, the zero-emissions policy in California has indeed encouraged the development of electric vehicles but has, on the other hand, restricted the promotion and development of hybrid-electric vehicles (Orsato et al.
2012).
45 Demand factors: Two factors that can reduce demand for new technologies are the performance of the new technologies and the high price of these technologies because they are produced in a small scale.
Demand factors are the major economic barrier to the diffusion of the new technologies. Often a new technology does not prove as efficient to meet the users’ needs as the conventional technology. RETs are a typical example to represent this phenomenon. This is especially true in the case of the introduction of RE in the GCC where the cost of the energy generated from hydrocarbon resources is relatively low because of the heavy subsidy system for the hydrocarbon resources in the region.
Infrastructure and maintenance: The introduction of new technologies may require adaptation of the established infrastructure. In most cases, the existing infrastructure is not ready for adoption of the new technologies. Thus, new systems may have to be established in order to adopt the new technologies. Another barrier to the adoption of new technology is the investment in its maintenance. The establishment of new infrastructure may incur high investment costs. Accordingly, the crucial question that might arise is who is responsible to cover the high costs of these new investments, and how these investments could possibly be achieved.
Undesirable effects associated with the new technologies: Although the new technologies might contribute to solving issues of unsustainability, they might also have some undesirable environmental impacts. In the case of RE technologies, for instance, the heat produced through the processes of solar energy concentration, or
46 the operation of wind turbines, can be fatal to birds. Some other effects relate to people’s preferences regarding the aesthetics of the landscape.
Relevance and limitation of SNM to address the uptake of RE in Oman
The above discussion of niche formation processes generates insights that help to guide the analysis in this thesis and is useful in coordinating the analysis of the their strengths and weaknesses of emerging RE projects and, consequently, their role in bringing about societal change towards further RE development in Oman. The analysis presented herein is based on three internal niche processes: learning processes, actor networking, and vision articulation.
The SNM approach used in this thesis allows an understanding of RETs diffusion in the Gulf States from a bottom-up perspective, especially with regard to the engagement of actors associated with the development of RE projects. However, the focus on understanding internal niche formation processes and the interactions between them is not sufficient to provide a comprehensive analytical framework in which to analyse broader factors surrounding the environment in which RE projects are embedded and with which they interact. An understanding of the interactions between RE projects and the broader factors, such as the social, institutional, and political dimensions, existing in the external environment is equally important, as such factors can play crucial roles in promoting or discouraging the uptake of RE projects in the case in question.
47
An understanding of broader context is essential for this thesis, because this thesis investigates the challenges and opportunities facing RE uptake in the context of hydrocarbon-rich countries (such as Oman, whose economies are heavily reliant on hydrocarbon export revenues). Therefore, an understanding of the dynamics of the
Oman’s specific political economy and its influence on RE projects is important; without this, it is difficult to fully envisage the challenges and opportunities for RE uptake in Oman.
2.4 System innovation frameworks to address interactions: technology, society and policy
This section discusses two system innovation frameworks that offer a holistic understanding of the barriers to RE uptake, complementing the analysis of RE projects using SNM concepts of three internal processes. These are: the technological innovation system (TIS) approach and the multi-level perspective
(MLP) approach. Each framework is discussed in terms of aspects relevant to the analysis in this thesis. Also, framework limitations and strengths are highlighted.
As will be shown below, TIS framework offers a useful tool for exploring the interactions between new technologies (in this thesis, RE projects) and their surrounding institutional environment but it is limited by the use of ‘innovation’ as its primary unit of analysis. As this thesis concerns the uptake of RE in the Arab
States of the Gulf, RETs are likely to be imported, not invented, at a national level. As
48 such, RE uptake is not prevented by the challenges inherent in creating an innovative, competitive environment for the new technologies; rather, uptake involves readily transferred technologies that must be adopted by the existing social, institutional, and technical structures. Therefore, because the MLP approach provides a systemic framework that differentiates between RE projects and their surrounding social, institutional, and technical components, this approach is used in the analysis herein.
The key difference of systemic innovation frameworks compared to the aforementioned initiative-based learning approaches is that systemic innovation frameworks, as opposed to the focus on individual or group of technologies and their internal social processes, pay particular attention to the processes operating not only at market, scientific and economic spheres but take into account social, cultural, institutional and political dimensions when explaining the sources of technological adoption.
2.4.1 Technological innovation system approach (TIS)
The system innovation approach is the first systemic innovation framework used to inform our understanding of the interactions between new technologies and their surrounding environments. Innovation systems became a major area of research within innovation studies at the end of the 1980s (Freeman, 1987; Lundvall, 1992;
Nelson, 1993). The development of the system of innovation approach has been
49 influenced by numerous other theories of innovation, including interactive learning and evolutionary theories. The system innovation approach attempts to explain the necessary internal and external conditions for innovation using a systematic approach.
Freeman was the first person to use the expression ‘national system of innovation’ in published form in his book ‘Japanese Innovation System’ on technology policy and economic performance in Japan (Freeman, 1987). In his study, Freeman (1987) defines a national system of innovation as ‘the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies’ (p. 1). In this empirical study, the Japanese national system of innovation is described as a combination of four elements:
• The role of the Ministry of International Trade and Industry.
• The role of company R&D, especially in relation to imported technology.
• The role of education, training, and related social innovations.
• The conglomerate structure of industry (Freeman, 1987, p. 4).
Since its emergence, the national system of innovations has been quite attractive for policy-makers seeking alternative frameworks for understanding the differences between and various ways to support technological change and innovation (Edquist,
1997: 3). The OECD (2002) report on ‘Dynamising National Innovation Systems’, for instance, provided several overarching conclusions on national innovation systems:
50 • The building block of innovation is the innovative firm, but a firm’s innovative
capacities are limited by market and systemic failures.
• A firm’s innovative capacity is linked to its ability to combine knowledge from
external and internal sources.
• Firms have a range of innovation modes to choose from, and it is important to
adopt the mode that fits their individual learning needs.
• Technological innovation plays a crucial role, but non-technological forms of
innovation deserve more attention.
• A firm’s innovation may be characterised in terms of process or product
innovation, while ultimate innovation behaviour implies a reinvention of the firm
itself.
Thus, the OECD work on national innovation systems acknowledges the firm as the founding unit of the innovation system (Greenacre, Gross & Speirs, 2012). The focus on the firm can be expanded to consider innovation systems that transcend regional and sectoral levels. In such cases, within a particular sector, the research examines the set of new and established products and the set of agents involved in the creation, production, and sale of those products (Greenacre, Gross & Speirs, 2012).
This concept transcends both specific technological and national boundaries, with sectors located in small regional clusters or spanning global networks, as in the case of multinational companies (Stenzel, 2008).
51 The discussion above shows that the starting point for the analysis of national innovation systems is the notion of ‘innovation’ at the firm level. Because this thesis addresses the diffusion of RE technologies at the national level, national and regional perspectives on innovation system are more useful to the analysis in this thesis.
Another useful innovation system perspective is that provided by the technological innovation system (TIS), which has been developed with specific types of technology as its analytical starting point (Hekkert et al., 2007; Bergek et al., 2008). TIS is useful because it is focused on the diffusion of a particular technology and accounts for specific numbers of agents, networks, and relevant institutions. Thus, unlike innovation systems with national and regional perspectives, TIS is less complex in terms of mapping the boundaries of the dynamic interactions between agents, relations, and institutions (Greenacre, Gross & Speirs, 2012). Yet, the scope of TIS overlaps with that of national, regional, and sectoral systems in terms of the dynamic interactions of actors and knowledge flows. Bergek et al. (2008) defines the three main elements of TIS as:
• Actors, including firms, users, suppliers, investors, and other organisations.
• Networks, defined as channels for the transfer of tacit and explicit knowledge.
• Institutions, which are entities that govern and dictate the environment within
which all actors operate.
Note that, in general, the innovation system frameworks discussed above tend to focus on the structural composition of a system and lack sufficient analysis of the
52 processes that directly influence the development, diffusion, and use of new technologies (Bergek et al., 2008). Accordingly, Hekkert et al. (2007) and Bergek et al. (2008) put forward a modified list of seven functions for describing and analysing technological innovation systems:
• Function 1: entrepreneurial activities. There is no such thing as an innovation
system without entrepreneurs. Entrepreneurs are essential for a well-functioning
innovation system. The role of the entrepreneur is to transform the potential in
new knowledge, networks, and markets into concrete actions to generate – and
take advantage of – new business opportunities.
• Function 2: knowledge development. Mechanisms of learning are at the heart of
any innovation process. Therefore, R&D and knowledge development are
requisite within the innovation system. This function encompasses ‘learning by
searching’ and ‘learning by doing’.
• Function 3: knowledge diffusion through networks. The essential function of
networks is the exchange of information. This is important in a strict R&D setting,
but especially in a heterogeneous context where R&D meets government,
competition, and the market.
• Function 4: guidance of the search. Since resources are almost always limited, it
is important that, when various technological options exist, specific foci are
chosen for further investment. Without this selection, resources would be
insufficient for all of the individual options.
• Function 5: market formation: New technology often has difficulty competing
with embedded technologies. Because of this, it is important to create protected
53 spaces for new technologies. One possibility is the formation of temporary niche
markets for specific applications of a technology.
• Function 6: resource mobilisation: Resources, both financial and human, are
necessary basic inputs to all activities within the innovation system. For a specific
technology, the allocation of sufficient resources is necessary to make knowledge
production possible.
• Function 7: creation of legitimacy/opposition of resistance to change: In order to
develop well, a new technology must become part of, or overthrow, an
incumbent regime. Advocacy coalitions can function as a catalyst; they put new
technologies on the agenda (function 4), lobby for resources (function 6), and
advocate favourable tax regimes (function 5), and, by doing so, create legitimacy
for a new technological trajectory.
It is expected that the more these system functions are fulfilled, the better an innovation system will perform, resulting in higher probabilities for the successful development, diffusion, and use of new technologies.
One of the major contributions of innovation system theory is that it leaves behind the concept of market failure that identifies barriers to and drivers for innovation, and replaces it with a broader concept of system failure that involves not only market failure but other sub-system failures including institutional failure, infrastructure failure and actor networking failure. (Bergek et al., 2008; Jacobsson &
Johnson, 2000).
54 2.4.2 Advantages and limitations of TIS
The discussion of innovation systems shows that the principal starting point for any analysis of national innovation systems is the notion of ‘innovation’. As stated by
Edquist (2005; 182), the main function in system innovations is to pursue innovations processes (i.e., to develop, diffuse, and use innovations). This discussion also shows that the system innovation approach provides an inward-oriented understanding of a system and does not pay considerable attention to the environment surrounding the system (Markard & Truffer, 2008). As a consequence, external institutions which might, for example, hinder the innovation process are treated merely as blocking mechanisms, although they may be much more than that.
This method of framing the system brings two challenges to this thesis’s case study.
First, it is argued that the characteristics of ‘innovation’ set goals that are unattainably high for less-developed countries. As was argued by Arocena & Sutz
(2000), there are no less-developed country with mature innovation systems to study; rather, strategies must be developed to create such a system. Therefore, innovation systems provide a framework in which national governments may design national development strategies (Vang & Joseph, 2009). The Arab States of the Gulf and Oman are no exception. It is worth noting that, in Oman, many (if not the majority) of the large firms have some type of joint venture arrangement with and receive technological guidance from foreign partners (UNCTAD, 2014). Most large
Omani firms do not have in-house R&D, and new technologies are introduced mainly through joint ventures with international partners. There is little incentive to
55 innovate inside the firm or in cooperation with other, smaller firms, R&D entities, or academics. The private sector is perceived as relatively conservative, as the top executives in many large companies tend to use a hierarchical, top-down style of management; this does not usually encourage spin-off activities, fruitful subcontracting, or linkages between large and small firms, and there is an overwhelming preference to conduct technology transfer through international trade (UNCTAD, 2014). RETs are no exception to the preference for technology transfer through international trade. Since an analysis of technology transfer is beyond the focus of this thesis, it is concluded that the innovation system approach is not relevant to the aim of this thesis.
Second, this thesis seeks to improve the understanding of the interactions between
RE projects and their surrounding environments (i.e. how they influence and/or are influenced by readily established infrastructure, institutions, actor networks, and political structure). Although the system innovation approach provides a comprehensive analytical framework that captures key factors influencing the diffusion of new technologies, this approach is less powerful when it comes to a system interactions with the wider surrounding environment (Markard & Truffer,
2008). To better delineate innovations system from their environments, system boundaries are conceptually determined such that the interactions among components within the system are more intense than those between the system and its environment (Markard & Truffer, 2008). For example, Edquist (2005) suggested that the system can be defined based on the activities that are, conceptually, key determinants of the innovation process. In other words, the system is said to
56 encompass all important factors that significantly influence the development, diffusion, and use of innovations. This latter proposition means that no distinction is made between influences which are closely related to the innovation process and part of potential feedback loops and those that are not affected by the innovation process (Markard & Truffer, 2008). Influences such as input cost (energy, labour, material and capital), economic growth, and demographic changes are certainly important for a broad series of innovation systems, although they are affected little by the outcome of a particular system. In the terminology of systems theory, such factors are external parameters. Also, despite the delineation of the system boundaries, the innovation system concept does not make clear whether the referenced innovation system is micro- or meso- in scale. For instance, this concept does not distinguish whether the system innovation actors are different from the actors existing in the surrounding readily established system environment. Here lies the strength of the ‘regime’ notion within a multi-level perspective (MLP) framework, which explains strategic interactions via the interplay between niches
(micro-level) and factors within the readily established energy system (meso-level) and also considers the influence of external macro-level factors, such as global energy prices and climate change. An overview of the MLP framework, its conceptual structure, and the dynamic interactions between its three main analytical levels (niche, regime, and landscape) is provided in the following sub-section.
2.4.3 Systemic multi-level perspective approach (MLP)
57 Because niches are embedded in broader external processes with which they interact, an isolated understanding of these internal niche processes is not sufficient to analyse the potential role of niches in the wider uptake of new technologies
(Schot & Geels, 2008). In particular, SNM scholars emphasise that governmental policies are needed to provide ‘shielding’ or ‘nurturing’ spaces for niche technologies
(Raven et al., 2015), and, thus, governmental relations with other actors is also important.
Thus, because niches cannot bring about societal change in isolation, understanding the linkages between niches and their surrounding environments is crucial (Schot &
Geels, 2008). Accordingly, the multi-level perspective (MLP) approach is used to explore the interactions between niches and their broader external processes. The
MLP approach is useful and relevant as it provides a systemic approach through which to explain the interplay between niches and two other levels: socio-technical regimes and landscapes (Geels, 2002). Niches represent micro-level scales wherein socio-technical experiments take place; socio-technical regimes represent meso- level features wherein established rules, networks of actors, and technical elements exist; and the landscape represents a macro-level scale wherein macro- developments, such as global climate change agreements, take place.
The MLP framework emphasises the importance of the interplay between development processes at these three levels: niche, regime, and landscape, in order to promote the successful uptake of new technologies (Markard & Truffer, 2008).
Such interplay is represented by a nested hierarchy (Figure 2.3); in this nested
58 hierarchy, regimes are embedded within landscapes, and niches are embedded within regimes. This hierarchy indicates that the meso-level regimes account for the stability of the existing technological development and depicts the occurrence of trajectories; the landscape macro-level consists of slowly changing external factors, which provide gradients for trajectories; and the niche micro-level accounts for the generation and development of radical innovations (Kemp, Rip & Schot, 2001). The following sub-sections detail the multi-level framework and illustrate the three analytical levels of development, as well as their interactions.
Figure 2.3. Multiple levels as nested hierarchy. Source: Geels (2002, 1261).
2.4.4 Dimensions of the MLP approach: niche, regime and landscape
In the MLP, the meso-level is the central level, or the so-called ‘socio-technical regime’. The socio-technical regime refers to the established practices and associated rules used by actors and institutions, which stabilize the societal system
59 and guide decision-making and the individual behaviour of actors (Geels, 2002;
Loorbach, 2007). These practices include: engineering practices, production process technologies, product characteristics, skills and procedures, methods of handling relevant artefacts and persons, and means of defining problems; all of these practices are embedded in institutions and infrastructures (Rip & Kemp, 1998). The socio-technical regime consists of three interlinked dimensions (Geels, 2005):
(1) networks of actors and social groups;
(2) formal, normative, and cognitive rules, such as regulations, standards, and laws that guide the activities of actors; and
(3) material and technical elements.
The second level, which is described in more detail in section 2.3.3, consists of the micro-level in which radical innovations and novelties are generated, tested, and diffused inside so-called niches (unlike the incremental innovations that emerge within the regime).
The macro-, or third level, is known as the socio-technical landscape and represents a set of deep structural trends, such as societal values, political culture, built environment, and economic development, and other trends, such as climate change regulations and oil prices, that influence both regimes and niches. Geels (2002) defines the landscape as a:
60 set of heterogeneous factors, such as oil prices, economic growth, wars,
emigration, broad political coalitions, cultural and normative values, [and]
environmental problems (p. 1260).
The context of the landscape is even harder to change than that of the regime; however, the landscape directly influences the regime level, as well as the niche level, by defining ‘windows of opportunity’ and directions for change (Geels, 2002;
Loorbach, 2007).
The MLP framework emphasises the importance of the interplay between development processes at all three levels in order to promote the successful uptake of new technologies (Markard & Truffer, 2008), which is governed not only by processes within the niche level, but also by developments at the existing regime level and within the socio-technical landscape. Destabilising pressures created by the socio-technical landscape combine with emerging radical innovations at the niche level and interplay with stabilising mechanisms at the regime level. Thereby, this framework leaves room for contingencies such as external shocks or disruptive changes at the landscape level (Geels & Schot, 2007).
Interactions between MLP framework dimensions
While the nested hierarchy provides a heuristic representation of the three niche, regime, and landscape levels comprising the MLP, the unfolding transition pathways
61 resulting from dynamic interactions between these three levels bring about socio- technical change (Figure 2.4). The socio-technical change that occurs through the interplay between the dynamics of the three levels is a key feature of the MLP approach. Thus, transitions involve changes and reconfigurations of technologies, actors, and institutions through the interactions of niches, regimes, and landscapes over long periods of time (Berkhout et al., 2010). In this analytical framework, Geels
(2005; 2002) argues that these interactions can account for the stabilities and instabilities in a regime.
Regime instabilities can eventually lead to the growth of more radical alternative regimes. For example, novelties emerging in technological niches may, under certain conditions, put pressure on the regime and, consequently, break through into the regime. In the beginning, because niche-level novelties do not yet have an established design, these efforts work in different directions represented by small arrows in Figure 2.4. These arrows grow longer and thicker as the radical innovations gradually stabilise into a dominant design, moving towards successful uptake by the regime.
In some cases, tensions in the incumbent regime may create a window of opportunity that leads to a search for more radical solutions. These tensions originate within the incumbent regime when the existing technologies and behaviours are no longer sufficient to address problems arising within the regime. In terms of regime stability, the seven dimensions (technology, user practices, and application domains (markets); symbolic meaning of technology; infrastructure;
62 industry structure; policy; and techno-scientific knowledge) co-evolve in regular incremental processes - represented by long arrows in Figure 2.4. As to regime instability, the linkages between the seven dimensions can be weakened, which creates internal ‘tensions’ that are represented by short arrows pointing in different directions. The internal tensions that arise within the regime may also interact with external pressures originating at the landscape level. Developments in the landscape level, which include cultural changes, demographic trends, and broad political shifts, usually take place very slowly. The slow evolution of landscape developments are represented by the wide, long arrows in Figure 2.4. The mechanisms outlined above lead to the identification of two forces that drive change: internal or endogenous forces (i.e., niche, regime-related forces) and external or exogenous forces
(landscape-related forces).
63
Figure 2.4. The dynamic of socio-technical change in the multi-level perspective approach. Source:
Geels (2002, p. 1263).
2.4.5 Advantages and limitations of the MLP framework
The strength of the MLP is in its power to explain systemic changes in three analytical layers (namely niche, regime, and landscape as well as the interplays between them. The MLP approach offers a heuristic tool that can be used to trace and understand major structural changes in socio-technical systems (Geels, 2002). In this approach, the technological innovation must be a component of a broader set of co-evolving institutional, behavioural, and cultural changes (Smith, Stirling &
Berkhout, 2005). As set out by Geels (2012), the MLP approach has the following
64 characteristics:
(a) A co-evolutionary and ‘systemic’ approach. In other words, transitions are driven not by single factors such as prices or technological change, but by co-evolutionary developments between multiple dimensions (technology, industry, markets, consumer behaviour, policy, infrastructure, and cultural meaning).
(b) An actor-based approach. The MLP focuses on strategies, perceptions, actions, and interactions between technology providers, technology users, planners, and public opinion.
(c) Stability and change. The MLP addresses stability, lock-in, and resistance to change on the one hand, and seeds for radical systemic change on the other.
(d) Complex dynamics. The MLP encompasses non-linear cause-and-effect relationships and simple drivers. It employs mutually reinforcing developments, alignments, co-evolutions, innovation cascades, knock-on effects, and hype- disappointment cycles.
However, despite its strengths, which include providing a systemic approach to the analysis of factors that promote or delay the uptake of new technologies, this approach has been criticised for its conceptualisation of the ‘regime’, and especially its failure to account for power and politics (Grin, Rotmans & Schot, 2011a;
Meadowcroft, 2011a; Geels, 2014). This thesis seeks to enhance the understanding of the strengths and weaknesses of RE projects in the Gulf Arab States, wherein politics and power are positioned primarily at the regime level. Governmental policies are perceived important to provide shielding and/or nurturing spaces for
65 niche technologies (Raven et al., 2015) and thus their interactions with other actors
(Osunmuyiwa, Biermann & Kalfagianni, 2017). Grin, Rotmans & Schot (2011a) affirm this in their analysis of agency in Dutch transitions; they argue that, to overcome transitional inertia created by incumbent actors, the Dutch Knowledge Network on
System Innovations and Technologies approach accepts that ‘the state is central in the collective decision-making process of actors within transition process because of its focal role and relationship with other actors whose activities places pressures on ecosystem’.
The MLP has been criticised in particular for paying insufficient attention to the role of collective actors who shape rules and resources through, for example, industry associations, governmental departments, and special-interest groups (Geels, 2014).
This in turn raises questions about which actors exercise power in transitions, which types of power are being exercised, and importantly, what types of states contain these transitions.
In response to this critique, a number of theoretical and empirical studies have been conducted to improve the understanding of the roles of actors, power, and politics within regime and the influence of the latter on technological niches (Avelino &
Wittmayer, 2016; Geels, 2011). Accordingly, the MLP literature has accounted for the role of political economy and its strategies in blocking transitions. Smink, Hekkert
& Negro (2015), Stenzel & Frenzel (2008) and Konrad, et al. (2012) highlighted the use of strategies such as ‘defence’ by limiting access to financing options, ‘reaction’
66 to new technological entrants through the creation of tough market entry rules, and
‘proactivity’ through the enactment of highly stringent niche standards that influence public debates and opinions on technology co-option (Smink, Hekkert &
Negro, 2015). However, these approaches have been largely applied in the context of developed countries (Moe, 2015; Geels, 2014), with only a limited number of examples from developing countries (Baker, Newell & Phillips, 2014; Ulsrud et al.,
2011). Further, the literature has been very limited with regard to oil-exporting rentier states (i.e. states which derive a substantial part of their revenue from foreign sources in the form of rent, largely oil revenues (Beblawi & Luciani, 1987))
(Normann, 2015; Rosenbloom & Meadowcroft, 2014; Moe, 2015; Osunmuyiwa,
Biermann & Kalfagianni, 2017).
2.4.6 Rentier state theory to address the political economy gap
To enrich the ‘regime’ concept and to better understand the special context of oil- rich countries such as the Arab States of the Gulf, whose economies are highly reliant on hydrocarbon export revenues, this section combines the MLP literature with more specific analysis of political economy in rentier states (i.e. states that rely on rent distribution).
The most relevant theory is rentier state theory (RST). RST is a political economic theory that seeks to explain state-society relations in states that generate a large proportion of their income from rents; or externally-derived, unproductively-earned payments (Gray, 2011). In a rentier state, the government receives the economy’s
67 external rent and distributes the rent according to a hierarchy of beneficiaries that maintains the government’s dominant position (Beblawi, 1987. p. 53). An important aspect of rentier states is that only a few groups of actors are involved in the generation of rent, while the majority merely distribute or receive it. This means that a small portion of society generates the majority of wealth and the remainder is engaged only in the distribution and utilisation of the wealth created (Beblawi, 1987, p. 51). Thus, a rentier is a member of the special group that receives a share of the economy’s yields despite not actively participating in economic production (Levins,
2013). In this case, the population relies on their government for food, shelter, income, and job opportunities; in a rentier state, the government plays the role of benefactor (Levins, 2013). As such, rentier actors devote most of their time to maintaining the status quo, hence maintaining the existence of political elites.
One way to maintain the status quo is through the elimination of civil representation in economic production via, for example, low taxation, no taxation (‘no taxation, no representation’), or high subsidy provisions such as hydrocarbon subsidies. Despite their wealth, rentier states remain fragile, as any change or pressure within the energy system can create political instability. This is critical in that RE transitions are more decentralized in nature, changing the accumulation of power and resources in and around the existing infrastructure while producing new actors.
2.4.7 Rentier strategies and actors
68 To elaborate on the strategies employed by rentier actors to maintain the status quo while influencing the uptake of RE, this thesis explores four types of strategies identified in the literature on political economy and rent.
First, rentier actors such as government representatives and related elites engage in
‘defensive strategies’ by ensuring that attempts at transitions are blocked. Instead of focusing on reformulating regime rules and norms to block transitions, this strategy relies on the patronage network between business corporations and governments.
This network consists of informal power structures and systematically weakens attempts at transitions by rendering formal decisions that favour regime interests
(Schmitz, Johnson & Altenburg, 2013).
Second, actors can employ ‘material strategies’ that draw on technical capabilities and financial resources to improve the technical dimension of a socio-technical regime. Actors may also use their positions to attract attention and funding from external funders to improve the technical dimensions of existing technologies. This might involve promises and statements that ‘solutions are just around the corner’.
An example is the political support for carbon capture and storage technologies, which claim to use ‘clean coal’ and, thus, are used to legitimate support for the coal industry.
The third form of resistance relates to ‘institutional power’, which is embedded in political cultures, ideologies, and governmental structures. This wider institutional context facilitates the strategies of the incumbent actors and thus assists regime
69 resistance. In other words, although the government may not have a role in controlling the market, this hands-off strategy allows (for example) powerful companies to occupy main roles in the competitive market. In this way, the government can indirectly support the interests of the incumbent regime while resisting change brought about by newcomers.
Fourth, rentier actors engage in the use of ‘discursive strategies’, which refer to the tendency of actors to dominate the discourses that shape not only what is discussed but also how issues are discussed. In this case, actors facilitate research and technical support, expert witness hearings, position papers, and sometimes advertisements in ways that enhance the legitimacy of the existing regime. Regime actors can use their position and authority to, for example, render problem definitions or policy goals.
2.5 Thesis approach
Resting on the combination of different analytical approaches, this section presents the analytical framework developed to analyse the factors and conditions that held back the uptake of RE in the hydrocarbon-rich countries. The analysis presented in sections 2.3–2.5 reveals that no single approach is sufficient. In particular, it emerges that combining elements from the SNM and MLP approaches and RST is useful in forming an analytical framework that analyses the adoption of RETs in the context of hydrocarbon-rich states from a system perspective. This is important because although each approach provides useful insights into RET adoption, it also exhibits
70 drawbacks that restrict the analysis in this study. Thus, this thesis developed the socio-techno-economic-political framework (STEP) that combined and linked technical, social, economic and political dimensions existing at the national energy regime with RE projects. The STEP analytical framework is described in detail as follows.
2.5.1 Socio-techno-economic-political framework (STEP) to analyse RETs adoption in hydrocarbon-rich states
The advantage of the SNM approach lies in its ability to inform a detailed analysis of the internal dynamics of RE projects (i.e. niches). The analysis of internal dynamics allows the prediction of RE projects’ strengths and weaknesses which, according to
SNM advocates, play a crucial role in facilitating the gradual uptake of new technologies by the energy regime (Kemp, Schot & Hoogma, 1998b; Kemp, Rip &
Schot, 2001). In this thesis, the three internal processes that inform the analysis of
RE projects’ internal dynamics are: (a) learning processes, (b) actor networking, and
(c) visioning. However, an understanding of these internal processes is not sufficient to fully understand the reasons behind the strengths and weaknesses of RE projects because these projects are embedded in and interact with a broader context (Schot
& Geels, 2008). Thus, addressing the links between RE projects and other processes that exist in energy and policy regime was essential to improve the analysis of strengths and weaknesses of RE projects and the potential role they can play to influence large-scale uptake of RE.
The MLP approach offers a strong alternative for studying the links between RE projects and their surrounding environments. The MLP provides a system approach
71 for explaining the interplay between niches and their surrounding environments as it differentiates three levels of societal change: (a) the niche level, which involves providing incubation or protection for new technologies; (b) the regime level, which represents the dominant energy system wherein established rules, institutions, networks of actors and governance structures exist; and (c) the landscape level, which represents the influence of external factors that affect societal change, such as oil price shocks and climate change (Geels, 2002a). The MLP strongly emphasises the importance of interplay between development processes at these three levels in promoting the successful uptake of new technologies (Markard & Truffer, 2008). It also acknowledges that processes in the socio-technical regime are significant in this interplay as regimes are established institutional structures that create stability through rule formation and span different issue areas, scales and spaces (Geels,
2011). The socio-technical regime concept encompasses dimensions such as policy, technology, user practices, science, cultural meaning, infrastructure and industry
(Geels, 2002a). The analysis of these dimensions and the interplay between them is equally important in the analysis of how the regime promotes or discourages the uptake of RE projects.
The MLP, however, has been criticized for underestimating the influence of power and politics in societal change (Geels, 2014; Grin, Rotmans & Schot, 2011b;
Meadowcroft, 2011b), partly because of its origins in structuration theory (Geels,
2011). An understanding of the roles of actors, agency, power and politics within the regime is important because the focus of this thesis is on the uptake of RE in oil-rich countries, whose economies are reliant on hydrocarbon rent distributions and
72 influenced by vested political interest towards maintaining the status quo. Thus, power and politics are expected to significantly influence the promotion or suppression of RE uptake in the Arabian Gulf States. To understand the role of politics and powers in the special context of oil-rich developing countries, it was useful to enrich the regime concept with more specific insights from political economy theories that are better explain the political economy context of hydrocarbon-rich developing states. RST is the most relevant theory for the explanation of the special political economic context of hydrocarbon-rich developing countries. RST is useful in explaining the role of the regime in the uptake of RE, as it explores the understudied influence of the political system and particularly the roles of rentier actors (i.e. a small proportion of the society who are involved in in the generation of rent via oil and gas export revenues) and the strategies they employ in promoting or blocking societal changes. This thesis focuses on four strategies identified in the literature on political economy and rent, including defensive, material, discursive and instrumental strategies and the use of institutional structures (see section 2.5.1). The adoption of these strategies will be tested in the light of the following questions: to what extent do rentier actors employ these strategies to reinforce and promote path dependence in rentier states? And, to what extent does the employment of these strategies allow the emergence of RE innovations in rentier states? Thus, unlike the SNM and MLP which highlight on the pressure created by niches on the regime (see section 2.4.4), the study of rentier strategies allows examining the influence of regime on niches.
73 The STEP framework’s three main theoretical concepts, discussed and adopted as necessary for this study, are technological niches, socio-technical regime and political economy. More specifically, these three key aspects were linked to SNM,
MLP and RST, respectively. Furthermore, these were linked to chosen indicators as the themes for enquiry emerged from the discussion of the relevance, advantages and disadvantages of these approaches to the context of hydrocarbon-rich states as well as the discussion of the potential integrity of these approaches to analyse the factors and conditions that hinder the uptake of RE from a system perspective (Table
2.1).
74 Table 2.1 STEP analytical framework: key theoretical concepts, authors, relevant dimensions/indicators, advantages and limitations.
Theory main Relevant Approach Authors Advantages Limitations concepts dimensions/indicators
Kemp, Rip and - Focuses only on RE Learning processes, Allows understanding of projects. Technological Strategic niche Schot, 2001; Kemp, visioning, and RETs diffusion from a - Limited attention to niches management Schot and Hoogma, 1998; Rip and networks of actors bottom-up perspective. broader factors in energy Kemp, 1998 regime. Offers a systemic approach Limited attention to the to analyse the interaction role of actors, power, and Socio-technical Multi-level Rip and Kemp, Institutional, market, between RE projects and politics within regime in regime perspective 1998; Geels 2002 technical and cultural other factors existing at influencing the uptake of socio-technical regime. new technologies. - Allows understanding of RETs diffusion from a top- Defensive strategies, down perspective. Beblawi, 1987; material strategies, Political- Rentier States - Enables understanding of Specific to only oil-rich Gray, 2011; Levins, institutional power economy Theory actors, power, and politics rentier states. 2013 and discursive within regime in strategies influencing the uptake of new technologies.
75 2.5.2 The need for country-specific data
Along with the policy dimension, it is equally important to assess the other regime dimensions, such as technology, user practices, science, cultural meaning, infrastructure and industry, that can challenge the uptake of RE in the Arab Gulf
States to construct a detailed picture of the core characteristics of the energy regime. The MLP approach is instrumental to facilitate the analysis of other factors existing at the incumbent energy regime such as market, user preferences, culture, industry and technology (Geels, 2002c). Despite its features, the MLP has received some criticism (Smith, Voß & Grin, 2010) for using metaphors and imprecise concepts, with the danger of creating ambiguity and categorising phenomena too easily because the concepts have vague boundaries. To avoid the ambiguity inherent in the MLP approach and to produce country-specific information about the factors that promote or delay the uptake of RE in general and RE niches in particular, complementary information on technical, market, institutional and cultural challenges was crucial to clarifying the interaction between RE projects and the incumbent energy regime. Because such data were non-existent for the case study undertaken in this thesis, however, new, original information had to be generated. In particular, due to the limited availability of information on barriers to and opportunities for RE implementation in Oman, the use of an inductive approach that allows information generation is necessary. Both general and specific, detailed analyses of the barriers and opportunities are needed to inform researchers, investors and policymakers in Oman. Further, because characteristics vary between countries, it is essential to employ a method that enables generation of country-
76 specific data in cases featuring limited information about such characteristics. The grounded theory (GT), which is really an approach and not a theory, provided such an approach to data collection and data analysis due to the following reasons.
Therefore, the GT approach (herein, via semi-structured interviews with energy experts) was selected to guide the collection of country-specific data; the decision to use this approach was based on GT’s induction capability for theory development
(Punch, 2005). GT has become popular among social researchers (Denscombe,
2010). The approach originated in the United States in the 1960s through a collaboration in medical sociology between Glaser and Strauss (1967), who studied patients dying in hospitals. Their influential book, The Discovery of Grounded theory, was published in 1967 in response to their publication, Awareness of Dying, after readers requested more information on their methodology (Punch, 2005).
Accordingly, the authors wrote The Discovery of the Grounded Theory, which detailed the methods developed and used in their study of dying patients. Further discussion of the use of GT to guide the generation of primary data will be provided in Chapter 3.
2.6 Conclusions
This chapter has critically analysed useful approaches to study the uptake of renewable energy technologies and investigate their relevance for application to the context of hydrocarbon-rich countries, particularly Oman. It presents the STEP analytical framework which incorporates concepts from strategic niche management
77 (SNM]), multi-level perspective (MLP) approach, and rentier state theory (RST) to analyse drivers, barriers and opportunities for renewable energy uptake in Oman.
STEP main blocks of analysis are: technical niche, socio-technical regime and political economy. The SNM approach has been argued to offer a useful tool to uncover and understand challenges, strengths and weaknesses of RE projects via focusing on analysing three social processes of visioning, learning processes and actor networking. The MLP framework was claimed useful to uncover other factors featured by the socio-technical regime – such as institutional, cultural, technical and market-related factors – and with which RE projects interact. Further, RST was deemed relevant to study the role of political structures, characterised by vested interest in fossil fuels, to influence the uptake of renewable energy in the context of hydrocarbon-rich countries.
STEP analytical framework is used and applied to the case of Oman, a particularly hydrocarbon-rich country. The application of the STEP framework in Oman is challenging because of the lack of available information that can be used to inform a comprehensive understanding of what factors and conditions that have held Oman back from adopting renewable energy technologies. Therefore, as will be detailed in the following chapter, primary and secondary, quantitative and qualitative data and semi-structured interviews were needed to inform the analysis in this thesis. The results of the analysis are offered in Chapters 5, 6 and 7.
78 CHAPTER 3 Research Methodology
3.1 Introduction
Having outlined the analytical framework that will be used to address this thesis’s aim – which is to investigate the factors and conditions that have held Oman, a particularly hydrocarbon rich country, back from adopting and promoting modern, renewable energy technologies – this chapter discusses the methodological choices for data collection, sampling strategy, and analysis. The methods consisted of literature review, survey and systematic review of literature.
Primary information was obtained from a systematic review of published articles on renewable energy development in Oman and interviews with three different groups of stakeholders: unstructured interviews for exploratory research (group I), semi- structured interviews with representatives of renewable energy projects (group II), and semi-structured interviews with energy regime experts representing government, private and academic sectors (group III).
A mixed-methods approach involving both quantitative and qualitative data and analyses was used to analyse primary data. Quantitative content analysis was employed to published articles on renewable energy that are reviewed systematically. Qualitative analytical approach, i.e. Grounded theory (GT) using coding and memoing, was applied to the data from the stakeholders’ survey (groups
II and III).
79 Further, data from secondary sources were used in order to inform the analysis of strategies employed by political actors to influence the uptake of renewable energy in Oman and in this way to uncover the interaction between actors representing both renewable energy projects and Oman’s political regime. Process-tracing method was used to analyse this set of secondary data to identify one or more causal processes that explain the political resistance or assistance to renewable energy developments in Oman.
Before discussing the data collection and analysis procedures used for this thesis, the selection of Oman as a case study is justified in detail in the following section.
3.2 The selection of Oman as a case study
Oman was selected as a case study because it is a member of the regional Gulf
Cooperation Council (GCC), which includes also Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE. Like its neighbouring countries of the GCC, Oman has distinctive characteristics as a rentier state which derives a substantial part of its revenue from foreign sources in the form of rent, largely oil revenues (see section 2.5). Despite the differences in oil and gas wealth, Oman is not considerably different from other Gulf
Arab States, which are generally characterised by a set of unique regional factors, including: (a) the availability of large supplies of conventional oil and gas resources;
(b) the pivotal role played by hydrocarbon wealth in oil and gas producers’ economic development since the 1960s; and (c) the unspoken social contract (resulting from the first two factors) adopted in most Gulf countries in which energy resources are
80 considered to be public goods from which export revenues should be shared with citizens through facilities like subsidies (El-Katiri, 2014).
Unlike its neighbouring countries characterised by high per capita income, Oman is a middle-income country; it has the smallest relative hydrocarbon reserves in the region (EIA, 2013b). The shortage of natural gas reserves in Oman has forced the country to import natural gas from Qatar via the Dolphin Pipeline project since 2008
(EIA, 2013a). Natural gas imports account for 10.8% in Oman, more than a third of the total natural gas consumption in the UAE, and 19.2% in Kuwait (El-Katiri 2013, p.
13). Growth in power and water generation demands, energy-intensive industrialisation, urbanisation, growth of transportation and increasing standards of living are key factors behind increasing domestic demands for oil and gas. GCC per capita domestic consumption of primary energy is among the highest in the world, and GCC countries contribute six of the top 12 countries in energy consumption per capita (Hertog & Luciani, 2009). To this end, this thesis argues that these prevailing conditions could place Oman amongst the first GCC countries to develop alternative energy sources to avoid anticipated oil and natural gas shortages. This is equally important for the other GCC countries.
The selection of Oman is also motivated by the fact that, despite the availability of high renewable energy potential (Figure 3.1), regulatory frameworks supporting the uptake of renewable energy technologies are still nascent. Like in other GCC states, since 1990s, renewable energy implementation in Oman has been concentrated in research and administrative applications. As argued in section 1.2, it is useful to
81 analyse ongoing RE developments to improve the understanding of factors that have
held back the adoption of renewable energy technologies in Oman from actual
practices, by assessing: (a) the characteristics of these renewable energy projects, (b)
the internal factors that lead to the success or failure of such projects and, (c) how
project implementation is influenced by other factors existing in energy regime with
which such projects interact. Oman, in which a number of renewable energy projects
have been developed despite the nascent (or the lack of) renewable energy
regulatory framework, offers a case study for such investigations. The selection of
five RE projects is justified in the following sub-section.
Annual Average GHI for 2005
Figure 3.1 Location of Oman in the GCC region. Map shows Yearly Global Horizontal Irradiation for the year 2005 in kWh/m2 (source: www.irena.org/GlobalAtlas).
Further details about Oman’s political, economic, and energy policy contexts, in
which renewable energy is introduced, as well as its current state of renewable
energy are provided in Chapter 4.
82
3.2.1 RE project cases and renewables-related research in the case study
Oman offers a case wherein renewable energy projects, and renewables-related research, have emerged despite the nascent (or the lack of) regulatory framework, which motivates the investigation in this research. Because there has been limited movement in the renewable electricity sector to date, the options for presenting case studies are constrained. The relevant literature on renewable energy is limited.
Furthermore, evaluations of existing renewable energy initiatives are scarce, and most literature was not produced by independent sources.
Four out of a total 8 renewable energy projects were selected. The selection of pilot projects was guided by reviewing the secondary literature associated with updated
RE initiatives in Oman; this literature includes journal articles, newspapers, and governmental or company websites such as Public Authority for Water and
Electricity, Authority for Electricity Regulation, and Petroleum Development Oman.
From the analysis of the secondary literature, it emerged that there are three types of renewable energy projects: government-led projects including 303 kW solar project and 50 kW PV project, national oil company-led project such as 7 MW solar enhanced oil recovery project and private investors projects such as 6 MW concentrator photo voltaic (CPV). Further, Oman’s activity in renewables-related research was analysed in this thesis.
83 Therefore, in this thesis, renewable energy-related activities were selected to represent four sectors: national oil companies, government, private investors, and academia. Such diversity facilitate enhanced understanding of the different types of interactions among various groups of actors involved in renewable energy development in Oman.
3.3 Literature review
Data collection and analysis methods were guided by the review of existing literature conducted in chapters 1, 2 and 4.
Chapter 1 provided an overview of the energy context in the Gulf Cooperation
Council countries (GCC), and its current state of renewable energy adoption. Due to arising energy challenges such as energy security and high per capita carbon emissions, this chapter points out to the importance of developing alternative, low- carbon energy sources such as renewables in this group of countries. This chapter also pointed out to the need for developing an analytical framework which addresses the social, political and institutional factors – along with technical and economic factors – that influence the adoption of renewable energy technologies in hydrocarbon-rich GCC states. Thus, theoretical approaches that can inform the uptake of renewable energy technologies in the context of hydrocarbon-rich states have been reviewed in Chapter 2.
84 Chapter 2 puts the research problem into the context of the existing literature pertaining the understanding of factors that influence the diffusion of renewable energy technologies. In chapter 2, the influence of existing theories, knowledge, and concepts (such as SNM, MLP and RST) are treated as ‘provisional’ and open to question, as they have not been proved fixed or correct, but have been used as starting points from which to launch this thesis’s investigation (Denscombe, 2010).
The review of existing theoretical approaches guided the development of this thesis’s approach, which in turn guided the data collection and analysis methods, as will be detailed in the following sections.
As this thesis aims to investigate the factors and conditions that have held Oman, particularly hydrocarbon rich country, back from adopting and promoting the uptake of renewable energy technologies in spite of the abundance of renewable energy resources, detailed analysis of the economic, political and energy policy contexts of such hydrocarbon rich country was a pre-requisite to guide the research design and the need for primary data collection. It was particularly useful to provide precise details relating to Oman’s historic dependence on hydrocarbons and how these resources have played crucial role in shaping its political economy and how the features of such political economic structure have played a significant role to contribute to hydrocarbon path-dependency and how they also form formidable barriers to the diffusion of new energy services, such as renewable energy. It was also essential to review the status of renewable energy in this particular context from a historical perspective to learn about the trends of renewable energy development in Oman. As will be revealed in chapter 4, renewable energy initiatives,
85 such as studies, investments and policies, have emerged in spite of a strong regime commitment to support and preserve oil dependency. These initiatives have triggered the question of: why these initiatives have emerged against the status quo; to what extent can they proliferate in the face of vested interest in hydrocarbons to tackle emerging energy challenges such as energy security and high per capita carbon emissions; and what are the factors and conditions that may assist or resist their uptake. Therefore, a closer investigation of these renewable energy projects as well as their surrounding environment, with which they interact, was needed. To achieve this closer investigation, systematic review of literature on renewable energy development in Oman and semi-structured interviews with representatives of renewable energy projects were needed. Detailed discussion about primary data collection via interviews and systematic review of literature is provided in the following sections.
3.4 Primary data collection – Interviewing
The collection of original data was driven by a lack of available information that could be used to inform a comprehensive understanding of what factors and conditions that have held Oman back from adopting renewable energy technologies in spite of the arising energy issues such as energy security and high per capita carbon emissions. To address this data deficiency, primary data were collected from interviews. In particular, semi-structured interviews were deemed appropriate to gather information from experts involved in operating Oman’s energy system.
Diverse actors’ perspectives were approached from top-down and bottom-up
86 perspectives. Because this thesis employs both the SNM and MLP frameworks, approaching stakeholders from both top-down and bottom-up perspectives was essential. The bottom-up perspective was applied to contact actors involved in developing RE projects in Oman, while the top-down perspective was used to approach actors who represent the incumbent energy regime. In this way, a detailed picture of the drivers, barriers and opportunities for RE development in Oman could be realized.
In this research, three groups of people were interviewed. Unstructured interviews were conducted with the first group for exploratory research purposes. Semi- structured interviews were then conducted with the second and third groups who represent renewable energy projects and energy regime in Oman, respectively. In total, 25 people were interviewed during different visits to Oman between 2012 and
2014. The interviewees represent three different sectors, including research, government, and business (Table 3.1).
Table 3.1 Interviews with energy experts by sector, Oman, 2012-2014.
Sector name No. of interviewees
Knowledge centres (universities and research centres) 4
Government agencies (ministries and regulatory bodies) 10
Business sector (utility companies, national grid operators, 11 renewable energy service companies, and oil firms)
Total 25
87
3.4.1 Unstructured Interviews (Group I): Exploratory research
Unstructured interviews were conducted with the first group for exploratory research purposes. The first group of interviewees were selected based on their relevant experience in the topic, availability and willingness to be interviewed. In total, 6 unstructured interviews were conducted during the research exploratory stage. Using web search engine, three interviewees from the Ministry of the Environment, Public
Authority for Water and Electricity Regulation and Sultan Qaboos University were identified and interviewed in February and March 2012. At the Oman Power and
Water Summit in May 2013, representatives from electricity utilities, academic organizations, oil and gas companies, governmental authorities, and international renewable energy investors attended this important summit. Following up from the summit, three preliminary interviews were conducted with representatives from
Authority for Electricity Regulation, and Public Authority for Civil Aviation (Table 3.2).
At this stage, the research was focused on understanding recent trends in renewable energy development in Oman and initiating contact with potential interviewees for a subsequent series of interview. These initial contacts were interviewed in an informal research setting using unstructured interview questions. These interviewees served as ‘gate-keepers’ and assisted in identifying further interviewees and information in later research stages (Valentine, 1997).
88 Table 3.2 Exploratory interviews conducted in Oman (Group I), February 2012 and
May 2013
No. Interviewee position Institution Meeting date
1 Expert, Director of Ministry of Environment and 21 March 2012
Climate Affairs Climate Affairs
2 Manager, renewable Public Authority for Water & 9 May 2012
energy and CDM Electricity Regulation
3 Director Authority for Electricity 12 May 2013
Regulation
4 Regulatory specialist Authority for Electricity 12 May 2013
Regulation
5 Academic Sultan Qaboos University 22 February
2012
6 Manager, Numerical Public Authority for Civil 28 May 2013
Weather Prediction Aviation (PACA), National
(NWP) Section Meteorological Service
3.4.2 Semi-structured interviews (Group II): RE projects
The second group of interviewees involved representatives of the few renewable energy projects in Oman. Four out of a total 8 renewable energy projects, as well as academic publications in renewable energy field (published between 1995 and 2015), were selected to examine their success or failure; and their potential roles in
89 transforming Oman’s energy system towards large-scale development of renewables.
The four RE projects cases, as well as academic publications in renewable energy field were selected to represent four sectors including a national oil company, government, private investment, and academia. In total, 7 actors representing the four renewable energy projects as well as academia were interviewed during a seven- week visit to Oman within a period of seven weeks in spring 2014 (Table 3.3). Using semi-structured interviews, interviewees were asked about their motivations for building the projects; challenges faced before, during, and after building; and their interactions with governmental actors and other actors representing the selected renewable energy projects. Three questions guided the semi-interviews with RE projects representatives:
• To what extent are technical, political and social aspects incorporated in the
learning processes?
• How broad is the actors’ network and to what extent are their interactions
regulated?
• To what extent do the different actors’ visions converge?
The recruitment of a larger number of interviewees was constrained by: (i) limitations in the number of experts able to represent such projects; (ii) reluctance of candidates to participate in the interview session; and (iii) limitations in the amounts of time and funding allocated to fieldwork in Oman.
90 Table 3.3 Interviewees (Group II) representing four selected renewable energy projects, as well as renewables-related research in Oman, February – March 2014.
Meeting Name of Name of No. Position Category date projects organization 1 10 Feb 2014 Scientific Academic Sultan Qaboos Academic research University 2 11 Feb 2014 7 MW solar Energy policy Petroleum National oil enhanced oil advisor Development company recovery Oman (EOR) project
3 17 Feb 2014 Scientific Academic Sultan Qaboos Academia research University 4 03 Mar 50 kW PV Director Majan State-owned 2014 project Electricity company Distribution Company 5 10 Mar 303 kW solar Director Rural Areas State-owned 2014 project Electricity company Company 6 10 Mar 303 kW solar Planning Rural Areas State-owned 2014 project manager Electricity company Company 7 11 Mar 6 MW Manager Advanced Private 2014 concentrator Business company photo voltaic Solutions (CPV)
91 3.4.3 Semi-structured interviews (Group III): Energy experts
Just interviewing representatives of renewable energy projects was, nonetheless, unsatisfactory because these renewable energy projects do not work in isolation of their surrounding environment, in which they are embedded and interact. Therefore, it was essential to examine the influence of other factors such as institutional, market, technical and cultural factors existing at dominant energy regime and play a potential role to promote or discourage the development of renewable energy projects. Therefore, further interviews with energy experts representing the government, business, and knowledge centres, with whom actors representing renewable energy projects interacted, were needed to provide a broader picture of challenges and opportunities for renewable energy adoption in Oman. Semi- structured interviews were conducted with energy experts, with the objectives to:
• Categorize the country’s motivation for renewable energy use from the
perspective of energy experts;
• Identify key challenges to renewable energy uptake in Oman from
stakeholder perspectives;
• Gather views on measures for the future development of renewable energy in
Oman; and
• Test the level of collaboration among actors involved in renewable energy
development as well as the extent of collaboration with other actors in the
academic, public, and private sectors in Oman.
92 The exploratory research and semi-structured interviews with representatives of renewable energy projects led to the identification of interviewee candidates for this third group of actors representing the dominant energy regime. Before undertaking the fieldwork, invitation letters were sent to the potential interviewees via e-mail.
The invitation letter explained the purpose of the research, the research rationale as wells as ethical issues and security of information. In total, 12 people were interviewed during a seven-week visit to Oman between 26 January and 13 March
2014. The interviewees represent three different sectors, including research, government, and business.
The category, position, institution name, and date of interview of each interviewee is listed in Table 3.4. Interviews lasted between 45 and 90 minutes and were recorded and later transcribed for subsequent coding. During the interview, interviewees were invited to talk about: organizational context regarding renewable energy development, organisational motivations towards renewable energy development in
Oman, challenges to renewable energy development, suggestions for policies to ease future implementation of renewable energy development in Oman, and the extent to which they influence or have been influenced by decision-makers with regards to renewable energy development in Oman. Organisational collaboration in the development of renewable energy in Oman was also investigated during the interviews. Interview questions are presented in Appendix A.
Furthermore, interviews were tailored with quantitative questions through which the interviewers were asked to score the importance of identified motivations and
93 barriers based on a scale of 1 to 4, where 4 represents high importance and 1 represents least importance.
Table 3.4. Details of energy experts who were interviewed between February and
March 2014, Group III, Oman.
Meeting No. Position Institution Category date
11 Feb Public Authority for 1 Engineer Government 2014 Electricity & Water
12 Feb Ministry of Environment 2 Environmental Expert Government 2014 & Climate Affairs
23 Feb 3 Research Director The Research Council Academia 2014
23 Feb Oman Power 4 Manager Company 2014 Procurement Company
24 Feb Oman Electricity 5 Manager Company 2014 Transmission Company
26 Feb Authority for Electricity 6 Director Government 2014 Regulation
10 March Muscat Electricity State-Owned 7 Planning Engineer 2014 Distribution Company Company
10 March Muscat Electricity State-Owned 8 Planning Manager 2014 Distribution Company Company
94 11 March Majan Electricity State-Owned 9 Electricity Engineer 2014 Distribution Company Company
12 March Ministry of Environment 10 Climate Change Expert Government 2014 and Climate Affairs
12 March Ministry of Environment 11 Climate Change Expert Government 2014 and Climate Affairs
12 March AMGE Renewable Energy Private 12 Manager 2014 Solution Provider Company
3.5 Secondary literature – Systematic review and political strategies
As discussed in section 3.4.2, interviewing larger number of interviewees was constrained the limited number of RE projects in Oman and thus limited number of experts representing existing projects. This small number of interviewees makes it difficult to avoid the interviewees’ bias towards the issues discussed during the interview because an individual’s opinion can be personal and might not necessarily be representative of the actual role of the organisation. Secondary data, therefore, were essential at this level of analysis to enhance the completeness of the findings from 7 semi-structured interviews, which, in total, result in a small data sample for only five pilot projects. Therefore, to overcome such limitation and to gain further details about pilot projects surveyed in this paper, peer-reviewed journal articles, governmental documents, and newspaper articles were collected. Governmental documents included Annual Reports prepared by the Authority for Electricity
Regulation (AER), and the Study on RE Resources (2008) issued by the AER.
95 Presentations delivered by the AER, such as in Cunneen (Cunneen, 2005), were requested from interviewees to support the analysis of factors that lead to the success or failure of surveyed pilot projects.
Further, literature pertaining renewable energy development in Oman has been deemed essential to enhance the identification of factors and conditions that have held Oman back from adopting renewable energy. In particular, it was important to learn about the interest of academic research to address technical, economic, social and political challenges facing the development of renewable energy in Oman.
Therefore, systematic review of literature focused on renewable energy development in Oman only was conducted.
Moreover, although interviewing energy experts representing Oman’s energy regime helps to identify the factors that challenge the uptake of renewables and exist in the surrounding environment of RE projects, just focusing on interview outcomes is not sufficient to learn about the interaction between RE projects and Oman’s energy policy. Therefore, to unlock the understanding the role of power and politics at
Oman’s energy regime in influencing the uptake of renewable energy in Oman, secondary data on pertaining political strategies at energy regime were collected.
These two sets of secondary data are discussed in detail, as follows:
3.5.1 Systematic literature review: Oman only
96 To learn about the extent at which factors and conditions that have held Oman back from renewable energy deployment are addressed in the existing literature, systematic review of articles that had focused only on Oman and been published between 1995 and 2015 was conducted. To do so, this systematic review of literature is aimed at analysing changes in academic interests to address factors such as technical, economic, institutional, political and social factors towards renewable energy development in Oman.
To analyse changes in academic interests towards renewable energy development in
Oman, in total, 92 peer-reviewed journal articles published between 1995 and 2015 were identified and collated in an Excel spreadsheet; these articles were organised on the basis of title, year of publication, author names, journal name, focus (i.e. technical, economic, or political), and frequency of mention of ‘policy’ words. This systematic review of literature helps to learn about the trends in renewable energy development in Oman and thus identifying gaps in existing knowledge.
3.5.2 Secondary literature on political strategies
The systematic review of literature focused only on renewable energy development in Oman, and the interviews with representatives of renewable energy projects and energy experts were useful to identify the different factors and conditions that have delayed the uptake of renewable energy in Oman but were insufficient to inform the analysis of political strategies employed by political actors to influence the uptake of renewable energy in Oman. As discussed in Chapter 2, an understanding of internal
97 processes that explain the success or failure of renewable energy projects in Oman is not sufficient; further understanding of other external factors with which such renewable energy projects interact is equally important in order to gain a detailed picture of the factors that influence the uptake of renewable energy in Oman. Given the vested interest of rentier actors in hydrocarbon resources, an analysis of the role of power and politics in assisting or discouraging the uptake of renewable energy in
Oman is especially important (see section 2.5).
To identify the strategies exercised by political actors to influence the development of renewable energy in Oman, data, this time from secondary sources, were used.
Due to the limited availability of data on strategies employed by rentier actors to assist or prevent the uptake of renewables, as well as the sensitivity of the topic under question and limited willingness of interviewees to share opinions in politics related topics, this research uses secondary data such as governmental websites and reports, journal articles, company websites and newspaper articles to supplement the information provided by interviewees. Moreover, in certain situations, social media outlets—such as Twitter—were instrumental in the analysis of political strategies. The collection of secondary data was guided by the question: What strategies employed by political actors to assist or resist the uptake of renewables?
3.6 Analysis of primary data – Interviews
This section details the methods used to analyse the primary data from interviews.
98 3.6.1 Analysis of semi-structured interviews (group II): Grounded theory
This thesis aims to achieve a closer look at renewable energy projects and to improve the understanding of practical barriers towards their implementation. The limited movement in the renewable electricity sector to date constrains the number of case study options. Therefore, the semi-structured interviews with actors representing the five selected renewable energy projects (i.e. group II) were valuable to inform their analysis.
The Grounded theory (GT) approach was selected to analyse the data gathered from semi-structured interviews because (i) it is primarily associated with interview transcript analysis, and (ii) the ‘inductive’ GT approach can be used to derive concepts and categorise data to capture the meaning contained within the data
(Denscombe, 2010). Coding and memoing were used simultaneously to analyse interview transcripts. This thesis employs Denscombe’s definition of codes, which are:
tags or labels that are attached to the ‘raw’ data. They can take the form of names, initials, or numbers; it does not matter as long as the code is succinct and is used systematically to link bits of the data to an idea that relates to the analysis (Denscombe 2010, p. 284).
In this thesis, coding the interviews transcripts involved using technical, economic, social and political labels to differentiate between the different challenges faced the development of renewable energy projects.
99 Memoing was the second basic operational tool used in qualitative data analysis of interview transcripts (Punch, 2005). Strauss and Corbin (1990) differentiate memos used for data analysis from those written or typed for communication among members of organisations or families; they define memos as specialised communications that contain the products of analysis or directions for the analyst. In this thesis, Glaser’s (1978) definition of a memo was employed:
A memo is a theorizing write-up of ideas about codes and their relationships as they strike the analyst while coding … it can be a sentence, a paragraph or few pages … it exhausts the analyst momentary ideation based on data with perhaps a little conceptual elaboration (Glaser, 1978, p. 83).
During the interview transcript analysis, memos were used to correlate different concepts and link the codes. Memos were used to record observations and take notes during the interview process and were also employed hand-in-hand with coding during the analysis process. There was no specific period during which memos were employed. The data analysis results from the use of GT approach to analyse semi-structured interviews (Group II) are presented in Chapter 5, section 5.4.
3.6.2 Analysis of semi-structured interviews (group III): Grounded theory
This set of 12 semi-structured interviews, i.e. group III, were also analysed using GT approach because of its ability to allow the generation of country-specific data about drivers, barriers and policies to renewable energy development in Oman from interviewed stakeholders, especially in cases with limited availability of information.
Further, the use of GT approach helps to view the barriers to renewable energy
100 implementation from another perspective, enable a better understanding of it.
Importantly, it helps to produce a fuller picture that incorporates different facets of the barriers to renewable energy implementation (Denscombe, 2010).
Also, GT enables these barriers to be decomposed into levels ranging from the general to the specific, which aids in understanding the causes behind existing barriers; this, in turn, may help stakeholders more readily understand and respond to barriers. Generation of concepts and decomposition of identified barriers was accomplished using memoing and coding processes simultaneously during the analysis of the interview transcripts. Following methods described by five key GT scholars, including Glaser and Strauss (1967), Glaser (1978), Strauss (1987), Strauss and Corbin (1990), and Glaser (1992), three coding procedures were used to enable decomposition of identified barriers. These procedures, open coding, axial coding, and selective coding are explained as follows:
• Open coding was used for the first level of conceptual analysis of data to find
the substantive codes within the data. The term ‘open’ is derived from
fracturing or ‘breaking open’ the data to reveal the theoretical possibilities
therein. Open coding was accomplished through line-by-line analysis in order
to abstract the concepts and categories from data. Manual labelling is an
open coding method in which labels are attached to pieces of data that may
consist of words, phrases, lines, paragraphs, or more, depending on the data
collected (Punch, 2005). During this stage, numerous concepts and categories
were identified in the data.
101 • Axial coding was used to connect the substantive categories developed by
open coding. Axial coding, or theoretical coding, is used to make connections
between a set of concepts (Strauss & Corbin, 1990).
• Finally, selective coding was used to develop abstract, condensed, integrated,
and grounded pictures of the data. These selective codes constitute the core
categories and storylines that represent the central phenomena around which
other categories are integrated. As will be shown in Chapter 6, market,
economic, financial, technical, and cultural barriers are the foremost selective
codes that were identified in the selective coding process.
The data analysis results from the use of GT approach are presented in Chapter 6.
3.7 Analysis of secondary data
This section details the methods used to analyse secondary data from systematic review of literature focused on Oman only and secondary data on political strategies.
3.7.1 Quantitative analysis of systematic review of publications on RE implementation in Oman
Articles published between 1995 and 2015 were analysed to uncover whether there had been a shift in academic interest toward renewable energy development in
Oman between 1995 and 2015.
102 A total of 92 journal articles were analysed quantitatively in two ways: first, the total number of articles published in each year between 1995 and 2015 was identified; second, content analysis was employed to identify the number of mentions of technical, economic, and political words in the surveyed articles. The directed coding approach was used to identify these three selected categories. All text passages in the selected categories were coded. Textual analysis of those passages and the frequencies of mention of technical, economic, and political categories in the text passages from the surveyed journal articles were counted. The outcome of this analysis is presented in section 5.3.
3.7.2 Analysis of secondary data on political strategies - Process-tracing method
Process tracing method was used to analyse secondary data on political strategies detailed on section 3.5. The analysis of these data aims to examine the influence of political regime actors on the decision-making in relation to renewable energy development in Oman. In social science, process-tracing is a method for studying the causal mechanisms that link causes with outcomes; this enables the researcher to make strong inferences about how a cause (or set of causes) contributes to an outcome (Beach & Pedersen, 2013). In this thesis, causes refer to strategies used by energy sector decision-makers, and outcomes refer to the delay of renewable energy development in Oman. In process tracing, interview transcripts and secondary sources mentioned in section 3.5 are examined to see what are the causal processes employed by rentier actors to assist or delay the uptake of renewable energy in
Oman. According to George & Bennett (2005):
103
In process tracing, the researcher examines histories, archival documents, interview transcripts, and other sources to see whether the causal process a theory hypothesizes or implies in a case is in fact evident in the sequence and values of the intervening variables in that case (p. 6).
The process-tracing method was used to investigate whether rentier state theory
(RST)-based predictions match the empirical evidence in real situations. In other words, to investigate whether rentier actors play strategic roles in resisting the uptake of new technologies that threaten their interest in maintaining the status quo, including instrumental, defensive, discursive, and strategic uses of institutions and resources (see section 2.4.6).
Process tracing can be used to either test theories or inductively generate new variables or hypotheses from the mechanisms observed in case studies (George &
Bennett, 2005). Although RST-based strategies were identified in sub-section 2.4.6, the use of process tracing in this thesis is not restricted to testing existing theory.
Rather, new hypotheses may be generated from the mechanisms observed in the collected data.
The analysis using process-tracing method to secondary data sources is presented in section 7.3.
3.8 Thesis approach, integrated analysis of primary and secondary data
104 In keeping with the STEP analytical framework developed in Chapter 2, this section suggests how the primary and secondary data have been integrated in light of the proposed thesis approach.
In chapter 2, it was discussed that in order to achieve better understanding of factors and conditions that have held back the uptake of renewable energy in hydrocarbon-rich sates, several elements from different approaches, i.e. strategic niche management (SNM), multi- level perspective approach (MLP) and rentier state theory (RST) (see section 2.6), need to be brought together. While these approaches complement each other, their approach to renewable energy uptake in hydrocarbon states remain independent unless they are linked and combined. With this in mind, this section suggests a plan to combine and link the three theoretical concepts –i.e. technological niche, socio-technical regime and political economy – to achieve an integrated analysis of the data generated by this thesis empirical investigation.
More specifically, integrity was achieved by linking the theoretical concepts of i.e. niche, socio- technical regime and political economy concepts to SNM, MLP approach and RST, respectively.
The MLP is particularly useful to study the interplay between technological niches and, socio- technical regime and economic-political regime. Furthermore, these were linked to chosen indicators and guiding questions as the themes for enquiry emerged from the review of literature in Chapter 2. Data collection methods matched the guiding questions and indicators of each concept, for which both quantitative and qualitative analyses methods were employed to uncover the factors and conditions that held Oman back from using renewable energy in its energy mix despite the abundance of renewable energy resources and wealth from hydrocarbon resource revenues (Table 3.5).
105 Table 3.5 STEP analytical framework, relevant dimensions, guiding questions, and data sources and analysis methods.
Theory main Relevant Data analysis Approach Authors Guiding questions Sources of information concepts dimensions/indicators method - To what extent technical, economic, social and political aspects are aligned in the Kemp, Schot learning processes? Content 7 semi-structured and Hoogma, - How broad the actors’ analysis; Strategic Learning processes, interviews and Technological 1998; Rip and networking is and to what Grounded niche visioning, and Systematic literature Niches Kemp, 1998; extent their interactions are theory: management networks of actors review Kemp, Rip and regulated? Coding and
Schot, 2001 - To what extent the different memoing actors’ visions are converging?
- What are the barriers Grounded Socio- Rip and Kemp, Multi-level Institutional, market, existing at readily established 12 semi-structured theory: technical 1998; Geels perspective technical and cultural energy system that impede interviews Coding and regime 2002 the uptake of renewables? memoing Governmental Defensive strategies, documents, journal Beblawi, - What strategies employed material strategies, articles, companies’ Process- Political- Rentier 1987; Gray, by political actors to assist or institutional power websites and tracing economy states theory 2011; Levins, resist the uptake of and discursive newspaper articles and method 2013 renewables? strategies social media accounts such as twitter.
106 3.9 Conclusions
This chapter introduced the research methodology adopted to address the objectives of this thesis and justified the selection of Oman as a case study.
Both secondary information and semi-structured interviews were shown to be instrumental in informing the investigation presented in this thesis. Drawing on qualitative data, a mixture of qualitative and quantitative methods were shown to be useful in the analysis.
The analysis herein focused on four topics: (i) changes in academic interest towards renewable energy implementation in Oman; (ii) strengths and weaknesses of renewable energy projects; (iii) drivers, barriers and policy option in Oman’s energy regime; and (iv) political actors’ influence on renewable energy uptake.
The quantitative content analysis method was instrumental to assess changes in academic interest towards renewable energy implementation in Oman by analysing a set of academic articles published between 1995 and 2015. Qualitative analysis methods, on the other hand, were useful to analyse data from 7 semi-structured interviews with representatives of five renewable energy projects and 12 semi- structured interviews with energy experts. The GT approach was argued to be useful for and relevant to interview transcript analysis; coding and memoing were used to identify themes and sub-themes concerning drivers, barriers, and opportunities for
107 renewable energy uptake. Further, process-tracing method was shown to be instrumental to analyse secondary data in order to identify strategies used by political actors to influence the uptake of renewable energy in Oman.
Primary, secondary data, quantitative and qualitative data analyses complement each other and provide a detailed picture of the challenges and opportunities facing renewable energy uptake in Oman. This combination of methods enables capturing the significant elements, ranging from techno-economic to social and political factors that influence the uptake of renewable energy in Oman.
The findings from primary and secondary data, quantitative and qualitative analyses, are presented in Chapters 5, 6 and 7.
108 CHAPTER 4 Oman: hydrocarbons and renewable energy
4.1 Introduction
As discussed in chapter 3, Oman was selected as a case study in this thesis. This chapter expands on the discussion in section 3.2 and analyses Oman’s economy, energy policy, rising energy challenges and the status of renewable energy in relation to its historical dependence on hydrocarbons. The understanding of Oman’s context is important to unlock the understanding of factors and conditions that have held back its uptake of renewable energy.
Like neighbouring countries in the Gulf States, oil and gas wealth played a significant role in the distribution of power among Omani rulers and citizens. The success of
Oman’s economy and government is, therefore, rooted in its petroleum and natural gas export revenues. The commercial production of oil in Oman in 1960s was key to funding state-sponsored developments, including basic infrastructure such as the building of transportation infrastructure, schools, hospitals and telecommunication systems and the introduction of electricity services in the country. This activity fostered steady economic growth and greatly improved the standard of living.
The Omani government established itself as the primary means of economic redistribution for all of Oman’s ethnic, religious, regional and tribal groups through its monopoly over oil rent. Rent redistribution has been key to centralising the authority of the Omani state and minimising the importance of these other groups
(Valeri, 2013). Providing cheap energy via hydrocarbon subsidies have been a
109 convenient way to distribute oil revenues, maintain the legitimacy of the ruling family and eliminate the representation of citizens. Further, state-owned enterprises in energy sector have been a predominant practice to ensure control over hydrocarbon production and allocation of resources.
These three features of energy policy (i.e. state-owned enterprises, hydrocarbon subsidies and government monopoly) significantly contribute to hydrocarbon path- dependency while also forming formidable barriers to the diffusion of new energy services, such as renewable energy. Yet, despite Oman’s vested interest in hydrocarbons, attention towards renewable energy development in Oman has increased in the latest years.
4.2 Oman’s historic dependence on hydrocarbons
To better understand the context into which renewable energy will be introduced, it is important to trace the historical evolution of Oman’s energy system. This section describes the importance of oil and gas discoveries in the history of Oman in terms of shaping not only Oman’s domestic energy system but also its political economy, which has been characterised by the distribution of oil wealth and governmental interest to maintain the status quo.
4.2.1 The discovery of oil and gas and the shaping of Oman’s economy
110 The discovery of oil and gas played an important role in Oman’s history. Oman’s economic prosperity is directly linked to the development of the oil industry. The discovery of oil over the past five decades and the use of its export revenues has boosted spending in infrastructure, health, education and welfare and, most importantly, influenced the formulation of Oman’s institutional settings.
Commercial oil production was started in 1962 when, after 37 years of intensive oil exploration activities, the Petroleum Development Company discovered commercially-viable oil reserves in the Yibal field; this find was followed by discoveries in the Natih and Fahud fields in 1963 and 1964, respectively (van
Scherpenzeel, 2000), which were followed by several more oil discoveries. The first oil cargo was exported in 1967 and was followed by the discovery of natural gas in
1978, which shifted attention to increasing investment in the gas sector. This, in turn, shifted the energy sector away from oil to meet increasing local demand for power generation, water desalination and export contract commitments and to diversify and sustain economic growth (MOG, 2013).
Oman’s crude oil production grew steadily from 283,000 barrels per day in 1980 to
955,000 barrels per day in 2000, albeit with some periods of shrinking production.
For instance, after peaking at 955,000 barrels per day, production in the following years fell to 710,000 barrels a day in 2007, which was nearly the number in 1990. In
2011, Oman produced 884,900 barrels per day, which accounted for a more than
24% increase over the previous four years from the 2007 minimum (NCSI, 2015)
(Figure 4.1).
111 1,200,000 35
1,000,000 30 25 800,000 20 600,000 15 400,000 Barrels per day per Barrels 10 Billion Cubic Meters 200,000 5
0 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Crude oil daily average (barrels/day) Oman Natural Gas Production (Billion Cubic Meters)
Figure 4.1 Oil and gas production in Oman 1980–2017. Source: Author, based on data from NCSI (2012) and BP (2018).
This increase in oil production and export was accompanied by an expansion of the gross domestic product (GDP) per capita by an average of 9.7% between 1966 and
1990 (World Bank, 2015). Since then, Oman’s economy has been heavily reliant on oil and gas export revenues, which contributed 81.1% of the country’s gross export revenues in 2012 (omanet.om, 2012) and a significant part of its GDP (which increased from 41.9% of the GDP in 1991 to more than 50% in 2011, and remained just under 50% in 2014 ;(NCSI, 2012). Meanwhile, non-oil revenues contributed 48% of the GDP in 2011 and 60% in 2014 (NCSI, 2015) (Figure 4.2).
112 Mining and quarrying
Electricity and water supply
Agriculture and fishing
Building and construction
Manufacturing
Oil and gas
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
2011 2014
Figure 4.2 Share of economic sectors in Oman’s GDP in 2011 and 2014.
Source: Author based on data from Statistical Year Book (2015).
Oman consciously built a domestic oil and gas sector to fully exploit its riches; this has led to the emergence of the energy sector as the most prosperous of all Omani industries and arguably the strongest vested interest, with institutional and bureaucratic apparatus built to cater to its needs. To date, the energy sector has, with little doubt, exerted substantial influence on Oman’s political-economic decision making. Energy policy in Oman is still heavily angled toward prolonging the extraction of oil and gas into the indefinite future and features a vested interest in satisfying the requirements of the oil and gas sector (James, 2017b, 2017c). Features of this vested interest in hydrocarbons are discussed in detail in section 4.4.
4.2.2 Hydrocarbons influence on Oman’s electric power system (1970s–2014)
113 The evolution of Oman’s electric power system is highly correlated to the discoveries of oil and gas resources since the 1960s. The first power and desalination plant was established in 1975 in Al Ghubra, with an initial capacity of 25.5 MW of electricity and 6 million gallons of desalinated water. The plant was initially fired by diesel before its upgrade in 1980s. That upgrade converted the plant from diesel to natural gas and increased the capacity to 294 MW and 12 million gallons of water. In 1986, due to demand for water that outpaced supply, two new water units were constructed to double the production capacity to 24 million gallons. Initially, the Al
Ghubra project principally supplied the capital city (Allen & Rigsbee, 2000).
A new Ministry for Water and Electricity Regulation was established in 1978. The new ministry extended the construction of power stations to areas beyond the capital city, including some northern parts of Oman, building a 250 MW station to serve the Rusail Industrial Estate, the 26.5 MW Wadi Al Jizzi station serving residential sector, and a 53 MW station serving a copper refinery and Sohar. Another
22 locations outside the capital city were also supplied with about 27 MW by diesel- powered generation plants (Allen & Rigsbee, 2000). The development of the national grid in the 1990s connected the capital city with other distributed generation plants and led to the establishment of new power projects to meet growing electricity and water demands. Following this historical expansion, the contribution of natural gas in the electricity generation fuel mix increased to more than 97% in 2011, while the diesel, which is used in off-grid plants to generate electricity for rural areas or as back-up for grid-connected plants during peak periods, contributed less than 3%
(AER, 2011; Allen & Rigsbee, 2000).
114
Before 1999, the generation, transmission, and distribution of electricity and related water services fell primarily under the authority of the Ministry for Water and
Electricity Regulation, which was a self-regulated, vertically-integrated utility
(Cunneen, 2005). The power sector was directly funded by the government. Due to the increasing demand for electricity and desalinated water as a result of increasing population, number of households, standard of living, urbanisation, and general industrial development, in 1999, the council of Ministers of the Sultanate of Oman approved policies for the restructuring and prospects for privatisation of Oman’s electricity sector. Along with increasing demand for water and electricity, this power sector restructuring was also driven by the need to enable demand forecasting, improve efficiency, increase financial transparency, supply security, and facilitate private sector investments (Cunneen, 2005).
The electricity sector restructuring was fully implemented in May 2005. The set of players involved in this transformation expanded from the historical set of utilities and regulators to include generation, transmission, and distribution state-owned companies. In 2005, the Authority for Electricity Regulation was established to undertake the regulation of the newly restructured electricity sector. Likewise, the
Public Authority for Electricity and Water was established to handle all of the sector’s legal responsibilities, which were previously enacted by the Ministry for
Water and Electricity Regulation. Up to 2017, the Authority for Electricity Regulation regulates the electricity sector under the new Sector Law, which was approved by
115 the Council of Ministers in 2004 to oversee the development of regulation and progressive privatisation of the electricity and related water sectors (IBP Inc., 2015).
The new electricity sector consists of three markets: the Main Interconnected
System (MIS), which serves the majority of customers residing in the northern part of the county; the rural areas market, which serves rural areas in Oman; and the
Dhofar electricity market, which serves the southern part of Oman (Figure 4.2).
Generation, transmission, and distribution companies were unbundled under the new electricity market, except for those in the rural electricity market. Although one of the most important regulatory developments of the 2004 law was to unbundle the electricity sector into generation, transmission, and distribution sectors, Oman
Power and Water Procurement Company (OPWP) (Figure 4.3), under the single-
1 buyer model , remains the only entity that can buy electricity from all licensed electricity generation companies under long-term contracts of power purchase, which span 15 years on average.
To compete for a power purchase agreement contract, the Oman Power and Water
Procurement Company (OPWP), which operates under a single buyer model, remains legally obligated to show the economic feasibility of electricity production.
Unbundling in Oman was aimed at enforcing accountability, better management, and promoting efficient operations. The Oman electricity distribution market has been monopolised by three licensed, state-owned electricity distribution companies,
1 Single Buyer Model in the context of Oman is defined as there is only one buyer (i.e. sole purchaser of capacity and output from the licensed production facilities) and seller of bulk electricity (i.e. sole provider of bilk supplies of electricity to electricity distribution companies) (AER, 2008).
116 i.e. MEDC; Majan, Mazoon, and DPC; Figure 4.3) that have the right to pay the
OPWP (the single buyer and seller of electricity) for the bulk supply in order to distribute electricity within their authorised areas. The legislation stipulates that the electricity distribution companies can only purchase their electricity from the OPWP
(Royal Decree 78/2004, 2004).
Direction of Transmission
Al Rusail Al Ghubrah
Wadi Jizzi ACWA Barka MEDC MIS OPWP C UPC Sohar Majan U Al Kamil SMN Barka OETC S Al Sawadi Al Batinah Mazoon T Sur O M E Rural Generation Distribution & Supply R S
DGC OPWP DPC Dhofar Sembcorp Salalah DPC/OETC
Generation Distribution
Figure 4.3 Overview of principal regulated transactions in Oman’s electricity market. Source: Cunneen
(2005).
Electricity generation is characterised by high reliance on hydrocarbon-based technologies such as Open Cycle Gas Turbine (OCGT) and Closed Cycle Gas Turbine
(CCGT). The main national grid in Oman consists of a total of 11 plants, which generate electricity from natural gas (OPWP, 2015) (Figure 4.3). Of those, five are operational Open Cycle Gas Turbine (OCGT) plants with a total generation capacity of 1945 MW and six are Closed Cycle Gas Turbine (CCGT) plants with a total generation capacity of 5171 MW (OPWP, 2015). The electricity generators purchase their gas requirements from the Ministry of Oil and Gas. Gas consumption used for electricity generation to provide electrical services including lighting, heating,
117 cooling, and the use of electrically powered appliances for the residential, commercial, industrial, governmental, agricultural, fishery, and tourism sectors
(along with the Ministry of Defence) has increased from 104.4 billion Scf in 2000 to
295 billion Scf in 2015 (AER, 2011; NCSI, 2015).
4.3 Oman’s energy policy and hydrocarbon path-dependency
Having analysed the role of oil and gas in shaping Oman’s economy and its electricity market, this section analyses Oman’s energy policy to enhance the understanding of the main features of Oman’s energy policy in which renewable energy can be introduced. This section explains how the abundance and high reliance on hydrocarbons export revenues has also contributed in shaping domestic energy policy in Oman. As mentioned in the chapter’s introduction, Oman’s energy policy has been featured by state-owned enterprises, hydrocarbon subsidies, and government monopoly. This section discusses these three features in detail and explains how they have been playing a role to perpetuate oil-path dependency while also restrict the uptake of renewables.
4.3.1 Predominance of state-owned enterprises
In Oman, the government plays a large role in the economy through multiple state- owned enterprises and parastatal2 corporations. In 2010, for example, the
2 Parastatal meaning in Oxford Dictionaries: (of an organization or industry) having some political authority and serving the state indirectly.
118 government owned at least 51% shares in oil and gas companies, aviation, telecommunication, shipping, power and commercial and industrial companies
(State Audit Institution Oman, 2010). State-owned enterprises are profitable, politicised, and serve the political purposes and enjoy the direct protection of the ruling elite; members of the ruling family often serve as company chairmen. This is particularly evident in the oil industry sector, which provides the main source of income.
Prominent examples of state-owned enterprises in Oman’s oil industry include
Petroleum Development Oman (PDO), which accounts for around 70% of the country's crude oil production3 and is 60% owned by the government (IBP Inc.,
2015). PDO also controls nearly all of the natural gas supply in Oman, while the gas transmission and distribution systems are regulated by the Oman Gas Company, which is a joint venture between the Ministry of Oil and Gas (80% of shares) and
Occidental Oman (20%). The Oman Oil Company is responsible for energy investments both inside and outside of the country and is fully government owned.
The government of Oman also owns all or a majority share in all companies associated with energy industry (IBP Inc., 2015).
Public enterprises have comparatively better access to credit. The board membership of state-owned enterprises is composed of various government officials, with a senior official, usually cabinet-level, serving as chairperson. For
3 About Petroleum Development Oman (PDO): http://www.pdo.co.om/en/about/Pages/default.aspx
119 example, the Minister of Oil and Gas serves as the Chairman of Petroleum
Development Oman; he also serves as the Chairman of the Board of Oman LNG
L.L.C., the Chairman of the Oman Refineries and Petrochemicals Company L.L.C., and the Vice Chairman of the Oman Oil Company S.A.O.C.4
State-owned enterprise are fundamentally political institutions. They are ultimately subject to political policy and serve as instruments of political pre-emption and control that are utilised by the state to exert its will (Richards & Waterbury, 2008, p.
203). In such enterprises, it is the state, rather than market forces, that controls how these parastatal companies determine patterns of production and allocation of resources.
The inherent nature of state-owned enterprises presents several challenges to new entrepreneurs such as renewable energy investors by distorting the effects that such entrepreneurs have on the national economy. These state-owned enterprises have a detrimental effect on private sector growth and development, dominating certain sectors of Oman’s economy and creating a de facto monopoly in certain industries; they are also able to reap the benefits of state patronage while remaining shielded from the market demands for profitability and productivity that would be required of comparable private enterprises.
Protectionist policies and government favouritism for state-owned enterprises inevitably put artificial limits on entrepreneurship and market competition. As long
4 Bloomberg: Mohammed bin Hamad Al Rumhy: https://www.bloomberg.com/research/stocks/private/person.asp?personId=26082935&privcapId=9663 738
120 as the state maintains a presence in certain sectors of the economy through state- owned enterprises, it will serve as a barrier to new entrepreneurs which do not enjoy the patronage of the state. Additionally, the political clout of these state capitalist institutions allows them to edge out smaller domestic rivals in similar economic roles, further limiting healthy economic competition.
The political nature of these enterprises also poses another potential barrier to new market entrants and economic growth. The potential for politically motivated favouritism and cronyism5 in these enterprises is extremely high given the patronage-based and redistributive economic model of rentier state governance.
These politically driven enterprises inherently favour those with political connections, or [in Arabic wasta], from groups with favoured social, political, or economic positions.
Another potential barrier to new markets entrants can also results from Oman’s privatization of some of its state-owned enterprises. For instance, as part of its larger economic reform strategy, the Omani government has begun to divest its interest in some of its public enterprises through gradual privatization. However, the opaque nature of this privatization and the closed political system in Oman could potentially lead to a transfer of wealth and assets from the state to a small cadre of politically connected insiders, creating a system of crony capitalism6. This type of rent-seeking capitalism would ultimately be detrimental to Oman’s long-term economic growth.
Crony capitalism leads to the improper allocation of resources and bars new entrants
5 In Oxford Dictionaries, cronyism is defined as the appointment of friends and associates to positions of authority, without proper regard to their qualifications. 6 In Oxford Dictionaries, crony capitalism is defined as An economic system characterized by close, mutually advantageous relationships between business leaders and government officials.
121 into the private sector who are unable to compete with firms connected to the government. These artificial barriers to market entry created by crony capitalism could prevent Omanis from engaging in entrepreneurship and threaten the viability of Omani-owned small and medium enterprises that do not possess political connections.
4.3.2 Provision of hydrocarbon subsidies
Hydrocarbon subsidies also features in Oman’s political economy and contribute to path-dependency; they also form a barrier to renewable energy integration.
Hydrocarbon wealth has been considered something of a public good to be provided by rentier state governments, if not for free, then at prices that have been, in many cases, a fraction of their price in other international markets (El-Katiri, 2014).
In Oman, the electricity sector is subsidised at both the generation and distribution ends. On the electricity generation side, hydrocarbon subsidies provided by the government to electricity generators consist mainly of financial incentives to engage in energy supply in Oman so that the provision of electricity and related water services is secure in all parts of the country. Electricity generators in Oman purchase their gas requirements from the Ministry of Oil and Gas at a cost of USD1.5 million
British thermal unit (mmBtu), which is much lower than the gas price in the international market (AER, 2011). The governmental subsidy, which covers the cost difference between the purchased natural gas and the international market price, equals 105.4 million Omani Rial at a cost of USD1.5 per MMBtu and is subject to increase as the cost of gas in the international market increases. Natural gas
122 subsidies can increase five-fold when the price of natural gas on the international market reaches USD9 per MMBtu. For instance, the doubling of the wholesale price for natural gas from USD1.50 per mmBtu to USD3 per mmBtu on 1 January 2015 resulted in a significant increase in the total system cost for electricity generation, which by necessity was absorbed via a significant increase in the direct subsidy to the sector (Oxford Business Group, 2016). On the electricity distribution side, electricity tariffs are highly subsidised in a way that does not reflect the real cost of electricity production. In Oman, the average price of electricity is almost twelve times less than the average price of electricity in Australia, five times less than UK prices, and four times less than US prices (Figure 4.4).
Australia 0.49 UK 0.21 United States 0.18 UAE 0.1 Saudi Arabia 0.09 Qatar 0.05 Oman 0.04 Bahrain 0.03 Kuwait 0.01
0 0.1 0.2 0.3 0.4 0.5 0.6
Average Electricity price in USD/kWh
Figure 4.4 Average electricity price in the GCC, USA, UK and Australia in 2015. Sources: Author based on data from IMF (2015); Statistica (2015).
Since the 1980s, the government has set a fixed tariff structure at very low prices which neither reflect the real economic costs of electricity generation nor provide
123 sufficient revenue to cover the economic cost of supply. Therefore, the government subsidises the distributors to remunerate them for the full economic cost of supply.
These tariff subsidies are identified by the Authority for Electricity Regulation as ‘the difference between the economic cost of supply and Permitted Tariff revenue.
Subtracting customer tariff revenue from the Maximum Allowed Revenue identifies the electricity subsidy requirements in a particular year’ (AER, 2011). For instance, tariff revenues for the Main Interconnected System, which provides electricity to the northern half of Oman, accounts for 60% of the total economic cost, while the remaining 40% of the economic cost of supply is covered through governmental subsidies (AER, 2011). For instance, in the main national grid, the current power generation cost is 25 Bz/kW (~0.065 USD/kW), for which the consumer pays only 10
Bz/kW (~0.026 USD/kW) to the electricity distribution companies. Apparently, this does not cover the real cost of generation; thus, the government pays the difference between the generation cost and the total revenue in a form of subsidy at 15 Bz/kW
(~0.039 USD/kW). To this end, if electricity generated from renewable sources costs
70 Bz/kW (~0.18 USD/kW), then the government should pay a difference of 60
Bz/kW (~0.16 USD/kW), which is not competitive with the current 15 Bz/kW (~0.039
USD/kW) subsidy. To illustrate this further, Table 4.1 provides a comparison between CCGT and OCGT technologies and the five types of renewable energy technologies in terms of investment cost (USD per kW) and the average Levelised
Cost of Electricity (LCOE). The investment cost of utility-scale solar PV can be almost four times that of CCGT and OCGT technologies, three to eight times the cost of conventional technologies in the case of solar CSP technologies, and twice the cost of onshore wind technologies (Table 4.1). Moreover, based on 2014 data, for all
124 renewable energy technologies the average Levelised Cost of Electricity (LCOE) remains significantly higher than the average LCOE for CCGT and OCGT (USD 0.02–
0.05 per kWh); despite the lowest cost of utility-scale solar PV, which hit a record low of USD 0.06 per kWh, as recorded in Dubai in 2014 (Table 4.1).
Table 4.1 Estimated costs of RE technologies compared to natural gas power generation-based technologies in the GCC. Data aggregated from IRENA reports (2014). Technology type Investment cost Average LCOE (USD/kWh)
(USD/kW) in 2014
CCGT 1100 0.02 – 0.05
OCGT 750 0.02 – 0.05
Utility-scale solar PV 1,570 – 4,340 0.11 – 0.28 (0.06 in
Dubai7)
Residential solar PV N/A 0.14 – 0.47
Parabolic trough solar 3,550 – 8,760 (in 2013) 0.17 – 0.35
CSP
Solar towers CSP 3,550 – 8,760 (in 2013) 0.17 – 0.29
Onshore wind 1,280 – 2,290 0.06 – 0.12
Thus, there is a double subsidy system in Oman’s electricity sector at the supply and demand sides. This double subsidy system could put pressure on the state’s budget, especially during periods with increasing hydrocarbon prices in the international
7 Without any financial support.
125 markets, which force the government to pay for the difference between the fixed cost of energy at the national level and the price of the commodity on the international market. This subsidy system reflects a fragile energy system even during periods with low oil prices, when the difference between the fixed hydrocarbon prices at the national level and international level is minimised. Low oil prices still exert a huge amount of pressure on the state budget as a result of decreased hydrocarbon export revenues, which are the main source of budget balance. Nonetheless, with the rentier actors’ interest in maintaining status quo, the current electricity sector laws require that electricity be generated from most feasible and also least expensive technologies.
This double subsidy system favours pre-existing modes of power generation based on hydrocarbons and thus decreases the competitiveness of renewable energy investments; it also creates an attractive environment for large-scale power investors to invest in either natural gas- or diesel-based projects, which feature relatively cheap supplies of oil and gas.
4.3.3 Government monopoly in the energy sector
Another factor that contribute to oil-path dependency is the absence of market competition via government monopoly. In Oman, the electricity market is regulated by the Authority for Electricity Regulation under newly established sector law.
Oman’s electricity market features an absence of competition, as network
126 companies such as the Oman Electricity Transmission Company (OETC); distribution companies such as the Muscat Electricity Distribution Company (MEDC), Majan,
Mazoon, and the Dhofar Power Company (DPC); and the single buyer and seller of electricity and water (OPWP) are all statutory monopolies established under the sector law.
The OETC is the monopoly provider of transmission services to the main national grid in the northern half in Oman. The OETC is responsible for the central dispatch of electricity generation and desalination facilities connected to the main national grid
(AER, 2008). Similarly, the electricity distribution market is currently monopolised by four licensed, state-owned electricity distribution companies (MEDC, Majan,
Mazoon, and DPC; see Figure 4.3). These licenced distribution companies have monopoly rights to distribute electricity within their authorised areas. Moreover, the
OPWP is both the only buyer of electricity from the licenced electricity generation facilities and the only seller of electricity to the electricity distribution companies; the legislation stipulates that the electricity distribution companies can only purchase their electricity from the OPWP.
Although the established (2004) Electricity Regulation Law aims to unbundle the electricity sector into generation, transmission, and distribution sectors, the single- buyer model remains the only entity that can buy electricity from all licensed electricity generation companies under long-term contracts of power purchase, which last 15 years on average (Cunneen, 2005; IBP Inc., 2015). To compete for a power purchase agreement contract, the OPWP, which operates as a single buyer
127 model, remains legally obligated to demonstrate the economic feasibility of electricity production. Unlike in the West, where unbundling was considered necessary primarily for promoting competition, unbundling in Oman was aimed at preventing the abuse of market power and protecting consumers from potentially higher prices and lower quality of service.8 This, however, puts a structural burden on the spread of renewable energy production in Oman.
Accordingly, it is important to note that the electricity distribution monopoly, as well as the lack of coordination between the three distribution companies, may constrain the uptake of renewable energy, especially in view of the fact that the renewable energy resources that can be located and harvested by one system may serve smaller proportions of the population. In the current monopolistic electricity market, newcomers such as renewable energy investors will find it difficult to enter the market. In order to harvest renewable energy resources in a cost-effective manner, it is essential to enable a mechanism that allows small-scale generation of electricity, which is not present under current sector law. Furthermore, apart from the electricity generation plants, all of the remaining companies are government-owned and held at some remove through the Electricity Holding Company (EHC).
4.4 Energy challenges in Oman
8 Authority for Electricity Regulation (AER): http://www.aer- oman.org/aer/EconomicRegulation.jsp?heading=1
128 The Arab States of the Gulf (including Oman) have been endowed with high hydrocarbon reserves that have played a significant role in their economic prosperity and stability over the last eight decades. However, oil price shocks, increasing domestic energy demands, and climate change-related matters have arisen, and yet to be treated as a matter of urgency towards a search for alternative economic, low- carbon energy sources in the GCC. This section analyses the importance of addressing each one of these challenges and analyses the extent at which the uptake of renewable energy in Oman has been triggered by these challenges.
4.4.1 Oil and gas reserves and price shocks
In comparison to its neighbouring countries, nonetheless, Oman hosts the smallest hydrocarbon reserves, hydrocarbon export stocks, and revenues among the GCC, as discussed hereunder.
Oman had total proven reserves of 5.4 thousand million barrels of oil as at the end of
2016, and 24.9 trillion cubic feet of natural gas as at the end of 2016 (BP, 2016).
Oman’s 5.4 billion barrels of proven oil reserves rank 7th in the Middle East, and 23rd in the world. Iran holds the largest natural gas reserves in the Middle East region, with 1183 trillion cubic feet, followed by Qatar with 858.1 trillion cubic feet, as at the end of 2016. The reserves in Saudi Arabia, United Arab Emirates, Iraq, Kuwait, Oman,
Yemen, and Bahrain are far less than those in Iran and Qatar; the three smallest reserves are those of Oman, at just 24.9 trillion cubic feet, followed by Yemen and
Bahrain, at 9.4 and 5.8 trillion cubic feet, respectively (ibid). On the other hand,
129 Saudi Arabia holds the largest oil reserves in the region, with 266.5 billion barrels, followed by Iran, Iraq, Kuwait, and UAE, each with over 97 billion barrels as at the end of 2016 Qatar, Oman, and Yemen have the smallest oil reserves in the region, standing at 25.2, 5.4, and 3 billion barrels, respectively (BP, 2016). Accordingly,
Oman has very small oil and gas reserves compared with other countries in the region, which creates inevitable uncertainties with regards to Oman’s future energy supplies and revenues.
Oman’s crude oil reserve to production ration (R/P ratio) is equal to 14 years and its natural gas R/P ratio is equal to 27 years (IRENA, 2016). In fact, Oman has already started to import natural gas from Qatar via the Dolphin pipeline system since 2008
(EIA, 2013a).
Uncertainties associated with small oil and gas reserves go hand in hand with oil price shocks. As discussed in Chapter 1, the GCC states have narrow export profile: in
2015, oil and natural gas in total exports accounted for 50% in Bahrain, 89% in
Kuwait, 62% in Oman, 82% t in Qatar and 78% in Saudi Arabia (World Bank, 2015).
Oil and gas exports revenues have continued to generate significant economic wealth in the GCC countries, except for the UAE and Bahrain. In 2014, for example, hydrocarbon export revenues in Saudi Arabia accounted for 43% of GDP; 56% in
Oman, 51% in Qatar and 63% in Kuwait, and for less than 40% for the UAE and
Bahrain, accounting for 34% and 24%, respectively (EIA, 2013b). This high economic reliance on hydrocarbons exports revenues makes the Gulf States economies
130 correspond to changes in oil prices and thus highly vulnerable to fluctuation in oil prices (Figure 4.5).
Figure 4.5 Gulf States GDP and oil prices. Sources: Author based on data from World
Bank (2014).
The impact of oil price shocks can be exemplified by the slump in oil prices in mid-
2014. The drop in oil prices since mid-2014 has resulted in a direct reduction in oil contribution to the total GDP by around 50% for the UAE, 80 % for Bahrain, 30% for
Kuwait, 40% for Oman, 75% for Qatar and 40% for Saudi Arabia between 2013 and
2015 (World Bank, 2015). It had also a significant adverse impact on Oman’s state budget. The budget deficit grew dramatically (by 32%) between 2015 (2,500 million
Omani Rial) and 2016 (3,300 million Omani Rial) due to the recent drop in oil prices
(pwc, 2016).
4.4.2 Increasing domestic energy demands
131 Hydrocarbon resources not only nurture Oman’s economy, but are also the main source of the energy supply needed to meet increasing domestic energy demands.
Almost all of the local demand for energy in Oman, including industrial, transportation, power, and water generation, is met by domestic oil and natural gas resources.
In a total area of 309,501 km2, the population of Oman almost doubled from 2.34 million in 2003 to 4.24 million in 2014 (World Bank, 2013a). Due to the continuous population growth and general economic development in the country, the domestic demand for gas consumption over the last few years has increased dramatically. For instance, natural gas consumption by the industrial sector increased from 27.4% of total gas consumption in 2000 to 56% in 2014, and gas consumption by the power sector increased from 19.1% in 2000 to 21% in 2014 (NCSI, 2015) (Figure 4.6).
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00% industrial activities power generation oil fields other
2000 2014
Figure 4.6 Changes in natural gas consumption by sector in Oman in 2000 and 2014. Source: Author based on data from NCSI (2015).
132 Oman’s annual growth in power demand was projected to be 10% from 2013 to
2020 (OPWP, 2014). Meanwhile, the peak power demand is expected to increase by
11% in the same period. The semi-arid environment of Oman, need for air conditioning, increase in the standard of living, growth in energy-intensive industrialisation, population growth, introduction of new households, and infrastructure investments are the major factors behind the increasing power demand. Between 1995 and 2011, electricity consumption increased steadily among all these sectors, depending on natural gas and oil supplies for service generation
(NCSI, 2012) (Figure 4.7).
Historical electricity consumption by sector
10000 9000 8000 Residential 7000 Commercial 6000 Industrial 5000
GW/h Government 4000 3000 Other 2000 1000 0
1980 1985 1990 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Figure 4.7 Trends in electricity consumption per sector in Oman, 1995–2011. Source: Author based on data from Statistical Year Book (2012).
Accordingly, the total domestic gas demand doubled from 574 billion Standard cubic feet (Scf) in 2000 to 1,228 billion Scf in 2011. For example, the power sector, which provides electrical services including lighting, heating, cooling, and the use of electrically powered appliances for the residential, commercial, industrial,
133 governmental, agricultural, fishery, tourism, and defence sectors, showed a corresponding increase in natural gas consumption from 104.4 billion Scf in 2000 to
229 billion Scf in 2011 (AER, 2011). The total contracted capacity (4807 MW in 2012) is expected to increase to a maximum of 6910 MW in 2014 before falling back to
5844 MW by 2018 (OPWP, 2014). These projected demand capacities are intended to be filled by either extending current contracted capacities or contracting new capacities, all of which are fired by natural gas using either open-cycle gas turbine or combined cycle gas turbine technologies (OPWP, 2014). In 2011, natural gas accounts for almost over 97% of the total fuel mix used to fire power plants around the country, while a small amount of electricity is generated from diesel to supply off-grid rural areas (Figure 4.8) (AER, 2011).
Diesel, 2.5%
Natural gas, 97.5%
Figure 4.8 Energy-mix for power generation in Oman in 2011, Source: Author based on data from AER, (2011).
This increasing demand for power has, in return, put pressure on domestic
134 hydrocarbon supplies such as natural gas. Natural gas imports have occurred in most
GCC countries, including Oman, the UAE (19.2% of natural gas consumption), Kuwait
(37.7%); and Iran (7.3%; BP, 2014). Records indicate that Oman has obtained 10.8% of its natural gas through import from Qatar since 2007 through the Dolphin pipeline
(BP 2014; IBP Inc. 2015). In a 25-year deal, also Oman signed a memorandum of understanding to import gas from Iran starting in 2015.9 While the gas imports from
Iran will be allocated partially to Liquefied Natural Gas (LNG) processing, the majority will be used to meet domestic demand. The main driver for natural gas imports in Oman and other GCC countries, which used to be net exporters of natural gas, is the increasing domestic demand for energy, especially for electricity and water desalination.
4.4.3 Environmental impacts of the rise of hydrocarbons use
Oman is not a major contributor to global total GHG emissions but it is ranked among the highest in the world in terms of per capita carbon emissions (World Bank,
2013b). The Gulf states’ per capita emissions of carbon dioxide were the highest in the world in 2014. This is partly due to the states’ small populations and high levels of energy consumption. In 2014, Qatar topped the ranking emitting 40 metric tons per capita, followed by Kuwait ranked fourth, Bahrain fifth, the United Arab Emirates eighth, Saudi Arabia 10th, and Oman 13th (Figure 4.9).
9 See more information: http://uk.reuters.com/article/2013/08/27/uk-iran-oman- idUKBRE97Q0EE20130827
135
45 40 35 30 25 20 15 10 5 0 emissions (metricper tons capita) emissions 2 Qatar Kuwait Oman CO Curacao Bahrain Australia Lu xemb ourgSaudi ArabiaUnited States
Brun ei Darussalam Trinidad and Tobago United Arab Emirates Sint Maarten (Dutch part)
Figure 4.9 Worldwide countries with highest per capita carbon emissions (GCC States are highlighted in red). Source: Author based on data from World Bank (2014).
Domestic consumption of hydrocarbon resources, mainly oil and gas, has contributed to incremental increases in Oman’s total carbon emissions due to 100% reliance on these resources to meet increasing domestic energy needs. In the GCC, the total domestic consumption of oil surged by 113.7% between 1980 and 2013 and by 160.8% in terms of domestic natural gas consumption in the same period (EIA,
2013b). Meanwhile, the per capita electricity consumption of the GCC countries has exceeded the world average (3104 kWh per capita) but also surpassed the level of the major industrial countries such as the UK (5,407 kWh per capita), the US (12,988 kWh per capita) and dwarfed the level of other developing countries such as India
(765 kWh per capita) and China (3762 kWh per capita). In 2013, the per capita electricity consumption exceeded 10,000 kWh per capita for all GCC countries except for Oman (5981 kWh per capita) and Saudi Arabia (8,741 kWh per capita).
136 Total CO2 emissions have increased by a factor of 5, from a total of 11.9695084
MtCO₂ in 1990 to 65.1766135 MtCO₂ in 2014 (Figure 4.10) (World Resource Institute,
2014).
70.0000
60.0000
50.0000
40.0000
30.0000 MtCO₂e
20.0000
10.0000
0.0000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total CO2 (including Land-Use Change and Forestry) (MtCO₂)
Figure 4.10 Historical overview of total CO2 (including Land-Use Change and Forestry) (MtCO₂) in Oman (1990 – 2014). Source: Author based on data from World Resource Institute (2014).
In Oman, the energy sector accounted for 90% of total CO2 emissions in 2014 due to
100% reliance on hydrocarbons, followed by emissions sourced from bunker fuels, industrial activities, agriculture, and waste (Figure 4.11; World Resource Institute,
2014).
137 1% 0% 5% 1% 3% Energy (MtCO2e)
Industrial Processes (MtCO2e) Agriculture (MtCO2e)
Waste (MtCO2e)
Land-Use Change and Forestry (MtCO2) Bunker Fuels (MtCO2) 90%
Figure 4.11 Emissions per sector (MtCO2), Oman, 2014. Source: Author based on data from World Resource Institute (2014).
While renewable energy technologies can play a crucial role in addressing these emerging energy issues, their adoption can be impeded by the vested political interest in hydrocarbons, which is explained in detail in the following section.
4.5 The rise of renewable energy in Oman
Despite the governmental vested interest in hydrocarbons, the interest in pursuing renewable energy development in Oman has evolved. Academics, for example, have been active in studying the potential of renewable energy resources as well as the
138 technical and economic feasibility of renewable energy technologies in Oman since
1995 (see, for example: Al-Hinai & Al-Alawi, 1995; Al Malki, Al Amri & Al Jabri, 1998).
Also, governmental entities such as Authority for Electricity Regulation have undertaken both studies (see, for example, AER, 2008) and pilot projects (Clover,
2013; Al Harthy, 2013; IRENA, 2014) to assess the potential for renewable energy development in Oman. Private investors, and national oil companies have also undertaken various renewable energy initiatives in Oman, including research studies and pilot projects. Furthermore, departments dedicated to oversee the development of renewable energy in Oman, and renewable energy policy initiatives have been developed in the latest years. These are discussed in the following section.
4.5.1 First governmental study on RE resources
In 2008, Oman’s Authority for Electricity Regulation launched a study to assess the potential renewable energy resources in Oman. The study indicates the existence of significant renewable energy resources in Oman, especially wind and solar, as discussed in the following segments.
Solar energy
The AER (2008) study indicated that the solar energy density in Oman is among the highest in the world. The solar insolation varies from 4.5 to 6.1 kWh/m2 on a daily basis, which corresponds to 1,640 to 2,200 kWh/year. Six locations in Oman had been evaluated using daily global solar radiation data obtained from measurements
139 at co-located weather stations over a period of six years (1987–1992; Al-Hinai & Al-
Alawi, 1995) (Figure 4.12).
Generally, the highest potential is concentrated in northern Oman and in desert areas, which cover 82% of the country, while the lowest is in the southern coastal area. The AER (2008) study identified two solar technologies suited to the environmental conditions in Oman: photovoltaic (PV) systems and solar thermal plants (CSP). There are two main types of PV technologies that are applicable to the
Omani environment. The first type, which currently dominates the renewable energy market, is silicon wafer-based silicon cells, which form PV modules; the second is thin film solar panels, which are less efficient but use less material in manufacturing, which makes them less expensive.
Figure 4.12. Annual average solar insolation (kWh/m2 per day) for the six weather stations in Oman
(1987–1991). Source: AER (2008).
Theoretically, these two solar technologies can be applied either on-grid or off-grid in small power systems. However, the efficiency of PV cells can be influenced by the harsh environmental conditions in Oman, including high air temperature and dust
140 contamination. It is estimated that the arid environmental conditions in Oman may reduce the efficiency of PV cells by approximately 10% compared with standard conditions. The same study also estimated the theoretical potential of renewable energy technologies for electricity generation in Oman by identifying the area available for PV cell installation, including buildings and parking areas. Under the assumption that 50% of the houses in Oman are suitable for PV installation and that an area of 20 m2 is available at each house, the total potential area would provide space for an installation capacity on the order of 420 MW and annual electricity production of 750 GWh, which corresponds to 5–6% of the 2007 annual electricity demand of 13,900 GWh (AER, 2008).
Solar thermal plants, or Concentrated Solar Power (CSP) systems, on the other hand, concentrate solar insolation in order to produce steam, converting kinetic power into electricity as in conventional power plants. The advantage of CSP systems is that they store heat recovered during the day for use at night, enabling continuous electricity production. The AER (2008) study indicated CSP plants with storage technology would require 1 km2 of land use for 10 MW capacity. Theoretically it would be possible to supply all of Oman’s 2007 electricity consumption of 13,900
GWh if a land area of ~280 km2 is used for solar collectors, corresponding to around
0.1% of the country’s land area (AER, 2008).
Wind energy
The AER (2008) study identified significant wind energy potential in coastal areas from Masirah to Salalah in southern Oman and in the Dhofar Mountain Chain north of Salalah. The assessment of wind energy sources was based on wind data collected
141 by the Meteorology Department at 21 weather stations scattered around Oman.
Only five stations received wind speeds in the highest category in 2005 and 2006; all stations measured wind speed at 10 metres above ground level, and wind speed at
80 metres was estimated to infer the conditions at the hub height of modern large wind turbines with a capacity of 203 MW. The annual mean wind speeds at 10 and
80 metres were estimated for the five locations mentioned above. From wind speed data, a rough estimate of wind energy content was calculated in kWh/m2/year at each of the five selected sites. The calculations show that the potential wind energy content in Oman ranges from 3,400 to 4,500 kWh/m2/year (Figure 4.13).
Figure 4.13 Annual mean wind speed at 10 m and 80 m above ground level for 2005–2006 at five meteorological stations in Oman. Source: AER (2008)
Grid-connected wind turbine technologies with capacities of 1–5 MW can accommodate the estimated low wind speeds in Oman. Theoretically, it is estimated that the installation of 375 wind turbines with 2 MW capacity, 80 m hub height, and
90 m rotor diameter in Oman would have a technical generation potential of up to
142 750 MW and require a wind farm land area of approximately 100 km2, preferably installed in the available lands in the mountains north of Salalah or at Sur; this corresponds to 20% of the total electricity generation in Oman in 2005 and around
0.03% of the country’s land area.
Biogas energy
Potential energy from biogas can be generated in Oman from several materials, including wastewater and agricultural waste, which are readily available in the northern and southern parts of Oman along with agricultural areas scattered throughout the country. Currently, there are two wastewater treatment plants in
Oman; one is in Muscat, in the north, and the other is in Salalah in the southern part of Oman (AER 2008; Al-Badi et al. 2009). The study identified some challenges to the use of biogas for electricity generation in Oman.
Most of the waste material is presently used as fertiliser, leaving limited amounts with which to generate energy from biogas. As a rule of thumb, a viable biogas plant should have at least 100–200 milk cows or camels in stable to provide a practical amount of biogas. However, the study found that the number of animals varies extensively among the widely distributed farms in Oman; this creates difficulties in terms of resource discovery and collection. For these reasons, the study concludes there is limited potential for biogas electricity production at present.
Geothermal energy
143 The AER (2008) study used data provided by the Ministry of Oil and Gas in order to identify the locations, depths, and temperatures of boreholes within the concession area of Petroleum Development Oman (PDO). Accordingly, the study identified 55 boreholes locations with temperatures above 100 °C. The highest observed borehole temperature (174 °C) was located in the northern part of Oman; however, this temperature is below the temperature required for the direct use of the hot water in steam power plants (AER 2008; Al-Badi et al., 2009).
Wave energy
Information on wave energy along the Omani coast was not locally available.
Therefore, the AER study relied on information provided by the European Directory of Renewable Energy in order to assess the wave energy potential in Oman.
Compared with the standard energy flux required to generate energy from waves, which varies from approximately 10 to 100 kW per metre of wave length, the
Arabian Sea’s wave energy flux was found to be relatively small; therefore, the potential of wave energy to contribute to electricity generation is considered marginal (AER 2008; Al-Badi et al., 2009).
The above discussion indicates the significant potential of solar and wind energy for renewable energy development in Oman compared to biogas, wave, and geothermal energy resources. Most importantly, the 2008 government study recommended the implementation of pilot projects for certain types of renewable energy technologies; it also recommended that the Authority for Electricity Regulation and other entities undertake further research and continuously evaluate emerging renewable energy
144 projects (AER, 2008). This governmental study has signalled actors from different sectors including academia, utility companies and private investors to establish a number of renewable projects in Oman. Examples of these renewable energy projectss include 303 kW solar project in 2014, 6 MW concentrator photo voltaic
(CPV) in 2010 and 50 kW PV project in 2012 established by, private investor and state-owned electricity distribution company, respectively. As this thesis seeks to achieve a closer look at these establishments and assesses the degree of their success to drive a large-scale uptake of renewable energy in Oman, these projects will be analysed by using data from systematic literature review as well as interviews with experts representing these projects (see sections 3.4 and 3.6).
4.5.2 Regulation of RE in Oman
The number of stakeholders involved in the emerging renewable energy sector in
Oman is relatively small, and their leverage in the promotion of renewable energy in the country varies. Four categories of stakeholders involved, directly or indirectly, in influencing the future of renewable energy in Oman can be distinguished: government, oil companies, private investors, and academics.
First, the government is involved in promoting renewable energy deployment through the Public Authority for Electricity and Water (PAEW), Authority for
Electricity Regulation (AER) and the Ministry of Environment and Climate Affairs
(MECA). A new department focused on advancing studies in renewable energy in
Oman was established in the PAEW. Over the last decade, this newly established
145 department has conducted a number of studies to: study the potential use of renewable energy in electricity generation in Oman; enhance collaboration with international consultants, such as the International Agency for Renewable Energy
(IRENA) and Japanese Agency for International Cooperation (JICA); implement renewable energy pilot projects in coordination with other governmental entities; prepare national energy strategies; and enhance cooperation between renewable energy-focused entities in Oman.10
The AER is an independent electricity regulation entity in Oman and was established in 2005 to undertake the regulation of the newly restructured electricity sector under the new sector law. As discussed in the previous section, AER was the first governmental entity to commission a study on renewable energy development in
Oman. Further, as will be shown in the following section, AER has been proactive to initiate and release first renewable energy policies in Oman including rural areas renewable energy policy and rooftop solar PV installation scheme (in Arabic Sahim).
The Ministry of Environment and Climate Affairs has also established a department for renewable energy. The current role of the department in renewable energy development in Oman is to survey existing renewable energy projects in Oman, raise awareness of the advantages of renewable energy development in Oman, and encourage the installation of renewable energy projects through Clean Development
Mechanism (CDM) activities under the United Nations Framework Convention on
10 The Public Authority for Electricity and Water: https://www.paew.gov.om/Our-role-in- Oman/Renewable-energy
146 Climate Change (MECA, 2010). Regarding the latter, the Designated National
Authority (DNA) was established within the Ministry in 2009 to oversee the implementation of CDM projects (MECA, 2010).
The predominant oil company in Oman, PDO, has been active in promoting the development of renewable energy in Oman; since 2000 PDO was the first entity to investigate the potential for renewable energy in Oman. This study (i.e. Buckley &
Holmes, 2000) preceded by 8 years the AER (2008) renewable energy study commissioned by the government in 2008 (i.e. (AER, 2008)). Further, PDO has been proactive in implanting renewable energy pilot projects to test economic and technical feasibility; its first pilot project has been operating since 2013 and is used to meet local energy needs at the company level in the enhanced oil recovery process used to produce oil in Oman (see section 5.2 and Table 5.1).
From the above discussion, it emerges that the identification of the entity that can leverage and regulate the uptake of renewable energy in Oman is still unclear. It appears that the Ministry of Environment and Climate Affairs is playing a marginal role to promote the uptake of renewable energy in Oman. Also, despite its newly established renewable energy department, the role of the PAEW to promote the uptake of renewable energy in the country remains unclear. While the PDO is not an energy regulatory entity, by establishing its largest renewable energy project to date, PDO appears to dominate the emerging renewable energy sector in Oman regardless with the lack of renewable energy regulatory framework in the country. In comparison, given its recent establishment of renewable energy policies initiatives,
147 AER appears to be the most active entity to regulate and leverage the uptake of renewable energy in Oman.
4.5.3 Nascent regulatory framework for RE in Oman
The previous subsection outlined the distribution of power and the potential role of different entities to leverage the future uptake of renewable energy in Oman. This section expands on this argument by providing an overview of regulatory frameworks that have been established in the latest years to promote the uptake of renewable energy in Oman.
The release of a 2008 governmental study not only encouraged the development of renewable energy pilot projects but also the introduction of two types of policies that aim to promote the uptake of renewable energy in Oman. On 16 March 2013, the Authority for Electricity Regulation (AER) announced the first policy in Oman to promote the integration of renewable energy in rural area energy systems. The goal of this first renewable energy policy is to promote the integration of renewable energy deployment into the current diesel-based energy system that provides electricity to remote and rural areas (AER, 2013). Therefore, the requirements of the new policy are restricted to the Rural Areas Electricity Company (RAECO), which is the only company that is responsible for electrification in rural and remote areas.
The current rural area policy initiative includes the following components: (a) ‘A
Requirement to Include Renewable Energy Components in Article (87) Applications’ and (b) ‘A Requirement to Evaluate Projects Using “Economic” Fuel Cost
148 Assumptions.’ In the first component, RAECO is required to include a renewable energy technology component (solar or wind) in each project for which a request for
Article (87) electrification funding is submitted to the authority. If no renewable energy component is included, RAECO is required to provide AER with an explanation and supporting analysis to confirm that renewable technology is either technically or economically infeasible for the given project. In the second component, the cost of electricity supplied to RAECO customers and the RAECO subsidy are evaluated for each Article (87) funding request using estimates of the economic cost of diesel fuel and an assumed profile of fuel cost escalation in accordance with guidance provided by the authority.11
This policy, in particular, has been the main reason behind the establishment of the first rural area pilot project Mazyonah 303 kW solar project and continues to trigger the establishment of further rural area projects such as the upcoming 500 kW wind- based pilot project based in the rural island of Masirah (Al Harthy, 2013).
The second policy initiative enables individuals, such as homeowners and institutions, to produce solar electricity for use and surplus sale to electricity distribution companies at the cost of electricity. This policy, locally called the ‘Sahim’ scheme, was established by Oman’s AER in 2017 (Viswanathan, 2017a).12 The scheme enables homeowners who wish to install photovoltaic cells in their homes to approach AER, which then will direct them towards companies that will outfit their homes with these cells. Although homeowners will be expected to pay for the
11 http://www.aer-oman.org/ 12‘Sahim’ scheme to power homes by solar energy, Times of Oman: http://timesofoman.com/article/109724/Oman/Solar-energy-initiative-'Sahim'-launched-in-Oman
149 installation of these cells, they can expect to benefit from them in the long term. The distribution companies can act as agents for the OPWP (the current single buyer of electricity) to buy rooftop PV-generated electricity from consumers via a net metering mechanism that allows for compensation for electricity generated by rooftop PV panels (AER, 2017b; Viswanathan, 2017a).
Although the adoption of renewable energy technologies is relatively negligible, these two policies pave the way for renewable energy uptake in Oman. Yet, these two policies are not without their limitations. They are still nascent regulatory frameworks. The policy does not include other electricity distribution companies and ignores the possibilities to harness renewable energy potential beyond rural areas.
Further, the Sahim scheme, although promising, has not yet addressed the major obstacle for renewable energy adoption in Oman, which is the cost gap between the cost of electricity produced from renewables and conventional energy sources (i.e. natural gas). The Sahim scheme will remain a voluntary approach unless an electricity tariff on the user side is reformed to reflect the actual cost of electricity production or is complemented with an incentive programme that enables users to cover part of the technology capital cost through subsidies. To address these limitations, a further understanding of barriers, from a systematic perspective (as discussed in Chapter 2), must be established.
4.6 Conclusions
In Oman, there has been little willingness to challenge the interests of the oil and gas sector and very little interest in undertaking any kind of energy transition. Since the
150 beginning of oil and gas production at commercial levels in the 1960s and 1970s, respectively, oil and gas resources have played significant roles in boosting Oman’s socio-economic development via the creation of a new, yet significant source of economic income. Due to the poor performance of other sectors such as agriculture, fishery and manufacturing in enhancing economic income, Oman’s economy has revolved around the oil and gas industry, which contributed more than 45% of the
GDP in 2014. Oil and gas export revenues have played a crucial role in facilitating the development of basic infrastructure in Oman, including the building of transportation infrastructure, schools, hospitals and telecommunication systems, and the introduction of electricity services in the country.
The significance of oil and gas export revenues, which are primarily controlled by the state, has defined Oman’s political economy and the state-society relations in which the government receives the economy’s external rent and distribute the rents according the hierarchy of beneficiaries – a hierarchy that maintains the government’s control over hydrocarbons. The government’s control over hydrocarbons can be featured in many practices such as state-owned enterprises, hydrocarbon subsidies and governmental monopoly in the energy sector, all of which have, to a large degree, discouraged the uptake of renewable energy until recently. For instance, for long time, government favouritism of state-owned enterprises in the energy sector introduced artificial barriers to entrepreneurs, such as new renewable energy entrants, who do not benefit from the patronage of the state. Hydrocarbon subsidies, a political channel to distribute oil and gas wealth to citizens through relatively cheap energy prices, have continued to disadvantage the
151 competitiveness of renewable energy technologies. The third feature, government monopoly, which is especially comprehensive in the electricity sector, arguably eliminates the entry of new energy investors via explicit support for incumbent energy actors in sector law. Little structural change can be expected in this situation.
The high reliance on hydrocarbons, however, is not without drawbacks. Many energy-related issues have emerged in recent years, including economic vulnerability due to fluctuation in oil prices, increasing pressure on domestic energy supplies, and increasing total and per capita GHG and carbon emissions. In recognition of these challenges, interest in pursuing the development of renewable energy in Oman has increased. This interest is evidenced by the emergence of assessment studies, pilot projects, new renewable energy departments and renewable energy initiatives.
The discussion of energy politics in Oman and the vested interest in hydrocarbons shows that despite a strong regime that supports and perpetuates oil dependency, renewable energy projects and policy initiatives have been developed. Such developments are precisely what triggered this thesis investigation. The following chapter gives a closer look at renewable energy projects: what are the motivations behind their establishment, what are the challenges renewable energy developers have faced in the process of establishing these projects, and to what extent are renewable energy developers interested in addressing the social and political challenges of renewable energy development along with techno-economic challenges.
152 CHAPTER 5 Assessment of renewable energy (RE) projects in Oman
5.1 Introduction
As discussed in Chapter 4, Oman’s economy has revolved around oil and gas export revenues since the 1960s, when these hydrocarbons were discovered. Having abundant resources of oil and gas over the last five decades, the need for alternative energy resources has not been a concern until recently. Despite the arising energy challenges such as growing domestic demands for energy—due to increasing population, industrialisation, and urbanisation—, increasing per capita carbon emissions, economic vulnerability to oil price shocks and energy security, Oman’s energy policy remains largely oriented towards oil-path dependency (see section
4.4). Nonetheless, the interest to search for alternative energy sources such as renewable energy emerged with academics being proactive in assessing the technical and economic feasibility of renewable energy implementation in Oman since 1995 (see section 4.5). Also, governmental entities and private investors played a role in demonstrating the feasibility of renewable energy uptake in Oman since the
2008 (see section 4.5.1).
This chapter explores the reasons behind the existence of few renewable energy projects in Oman despite the state’s vested interest in hydrocarbons and the lack of policy and regulatory frameworks to support the uptake of renewable energy technologies in the country. It does so by presenting findings from a systematic review of the literature that has focused only on renewable energy development in
153 Oman as well as analysing the outcomes of seven semi-structured interviews with representatives of renewable energy developments in Oman.
The chapter examines four of the eight renewable energy projects, as well as academic publications in renewable energy field (developed between 1995 and
2015). The analysis aims to reveal the differences and similarities between renewable energy initiatives in terms of motivations behind their establishment, as well as the challenges face their development, and the extent at which social and policy challenges are addressed along with techno-economic challenges.
5.2 RE projects (1995-2015)
This section presents the evolution of RE projects and Oman’s activity in renewables- related research, which are conducted by academics, the government, a national oil company, and by individual investors between 1995 and 2015. It draws on secondary data sources including published peer-reviewed journals, newspaper articles, company websites, and governmental documents.
Between 1995 and 2015, along with academic publications, eight renewable energy projects have been established: solar water desalination plant (in 1995), 10 kW wind turbine addition to water desalination plant (in 1996), Renewable Energy Scoping
Study by PDO (in 2000), 7 MW solar plant for Enhanced Oil Recovery (in 2013),
Renewable Energy Potential Study by Authority Electricity Regulations (released in
154 2008), 6 MW CPV solar technology project (in 2010), 50 kW PV rooftop project developed by the Majan company (in 2012), and the 303 kW solar project by the
Rural Areas Electricity Company (in 2014).
5.2.1 Governmental, national oil company, private and academic projects
The first renewable energy project, 10 kW wind turbine addition to water desalination plant, was established in 1995, by the Ministry of Water Resources (now the Ministry of Regional Municipality and Water Resources) (Al Malki, Al Amri & Al
Jabri, 1998). As a part of its programme to investigate and assess water resources in
Oman, the Ministry installed a solar water desalination plant in the rural area of
Heelat Ar Rakah, so that the area could pump and desalinate water from its own well. Given the remote location of the camp, the plant operated by using photovoltaic cells; a year later a 10 kW wind turbine was added to the solar unit to run the pump (ibid).
The third and fourth renewable energy initiatives were established by Petroleum
Development Oman (PDO). PDO has been proactive in terms of studying the potential for renewable energy investment in Oman, and in establishing its own pilot projects. In fact, PDO launched its first renewable energy study in 2000, eight years before the government initiated its own investigation (Buckley & Holmes, 2000). The
PDO also set the precedent in terms of implementation: the PDO executed its first solar energy pilot project in Oman in 2013 (GlassPoint, 2015)—two years before the first governmental pilot project.
155
The fifth and sixth renewable energy initiatives were launched by the government through the Authority for Electricity Regulation. In 2008, the government launched its first study regarding the potential for renewable energy investments in Oman
(AER, 2008). The same year, the Authority for Electricity Regulation appointed a consultant to study the technical and economic feasibility of renewable energy implementation in the country. The study recommended the immediate implementation of renewable energy pilot projects. Accordingly, a number of governmental projects have taken place, including an invitation for proposals from both national and international investors to build pilot projects that included wind, solar PV, and CSP. In 2010, six renewable energy pilot projects were shortlisted (Al
Harthy, 2013). However, in 2014, only one pilot project was developed by the Rural
Areas Electricity Company, the 303 kW solar project in Al Mazyunah (Kamoonpuri,
2015).
Nonetheless, this 2008 renewable energy study motivated other local and international actors to investigate the potential for renewable energy investment in
Oman. For instance, private investors launched their own pilot projects or experiments to test the technical and economic performance of renewable energy technologies in the particular environmental conditions of Oman. These demonstration projects include a 6 MW CPV solar technology project, which was built by private investing company in 2010; and a 50 kW PV rooftop project developed by the Majan company in 2012 (Kamoonpuri, 2015). Examples of
156 academic research include Charabi & Gastli, 2013; Kazem, H.A., Chaichan, M.T., Saif,
S.A., Dawood, A.A., Salim, S.A., and Rashid, A.A. and Alwaeli, 2015.
Because there has been limited movement in the renewable energy to date, only the four renewable energy projects, i.e. 7 MW solar plant for Enhanced Oil Recovery, 6
MW CPV solar technology project, 50 kW PV rooftop project, and the 303 kW solar project, developed between 1995 and 2015 are studied in detail in this thesis. In addition, academic articles published between 1995 and 2015 were also analysed.
The four projects and academic research were selected to represent a variety of actors’ affiliations to include oil companies, governmental projects, private investors and academic researchers. The focus on these particular renewable energy activities is because it was possible to only approach these renewable energy initiatives within the timeframe of this research.
The five renewable energy projects are presented in Table 5.1, which indicates the year of development, project type and size, developer background, and the purpose of the project. It is worth noting that all these renewable energy projects were established before the launch of Oman’s renewable energy regulatory frameworks discussed in section 4.5.3, with the 303 kW solar project as an exception. These renewable energy projects are analysed in sections 5.3 and 5.4.
157 Table 5.1. Renewable energy developments in Oman (author’s aggregation), 1995-2015. Name of renewable 7 MW solar enhanced 303 kW solar project 6 MW concentrator 50 kW PV project Scientific research energy initiative oil recovery (EOR) (Clover, 2013; Al photo voltaic (CPV) (Albadi et al., 2014; project (GlassPoint, Harthy, 2013; IRENA, (Kamoonpuri, 2015; IRENA, 2014) 2015; IRENA, 2014) 2014) IRENA, 2014)
Year of development 2013 2014 2010 2012 Between 1995 and 2015
Type of technology Concentrated Solar Thin film PV modules CPV solar technology PV solar technology Different types of Thermal (CSP) and poly-crystalline RETs technology
Project developer Petroleum Rural Areas Electricity ABS Advanced Majan Company Universities, Colleges Development Oman Co. (RAECO) Business Technologies and Research (PDO) Council
Developing sector State-owned oil State-owned rural Private company State-owned Academia and production company areas electricity service electricity distribution research units company company
Aim of the project To reduce gas used for To enhance rural To demonstrate the To demonstrate the To investigate the EOR processes electrification with feasibility of RET feasibility of roof-top feasibility of lower cost, clean installations in Oman PV installation renewable energy technologies potential in Oman
158 5.3 Changes in academic interest towards RE
This section provides an overview of the evolution of academic publications concerned with the development of renewable energy in Oman. It provides statistics for the total number of publications that have been produced in the specified period and tracks the changes in academic interest towards renewable energy development in the country between 1995 and 2015. As discussed in Chapter 3, a total of 92 peer- reviewed journal articles were published in this period and have been analysed using the content analysis method. The direct coding approach was used to identify the number times technical, economic, and political words were mentioned in the surveyed journals.
Academic interest in researching the potential for renewable energy development in
Oman can be traced back to 1995, at which point the academic interest gained momentum. There are currently three research clusters that support research into the potential for renewable energy in Oman: the Renewable and Sustainable Energy
Research Group (RASERG), Sultan Qaboos University;13 the Renewable Energy and
Sustainable Technology Research Group, Sohar University; and the Renewable
Energy Strategic Research Programme of the Research Council.14 Before 2008, academic interest in researching renewable energy was relatively negligible, with no more than 20 scientific publications between 1995 and 2008 (see, for example: Al-
Hinai & Al-Alawi, 1995; Al Malki, Al Amri & Al Jabri, 1998; Dorvlo & Ampratwum,
13 RASERG Group: https://www.squ.edu.om/engineering/Research/Research-Groups/RASERG-group 14 Renewable Energy Strategic Research Program: https://home.trc.gov.om/tabid/1140/language/en- US/Default.aspx
159 2002; Jervase, J.A., Al-Lawati, A. and Dorvlo, 2003). After 2008, scientific publications in renewable energy flourished—with more than 70 articles produced. This can be traced back to the release of the 2008 governmental study on renewable energy resources in Oman (see AER, 2008), which recommended supporting both the immediate implementation of pilot projects and scientific research on renewable energy. In 2011, as part of governmental commitment to encourage the promotion of renewable energy in Oman, the Oman Research Council launched a number of funding schemes—including the financing of research in the industrial and energy sector, including renewables (Kazem, 2011). Since 2011, the number of scientific publications and pilot projects in the area of renewable energy has increased by
256% (from 18 to 64 publications) and 100% (from two to four pilot projects) in
2015, respectively (Figure 5.1).
14 12 10 8 6 4 Counts year per 2 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of publications Pilot projects
Figure 5.1 Evolution of scientific publications in renewable energy and pilot projects between 1995 and 2015. Source: Author’s aggregation
160 5.3.1 A focus on techno-economic aspects
A review of these 92 publications on chronological basis reveals that the majority of these studies have focused on technical, economic, and engineering aspects of renewable energy development in Oman, with limited attention to social and policy factors, which this thesis considers essential to its investigation. 84% of scientific research has focused on assessing the technical, economic, and engineering aspects of renewable energy, while only 16% has focused on the policy aspects. The 92 published articles surveyed in the period of 1995 – 2015 were mostly technical, and focussed on assessing the resource and technological potential for renewable energy deployment in Oman. They concentrated on solar and wind energy sources, with limited attention policy aspects of its implementation.
For instance, in 1998, Al Malki examined the technical and economic potential of using both solar and wind power for desalinating and pumping water from wells located in rural areas of the country, most of which are not connected to the national grid. The experimental project was installed by the Ministry of Water
Resources camping programme to investigate and assess water resources in the rural area of the Najd region. Solar power was used to run a reverse osmosis desalination plant to produce fresh water. The water was extracted from the camp’s local well using a wind turbine to generate the electricity needed to run a submersible pump in the well. This experiment showed the feasibility of using a combination of solar and wind power to operate water pumping and desalination in this particular area. It thus recommended the use of hybrid systems, along with
161 conventional power supply, to meet the increasing demands in real time (Al Malki et al., 1998).
Dorvlo and Ampratwum (2002) assessed potential locations for wind energy use in
Oman by using data from 13 weather stations established by the government in different locations around the country. Using monthly wind speed data obtained from the weather stations over a ten-year period (1986–1998), a wind speed range of zero to over 16 m/s was identified. The study defined four locations with appreciably higher wind speed for the potential use of wind energy: namely,
Thumrait, Sur, Masirah, and Marmul, which showed average wind speeds of 5.89,
5.22, 5.03, and 4.74 m/s, respectively. Thumrait and Marmul are inland stations in the far south, while Sur and Masirah are coastal stations in the eastern part of the country (Dorvlo & Ampratwum 2002). Further locations for potential wind energy projects were identified by Al-Yahyai et al. (2010), who used a scoring system to provide a preliminary ranking of the sites with high wind energy potential in Oman.
Different factors were considered in the assessment of wind energy, including: annual wind speed, vertical wind profile, wind turbulence, wind variability, local peak demand fitness, as well as the distance between the nearest transmission line and the site of potential wind energy. Each factor was awarded a score between 1 and 9, with 9 as the best and 1 the worst. Based on this scoring system, the study indicated that the four best sites for potential wind power generation are Qayroon
Hyrity, Thumrait, Masirah, and Ras Alhad; Duqum scored the lowest among all stations. In addition to using ground measurements from weather stations to assess the wind energy potential in Oman, Charabi et al. (2011) employed numerical
162 weather prediction (NWP) models—assessing their ability to provide wind data usable for wind energy resource assessment, in such a way as to enhance the spatially explicit inventory of the spatial and temporal coverage of wind resources across Oman. It was limited when using ground measurements from actual meteorological station networks, which are normally located close to populated areas to serve civilian purposes.
Efforts were also made to assess prospects for solar power in Oman. For instance, a neural network model was used to estimate sun-hours and ratios for a given point, based on its latitude, longitude, and altitude, as well as the month of the year. The study used data from 25 locations in Oman to plot contour maps. Such maps provide a source for the spatial distribution of sunshine hours and ratios on a monthly basis for the whole country; thus contour maps enable estimates to be made for any location (Jervase, J.A., Al-Lawati, A. and Dorvlo, 2003). Alternatively, Gastli and
Charabi used GIS-based solar radiation maps and embedded them in the ArcGIS
Software; this enabled them to generate solar radiation maps that capture the spatial and temporal variability in solar radiation. Based on the maps produced, they concluded that most of the regions in Oman have very high potential for solar energy and electricity generation throughout the year (Gastli & Charabi 2010).
There was also attention to assessing the economic feasibility of the adoption of different renewable energy technologies in Oman. Published between 1995 and
2015, 28 articles focused on assessing technical and economic feasibility of
163 renewable energy in Oman; only 8 of these have focused on the economic aspect only.
Al-Badi et al. (2011), for instance, assessed the economic prospects for using solar PV plants in Oman. Using average daily global solar radiation values and sun duration for 25 locations in Oman, this study considered a solar PV plant of 5 MW at each of the 25 locations in order to examine the economic potential for solar energy. The results indicated that the cost of electricity generated by PV systems varies between
210 and 304 USD/MWh from the best location to the least attractive location, respectively. The costs at the best location were found to be competitive with diesel generation, without including the externality costs of diesel. However, they were much higher than those of electricity generated by natural gas-powered generation facilities, which are highly subsidised in Oman (costing 24 USD/MWh) through long- term contracts with the government, which supplies them with requisite amount of fuel. Al-Badi (2011) also assessed the economic costs of four types of wind turbines at 27 locations around the country. The results showed that the cost of wind energy is low in the southern and middle regions of Oman, compared to the northern regions. Thumrait, Qairoon Hairiti, Masirah, and Sur were found to be the most promising sites for harnessing wind power, with an energy cost of less than 0.117
USD/kWh when 2000 kW, 1500 kW, 850 kW, or 250 kW wind turbines are used.
5.3.2 A shift towards policy aspects
164 The academic investigation of policy instruments that can promote the adoption of renewable energy in Oman started less than ten years ago, and have been inconsistent since (Figure 5.2). In 2009, a total of seven peer-reviewed journals were produced—policy mention appeared in only three publications. For example, there are 13 mentions of policy in Al-Badi, Malik and Gastli (2009), 25 mentions in Albadi,
El-Saadany and Albadi (2009), and only 3 mentions in Al-Badi et al. (2009).
120
100
80
60
40 COUNTS PER YEAR PER COUNTS
20 4 4 3 2 2 1 1 1 0 0 0 0 0 0 0 1995 1998 1999 2000 2002 2003 2004 2006 2009 2010 2011 2012 2013 2014 2015
Number of policy mentions Number of publications with policy mention
Figure 5.2 Number of publications with a focus on renewbale energy policy and number of ’policy’ mentions per year between 1995 and 2015. Source: Author’s aggregation.
In contrast, limited attention was directed to the social and political aspects of renewable energy deployment in Oman. Between 1995 and 2015, only two articles focused on assessing the level of awareness of and attitude towards renewable energy in the country. These include people’s attitude towards considering the use of solar thermoelectric refrigerators (Wahab et al., 2009), as well as governmental
165 awareness of and prevailing attitude towards renewable energy (Al Hatmi et al.,
2014).
Between 1995 and 2015, 15 scientific publications were concerned with the identification of policy instruments that can promote the implementation of renewable energy in Oman. In 2009, for instance, the focus shifted to the study of barriers to and policies for renewable energy promotion in Oman—alongside the ongoing focus on the technical, engineering, and economic aspects of renewable energy. Al-Badi et al, for example, examined the economic feasibility of the application of different types of renewable energy technologies. They found that the generation of wind power on large wind farms was not economical because the price of gas—USD 1.5 per MMBtu (Million British Thermal Units)—sold to the power generation plants was low when compared with that sourced from wind power plants. Al-Badi et al. (2009b) also revealed that there is a limitation to the use of biomass, wave, and geothermal energies in Oman; the only viable option was solar energy (Al-Badi, Malik & Gastli, 2009). The same study also revealed that the lack of policy and administrative support for renewable energy form the main barriers to the widespread adoption of renewable energy in Oman. This includes the highly subsidised cheap electricity sourced from hydrocarbon supplies, lack of adequate fiscal incentives to consumers, and the limitations on the flow of foreign technologies. According to this study, other challenges to the adoption of renewable energy in the country include a lack of adequate information and data, such as potential resources and their locations, as well as the cost, performance, and reliability of the system; lack of a skilled workforce to operate renewable energy
166 projects, or review the rules and policies for their implementation; and the shortage of adequate financial support for research (Al-Badi, Malik & Gastli, 2011, 2009).
Al-Badi et al. (2011a, 2011b) also discuss the policies supporting renewable energy, classifying these measures into indirect or direct policy instruments. Indirect policy instruments are used for the immediate stimulation of renewable energy technologies, while direct policies are used to improve long-term framework conditions. Indirect policy instruments include environmental taxes, the simplification of connection procedures, and transparent costs regulations. Direct policy instruments include tradable green certificates, tender systems utilising tax credits, investment subsidies, low interest loans, feed-in-tariffs, as well as premium system and production incentives (Al-Badi et al., 2011a, 2011b). While these policy instruments are useful in guiding the uptake of renewable energy, their relevance to the specific context of Oman has not been discussed in such studies.
In summary, the literature on renewable energy focussing on Oman presents a key source for up-to-date technical data invaluable to this thesis. It provides crucial knowledge on the academic attention to the investigation and development of renewable energy in Oman. It emerged, however, that these studies deal mostly with the technical, economic, and engineering aspects of renewable energy development; they pay limited attention to social and policy aspects, which this thesis considers essential factors to explore.
167 5.4 Similarities and differences between RE projects
This section presents an analysis of five renewable energy projects in Oman, surveyed between February and March 2014. It uses seven semi-structured interviews (group II) with representatives from the five selected renewable energy projects (see section 3.3.2), as well as secondary data sources such as peer-reviewed journal articles, governmental documents, and newspaper articles to reveal the differences and similarities between renewable energy projects in terms of: (i) motivations towards establishing these projects, as well as (ii) interest towards addressing social and policy challenges of project development along with techno- economic challenges.
5.4.1 Motivations shaping the five RE initiatives
This sub-section reveals similarities and differences between RE projects in terms of motivations towards establishing these projects. Motivations of each RE initiative are discussed as follows:
The vision for the first project, a 7 MW solar-enhanced oil recovery (EOR) project
(see Table 5.1, section 5.2) was to reduce the consumption of natural gas used for the operations of Enhanced Oil Recovery by the PDO and to increase the company’s profit by freeing more gas for either exports or use in other sectors, like power generation or other domestic industrial activities (GlassPoint, 2015). The 7 MW solar-enhanced oil recovery (EOR) project, has operated since 2013. It was built by
168 PDO, the leading oil company in Oman, in partnership with GlassPoint, an international company (GlassPoint, 2015). PDO is the largest oil producer in Oman and a joint venture between the government (which owns a 60% share), Shell, Total, and Partex. The current figures show that 22% of domestically produced natural gas is used for the operations of EOR (NCSI, 2015); this is because Oman’s oil is heavy and necessitates energy-intensive operations, like EOR, to produce steam. Mainly produced by natural gas combustion, steam is injected into oil reservoirs to heat it and make it easier to pump to the surface. The PDO’s development of the 7 MW project thus is driven by the desire to reduce the consumption of natural gas used to produce the steam necessary for EOR operations. The 7 MW thermal system generates an average of 50 tons of steam per day. The solar steam feeds directly into existing thermal EOR operations at PDO’s Amal West oilfield in south Oman, reducing the field’s gas consumption by 47,000 MMBtus per year (Bierman et al.,
2015). Due to tangible and more reliable results from the first phase of the project, the project has been expanded to produce 1 GW of thermal energy in 2017 (Bierman et al., 2014).
The vision for the second initiative – the 303 kW solar project in Al-Mazyona – was to test the feasibility of the technology in Oman’s environmental conditions, which has elements such as dust, humidity, and high temperatures. The development of this pilot project was intended to replace diesel-based facilities with renewable energy technologies, either to meet new demand or to expand existing facilities (Al Harthy,
2013). The 303 kW solar project is a key government-led undertaking. In 2013, the
Rural Areas Electricity Company (RAECO) installed the 303 kW solar project in the
169 rural area of Al Mazyonah in the Dhofar Governorate (Clover, 2013), following the recommendations of the first governmental study on renewable energy potential in
Oman (AER, 2008). This project comprises 151.1 kW of thin film photovoltaic (PV) modules and 151.5 kW of poly-crystalline technology. The estimated annual output of 550 megawatt-hours will be collected by the Rural Areas Electricity Company
(RAECO), which is responsible for delivering electricity services to off-grid rural areas in the country. Due to high expectations, the next project in the pipeline, which has been already approved by RAECO, is a 500 kW wind-based pilot project based in the rural island of Masirah. At the time, it was apparently important for RAECO to install solar because it was using electricity at a lower cost, and a chance to gather new data and learn from that project. Other considerations included the benefits to local
Omani employees who could receive specialised training and gain employment from this project, which allowed for a good base for similar future projects and more employment opportunities (CEO of RAECO, Hamed bin Salim al Magdheri, quoted in
Clover, 2013).
The vision for the third initiative – a 6 MW CPV technology project, established by a private company (Kamoonpuri, 2015) – also sought to test the technical feasibility of renewable energy technologies in Oman’s environmental conditions and the potential for investing in renewable energy in Oman. The 6 MW concentrator photo voltaic (CPV) project was installed to conduct technical monitoring for CPV technology, and generate data that can assist in calculating the cost, energy yield, and maintenance requirements of the technology (interview 7, group II, 2014). It
170 also acted as a trial to convince the government to harness available solar energy resources (ibid).
The motivation for the building of the fourth project – a 50 kW solar PV rooftop initiative – stemmed from the interests of the developing company’s CEO in investing in renewable energy technology to meet their electricity needs, as well as the desire to act as a model for renewable energy implementation in Oman
(interview 4, group II, 2014). In 2012, the Majan Electricity Distribution Company launched a 50 kW solar PV rooftop initiative as their fourth project. PV cells of 50 kW capacity were installed atop the company’s head office in Sohar, northern Oman
(Albadi et al., 2014), with another 3 kW solar PV module installed on top of the car park in the office complex.
Finally, academic research started since 1995, was driven by the objective of identifying potential resources and technologies of renewable energy in Oman (see section 5.3).
From the above discussion, it appears that, in Oman, renewable energy projects were initiated for various reasons. Gas saving, diesel saving and renewable energy technology demonstration are main reasons that drove the establishment of renewable energy projects in Oman in spite of the nascent (or the lack thereof) renewable energy regulatory framework. The following sub-section investigates the challenges face the development of five RE projects and the extent at which social and policy challenges of renewable energy development along with techno-
171 economic aspects are addressed by interviewed representatives of such renewable energy projects.
5.4.2 Technical, economic, social and policy challenges
This sub-section draws on seven semi-structured interviews (group II) with representatives from the five selected renewable energy projects to reveal similarities and differences between RE projects in terms of the challenges that face project development and interest towards addressing social and policy challenges of project development along with techno-economic challenges.
From the investigation of the first project, a 7 MW solar-enhanced oil recovery (EOR) project, which aimed to monitor the performance of renewable energy technology in steam production (Bierman et al., 2014), it was indicated that the opportunities for renewable energy development do exceed the challenges. For instance, the PDO representative has indicated that collaboration and engagement of stakeholders within and outside the PDO is evolving thanks to proactive role of PDO to commit to collaboration programmes such as signing Memorandums of Understanding (MoU) with research hubs in Oman (interview 2, phase II/group 1, 2014). Further, data availability and accuracy is indicated as an opportunity for the PDO to proceed with renewable energy development project. Due to the availability of financial resources– despite low natural gas prices that makes renewables uncompetitive the only challenge to face the development of renewable energy project as demonstrated by the PDO representative (interview 2, group II, 2014).
172
The challenges faced by the second project – the 303 kW solar project in Al-Mazyona
– were related to technological performance in Oman’s unique environmental conditions such as dust, high temperature, and humidity, human resources capacity to deal with the new technology, and limited cooperation between entities involved in renewable energy development in Oman. Interviewee 5 reported that in dealing with the unique environmental conditions in Oman:
… we want to learn how we can deal with renewable energy in an environment like Oman. Al-Mazyona is an area of high temperature, sun, desert, dust and it is also off-grid. We want to learn how to do deal technically, regulatory, legally and financially with such projects. (Interview 5, group II, 2014).
Further, interviewees 5 and 6 indicated their concerns regarding certain policy challenges that constrain the large-scale implementation of renewable energy technologies in Oman especially the lack of knowledge and experience related to the regulation of new technology at the political level.
Challenges addressed by the third project – a 6 MW CPV technology project, established by a private company (Kamoonpuri, 2015) – included technical such as intermittency of renewable energy and the need for storage technology; economic such as high up-front cost of technology, limited data and studies on cost-and- benefits of renewable energy development in Oman; social such informal networks with the governmental entities, difficulty to communicate with governmental officials which has consequences such as long-term approval process; and policy
173 challenges such as top-down approval process and the high subsidies allocated for conventional sources of electricity. Further, limited availability of data and information on renewable energy potential in Oman was a major investing challenge. As reported by interviewee 7, collecting data to measure the potential for solar energy use is a pre-requisite to start any new renewable energy business in
Oman:
Before starting the business in the country, meteorological stations where installed in different areas around the country, like Ajayez, Mazyonah, Smail, Muscat, to monitor the DNI (every 10 minutes’ measurements). The data has shown a high potential to solar energy use in Oman especially in Hayma and Mazyoonh (these are internal areas away from the coast). In Muscat DNI is around 600 while in Hayma it is about the double 1100. (Interview 7, group II, 2014)
The challenges faced by the fourth project – a 50 kW solar PV rooftop initiative – included highly subsidised electricity tariff, long-term approval process, the lack of policy framework that regulates the installation of renewable energy projects, and licence restrictions that does not allow electricity distribution companies to source their electricity from a different source than the OPWP (interview 4, group II, 2014).
An interviewee claimed that it is the aim of the company to install replicas of the solar project in different areas that belong to the licensed company. However, delays have been experienced in project approval—including the installation of the main project (interview 4, group II, 2014)—due to the limited data on the cost and benefits of renewable energy projects that need to be communicated with the government. Further, interviewee 4 (group II, 2014) pointed out to the lack of platform to exchange new knowledge related to renewable energy with
174 governmental entities so that to enhance large-scale uptake of renewable energy in
Oman.
Furthermore, academics have indicated that limited availability of data – to address technological performance under humidity, high temperature and dust conditions in
Oman and the inclusion of environmental externalities in the calculation of technology cost–coupled with limited research funding are challenges that need to be taken into consideration (interview 1, group II, 2014). Further, academics pointed out to the challenge of communicating research findings with decision-makers and the immature culture of collaboration between researchers, which results in duplication of efforts (interview 3, group II, 2014).
The technical, economic, social and political challenges faced by the five surveyed renewable energy projects are summarised in Table 5.2.
175 Table 5.2 Techno-economic, social and political challenges faced by five RE projects in Oman. Source: Survey (Group II), 2014.
Type of challenge 7 MW solar 303 kW solar project 6 MW concentrator 50 kW PV project Scientific research enhanced oil photo voltaic (CPV) recovery (EOR) project
Techno-economic Not specified Technological RE intermittency; Limited data on RE Humidity, high performance storage technology; cost-benefit analysis, temperature, dust, technological Limited local intermittency, limited performance; experience with RET availability of data; Technology high up- installations Limited research funding front cost, limited data on cost-benefit analysis Social Not specified Human resource Difficulty to Lack of platform to Research collaboration, capacity, limited communicate with communicate RE- limited communication cooperation between government officials, knowledge with with decision-makers RE interest groups limited experience decision-makers among government officials Political Lack of political Limited experience Political will, Top- Hydrocarbon Inability to influence leadership; with new technology down, elongated subsidies, long-term decision-making Lack of regulatory regulations approval process, approval process, lack frameworks; low informal actors of policy framework, natural gas prices networks with licence restriction. compared to government actors, renewables hydrocarbon subsidies
176
Based on the seven semi-structured interviews with representatives of five renewable energy projects—i.e. projects established by academics, the government, a national oil company, and by private investors—, a mix of challenges that face the development of renewable energy projects in Oman have been demonstrated. It appeared that the interest to address challenges toward renewable energy development in Oman, although has been predominantly focused on learning about technical and economic dimensions of renewable energy technological employment, representatives of renewable energy projects have extended their attention into social and policy dimensions of renewable energy development in Oman. Importantly, it appeared that private investors such as 6 MW concentrator photo voltaic (CPV) and 50 kW PV project are faced with more political challenges than the government-led (i.e. 303 kW solar project) or national oil company-led projects (i.e. 7MW solar enhanced oil recovery (EOR) project (see Table 5.2). In contrast, despite the lack of national regulatory framework for renewable energy development in
Oman, government-led and national oil company projects are directly advantaged by the governmental support both in financial and technical resource terms and faced with less challenges.
5.5 Conclusions
While the implementation of renewable energy in Oman does not exceed 1% of the total energy supply, interest in promoting the uptake of renewables is emerging as evidenced by establishment of few renewable energy projects by government, business, and academic actors. This chapter provided an analysis of five renewable energy projects of which four
177 types were distinguished: government-led project (such as 303 kW solar project and 50 kW solar PV rooftop project), national oil company-led project (such as the 7MW solar EOR pilot project), private investors-led project (such as 6MW CPV project) and academic’s research and administration projects.
Similarities and differences between renewable energy projects were identified in terms of the motivations behind the establishment of the projects as well as the challenges that face their development. The chapter revealed that motivations and interests towards addressing technical, economic, social and policy challenges towards renewable energy adoption vary between the four types of surveyed renewable energy projects.
That is technological performance – due to factors such as source intermittency, the need for energy storage technology, humidity, dust, and high temperature – as well as data availability are main technical challenges addressed by almost all interviewees. Further, economic factors such as high upfront cost of renewable energy technologies and cost- benefit analysis of renewable energy technologies were identified. Socially, it was revealed that insufficient collaboration either between renewable energy interested groups or with governmental entities was highlighted as a major social challenge facing representatives of all five renewable energy projects. Furthermore, lack of leadership, top-decision making, long-term approval process, nascent [or the lack thereof] of renewable energy regulatory framework and hydrocarbon subsidies were identified as major policy related challenges.
Importantly, it appeared that the development of government- and national oil company- led projects were faced by less challenges and more opportunities than those of private investors or academics. This raises questions of: (i) why some projects are more challenged
178 than others and (ii) what are their chances for success or failure to enhance the diffusion of renewable energy in Oman.
To answer these questions, Chapter 6 studies the barriers and opportunities embedded in
Oman’s incumbent energy regime with which renewable energy projects interact. This is important to avoid partial identification of barriers and opportunities that affect the development of renewable energy technologies in Oman. Furthermore, Chapter 7 studies the interaction between renewable energy projects and Oman’s incumbent energy regime to further explain the chances for success and failure of renewable energy projects to enhance the diffusion of renewable energy in Oman.
179 CHAPTER 6 Drivers, barriers and policy options for adopting RE in Oman’s energy regime
6.1 Introduction
In the previous chapter, the challenges – i.e. technological performance, data availability, technology cost, insufficient collaboration between RE interest groups, limited experience with RE, long-term approval process and hydrocarbons subsidies (see section 5.4.2) – that face the development of renewable energy in Oman from the perspective of interviewed representatives of renewable energy projects were identified. To avoid partial explanation of what factors that challenge the development of renewable energy projects, this chapter expands on the analysis provided in chapter 5 by assessing the barriers existing at Oman’s energy regime. This is important because focusing on challenges facing renewable energy from representatives of renewable energy projects only is not sufficient to fully understand the reasons behind the delayed adoption of renewable energy technologies in Oman especially renewable energy projects do not exist in isolation from their surrounding environment with which they interact.
This chapter draws on data gathered from 12 interviews with energy experts (Group III,
2014) representing academics, business actors, and government representatives. It uses grounded theory (GT) analysis with the objective of eliciting their views on the motivations, barriers, and policy measures influencing the adoption of renewable energy technologies in
Oman (see sections 3.4.4 and 3.6.3). Using the coding and memoing procedure (see section
3.6.3), this chapter provides a thematic classification of the motivations, barriers and
180 policies to the adoption of renewable energy in Oman (i.e. institutional, economic and financial, as well as technical and cultural barriers). Similarities and differences among barriers within or between stakeholder groups (academics, business actors, and government representatives) are also highlighted.
6.2 Drivers for RE deployment in Oman
In consultation with firms, researchers, and government stakeholders, a set of primary drivers for renewable energy uptake in Oman were identified. Six criteria were claimed to motivate the uptake of renewable energy technology in Oman: safeguarding the security of the national energy supply, enhancing air quality, sustaining economic growth, job creation, enhancing the country’s commitment to the global mitigation of climate change, and improving the country’s reputation (Figure 6.1).
To measure the importance of each of the aforementioned drivers, interviews were tailored with quantitative questions, in which interviewees were asked to score the importance of each driver based on a scale of 1 – 4, where 4 represents the highest importance and 1 the least importance. Based on the outcome of the interview, it was identified that the sustainability of national economic growth is a priority for the country to undertake the development of alternative energy resources like renewables. The development of a renewable energy manufacturing industry was perceived as a crucial element in promoting the development of renewable energy to enhance the sustainability of economic growth.
Hence, the renewable energy manufacturing industry could make a positive impact—
181 diversifying Oman’s economy away from its high reliance on hydrocarbons, by creating new sources of income. The security of national energy supplies and self-sufficiency received the second highest score in assisting in the deployment of renewable energy in the country
(Figure 6.1).
Figure 6.1 Drivers for renewable energy uptake in Oman as reported by 12 interviewees (Group III, 2014).
As had been reported by a governmental actor:
The advantage that can be added by renewable energy deployment is that the government can reduce using the natural gas and can manage to export these resources by selling them in the international markets in double prices than the cost paid at the national level (Interview 1, group III, 2014)
It was also asserted by 20% of interviewees that investments on both renewable energy installation projects and renewable energy manufacturing industries can contribute to job creation. This criterion was classified as the third most important factor, after safeguarding the national energy supplies and sustaining the national economic growth. Job creation is one of essential goals set by the government in the long-term national economic development plans.
182 Environmental impacts associated with the current practices of energy generation from hydrocarbon resources, like air pollution and GHG emissions, were classified as being not significantly important factors motivating the deployment of renewable energy in Oman.
Finally, it was argued by some interviewees that the country’s reputation regarding its adoption of green technologies, like renewables, could be one of the drivers that motivating the uptake of renewables in Oman. This criterion, however, received the lowest score from the interviewees.
6.3 Barriers to RE uptake in Oman’s energy regime
In this section, data from 12 semi-structured interviews with energy experts were analysed to identify the barriers, at energy regime, to renewable energy development in Oman. Using
GT approach, the identified barriers were separated into levels from general to specific to help understand their sources and enable stakeholders to comprehend and respond. For each barrier category, there is a top level (first level) representing a broad category of barriers, going to lower levels, in which more detailed and specific barriers are identified.
Thus, at the second level, several barriers within a category are identified, and at the third level the relevant elements of these barriers are presented.
Representatives of business and government sectors, as well as academics, reported a range of institutional, market, technical, and cultural barriers confronting the deployment of renewable energy technologies in Oman. These barriers have been categorised and outlined in Figures 6.2, 6.3, 6.4 and 6.5, and discussed in the following section.
183 6.3.1 Institutional barriers
According to the survey, interviewees representing the three sectors—academic, business, and government—pointed out two major institutional challenges delaying the penetration of renewable energy deployment in Oman: (i) the lack of regulatory framework, and (ii) the long-term approval processes. Of 12 interviewees, 8 stressed that the lack of a regulatory framework—such as renewable energy targets, licencing, permitting, or incentives—that regulate the uptake of renewables, has been one of the main challenges for investors to risk investing in renewables, as well as for governmental entities to facilitate approval for new investors. The lack of a regulatory framework leads to the persistence of the second major challenge—the long-term approval process. Approximately 4% of interviewees complained that the long-term approval process has delayed the implementation of their projects, while the governmental representatives pointed to delays in governmental initiation of new strategies—such as responding to new international environmental agreements, approving new renewable energy targets (interview 1 and 2, group III, 2014), or making changes to existing laws (interviews 1, 6, and 12, group III, 2014). These two major challenges have resulted in subsequent issues, as follows.
From the perspective of business actors representing utility (state-owned) and private companies, four out six interviewees from the business sector, and three out of five interviewees from the governmental sector, emphasised the five institutional barriers that have delayed the implementation of renewable energy pilot projects or the uptake of renewable energy proposals, or prevented any action towards renewable energy uptake.
These include the long-term governmental approval process for renewable energy
184 investments, lack of renewable energy support through the current power sector law, limited possibilities to influence government decision-making, inconsistent national energy policy, and accountability issues.
Moreover, 40% of business actors (i.e. utility companies, national grid operators, renewable energy service companies) stated that there was limited legislative and regulatory support compared to conventional modes of energy generation. More specifically, they complained that licencing, permitting, and approval processes continued to constitute a major challenge in developing renewable energy projects. All these processes require consultation, review, and approval from multiple agencies and levels of government with little to no streamlining and are often complicated. As indicated by two interviewees, there is less regulatory and institutional backing because there are no elements in the power sector law to support the deployment of renewable energy. For instance, two utility companies interested in producing their own electricity from renewables claimed that licence restrictions under the current power sector law did not allow for the generation or purchase of electricity from renewable energy sources (interviews 7 and 9, group III, 2014). Finally, it was alluded that energy matters—such as oil, gas, electricity, water desalination, GHG emission reduction, and renewable energy—are viewed separately. Therefore, renewable energy is still not a high priority on the governmental agenda.
The latter challenge has been emphasised further by academic actors, who have long been engaged in researching the potential for renewable energy uptake in Oman. Academics have pointed to the challenge of communicating their research findings with policy-makers at the high governmental level, as well as their inability to influence decision-making
185 regarding the uptake of renewable energy (interviews 1 and 3, group II, 2014). This particular challenge has been even emphasised with regards to the government due to the persistence of hierarchal, top-down decision-making process in Oman (interview 2, group III,
2014).
In addition, interviewees representing different governmental entities noted additional barriers delaying the uptake of renewable energy in Oman. These include delays in decision- making regarding new policies or strategies, lack of experience or know-how about renewables among officials, the weak position of emerging governmental departments associated with renewable energy to enforce their regulations, the absence of representation of renewable energy interest groups in the high-level decision-making arena, conflict of interest among officials, the lack of an entity dedicated to overseeing the implementation of renewable energy in the country, and the inadequate co-ordination between energy-regulating entities.
A specific example illustrating the delays in decision-making related to new policies and strategies is the delayed governmental launch of the national Designed National Authority
(DNA) at the Ministry of Environment and Climate Affairs (MECA), which was intended to consider the registration and approval process of the Clean Development Mechanisms
(CDM) projects. The actual registration of CDM projects started globally under the Kyoto
Protocol in 2005; however, Oman established its DNA in 2009. The 2008 economic crisis negatively impacted the demand and cost of carbon credits—such as certified emission reduction (CER) credits—and Oman was thus unable to take advantage of CDM projects at a time, as the cost of CER dropped from €16 to €4 (interview 2, group III, 2014). As pointed
186 out by two interviewees, such delays in decision-making associated with new policies such as renewables have been explained by the lack of experience or subject know-how among officials. This has been reinforced by the weak position of newly established departments to oversee the uptake of renewables in Oman. This can be explained by: (i) the absence of representation for such departments in high-level decision-making processes (interview 6, group III, 2014), (ii) difficulty in influencing or contributing to changing state laws (interviews
1 and 11, group III, 2014); and (iii) the inability to enforce regulations (interviews 1 and 2, group III, 2014). Furthermore, two interviewees pointed to the issue of conflict of interest among high-level officials as one of the challenges hindering the uptake of renewable energy in Oman. It was indicated that some of the actors who attempted to gain approval for renewable energy project in the form of pilot projects or proposals had either been declined or kept on hold (at the time when the interviews were conducted) by authorities in the Council of Ministers due to their vested interest in existing hydrocarbon-based electricity generation projects (interviews 6 and 10, group II, 2014). Four of the five governmental interviewees noted that the lack of a dedicated governmental entity to oversee the implementation of renewable energy in Oman is a major barrier. Consequently, the emerging efforts associated with promoting renewables in Oman remain uncoordinated due to a lack of leadership and political will. Similar to business actors, inconsistent views of energy-related matters is a challenge delaying the implementation of renewables in Oman.
A summary of institutional challenges delaying the deployment of renewable energy in
Oman indicates that barriers are embedded in the political culture and ideology, as well as in governmental structures (Figure 6.2). The lowest level, as illustrated in Figure 6.2, represents the specific barriers that lead to the existence of general barriers at the upper
187 levels (as indicated by arrows). That is, limited experience in renewable energy among decision-makers at the governmental level and the lack of a regulatory body specialised in renewable energy are two factors that lead to delays in project approval processes (i.e. there is a complex process and a long time-frame for obtaining a licence and a permit). They are also the reason for the lack of a national renewable energy regulatory framework, which has in turn resulted in imperfect competition among governmental and business entities to pioneer the development of renewable energy in the country. Moreover, the dominance of political-corporate actors, who have vested interest in hydrocarbons, involved in the energy decision-making processes has led to conflicts of interest among officials whose concern is to maintain the status quo; and who thus resist the uptake of alternative energy technologies, such as renewables (Figure 6.2).
Institutional Barriers
Complex process Imperfect Conflict of and long time- frame for competition interest among amongst officials obtaining license institutions and permit
Lack of policy/regulator Powerful fossil y framework fuel lobbies
Missing of Limited no. of regulatory body specialised in experts in RE renewable energy
Figure 6.2 Institutional barriers to deployment of renewable energy in Oman. Source: Survey (Group III, 2014).
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6.3.2 Market barriers
Coupled with the persistence of institutional barriers, 10 of 12 interviewees representing the three sectors agreed that the availability of hydrocarbons, hydrocarbon subsidies, a low electricity tariff structure, and the high up-front cost of renewable energy technologies are major barriers to the penetration of renewables in Oman’s energy markets—particularly the electricity market.
Based on the outcomes of these interviews, two types of market barriers can be recognised: market distortions and market failure barriers (Figure 6.3). Regarding the former, the abundance of hydrocarbon resources, coupled with high hydrocarbon subsidies, have been disadvantageous to the competitiveness of renewable energy technologies. In Oman, the power sector is characterised by double scheme subsidies, in which power production is subsidised on two sides: generation and consumption. In terms of generation, hydrocarbons produced domestically—like gas and diesel—are sold domestically at lower cost in comparison to the real cost of fuel on the international market. For instance, electricity generation investors can buy fuel for five times less than the real cost of the fuel on the international market (AER, 2011). In terms of consumption, the electricity tariff structure has been fixed since the 1980s; this means that electricity consumers in Oman pay only 54% of production costs to electricity distribution companies, while the government subsidises the rest. Consequently, electricity prices in Oman are among the lowest in the world.
Interviewees 6 and 9 put this issue into perspective:
189 Governmental subsidies to gas, diesel and electricity are the main challenges to renewable energy use in the country. (Interview 6, group III, 2014)
The current power generation cost is 25Bz/kW (~0.065USD/kW) for which the consumer pays only 10Bz/kW (~0.026 USD/kW) for electricity distribution companies. Apparently, this does not cover the real cost of generation, therefore the government pays the difference between the generation cost and the total revenue in a form of subsidy at 15Bz/kW (~0.039 USD/kW). To this end, if electricity generated from renewable sources costs 70Bz/kW (~0.18 USD/kW), then the government should pay a difference of 60Bz/kW (~0.16 USD/kW) which is uncompetitive to 15 Bz/kW (~0.039 USD/kW). (Interview 9, group III, 2014).
With the persistence of hydrocarbon subsidies, renewable energy technologies remain unable to compete with conventional energy technologies—especially with the current cost evaluation methods. As pointed out by two interviewees, one of the reasons behind this inability of renewable energy technologies to compete is due to the failure to internalise the cost of environmental damage associated with the use of hydrocarbon based technologies.
A consideration of the costs associated with environmental externalities can increase the total costs of electricity produced by conventional technologies such as OCGT and CCGT. To quote an executive director from the government sector:
If we adjust the calculation of electricity generation subsidies, which are sometimes four or five times higher, to include environmental externalities so we ensure a proper economic evaluation of renewable energy technologies, renewable energy technologies can have a lower cost than the full unsubsidised costs of fossil fuel generation. This allows us to consider the negative externalities associated with emissions and therefore we can see the additional benefits associated with renewables. These benefits do not appear in ordinary subsidy calculations. (Interview 6, group III, 2014).
Therefore, it is impossible to adopt renewables with the persistence of hydrocarbon subsidies unless renewable energy technologies are similarly supported by incentives such
190 as subsidies. Coupled with the lack of institutional backing, these are the factors behind the lack of demand for renewable energy technologies in Oman.
However, as pointed out by business actors interested in investing in renewables, market failure results from three economic challenges that create reluctance to risk investing in renewables, especially given the lack of a regulatory framework. These are high up-front costs, long payback periods, and a lack of demand for renewable energy products.
Actors interested in renewable energy also indicated that the lack of data and information associated with renewable energy resources in Oman is a significant challenge for investors wishing to risk investing in renewables. Data availability has also proved a challenge for decision-makers at the governmental level, as they need adequate information to guide their decision-making process. This is one of the reasons behind the delays in the approval process for renewable energy projects. A governmental actor expresses this issue as follows:
Oman requires a bankable data [set] that allows not only the private companies but also the government to see the real value that can be added by renewables so that investors and the decision-makers can be convinced about what is there on the ground. (Interview 1, group III, 2014).
A relevant barrier that explains the persistence of such high costs and data availability issues is the lack of knowledge about renewable energy financing among officials at the governmental level (interview 2, group III, 2014). Furthermore, a highly controlled electricity market reduces the chances for the competitiveness and penetration of renewable energy technologies. For instance, interviewee 9 indicated that the licencing conditions restrict
191 their ability to source their electricity from alternative sources, such as renewables, to the single electricity seller in the country.
Market barriers
Market Market distortions failure
High Restrictive Lack of Absence of Uncompetiti investment access to competitiven uncertainty market for ve RET costs technology ess RE risk
Highly Lack of High Exclusion of Low controlled adequate subsidies to environmental electricity energy information oil and gas externalities tariff cost sector and data
Figure 6.3 Market factors that impede introduction of renewable energy technologies in Oman. Source: Survey (Group III, 2014).
6.3.3 Technical barriers
Based on the current practices with regard to the implementation of renewable energy in
Oman, 4 of the 12 interviewees representing academic, business, and governmental sectors asserted that dust, high temperature, and humidity are three main factors that reduce the efficiency of renewable energy technologies (especially PV modules) in the specific environmental conditions of Oman. Yet, interviewees expressed their confidence in overcoming such technological challenges given the high pace of global technological innovation and thus performance. These factors are viewed as the most important criteria that need to be considered when making decisions with regard to technology transfer into the country (Figure 6.4).
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Furthermore, the remote location of renewable energy sources—especially wind and solar—from main demand sites, was identified as a constraint on the deployment of renewable energy technologies. Enabling these remote resources to access the national grid, which has expanded over time to meet consumer demands, might incur high connection costs as well as energy losses due to the long distance between these sources and the national grid. It was also pointed out that, in order to enable renewable energy access to the national grid, grid code upgrades would be required (Figure 6.4).
Although some interviewees noted the challenge of unpredictability and intermittent supply of renewable energy technologies (interview 2, 3 and 5, group III, 2014), 50% of interviewees did not consider the technical issues of intermittent supply from renewable energy sources—especially wind and solar—as a major challenge to the reliability of renewable energy technologies. Instead, interviewees expressed their optimism with regard to the possibility of overcoming such challenges based on the belief that these technologies have been implemented elsewhere in the world. The interviewees noted the importance of implementing renewable energy technologies to meet energy demands during the peak periods, which actually coincide with the peak production of energy from renewable energy resources. Nonetheless, a need for energy storage to overcome the challenge of energy intermittency has been addressed as an issue that needs to be considered upon the adoption of renewable energy projects in the country (interviews 3 and 12, group III, 2014).
It was also argued that the availability of areas required for the installation of renewable energy technology might challenge the adoption of renewables, due to the inconsistency of
193 present infrastructure planning, such as the rooftop design and area of buildings, with unfamiliar technologies like renewables (interviews 7 and 8, group III, 2014). However, the availability of areas to install renewable energy projects has been considered as an advantage in Oman, as it has areas like flat deserts that do not need to be altered for any future installations (interview 4, group III, 2014).
Finally, while five interviewees asserted that the lack of a skilled workforce to maintain and operate renewable energy technologies was a considerable technical challenge for renewable energy deployment in Oman, others viewed that readily available training programmes mean that the lack of technical skills is not a big challenge for Oman
(interviews 4 and 6, group III, 2014).
Technical barriers
Grid code Technology Lack of Missing upgrade and efficiency due to experienced and management is transmission dust, humidity local skilled staff infrastructure needed and temperature
limited Remote location experience with intermittent of renewable energysources sources
Figure 6.4 Technical barriers to renewable energy development in Oman. Source: Survey (Group III, 2014).
6.3.4 Cultural barriers
194 Three interviewees representing the business and governmental sectors asserted that there is a lack of demand for renewable energy products in Oman (interview 2 and 12, group III,
2014). They ascribed three cultural reasons as reasons for this lack of demand (Figure 6.5).
The first reason, as emphasised by eight interviewees, is the lack of awareness of the advantages of renewable energy technologies:
We need to market ourselves, our products and to raise awareness among customers to use our products because there is no renewable energy target or policy to motivate the customers to purchase our renewable energy products. (Interview 12, group III, 2014).
The second reason is the availability of and easy access to cheap electricity supplies in
Oman. Given the high costs of renewable energy technologies—especially up-front cost coupled with the lack of regulatory framework that regulates the uptake of renewables— customers have no motivation to switch to renewables, which is an expensive option compared to conventional cheap energy supplies. The third reason provided is that the public acceptance of the installation of renewable energy projects is a potential challenge to its adoption. Renewable energy technologies, like wind turbines and solar panels, are associated with aesthetic impacts. For instance, some interviewees pointed to the popular rejection of the establishment of a power grid extension in their area:
One of the issues that we face in the meantime in the connection of electricity transmission lines is that people complain about their routes passing their villages although we try to avoid this by installing in the mountains, still there are complaints. A project costing one million Rial has already been blocked. Renewables might be no exception. (Interview 5, group III, 2014).
Moreover, while 39% of interviewees alluded to the immature culture of collaboration between entities, including governmental, private and academic sectors, three interviewees
195 viewed the collaboration between actors positioned in different agencies as not being a major issue delaying the deployment of renewable energy in Oman.
Cultural barriers
Culture of Lack of demand for collaboration renewable energy between RE- products associated entities
Availability of Lack of awareness Public acceptance cheap electricity supplies of RETs for RE projects
Figure 6.5 Cultural barriers for wide-scale development of renewable energy in Oman,
Source: Survey (Group III, 2014).
6.4 Opportunities for RE adoption in Oman
The uptake of renewable energy in Oman has been constrained by institutional, market, technical, and cultural barriers that exist in the incumbent energy regime (see section 6.3).
The identification of barriers is important because they yield useful pointers for action to promote the deployment of renewable energy. Therefore, barriers can also be considered opportunities to promote the adoption of renewable energy.
This section aims to identify measures and combinations of measures that could potentially be used to overcome the identified barriers. It draws from 12 interviews conducted with
196 energy experts and reports on the third set of interview questions that were discussed with interviewees (see Topic 3, Appendix A).
6.4.1 Significance of RE barriers
To measure the importance of barriers identified by interviewees (i.e. institutional, market, technical and cultural), the interviews were tailored with quantitative questions through which the interviewees were asked to score the importance of barriers based on a scale of
(1 – 4) where 4 represents the highest importance and 1 represents the least importance.
Fossil fuel subsidies and lack of a renewable energy policy framework were ranked as the two most important factors that need to be prioritised in planning for renewable energy uptake in Oman. The high costs attributed to renewable energy technologies were considered as the third most important factor, while the fourth on the scale was the current institutional structure. It was also asserted by the interviewees that the current institutional structure needs to be upgraded in order to enhance its ability to undertake the deployment of renewable technologies. Finally, the technical issues associated with renewables, like intermittency and connection to the national grid, were not considered as major challenges for renewable energy deployment in Oman (Figure 6.6).
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Figure 6.6 Significance of barriers: fossil fuel subsidies, lack of policy framework, RETs cost, institutional structure, readiness of national grid, as reported from interviewed stakeholders (Group III, 2014).
6.4.2 Policy options to overcome barriers: demand side
One policy issue that needs to be dealt with is the energy pricing. 80% of interviewees had emphasised that highly subsidised electricity tariff does not favour the implementation of expensive renewable energy technologies. As reported by interviewee 12, power subsidies could be reformed so that electricity prices reflect the cost of production:
Governmental subsidies to gas, diesel and electricity are the main challenge to renewable energy uptake in Oman. Partial reduction of these subsidies can help in bringing up the balance for the use of renewable energy technologies in the country. (Interview 12, group III, 2014)
In order to enable competitiveness of renewable energy technologies, which do not require fuel for their operation, studying the removal of hydrocarbon subsidies and integration of environmental costs in calculating the fuel cost was recommended (interviews 2, 3 and 6, group III, 2014). This will not only increase the competitiveness of renewables, but also incentivise the more efficient use of electricity.
198 Moreover, filling the gaps in the currently fragmented energy governance could drive an integrated consideration of available energy resources, including renewables (interviews 5 and 6, group III, 2014). This could result from strong governmental intervention in supporting institutional co-ordination between prevailing energy governance bodies, the environment regulatory body, as well as the electricity and water supplying regulators, driven by concerns for the security of primary energy supplies; increasing energy demand; economic diversification; and making commitments to the tackling of global climate change.
While promising, the introduction of financial incentives, like feed-in tariffs, does not seem to be a suitable mechanism for the current electricity market in Oman and other GCC states, which are characterised by top-down, centralised, and large-scale implementations
(interview 4, group III, 2014):
If you want to introduce renewables, introduce them with a true cost because we already got a subsidy mechanism to manage the cost differential. In terms of introducing renewables, I do not think that we need to run a clever feed-in tariff to try making it competitive within an open market; we do not have an open market yet. (Interview 4, group III, 2014).
A potential shortcoming of the feed-in-tariff mechanism is the high upfront cost of renewable energy technologies. This is especially challenging in the Gulf States and Oman, where electricity tariffs are fixed at low prices. Should electricity tariffs remain untouched, electricity consumers—who enjoy almost the lowest electricity prices in the world—will have no incentive to pay for expensive renewable energy technologies. Otherwise, the government will need to cover the gap between the current electricity tariff and the electricity price sourced from renewable energy. It is utilities who will ask for the
199 compensation of any additional costs. Moreover, governmental support in minimising the high upfront costs will be necessary. In this case, direct cash grants or subsidies can contribute to removing this barrier. A key limitation of the feed-in tariff mechanism is the potential burden on the State budget—especially with the lack of a liberalised market, where the role of the government in pushing the use of technology can be substantial. This contradicts the ambition of Oman, and other Gulf States, to diversify their economies away from high economic reliance on a single source of export revenues, including hydrocarbons.
Financial incentives in the form of direct cash grants or soft loans can be a policy measure for lowering the high upfront investment cost of renewables. Subsidies supporting medium- to large-scale renewable energy asset investment were seen as attractive means of creating a competitive environment for renewable energy projects with conventional energy supply technologies (interviewees 2 and 12 group III, 2014).
The government is already giving subsidies to gas power plants, so why not to renewables. (Interview 2, group III, 2014)
However, a systematic study has to be conducted in order to measure the long-term impact of subsidy schemes on the state budget.
An additional observation promoting the use of and demand for renewable energy, as stressed by eight interviewees, is the importance of promoting public awareness of the new renewable energy technologies. Necessary information and awareness can be delivered through educational facilities, like schools and universities, or workshops designated for policy-makers or individual investors. The raising of awareness will promote the transfer of
200 knowledge among individuals, as well as commercial businesses and actors involved in the prospective development of renewable energy in the country. This can contribute to creating a culture of collaboration between stakeholders.
6.4.3 Policy options to overcome barriers: supply side
Only making renewable energy technologies competitive is insufficient, however; a related policy dimension requiring attention is the monopolistic regime of Oman’s electricity market. Further restructuring towards the privatisation and liberalisation of the electricity market may be necessary to facilitate competition between conventional electricity and renewable electricity generators (interview 4, group III, 2014).
However, should the Omani electricity market remain neither privatised nor liberalised in the short and medium term, a relevant policy measure that can promote the large-scale deployment of renewables is a combination of an Independent Power Producers model
(IPP) and Power Purchase Agreement (PPA), which will ensure the purchase of electricity from licensed generators. At present, electricity generation across the GCC is sourced under the Independent Power Producers model (IPP), with Power Purchase Agreement (PPA).
Thus, the spread of renewable energy can be achieved by implementing the current IPP and
PPA models. Given that the power production market in Oman (and other GCC countries) is not yet liberalised and the existence of the ‘Single Buyer’ model, a theoretical option combining IPP and a quota model in electricity generation could be a promising option for renewable energy promotion on a larger scale (interview 4, group III, 2014).
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In this case, the regulatory authority can announce its need to install a specific capacity of renewable electricity as IPP. The winning bidder can benefit from a long-term contract that guarantees their protracted PPA without raising consumer prices. Tenders are popular schemes, in which a regulatory authority alerts project developers of its need to install a specific capacity of renewable electricity (interview 9, group III, 2014). The winning bidders—who are selected based on specific requirements, like economical and technical feasibility—benefit from the long-term contract, which guarantees their long-term purchase
(power purchase agreement). One advantage of the tendering mechanism is that the competition between bidders normally focuses on the price per kWh, so that price is determined through bidding. This provides an opportunity to tackle one of the main challenges to renewable energy technologies—the high costs of technology. In practice, however, the institutional capacity to administer the tendering process may be a major constraint (interviews 1 and 2, group III, 2014).
To support tendering mechanisms, governments can take an active role in supporting and facilitating the quota model by defining a national target or fixing a quantity of electricity generated from renewable energy sources. This will attract the attention of investors and utilities to explore opportunities for increasing renewable energy deployment in Oman.
Renewable energy targets can be defined and passed by the government under a new sector law. In the short to medium term, a tendering mechanism is more suitable to the context of Oman than other quota policy options, such as Renewable Electricity Portfolio
Standards (REPS), which has been used in some states of the USA (interview 1, group III,
2014). Under the current electricity law, electricity distribution companies are obliged to
202 source their electricity from the single selling entity of the Oman Power and Procurement
Company (OPWP). Therefore, defining the quantity of renewable electricity to be sourced by electricity distribution companies is not a relevant option; unless the electricity market is liberalised, electricity distribution companies have no flexibility in how to meet this requirement (interviews 1, 8 and 9, group III, 2014).
A technical difficulty that can face prospective renewable energy developers is the technical connection of renewable energy sources (see sub-section 6.3.3), which mainly exist in remote areas, to the national grid. Although this might not be considered a major challenge for renewable energy development in the country, further grid reinforcement through the upgrading of the grid code needs to be acknowledged. During the interviews, it was found that the infrastructure developer, Oman Electricity Transmission Company, had already conducted an initial study of grid code upgrades to reinforce and increase the capacity of local distribution networks as a preparatory initiative for the future uptake of renewable energy.
Other technical difficulties include the limitation in the potential technical skills required for the operation and maintenance of renewable energy technologies. Although this might not be a major issue in Oman, training programmes are recommended to build up national capabilities. Moreover, an integration of renewable energy studies in educational curricula would ensure the accumulation of knowledge and capabilities that might produce a future labour market in Oman (interviewees 3, 5 and 11, group III, 2014).
203 Furthermore, supporting renewable energy research and development is essential to overcoming the technical challenges associated with renewable energy development in the country (interviews 1 and 3, group II, 2014). Research on the impact of local environmental conditions (e.g. dust, temperature, and humidity) on the efficiency of imported renewable energy technologies, energy storage, renewable energy resource identification, and the implications of hybrid FF-RE systems in Oman is considered an important action to enhance the development of renewable energy in the immediate term. As reported by interviewee
12:
Detailed feasibility studies to assess the efficiency of renewable energy technologies under the existent Omani environmental conditions is highly recommended before proceeding to any legislation. (Interview 12, phase III, 2014).
6.5 Conclusion
In this chapter, drivers, barriers and measures to overcome barriers were identified through semi-structured interviews with experts representing the government, business, and academic sectors in Oman. It was found that safeguarding the energy supply, enhancing air quality, sustaining economic growth, job creation, enhancing the country’s commitment to the global mitigation of climate change, and, less importantly, enhancing the country’s reputation, are potential drivers for the uptake of renewable energy in Oman.
Whereas technical issues had been perceived as the main barrier to the slow uptake of RE in the Oman, this research has uncovered that numerous additional factors have notably influenced such delays. High hydrocarbon subsidies, low electricity tariff structure,
204 fragmented energy policy, the absence of a renewable energy policy framework, as well as centralised decision-making emerged as major challenges to the adoption and expansion of renewable energy.
The identification of barriers not only helps in providing a systematic classification of the types of barriers but also aids in developing policy interventions to overcome identified barriers. The analysis of renewable energy barriers in Oman yielded useful pointers for overcoming the identified barriers. The main measures to overcome identified barriers were fossil fuel subsidies reforms and an implementation of current Power Producers (IPP) and
Power Purchase Agreement (PPA) models to renewable energy projects along with a quota model in electricity generation side. Financial incentives in the form of direct cash grants or soft loans are also options for lowering the high upfront investment cost of renewables.
Also, public awareness appeared to be required to enhance the local demand for renewable energy technologies.
While Chapter 5 focused on identifying the challenges that face the development of renewable energy at the level of specific RE projects (or technological niches), Chapter 6 focused on identifying the challenges existing at the national energy regime. As predicted by the MLP theory, the success of renewable energy implementation cannot be achieved without the collective action of actors representing renewable energy projects (or technical niches) and the national energy regime (socio-technical regime). To avoid treating these two levels of analysis separately, the following chapter aims to establish potential interactions between actors existing at energy regime, and renewable energy projects in Oman.
205 Chapter 7 The paradox of RE development in Oman
7.1 Introduction
This thesis investigated the factors and conditions that have held Oman, a particularly hydrocarbon-rich country, back from adopting and promoting modern, renewable energy technologies. Chapters 5 and 6 have generated unique information on the factors that have delayed the adoption of RETs. The factors identified emerged from the analysis of both, the
RE project cases, i.e., technological niches, and national energy regime levels, i.e., socio- technical regime, respectively.
At the technology niche level, a mix of techno-economic, social and political factors were identified as vital challenges to RE development in Oman from actual practices of actors representing renewable energy projects. Techno-economic factors included limitations of
RETs under high temperature, dust and humidity conditions and high capital cost of RETs.
Social factors encompassed limited communication between renewable energy interest groups and energy policy makers. The lack of renewable energy policy framework, long- term approval process and informal actors networks were identified as major political factors to hinder the development of RETs (see section 5.4.2).
At the regime levels, a number of practices emerged as crucial. These include the predominance of state-owned enterprises, informal actors’ networks, hydrocarbon subsidies, government monopoly in the energy sector (see sections 4.2 – 4.3), lack of renewable energy regulatory framework, heavily centralised, top-down decision-making, decision-makers interest in fossil fuels and long-term approval process (see section 6.3).
206 These practices have played a significant role to maintain the stability of Oman’s energy regime, perpetuate fossil fuel-oriented policy and hence delay the uptake of renewable energy technologies.
Whereas useful findings have emerged from the above research to explain the delayed adoption of RETs in Oman, these are still single factors, and a gap remains in relation to understanding the particular interplay and relationship between the regime and niche levels. Such interaction could possibly block-in or assist the adoption of RETs, and therefore will be assessed in this Chapter. The extent to which the development of RE projects have put pressure over the national energy regime and vice versa remains hidden. Such understanding of interaction between the development of the only RE pilot projects in
Oman and the national energy structures is particularly important due to vested interest in the country’s fossil fuels-dominated economy. A systemic approach is thus required to address structural conditions and their dynamics which remain hidden unless further analysis is undertaken.
Specifically, the extent to which renewable energy experimentations could further succeed is questionable in this context of fossil fuels- centralised, top-down decision-making processes. Also, the strategies employed by decision-makers to influence the success of RE projects in such context need further investigation. Thus, further investigation is needed.
Therefore, concepts drawn on strategic niche management (SNM), multi-level perspective framework (MLP) and rentier state theory (RST) (see section 2.5) will be applied to the original findings from literature reviews, the field work, and the analysis of renewable energy projects. Drawing on the proposed socio-techno-economic-political approach (STEP)
207 (see section 2.5) built upon SNM, MLP and RST, a novel interpretation of the findings is proposed. The study of interplay between technological niches and, socio-technical regime and economic-political regime is guided by applying the concepts of the MLP which emphasises the importance of interplay between development processes at three levels, niche, socio-technical regime and landscape, to promoting successful uptake of new technologies. The indicators and guiding questions that will be applied in this chapter have been drawn on concepts and ideas that emerged from the literature review (Chapter 2), linked to the theoretical concepts of technological niche, socio-technical regime and political economy (as per Table 3.5).
This chapter thus brings together the original findings from the field work and literature reviews through a theoretical approach in order to deepen the analysis of the delayed uptake of RE. It aims to shed new light on the potential role of RE project cases, i.e., technology niches, to influence or be influenced by other factors such as political factors existing in national energy regime. It also aims to identify possible opportunities for the government to accept and commit to promote and support medium and large scale development of RE plants in Oman in line with energy security, economic vulnerability to oil prices and increasing GHG emissions.
7.2 RE projects and socio-technical regime: limited role to drive the transition
Drawing on the proposed socio-techno-economic-political approach (STEP) (Table 7.1, also see section 2.5), this section applies the concepts of strategic niche management (SNM) –
208 i.e. learning processes, visioning and networks of actors – to examine the first direction of interaction between RE projects and national energy regime. It assesses the strengths and weaknesses of the studied renewable energy projects, i.e. technological niches, to examine whether they can play a collective role in putting a pressure over the national energy regime and hence stimulate the expansion of renewable energy technologies in Oman.
Chapter 5 provided unique information about the motivations and challenges that face the development of five selected renewable energy projects in Oman. The findings indicated that the five RE project cases were developed based on diverse motivations including: natural gas saving, enhancing rural electrification and testing the techno-economic feasibility of renewable energy technologies. While techno-economic factors such as high temperature, dust, humidity conditions and high capital cost of RETs have been a challenge for all RE project cases, social (such as limited communication with energy policy-makers) and political factors (such as long-term approval processes and informal actors networks) vary based on the type of RE developing agent. It was indicated that government- and national oil company-induced projects are faced with less socio-political challenges than those facing the private- or academic-induced projects (see Table 5.2).
With these differences in motivations and challenges facing the development of renewable energy projects in mind, this section aims to deepen the analysis of factors and conditions that have held Oman back from adopting renewable energy. It aims to further analyse and structure the findings presented in Chapter 5 based on three SNM process of: learning processes, visioning and networks of actors. The guiding questions (as per Table 7.1) used to interpret the data are:
209
- To what extent the different actors’ visions are converging?
- To what extent technical and social aspects are aligned in the learning processes?
- How broad the actors’ networking is and to what extent their interactions are regulated?
Also, the analysis of the strengths and weaknesses of each process is guided by a number of criteria (see section 2.3.2), as follows: the learning process is considered good when it is (a) broad, i.e. focusing not only on techno-economic optimisation but also on alignment between technical (e.g. technical design and infrastructure) and the social (e.g. user preferences, regulation and cultural meaning); and reflexive, i.e. there is attention to questioning underlying assumptions (Laak, Raven & Verbong, 2007). The process of voicing and shaping expectations is considered to be good when (a) an increasing number of participants share the same expectations (expectations are converging) and (b) the expectations are based on tangible results from experiments (Laak, Raven & Verbong,
2007). Building the social network is considered to be good when (a) the network is broad
(including firms, users, policy makers, scientists and other relevant actors) and (b) when the alignment within the network is facilitated through regular intersections between actors
(Laak, Raven & Verbong, 2007).
210 Table 7.1 Relating the concepts and approaches, their analytical dimensions and guiding questions for the study of renewable energy in Oman to the sources of information using the STEP framework, 2016.
Theory main Relevant Approach Guiding questions Sources of information concepts dimensions/indicators
- To what extent technical, economic, social and political aspects are aligned in the learning processes? 7 semi-structured interviews Learning processes, Technological Strategic niche - How broad the actors’ and Systematic literature visioning, and networks Niches management networking is and to what extent review of actors their interactions are regulated? - To what extent the different actors’ visions are converging?
- What are the barriers existing at Socio-technical Multi-level Institutional, market, readily established energy system 12 semi-structured regime perspective technical and cultural that impede the uptake of interviews renewables? Governmental documents, Defensive strategies, - What strategies employed by journal articles, companies’ Rentier states material strategies, Political-economy political actors to assist or resist websites and newspaper theory institutional power and the uptake of renewables? articles and social media discursive strategies accounts such as twitter.
211 7.2.1 Divergence of visions
The process of voicing and shaping expectations is considered good when (a) an increasing number of participants share the same expectations (expectations are converging), and (b) the expectations are based on tangible results from experiments (Laak, Raven & Verbong,
2007).
In Oman, from the discussion of motivations for renewable energy projects led by government, national oil company and private investors (see section 5.4.1), it appeared that renewable energy projects were initiated for different reasons and with diverse expectations. The national oil company’s motivation of using 7 MW solar technology is to free gas used in enhanced oil recovery for exports; government-induced 303 kW solar project was initiated to enhance rural electrification; and the private and academic actors’ motivations were to test the techno-economic feasibility of renewable energy technologies
(see sections 5.2.1 and 5.4.1). This can be considered normal for emerging niches. However, their visions do not seem to intersect or to have been fully articulated. Each group of actors—i.e. projects established by the government, a national oil company, scientific research and by individual investors—was working independently. This is in part, as will be discussed in sub-section 7.2.3, due to immature social networking between the actors involved in these renewable energy projects besides it was found that no widely supported strategy was available for future market development including the existence of renewable energy target at the national level.
212 Since the interviews took place in 2014, few renewable energy projects and policy initiatives have been approved. In May 2017, a policy initiative, known as ‘Sahim’ in Arabic, was launched (Viswanathan, 2017b; AER, 2017b). This new policy initiative allows individuals such as homeowners to install rooftop solar PV systems to produce solar electricity for use and surplus sale to electricity distribution companies (see section 4.5.3). Furthermore, a
Power Purchase Agreement was signed in September 2017 for the first utility scale 50 MW wind-based renewable project in southern Oman (Muscat Daily, 2017; Oman Observer,
2017). In October of the same year, these two initiatives were followed by an announcement of a national renewable energy target that aims to source 10% of the total electricity generation capacity from renewable energy sources by 2025 (Prabhu, 2017b). A week after the announcement of a 10% renewable energy target – to generate 10% of electricity from renewables – a consortium of international consultants was appointed to advise on the development of Oman’s first utility-scale 500 MW solar project (Prabhu,
2017a). However, these recent developments continue to be divergent and do not appear to intersect or to have been aligned with national renewable energy target.
7.2.2 A focus on technical and economic learning processes
The learning processes are considered ‘good’ when they are: (a) broad, focusing not only on techno-economic optimisation, but also on the alignment between the technical (e.g. technical design and infrastructure) and social (e.g. user preferences, regulation, and cultural meaning) aspects; and (b) reflexive, questioning underlying assumptions such as social values
213 and the willingness to change course if the technology does not match these assumptions
(Laak, Raven & Verbong, 2007).
From the discussion of renewable energy projects in chapter 5, it emerged that while the learning processes are diversified, i.e. techno-economic, social and political renewable energy barriers have been addressed, (see Table 5.1), they have been predominantly focused on assessing technical and economic dimensions of renewable energy technological employment. They have not extended this process into social and institutional dimensions to a significant degree, which is observable in all four types of renewable energy initiatives investigated by this research — i.e., projects established by the government, a national oil company, scientific research and individual investors.
While there is intent to learn from pilot projects (see section 5.4.2), the communication of lessons learnt from the projects does not go beyond online publications of results. See, for example, Albadi et al's 2014 study on the 50 kW solar PV rooftop initiative, and Bierman’s
2014 study of the 7 MW solar-enhanced oil recovery (EOR) project. Most of the lessons learnt by individual actors are not disseminated or discussed between one another. Little evidence for the bidirectional communication of lessons between renewable energy actors themselves or between renewable energy actors and government authorities was found.
The representative of the 6 MW concentrator photo voltaic (CPV) project, for instance, indicated that there is difficulty in establishing direct interaction with governmental actors and academics to communicate the learning outcomes of their projects (interview no. 7, phase II/Group1, 2014):
214 This information was raised to official authorities as a source of data to be analysed so possible strategies can be developed to increase the promotion of renewable energy within the country. Yet. To date, the policies supporting the renewable energy are not clear. (Interview 7, group II, 2014)
With actors’ difficulty to communicate with policy-makers due to persistence of heavily centralised top-down decision-making processes, which eliminate consultation with or involvement of private investors (interviews 4 and 7, group III, 2014), the possibilities of renewable energy projects (i.e. technological niches) to influence decision-making processes at the national energy regime are limited. In contrast to this view, however, an interviewee has indicated that while some renewable energy projects have been declined, others are accepted because of the informal networking of actors with officials at the governmental level (interview 7, group III, 2014).
7.2.3 Evolving but immature network of actors
Social network building is considered good when (a) the network is broad (including firms, users, policy makers, scientists, and other relevant actors), and (b) alignment within the network is facilitated through regular interactions between actors (Laak, Raven & Verbong,
2007). In Oman, despite the short history of renewable energy development, there is an indication that networks of actors in the field of renewable energy are diverse and evolving.
The social network started small with research institutes as the main actors; gradually, governmental and private investors have become involved, and the number of actors increased. The diversity of actors’ networks can be reflected in the five analysed renewable energy initiatives. This thesis classifies three different spheres of actor networks observable
215 in the five analysed renewable energy initiatives: actor networks at the governmental level
(including examples of actors representing the Mazyoonah and Majan projects), actor networks at the oil industry level, and actor networks at the private sector level. These are discussed subsequently.
In this first sphere of actor networking at governmental level, as observed in the two governmental-led projects, Majan and Mazyonah, the actors involved in developing these projects enjoyed direct networking with access to governmental financial and technical resources (especially in the Mazyonah project). While the state-owned Rural Areas
Company has undertaken full responsibility in the construction of a 303 kW project in the rural area of Mazyonah, its actors are in direct contact with those in the incumbent regime—specifically, actors in the Authority for Electricity Regulation because the project was established under the AER’s recommendations (interviews 5 and 6, Group II, 2014). The installation of renewable energy projects by the Rural Areas Company was directly supported by newly established policy regulations that oblige rural area investors to prioritise renewables unless they are proven to be technically or economically unfeasible.
In comparison, although it was installed by a state-owned electricity distribution company, representative of the Majan solar rooftop project has indicated difficulties in receiving approval for the project from the incumbent regime actors in the AER. Project approval was mainly delayed because there is no element in the power sector law supporting the uptake of renewables, and the licensed electricity distribution companies are not allowed to generate their own electricity or source electricity from any providers other than the sole state-owned electricity provider in the country, Oman Power and Water Procurement
216 company (interview 4, Group II, 2014). However, the networking of informal actors has created enough influence over governmental actors to allow the approval process to proceed.
In the second sphere of actor networks, as per SNM, associated with the national oil company, PDO, the 7 MW solar enhanced oil recovery (EOR) project was established as a joint venture between PDO and its international partner, GlassPoint. The Omani government has been directly involved in the finance of the project through its largest sovereign wealth fund administered by the Ministry of Finance. In 2014, Oman’s general reserve fund pledged USD53 million to support the construction of the project15. The project has also involved other oil companies, including Royal Dutch Shell, which has a 34% interest in PDO (GlassPoint, 2015).
The third networking sphere represents private investors who have limited resources compared to governmental and national oil company investors. With no renewable energy regulatory framework (the time at which these interviews were conducted), two private investors needed governmental support to receive approval for their projects. The interviewee representing the private sector indicated that it is difficult to influence government decision-making regarding the uptake of renewable energy in Oman (interview
7, Group II, 2014).
15 See the GlassPoint website: https://www.glasspoint.com/markets/oman/
217 There is ample evidence that the aforementioned network spheres have interacted with each another. In 2013, for instance, the Public Authority for Electricity and Water
(governmental level) and the Research Council (research level) planned to develop a strategic renewable programme using a grant of 8 million Omani Rials — despite delays in launching this programme (interview 2, Group II, 2014) — to enable a building resource capacity in the field of renewable energy. Similarly, actors involved in building the Majan 50 kW PV project and the project developers of the Mazyonah 303 kW solar project
(governmental-led projects) indicated the existing interaction with academics at a local university in the early stages of project planning and assessment (interviews 4 and 2, Group
II, 2014).
Moreover, there is an indication that actor networks are evolving. A notable example of this is the Oman Power and Water Summit (Determining the Future of Oman’s Renewable
Energy Sector), which was held in May 2013. The summit offered a platform for sharing knowledge between actors representing different domains such as academia, business, utilities, and government. This knowledge-sharing platform has maintained momentum through the annual occurrence up to 2018. Other emerging networking platforms include, first, the Renewable Energy Series organised by the Oman American Business Centre in partnership with Shams Global Solutions (SGS) and Dii Desert Energy (Dii), with the aim to connect local companies in the supply chain with international developers bidding on
Oman’s large solar independent power producer (IPP) projects (Times of Oman, 2018); second, EU-GCC Clean Energy Technology Network-led events such as the PDO-EU GCC
Clean Energy Technology Network workshop, which was held in Muscat in December 2017 and brought together project developers, financial institutions, technology leaders, industry
218 advisers, financial experts, government representatives, policy makers and entrepreneurs to debate the key challenges; and third, opportunities for Solar PV Roof Top business in Oman
(Makarouni, 2017) and GlassPoint Innovation Spur, which is the first renewable energy incubator in Oman, established via coordination between GlassPoint, the Research Council,
Innovation Park Muscat, Riyada and Sharaka, which aims to support Omani renewable energy innovators (Kothaneth, 2018).
However, social networks among renewable energy interest groups cannot be considered mature due to a lack of co-ordination in their ongoing efforts. As suggested by (Laak, Raven
& Verbong, 2007), a social network is considered good when alignment within the network is facilitated by regular interactions between actors. In Oman, however, as reported by interviewee 6, “…there is no good cooperation (everybody is working by himself)” (interview
12). This can be explained by the lack of leadership in coordinating the ongoing efforts in the field of renewable energy in Oman. The entity that can leverage and regulate the uptake of renewable energy in Oman is still unclear. Three different entities play a potential role in leveraging and coordinating the emerging renewable energy sector in Oman: the Public
Authority for Electricity and Water (PAEW); the Authority for Electricity Regulation (AER), which is the regulator of the electricity sector in Oman; and the Ministry of Environment and Climate Affairs (MECA) (see section 4.5.2). In the PAEW, a renewable energy department was established in 2013 to study the potential use of renewable electricity generation in Oman; enhance collaboration with international consultants, such as the
International Agency for Renewable Energy (IRENA) and the Japanese Agency for
International Cooperation (JICA); implement renewable energy pilot projects in coordination with other governmental entities; prepare national energy strategies; and enhance
219 cooperation between renewable energy-focused entities in Oman (PAEW, 2015). AER, on the other hand, has been proactive in releasing the first renewable energy policies in Oman, including a rural area renewable energy policy (AER, 2013) and a rooftop solar PV installation scheme (in Arabic Sahim) (Viswanathan, 2017b; AER, 2017b). Despite its newly established renewable energy department, MECA plays a marginal role in promoting the uptake of renewable energy in Oman because the new renewable energy department aims to survey existing renewable energy projects, increase awareness of the advantages of renewable energy development, and encourage the installation of renewable energy projects through Clean Development Mechanism (CDM) activities under the United Nations
Framework Convention on Climate Change (MECA, 2010), but not to set the regulations and policies that incentivise the uptake of RE in the country.
These immature social networks between actors from different sectors—such as academia, government, national oil companies, and the private sector—affect the other two aspects of internal niche processes: the learning processes and the articulation of visions.
Uncoordinated collaboration between actors involved in renewable energy development does not facilitate the meeting of expectations or convergence of visions (see sub-section
7.2.1).
From the use of SNM in this section to analyse the internal dynamics of surveyed renewable energy projects in Oman, it emerges that: (i) learning processes are limited and narrowly techno-economic, and do not encompass social and institutional aspects surrounding the new technologies; (ii) social networks are small, have few signs of growth and remain poorly coordinated and managed; and (iii) visions are fragmented and show few signs of
220 convergence. There is no single manager that manages these three processes. The deduction from this is that, with the existence of barriers identified in Chapters 5 and 6 and without governmental intervention, renewable energy projects would play a limited role in driving large-scale uptake of renewable energy in Oman.
To avoid partial explanation for why renewable energy projects would have a limited role to influence large-scale development of renewable energy in Oman, the following section provides an analysis of strategies used by economic-political decision-makers to interact with (assist or resist) renewable energy projects.
7.3 Economic-political strategies and RE projects
While the previous section assessed the influence of renewable energy projects on the national energy regime, this section uncovers the influence of national energy regime on renewable energy projects.
The findings presented in Chapters 4, 5 and 6 indicated that there were signs of two directions of interaction between actors representing renewable energy projects and energy experts representing the national energy regime. Specifically, informal actors’ networks, limited communication between RE projects actors and actors in the national energy regime, dominance of political-corporate decision-makers with vested interest in oil and gas, centralised, top-down decision-making process, long-term approval process and conflict of interest between decision-makers have been indicated as major policy barriers
221 delaying the adoption of renewable energy in Oman. It was also indicated that with the persistence of these challenges, some renewable energy projects show signs of success – i.e. national oil company- and government- induced projects – than others, i.e. private and academic projects.
This section aims to explain how the persistence of such practices have enabled employing particular economic and political strategies towards the promotion or delay of adopting renewable energy technologies. To do so, this section adopts the concepts of rentier state theory (RST) to identify the strategies used by decision-makers to assist or resist the uptake of renewable energy in Oman, i.e. defensive strategies, material strategies, institutional power and discursive strategies (see section 2.4.7).
This section draws upon secondary data, including company and governmental websites; newspaper articles; governmental documents, such as the power sector law, and annual reports from the Authority for Electricity Regulation; as well as relevant reports from IRENA; and published books. Moreover, in certain situations, social media outlets – such as Twitter
– were instrumental in the analysis of such political strategies. These additional sources of information were important because findings presented in Chapters 4, 5 and 6 were insufficient to link the aforementioned political factors with the delayed adoption of renewable energy in Oman. Process-tracing method – which is a method for studying the causal mechanisms that link causes with outcomes – was used to identify the strategies used by decision-makers to assist or resist the uptake of renewable energy in Oman (see section 3.7.2). The guiding question (as per Table 7.1) used to interpret the data is: What
222 strategies employed by political actors to assist or resist the uptake of renewables? These are discussed, as follows:
7.3.1 Material strategies: influencing public debate through media framing
The first form of power is material strategies, through which national oil companies are involved in the development of renewable energy projects by drawing on technical capabilities and financial resources to address the arising energy challenges that constraint company’s profit and hence state’s revenues. A salient example of this is development of concentrated solar thermal technology by political-corporate elites to reduce the domestic consumption of natural gas used in oil production, and to enhance gas saving for further export. As stated on GlassPoint’s website:
By using solar to generate steam, Oman can save up to 80% of the gas currently used for
EOR. The gas saved can be exported as LNG, boosting Oman’s export revenue, or as power and feedstock for new factories, generating jobs and diversifying the local economy.16
Given their easy access to technical and financial resources, political-corporate elites led by the predominant state-owned oil producing company (PDO) have been able to construct the largest 7 MW renewable energy project in the country. The Omani government has been directly involved in financing the project through its largest sovereign wealth fund administered by the Ministry of Finance. In 2014, Oman’s General Reserve Fund pledged a
16 See GlassPoint website: https://www.glasspoint.com/markets/oman/
223 USD 53 million to support the construction of the project;17 other oil companies have also invested, including Royal Dutch Shell, which has 34% interest in PDO (GlassPoint, 2015).
However, the PDO’s discourse—which is often used to influence public debate—contradicts the main purpose of the project. The discourse claims that the importance of constructing such renewable energy project is to minimise the environmental degradation associated with hydrocarbon consumption. For instance, emphasis is placed on the amount of carbon emission reductions. Indeed, according to the frequently used statement on their social media, as stated on GlassPoint Solar’s Twitter account:
The project will reduce carbon emissions by 300,000 tons annually, equivalent to removing
63,000 cars off the road. —GlassPointSolar Twitter account and (Hasan, 2017)
In this way, economic-political actors are capable to maintain the status quo (i.e. reliance on hydrocarbons) and at the same time influence the public debate about the expansion of renewable energy in the country. By drawing on technical capabilities and financial resources, economic-political actors can ensure taking control over the newly emerging renewable energy sector, and hence, as will be discussed below, eliminating the role of other renewable energy investors.
7.3.2 Defensive strategies
17 See GlassPoint website: https://www.glasspoint.com/markets/oman/
224 As discussed in section 2.5, economic-political actors such as government representatives and related elites engage in ‘defensive strategies’ by ensuring that attempts at transitions are blocked. In Oman, defensive strategies used by economic-political actors to block new comers attempts to influence decision-making about renewables are in two main forms: elimination of renewable energy actors’ representation and persistence of hydrocarbon subsidies.
Elimination of renewable energy actors’ representation
A key factor eliminating the influence of newcomers, such as renewable energy developers, is the patronage networks, an informal power structure that exists parallel to the formal structures of the state. Examples of these include state-owned enterprises—especially the
State’s presence in the oil and gas industry, which dominates the Omani economy (see section 4.4.1). As it is difficult to draw a line between the state and the oil and gas industry, these types of networks make it difficult for newcomers, such as those renewable energy entrepreneurs who do not enjoy the favouritism of the state.
The lack of state patronage is reinforced by the deliberate exclusion of the representation of renewable energy advocates in the council of ministers (or the cabinet). This strategic isolation of renewable energy interest groups has been emphasised by different interviews, such as by interviewees 1 (group II) and 6 (group III). Accordingly, new renewable energy contenders have faced a long-term approval process or even having some project proposals blocked by the cabinet due to a conflict of interest (interviews 4 and 5, group III, 2014), in addition to difficulties in interacting with policy-makers and influencing the decision-making
225 process. An example of this is associated with the generation of relevant data by renewable energy interest groups, who find it difficult to communicate their data or research findings with policy-makers (see section 5.4.2). Consequently, as part of the strategic isolation of new entrants, policy-makers rely on international agencies such as IRENA to generate their own data, which they keep confidential and inaccessible to the public. In the latter case, renewable energy interest groups are uncertain about the future of renewable energy in
Oman or whether they need to be prepared for the need to upgrade the national power grid (interview 5, group III, 2014).
Therefore, the new entrants—including renewable energy developers—are challenged by the well-established patronage networks, and thus have limited ability to influence policy decisions associated with future inclusion of renewables in Oman.
Persistence of hydrocarbon subsidies
Another political strategy intended to maintain the status quo at the expense of renewables, is the implementation of policies that claim support renewables but do not make renewables economically competitive with conventional sources, namely gas and diesel. In May 2017, for example, a policy supporting the installation of rooftop solar panels was launched (Viswanathan, 2017a). This policy targets the residential buildings sector.
According to the policy, while homeowners are expected to pay for the installation of solar cells themselves, they will have guaranteed access to the grid, and can sell any surplus energy generated by the solar cells back to the grid (Viswanathan, 2017a).
226 However, the launch of this policy does not involve or reform the existing low electricity tariff structures, which have remained unaltered since their launch in the 1970s. At present, residential consumers pay as little as 10 Bz/kWh (~0.026 USD/kW), if their consumption is in the range of 0–3000 kWh (AER, 2017a), while the cost of production can be as little as 25
Bz/kWh (~0.065 USD/kW) of electricity production from a natural gas power plant. The difference of 15 Bz (~0.039 USD/kW) is paid to electricity distributing companies by the government in the form of annual subsidies. However, it is expected that the cost of solar panel installation will be around 600 Omani Rials (~1,558 USD) at its cheapest, and the cost of electricity produced by solar cells to be around 50 Bz/kWh (~0.13 USD/kW) (Viswanathan,
2017a)—two times higher than the cost of electricity sourced from conventional sources.
The new policy does not offer the incentives necessary to overcome the high installation costs, nor does it involve reforming the current electricity tariff structure; this makes renewables an undesirable and expensive option.
Accompanied by the persistence of hydrocarbon subsidies, such renewable energy policies are expected to reinforce Oman’s dependence on hydrocarbon resources and increase the investment interests of current regime members in oil and gas.
7.3.3 Strategic use of institutional resources: prioritisation of hydrocarbon-based technologies
Another form of strategic resistance to renewable energy is through the explicit prioritisation of hydrocarbon-based technologies. This is achieved by creating sound policy
227 arguments on the basis of competitive costs, energy security, and technicalities. An example of this can be found in the current electricity sector law, which requires the sole Power
Purchase and Procurement Company in Oman to establish power purchase contracts with developers who generate electricity using the least costly and technically feasible technologies (Royal Decree 78/2004, 2004).
Under these conditions, the sector law favours the existing modes of power generation— such as Open Cycle Gas Turbines (OCGT) and Closed Cycle Gas Turbines technologies
(CCGT)—and thus disadvantages the competitiveness of renewable energy technologies
(see section 4.4.2). It also creates an attractive environment for large-scale power investors to finance natural gas- or diesel-based projects with relatively cheap supplies of oil and gas.
Currently, the electricity sector law does not have an element that supports the integration of renewable energy technologies. Therefore, the cost of renewable energy technologies constrains its adoption, whilst favouring the implementation of other, cheaper technologies, such as coal (James, 2017a). In this way, the government indirectly supports the interests of energy regime and resists the change brought about by newcomers.
7.4 Success and failure of RE projects: explaining the paradox
This section generates new insights about the influence of interactions between the regime and niche levels has on renewable energy development in Oman. It uncovers the extent at which such interplay and relationship between the regime and niche levels could possibly block-in or assist the adoption of RE in Oman.
228
7.4.1 Interplay between RE projects and national energy regime
In sections 7.2 and 7.3, guided by the MLP framework on the interplay between development processes at technological niches and socio-technical regime, two directions of interaction between renewable energy projects and Oman’s national energy regime have been examined. First, the use of SNM (see section 7.2) to analyse the internal dynamics of surveyed renewable energy projects in Oman showed that learning processes are concentrated on technical lessons, without extending substantially into social and institutional dimensions; actors’ networks are small, with few signs of growth and not sufficiently coordinated; and actors’ visions are not converging (Table 7.2). It also showed that with the lack of strategic management of RE projects, and without governmental intervention, RE projects play only a minor role in putting pressure over the national energy regime and hence driving large-scale uptake of renewable energy in Oman. Second, the use of RST (see section 7.3) enabled identifying three strategies used by economic-political actors to maintain the status quo at the expense of RE. These are material strategies used to influence public debate through media framing; defensive strategies used to eliminate RE actors’ representation in decision-making arena or by the maintenance of fossil fuel subsidies; and strategic use of institutional resources to perpetuate hydrocarbon-based technologies (Table 7.2). By using these three strategies, economic-political actors have played a strategic role in promoting the development of renewable energy; yet, they have also played a role in strategic resistance to its long-term implementation, in the favour of maintaining the status quo.
229 Table 7.2 Key findings of the study of challenges and opportunities to adopt renewable energy in Oman using the STEP framework, 2016.
Theory main Relevant Approach Guiding questions Key findings concepts dimensions/indicators
- To what extent technical, economic, - Learning processes concentrated on social and political aspects are aligned in technical lessons, without extending the learning processes? substantially into social and institutional Learning processes, - How broad the actors’ networking is dimensions. Technological Strategic niche visioning, and and to what extent their interactions are - Small actors’ networks, with few signs of Niches management networks of actors regulated? growth and not sufficiently coordinated. - To what extent the different actors’ - Actors’ visions are not converging. visions are converging?
High hydrocarbon subsidies; fragmented energy policy; lack of RE policy framework; Socio- - What are the barriers existing at readily Multi-level Institutional, market, informal institutions; long-term approval technical established energy system that impede perspective technical and cultural process; centrally managed, monopolised regime the uptake of renewables? electricity market; low electricity tariff and low demand for RETs - Material strategies: influencing public debate through media framing Defensive strategies, - Defensive strategies: elimination of RE material strategies, - What strategies employed by political actors’ representation and maintenance of Political- Rentier states institutional power actors to assist or resist the uptake of fossil fuel subsidies economy theory and discursive renewables? - Strategic use of institutional resources to strategies perpetuate hydrocarbon-based technologies
230
Reflecting on the five RE projects cases studied in this thesis and the two direction of interaction between RE projects and Oman’s national energy regime, variance between RE projects in terms of success or failure has been observed, as follows:
First, government induced projects are likely to succeed because of the direct support from the government. Unlike private investors, for instance, government induced projects are not subject to long-term approval process. Further, despite the persistence of hydrocarbon subsidies which disadvantage the competitiveness of renewable energy technologies, government induced projects have already shown signs of expansion with a new 50 MW wind-based pilot project confirmed to start operating in 2018 (Oman Observer, 2017). Furthermore, the government induced project are directly advantaged by the new renewable energy policies which are made exclusive to specific state-owned companies in Oman such as the 2013 renewable energy policy which is oriented towards promoting renewables in rural areas (see section 4.5.3).
Second, projects established by national oil company are also likely to succeed because the government directly backs national oil company. The success of oil company’s 7 MW solar pilot project is evident from its expansion to 1 GW project –
100 times larger than the pilot project – intending to start operating in 2018
(GlassPoint, 2015). As discussed in section 4.4.1, state-owned enterprises make it difficult to draw a line between government and business, resulting from formal and
231 informal networks which facilitate drawing on technical and financial resources necessary for projects development (see section 7.3.1) (GlassPoint, 2015).
Third, projects established by private investors, unlike government led or national oil company-induced projects, are unlikely to succeed due to the lack of direct governmental support. While long-term approval process has been an issue for private investors (see section 5.4.2), this barrier has not been an issue for government led projects or project established by national oil company. This is because the private investors do not enjoy the state patronage (see sections 4.4.1 and 7.3.2), and as indicated in section 5.4.2, private investors face difficulties to communicate with decision-makers. At the time of writing, private investors have not shown expansion of their projects.
Fourth, the contribution of scientific research to accelerate the uptake of renewable energy in Oman, like private investors, is also likely to be limited. Academics have limited role to engage in renewable energy decision-making processes, are faced by difficulties to communicate the outcome of their research to decision-makers and thus unlikely to succeed in driving the uptake of renewable energy in Oman (see section 5.4.2).
7.4.2 Heterogeneity of RE projects
With such weak role of RE projects to put pressure over the regime (represented by dotted arrow, Figure 7.1) and with the persistence of vested interest of economic-
232 political regime towards hydrocarbons (represented by solid arrow, Figure 7.1), heterogeneity between renewable energy projects and hence variance in their potential success or failure towards driving the uptake of RE in Oman has been observed (Figure 7.1).
The deduction from the above discussion is that, unlike private investors and academics (represented by sotted circles, Figure 7.1), renewable energy projects induced by the government and national oil company are likely to succeed in spite of the persistence of renewable energy barriers existing at the energy regime
(represented by solid circles, Figure 7.1). This contradicts with the predictions of the
MLP and SNM theories which assume that if niches are constructed appropriately, they act as building blocks for broader societal changes towards sustainable development (Schot & Geels, 2008) (also, see Figure 2.4). Oman presents an interesting case in which the state plays a crucial role to selectively support renewable energy projects, but with the purpose to maintain the status quo rather than facilitating a transition towards renewable energy uptake in Oman. Therefore, this chapter argues that the involvement of government and national oil companies in renewable energy development, although useful, is paradoxical, because they aim to delay the implementation of renewable energy in favour of maintaining the status quo. Thus, the development of renewable energy in Oman goes far beyond the techno-economic challenges.
233 Socio-technical regime Political-economy regime
• Fossil fuel subsidies • Material strategies • low electricity tariff • Defensive strategies • Fragmented energy • Strategic use of resources policy
RE projects 7 MW • Learning processes 303 solar • Actors networks6 MW kW 50 kW EOR • Visions CPV solar PV
Figure 7.1 Interaction between RE projects, Oman’s socio-technial regime, and economic-political regime and the resulting heterogeneity between RE projects. The solid arrow indicates strong influence, dotted arrow indicates weak influence, solid circules represent projects that are likely to succeed, and dotted circules represent projects that are unlikey to succeed. Source: Author.
7.5 Conclusions
This chapter provided a systematic analysis of factors and conditions that have held
Oman back from adopting and promoting modern renewable energy technologies in spite of energy security and high per capita carbon emissions that has afflicted the country in the last decade. By applying the STEP analytical framework, this chapter generated new insights from using SNM approach, the multi-level perspective approach (MLP), and RST to analyse technological niches (or RE projects), socio-
234 technical regime, and economic-political strategies, respectively. The systematic analysis has been achieved by uncovering two directional interactions between renewable energy projects and national energy regime to learn how renewable energy projects influence and are influenced by the energy regime.
This chapter indicated that the development of renewable energy in Oman goes beyond the technological performance and economic feasibility of renewable energy technologies. In the context of hydrocarbon-rich states, the study of the social, cultural, and political factors is highly important. In particular, the study of the political and economic contexts is highly important because these contexts explain the reasons behind the existence of other country-specific barriers—such as technical, economic, social, and cultural barriers.
Importantly, the two directions analysis of interaction between renewable energy projects and energy regime has indicated that the success of renewable energy projects in Oman is conditional to direct governmental support. Therefore, with the persistence of barriers at energy regime such as hydrocarbon subsidies, only government- and national oil company-induced projects are likely to succeed. Yet, the success of these projects has not necessarily serve long-term renewable energy development in Oman. Therefore, a main conclusion that emerges from this multi- theories approach is that the involvement of the government and national oil companies in renewable energy development is required, but definitely paradoxical.
It is so because this study has also shown how their participation has, in fact, delayed
235 the implementation of renewable energy in favour of maintaining the political and economic status quo.
236 CHAPTER 8 Conclusions
8.1 Introduction
This aim of this chapter is fourfold: (1) to highlight the key thesis findings, (2) to address the contribution of this thesis to the existing body of knowledge, (3) to discuss the thesis limitations and explore avenues for future research, and (4) to discuss policy recommendations.
This study has investigated the technical, economic and social factors and policy mechanisms that have held Oman, a particularly hydrocarbon rich country, back from adopting and promoting modern, renewable energy technologies. The use of multiple methodological approaches, i.e. socio-techno-economic-political (STEP) framework, to address this aim has been shown to be appropriate. The STEP framework brought together four qualitative approaches: strategic niche management (SNM), multi-level perspective (MLP), rentier state theory (RST), and the Grounded theory (GT) approach. The combination of these approaches provided a detailed picture of the challenges and opportunities facing renewable energy uptake in Oman both from top-down and bottom-up perspectives. The key findings of this thesis are discussed in the following section.
8.2 Concluding remarks
This section highlights the key findings of this thesis.
237 8.2.1 Uncoordinated technological niches
Since 1960s, the Omani energy sector has been dominated by oil and gas due to the abundance of these resources and their relative cheap supplies. Nonetheless, academics, national oil companies, private investors and the government have shown an interest to pursue the development of RE in Oman as far back as 1990s. To date, the study of renewable energy initiatives has been overlooked.
This thesis studied five RE projects developed between 1995 and 2015. The use of the SNM approach proved useful and brought new insights regarding the strengths and weaknesses of renewable energy initiatives and their potential role to drive the long-term implementation of renewable energy in Oman. Using the concepts of
SNM—based on learning processes, the articulation of visions, and network building—, it was shown that these initiatives are fragmented, developed for diverse reasons, and their visions are not articulated. There was no single manager to coordinate their activities. If managed properly, RE initiatives can provide useful information and data about the different challenges and opportunities that face the development of RE in Oman especially at its early stages.
This thesis found that existing RE projects are still consist of loose experiments with insufficient experimentation or learning. The learning processes were shown to concentrate on technical and economic lessons regarding the feasibility of renewable energy technologies, without extending substantially into social and institutional dimensions. For instance, it has been demonstrated that technical
238 performance and cost competitiveness of renewable energy technologies are no longer pose a challenge to renewable energy uptake in Oman. Recently established renewable energy projects in the neighbouring States of the Arabian Gulf have demonstrated that the cost of renewable energy technologies is no longer an issue.
Four recent examples are Dubai’s Sheikh Maktoum Solar Park Phase II Solar PV project completed in 2015, Saudi Arabia’s Al-Aflaj Solar PV project finished in 2015,
Dubai’s Sheikh Maktoum Solar Park Phase III Solar PV project established in 2016, and Saudi Arabia’s 300-megawatt photovoltaic plant built in 2017; these projects have contract prices of 5.98, 4.9, 2.99, and 1.79 US cents/kWh, respectively (Krupa &
Poudineh, 2017; Dipaola, 2017). The last two projects suggest lower costs of electricity sourced from renewables compared to traditional sources in Oman, which currently cost USD 0.03–0.08 per kWh. The costs of electricity generated by PV systems at the optimal locations for solar energy potential are competitive with, for example, diesel generation (Al-Badi et al., 2011a). Levelised costs of wind power are on par with the economic costs of on-grid, gas-fired plants, while wind power is economically attractive in the Salalah region (IRENA, 2014), where wind power potential is relatively high. Renewable energy investors showed a readiness to risk investing in renewable energy technologies despite the reality of reduced technical performance under the specific environmental.
It was also revealed that RE initiatives were dominated by the nation oil companies and government, whose intervention in newly emerging renewable energy sector can indeed be useful but in this thesis proved to be paradoxical.
239 8.2.2 Persistence of structural constrains
The discovery of fossil fuel resources and the wealth associated with their export revenue have significantly contributed in shaping Oman’s, not only its political and economic stability, but also infrastructure, markets structure, institutions and even the culture. This has been particularly evident in the energy sector.
The use of Grounded Theory (GT) provided country-specific information regarding the factors that play a crucial role in delaying the uptake of renewable energy in
Oman. In particular, high fossil fuel subsidies, low electricity tariff structures, lack of a renewable energy regulatory framework, long-term approval processes, informal institutions, top-down decision-making processes, monopolised electricity market and inadequacy of data and information associated with renewables. These features of Oman’s energy practices have posed major barriers to its integration of renewable energy.
The most remarkable attempts of Oman’s political will to foster the implementation of renewable energy technologies are: The Study of Renewable Energy Resources in
Oman in 2008 by the Authority for Electricity Regulation (AER); the Renewables
Readiness Assessment Report conducted by the Public Authority for Electricity and
Water in collaboration with the International Renewable Energy Agency (IRENA) in
2014; the 2013 AER’s policy initiative that allows issuing licences for renewable energy projects installed to electrify rural areas instead of using diesel projects; and the 2017 ‘Sahim’ policy initiative which enables individuals, such as homeowners and
240 institutions, to produce solar electricity for use and surplus sale to electricity distribution companies at the cost of electricity.
However, the lack of leadership – to systematically address the challenges that face the development of renewable energy in Oman while also coordinate the ongoing efforts that promote for the implementation of renewable energy in Oman – remains to be a challenge. The entity that can leverage and regulate the uptake of renewable energy in Oman is still unclear. Three different entities play a potential role in leveraging and coordinating the emerging renewable energy sector in Oman: the Public Authority for Electricity and Water (PAEW); the Authority for Electricity
Regulation (AER), which is the regulator of the electricity sector in Oman; and the
Ministry of Environment and Climate Affairs (MECA) (see section 4.5.2). In the PAEW, a renewable energy department was established in 2013 to study the potential use of renewable electricity generation in Oman; enhance collaboration with international consultants, such as the International Agency for Renewable Energy
(IRENA) and the Japanese Agency for International Cooperation (JICA); implement renewable energy pilot projects in coordination with other governmental entities; prepare national energy strategies; and enhance cooperation between renewable energy-focused entities in Oman (PAEW, 2015). AER, on the other hand, has been proactive in releasing the first renewable energy policies in Oman, including a rural area renewable energy policy (AER, 2013) and a rooftop solar PV installation scheme
(in Arabic Sahim) (Viswanathan, 2017b; AER, 2017b). Despite its newly established renewable energy department, MECA plays a marginal role in promoting the uptake of renewable energy in Oman because the new renewable energy department aims
241 to survey existing renewable energy projects, increase awareness of the advantages of renewable energy development, and encourage the installation of renewable energy projects through Clean Development Mechanism (CDM) activities under the
United Nations Framework Convention on Climate Change (MECA, 2010), but not to set the regulations and policies that incentivise the uptake of RE in the country.
8.2.3 National economic and political constrains
The energy sector, based on oil and gas export revenues, has and continue to play a vital role in Oman’s economic growth and development. Given its vital role in economic growth, the amount of power and influence has revolved around this vital source of income. The focus on developing this main source of income is featured in domestic institutions and industrial structures such as state-owned enterprises and government monopoly in the energy sector. The energy sector has also been directly linked to domestic political stability through provisions such as fossil fuel subsidies and low electricity tariffs.
The use of rentier state theory (RST), in combination with the MLP framework, enabled identification of three strategies have been employed by economic-political decision- makers, which are oriented towards preserving the main source of income but at the expense of renewable energy. These are material strategies used to influence public debate through media framing; defensive strategies used to eliminate RE actors’ representation in decision-making arena or by the maintenance
242 of fossil fuel subsidies; and strategic use of institutional resources to perpetuate the use of hydrocarbon-based technologies.
The development of renewable energy will require fundamental changes in the domestic institutions and industrial structures in a way that might not align with economic-political decision-makers’ interest to preserve the status quo on oil and gas production. Fundamental changes can be in the form of fossil fuel subsidy reform, liberalisation of governmentally monopolised energy market, and privitisation of state-owned enterprises in order to enhance the competency of renewable energy technologies.
In countries where oil and gas play a vital role in economic growth and development, as well as political stability, the interest of decision-makers to factor the use of alternative energy sources such as renewables might only happen when the main source of income, the energy sector, is under serious threat. Energy security and oil price shocks are the most two serious challenges that can put pressure over the national energy regime to address such challenges via the search of alternative energy sources such as renewables.
8.3 Thesis contributions
This thesis makes three novel contributions to existing knowledge:
243 First, on a theoretical level, while the approaches used to study transitions towards sustainable socio-technical systems have made considerable contributions to understanding the complex and multi-dimensional shifts necessary to adapt societies and economies to sustainable modes of energy production and consumption, they have often neglected the transition locations (i.e. the geographical configurations and dynamics of the networks within which the transitions evolve; Coenen &
Benneworth, 2012). As discussed in sub-section 2.6, existing approaches have been applied largely to the study of sustainability transitions in developed countries
(Geels, 2014; Moe, 2015), with limited examples from developing countries (Baker,
Newell & Phillips, 2014; Ulsrud et al., 2011), particularly, oil-exporting rentier economies, in which state structures rely on the distribution of rent (Moe, 2015;
Normann, 2015; Rosenbloom & Meadowcroft, 2014; Osunmuyiwa, Biermann &
Kalfagianni, 2017). The use of SNM to analyse renewable energy projects and the introduction of RST to the MLP approach to analyse the interaction between renewable energy projects and energy regime, and its application to Oman, reveal four insights that contradict the theoretical predictions of the SNM and MLP approaches, as follows:
First, one of the key assumptions of the MLP approach is that socio-technical transitions are a result of interactions between developments at three levels: niche, regime, and landscape. In this way, the MLP takes into account the distribution of power in society by acknowledging the presence of societal processes in separate layers and actor groups. Thus, the MLP approach assumes that socio-technical transition processes are de-centralised and not caused by a single event or driver.
244 This characteristic can be explained through an example given by Verbong & Geels
(2007), who analyse the changing roles of various actors in shaping the energy transition in the Dutch electricity system (1960–2004). Consideration of Oman case study analysis provided in Chapters 5, 6 and 7 reveals that the distribution of power is limited to government and oil industry actors (i.e. rentier actors). In other words, groups of actors in the private sector or at the niche level have limited roles in driving societal transformation processes due to heavily centralised, top-down governance structure, with vested interest in hydrocarbons.
Second, the MLP approach has been criticised for a bias towards bottom-up processes that drive societal changes through niche development. The MLP approach regards radical niches as spaces in which entire systems can be fundamentally changed (see, for example, Kemp, Schot & Hoogma, 1998). While niche development is essential in informing technological learning processes, it is evident from the analysis of the five renewable energy projects in Oman that niche development plays only a minor role in the uptake of renewable energy; it does not drive fundamental change in the existing regime. Using insights from SNM, it was revealed that, in Oman, renewable energy projects are fragmented featured by diverse expectations with no apparent signs of convergence, consist of insufficient set of experiments and learning, immature actor networks, and are certainly not a well-developed technological niche. All of these signs clearly indicate that renewable energy projects have a limited role in transforming Oman’s energy system, which is characterised by vested interest and high dependence on hydrocarbons. Therefore, in contrast with theoretical predictions, bottom-up developments are unlikely to
245 succeed under the persistent centralised, top-down decision-making processes in
Oman.
Third, while the MLP approach acknowledges the role of power and politics in resisting sustainability transitions through the use of defensive, reactive, and proactive types of power, these strategies have been developed primarily to explain relationships between firms and the government (Konrad, K., Markard, J., Ruef, A. and Truffer, 2012; Smink, M.M., Hekkert, M.P. and Negro, 2015; Stenzel & Frenzel,
2008). However, an analysis of the political architecture in Oman suggests that drawing divisions between firms and the government is relatively difficult, especially in the oil and gas industry, as these industries typically fall under the direct control of the state (Marcel & Mitchell, 2006). In the energy sector, state members are representatives of national oil companies, and vice versa (Marcel & Mitchell, 2006).
In this regard, this thesis uncovers new insights as to the roles of political actors and informal institutions in strategically resisting sustainability transitions using strategies such as the material, defensive, and strategic use of institutional resources. In this way, this thesis contributes to the MLP literature by highlighting the important role of power and politics to influence the uptake of renewable energy niches. In this way, stressing the importance of considering the influence of regime on niches – along with niches pressure on regimes – which has been largely neglected by existing literature.
Fourth, SNM and MLP theories tended to treat niches as a homogenous texture so that technological niches gradually grow into established designs, and consequently,
246 put pressure and break through into the regime (Geels, 2002a, 2005a). This conceptualisation disregards the differences between niches in terms of their interaction with actors at the energy regime, and hence the variance in their potential pressure on the regime. This thesis’s assessment of five renewable energy projects in Oman revealed variance in the degrees of success of each renewable energy project to put pressure on the energy regime due to the variance in the informal institutions existing between actors representing renewable energy projects and decision-makers at the energy regime. It appeared that government induced projects and project established by national oil company are likely to succeed because they are directly supported by the government in terms of project approval process and finance, as a result of formal and informal networks which facilitate drawing on technical and financial resources necessary for projects development. On the other hand, projects established by private investors or academics are unlikely to succeed because of the weakness of formal and informal networks between actors representing these projects and decision-makers at energy regime (see section 7.4).
Second, from a methodological perspective, this thesis contributes to existing knowledge by bridging three theoretical approaches, namely SNM, MLP, and RST, and by using both qualitative and quantitative methods to operationalise the theoretical approach. By applying the thesis approach to the findings provided in
Chapters 4, 5 and 6, SNM was useful for the analysis of the strengths and weaknesses of renewable energy projects, the use of the MLP approach and RST allowed to examine the political-economic context and its influence on renewable
247 energy uptake. This multiple methodological approach enabled viewing of the data
(i.e. challenges to renewable energy) from more than one viewpoint: with a focus on studying the strengths and weaknesses of renewable energy projects, SNM enabled approaching the research problem from a bottom-up perspective while the use of
MLP and RST to study the challenges in Oman’s energy regime enabled approaching the research problem from top-down perspective. Further, since the MLP has been criticised for being difficult to apply to empirical studies mainly due to using metaphors and imprecise concepts, with the danger of creating ambiguity and being able to categorise phenomena too easily since the concepts have vague boundaries
(Smith, Voß & Grin, 2010) (see section 2.5.2), the use of GT approach in this thesis enabled providing country specific data on the challenges that face the development of renewable energy projects from two levels of analysis: the challenges at the level of renewable energy projects (see sub-section 5.4) and challenges at Oman’s dominant energy regime level (see section 6.3). The employment of multiple approaches allowed deeper understanding of the subject; most importantly, it allows the production of complementary of data that make the findings more relevant. Furthermore, given the lack of a regulatory framework for renewable energy in Oman, the multiple methodological framework allowed for novel recommendations on potential policy instruments that can overcome challenges and enhance existing opportunities; this is valuable to both policy-makers and researchers in Oman. Policy recommendations are discussed in section 8.5.
Third, this thesis provides a novel account of the development of renewable energy in Oman. This includes generation of new insights on the factors that support or
248 oppose the development of renewable energy in Oman. As shown in section 5.3, the literature on renewable energy in Oman constitutes an important source for current technical data, which are invaluable for this thesis. However, these studies focus largely on the technical, economic, and engineering aspects of renewable energy implementation, with a limited focus on policy aspects; in this thesis, policy aspects are considered essential to understanding the role of the political structure in promoting or discouraging the potential uptake of renewable energy in Oman. The analysis presented in Chapters 5, 6 and 7, which uses multiple methodological approaches, provides a novel identification of general and specific challenges for renewable energy development in Oman. It is evident that the adoption of renewable energy depends on factors beyond technology. Social and political factors form profound barriers to the diffusion of renewables in Oman.
8.4 Thesis limitations and future work
Reflecting on the research design and methodology, the major shortcomings of this study include that fact that the case study is based on a single country in the Gulf
Cooperation Council (GCC) that is unique in terms of population size, political structure, extent of wealth, and amount of natural resources. Accordingly, while some of the research results herein may apply to other similar countries, other results may not be easily generalised. However, the decision to use four qualitative approaches (i.e. SNM, the MLP approach, RST, and GT) to complement the study of
249 activities regarding renewable energy projects led to limited time in which to carry out cross-country analysis; thus, cross-country analysis was not performed.
Notwithstanding this limitation, this study has made contributions that improve the understanding of the key issues related to the uptake of renewable energy technologies in the context of hydrocarbon-rich economies (see Chapters 5, 6 and 7) and the possible actions that can be undertaken to overcome these barriers (see section 8.5). To this end, were time and resources available, a cross-case study analysis producing a larger sample size for comparative analysis would constitute a useful extension to the results presented herein. Given the fact that the Gulf countries differ in terms of hydrocarbon wealth, political structure, history, and effort to undertake the deployment of renewable energy, cross-country analysis using the multiple-method approach could reveal different insights regarding the stage at which renewable energy is developed; these differences might reflect the different contexts in the GCC states.
Furthermore, with respect to methods, this research required semi-structured interviews with energy experts in Oman representing the public, private, and academic sectors. For example, it was possible to interview only 7 representatives from the 5 selected renewable energy projects and only 12 energy experts consented to be interviewed; these are small sample size. Interview time limitations, limited number of renewable energy projects as well as the reluctance of stakeholders to participate in the research, both contributed to the small sample size. This can be explained by the fact that the development of renewable energy in
250 Oman is relatively new and, therefore, the number of experts with specialised knowledge of the subject is relatively small. Also, if time had allowed further research, it might have been productive to conduct a workshop involving all of the stakeholders interviewed at an early stage to further validate the interview outcomes toward the research objectives.
Moreover, this research required interviews with a selected number of ‘elites’, including the Minister of Environment and Climate Affairs and the Head of the
Department of Renewable Energy Studies at the predominant oil company in Oman
(Petroleum Development Oman). ‘Elites’ are individuals in positions of power and influence; the notion of elites has a long history in sociology and organisational studies. Those considered to be elites are influential, prominent, and/or well- informed in an organisation, community, or specialised field (Marshall & Rossman,
2011). Therefore, interviewing elites could have many advantages, and valuable information can be gained from them. However, it was difficult to approach the selected elites in this study. The main difficulty arose from the initial approach, but the interviews were also difficult due to the sensitivity of the research topic, which touches the core of political economy in the case study. While energy policy in many
European countries might be regarded as comparatively open to public scrutiny, many stakeholders in resource-rich Arab states regard the entire sector as politically sensitive, as it pertains to the economic core of this group of states (Kumetat, 2012).
Thus, stakeholders were less willing to participate in this research, possibly because they feared retribution for what could be deemed a leak of policy information or documents.
251
8.5 Policy recommendations
The analysis using SNM, MLP, RST and GT yielded useful suggestions for action by different actors—who could foster the transformation of Oman’s energy system for the wide scale implementation of renewable energy. A common theme emerging from the analysis presented in this thesis—and stressed by interviewees from firms, academia, and government—is the need for a consistent policy framework.
From a policy perspective, the relevant issue is whether and to what extent the challenges to renewable energy deployment can be overcome so that the uptake of renewable energy can be stimulated. There is a complex of interactions between a wide range of factors such as governance structure, market barriers, energy pricing schemes, as well as technical, institutional, and cultural barriers. This suggests that different policy instruments can be used and combined in such a way as to offer an alternative to the current focus on hydrocarbons. It also suggests that the choice of type of instruments, their combination and tuning, should be systematically embedded in an overall energy system.
The Omani government needs to become more pro-active, effective, and consistent in supporting the development of renewable energy. This can be done, as follows:
252 8.5.1 Strengthen the role of RE projects
Based on the analysis of dynamic processes within renewable energy projects, using
SNM approach, this section presents a list of recommendations that may prove useful when developing renewable energy policies in Oman. These recommendations are especially important to actors in the government, academia and private sector.
Referring to the internal niche processes of SNM, the recommendations are divided into three parts: shaping expectations, building social networks, and learning processes. Given the fact that decision-making in Oman is top-down, a useful task for the government in the short- and medium-term would be to facilitate the temporary protection of renewable energy projects, and to consider the following recommendations:
(i) to expand the network of actors. The analysis of five renewable energy initiatives showed that there are four types of actors involved in renewable energy development: academics, government, private investors and a national oil company.
A note of concern is that financing actors and energy consumers (e.g., governmental, commercial, industrial and household consumers) appears to have been scarcely involved at the core of actors’ networks. The network of actors can be expanded through organising different platforms, regular meetings and symposia.
253 (ii) diversifying the network of actors is essential to extending the focus of current learning processes from techno-economic dimensions to include social and institutional dimensions. Learning about the latter dimensions is especially important in the context of Oman, whose economy is highly reliant on fossil fuels.
For instance, high fossil fuel subsidies, a low electricity tariff from conventional energy sources, and long-term approval processes are major barriers that need to be addressed by such learning processes (see section 6.3). Importantly, developing a platform that enables sharing lessons while also monitoring results and experiences from different experiments is an important condition for successful niche development.
(iii) The third process; expectations, while being high and diverse, do not converge, especially with the lack of national renewable energy development strategy. The recent release of the national renewable energy target to source 10% of electricity from renewable energy sources by 2030 opens a window of opportunity for the government to align different actors’ expectations to reflect on longer-term visions.
It is, however, important to acknowledge the differences between the actors’ ideas and expectations and not force the formulation of a vision to allow more room for diversity and enable learning from different options.
It is important to note here that these recommendations are based on an analysis that used SNM; this implies a bias towards a specific phase of the trajectory of renewable energy development, which is the early introduction of technologies to society. The following sub-section offers a discussion of policy instruments to
254 overcome barriers at socio-technical regime, which do not necessarily focus at the early stage of RE development.
8.5.2 Systematic consideration of RE barriers
The analysis of renewable energy barriers in Oman’s national energy regime yielded useful suggestions for the promotion of renewable energy in the country. First, fossil fuel subsidies could be reformed so that electricity prices reflect the cost of production. This will not only increase the competitiveness of renewables, but also incentivise the more efficient use of electricity. Additionally, a cut in power subsidies would reduce pressure on the state budget, which is particularly necessary given the recent drop in oil prices since mid-2014. Further research needs to be done to study the potential effects of such subsidy reforms on low-income electricity consumers, especially in the residential sector.
Electricity generation across the GCC is based on a combination of the Independent
Power Producers model (IPP) and Power Purchase Agreement (PPA), which ensure the purchase of electricity from licensed generators (Strategy&, 2010; Al-Asaad,
2009). Thus, the spread of renewable energy can be also successful by implementing the current IPP and PPA model. Given that the power production market in Oman and other GCC countries is not yet liberalised, and the existence of the ‘Single Buyer’ model, a theoretical option combining IPP and a quota model in electricity generation could be a promising option for RE promotion on a larger scale. In this
255 case, the regulatory authority can alert project developers of its need to install a specific capacity of renewable electricity as IPP. The winning bidder can benefit from a long-term contract that guarantees their protracted PPA without raising consumer prices. Governments can take an active role in supporting and facilitating the quota model by defining targets for renewable energy shares in electricity generation. This will attract investors and utilities to explore opportunities for increasing renewable energy deployment in Oman. Renewable energy targets can be defined and passed by the government under a new sector law.
Financial incentives in the form of direct cash grants or soft loans can be a policy method of reducing the high upfront investment costs of renewables. Subsidies to support medium- to large-scale renewable energy asset investments were seen as an attractive mechanism for creating competitive environments for renewable energy projects and conventional energy supply technologies. However, systematic studies need to be conducted to measure the impact of subsidy schemes on the overall state budget.
With regard to demand, rooftop PV module installations (solar panels) can be promising for the spread of small-scale renewable energy projects. Net metering—a billing mechanism that credits solar energy system owners for the electricity they generate—also has the potential to encourage consumers to predict their own electricity consumption and production from renewable sources. An additional point regarding enhancing the demand for renewables is the need to promote public awareness to the new RE technologies. The necessary information and awareness
256 can be delivered through schools and universities, or workshops designated for policy-makers and individuals.
8.5.3 Involving different actors in decision-making process
The collective action of all society actors—including public, private, civic, and academic—is essential to enabling a systematic transition towards renewable energy. The early recognition of the importance of actor involvement in the decision- making process will minimize the risks associated with the uptake of renewable energy technologies. Since the development of renewable energy is in its early stages in Oman, involvement of actors representing different levels of society can be useful to reduce the unsystematic nature and trade-offs in renewable energy deployment in the long run. The involvement of actors representing different levels of the society will help in avoiding the duplication of efforts and conflicts of interest, while facilitating an effective co-ordination of efforts. It will also facilitate the sharing of knowledge, lessons and experiences, as well as the flow of resources between actors.
This can be done by formulating a committee that: (i) has representatives from different sectors (i.e. public, private, academic, NGOs, and civil); (ii) make clear objectives for the role of this committee to provide a renewable roadmap; (iii) aim to meet regularly, but also update the roadmap regularly according to changes in
257 policies, for example; and (iv) aim to co-ordinate with national and international investors for the sharing of knowledge and information.
8.6 Conclusions
In this chapter, policy recommendations to overcome identified challenges to renewable energy uptake, the thesis contribution to the existing knowledge, its limitations and avenues for future research were revealed.
In reflection of thesis approach employed to analyse the case study of Oman, three main policy recommendations were made: (1) to, through governmental intervention, strengthen the on-going renewable energy projects via enhancing actors’ networking, expand the learning processes beyond technical and economic aspects while also creating channels for sharing lessons between different groups of actors (i.e. public, private, academic, and end users), align renewable energy projects’ visions with national visions; (2) know what does it take to overcome barriers but most importantly have fuller picture about existing barriers to eliminate possible trade-offs; and (3) engage different groups of actors in the decision-making process associated with renewable energy development.
This thesis made four novel contributions to existing knowledge: (1) it added value to the understanding of driver, barriers and policies implications for renewable energy implementation in Oman, (2) it brought new insights from the implementation of SNM and MLP in Oman’s hydrocarbon-rich context including the
258 contradict to theoretical predictions which assume the likely success of niche developments to achieve societal transitions, and (3) its novel methodological account by bridging three theoretical approaches of SNM, MLP and RST to assess the factors and conditions that have held Oman, a particularly hydrocarbon rich country, back from adopting and promoting modern, renewable energy technologies in spite of its abundant natural resources, and in the face of rising per capita carbon emissions, and regional energy security challenges.
Thesis limitations were also acknowledged in this Chapter. Two main limitations were acknowledged: (1) generalizability of this thesis’s outcomes due to the use of a single case study analysis, and (2) small interview sample.
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274 Appendix A. Interview questions
Topic # 1 – General questions
1. What is your position towards RE development in Oman?
2. How would you describe the present position of your institution/department with relationship to RE development in Oman?
3. What are the types and how many renewable energy projects implemented by your institution/department?
4. In your opinion, how would you perceive the future position of your institution in terms of RE development in Oman?
Topic # 2 – Drivers
5. From your experience, how important do you find the implementation of RE to the Omani government?
a. Not important
b. Important
c. Very important
d. Does not know
6. Why do you think the implementation of RE in Oman is important?
7. On scale of 1 – 4, when 1 is lowest and 4 is of highest priority; please rate reasons for Oman to use RE as:
a. Safeguard national energy security
275 b. Reduce air pollution
c. Sustain economic growth
d. Job creation
e. Country’s reputation
f. International commitment to reduce CO2
8. Do you see any disadvantages to RE development in Oman?
Topic # 3 – Implementation
9. As you may know, RETs incur high costs, in your opinion, do you think that it is the cost of renewable energy technologies that delays their implementation in Oman?
10. Would you like to share with us any of your institution’s past experience with regards of making decisions about a specific RE project?
11. How, in your view, do you think the competence of RETs to the hydrocarbons based technologies can be enhanced in Oman?
12. What do you think about the government paying subsidies to support RE implementation in Oman?
13. What do you think about tax exemptions as an incentive to encourage RE investments?
14. As you might be aware, the use of RE sources may require physical upgrades of the national electricity grids; would you perceive the connection of RE sources to national grid as barriers for their uptake? Why?
276 15. Installation, maintenance and operation of RETs require skilled workforce, how would you view the availability of skilled workforce to maintain the development of
RE in Oman?
16. From your experience, whom do you think the responsibility is to formulate/regulate RE policies and business processes for RE projects within the electricity market?
17. In scale of (1 – 4), please rate the importance of the following factors that may challenge a successful implementation of RE in Oman; when 1 is of lowest importance and 4 is of highest importance:
a. RET costs
b. Fossil Fuel subsidies
c. Infrastructure upgrades
d. Policy framework
e. Institutional structure
Topic #4 – Organisation’s Specific Questions
Government: Authority for Electricity Regulation:
• In your view, and your experience, why do you think that Oman is not using the renewable energy technologies despite the high potentials approved by your 2008 study and other published research?
• Would you like to share with us any of your Ministry/department past experience with regards of making political decisions about specific RE project?
• To what extent this Authority is connected with MECA?
277 • Does this Authority use the outcome of research from research institutions like
SQU TRC SU?
• Do you think that there is more governmental support is needed to help your institution support the development of RE in Oman?
Government: Public Authority for Electricity and Water:
• As you might be aware that the Omani government is now discussing the preliminary steps to prepare Oman’s long-term economic Vision 2021 – 2040, does your institution has any plans to discuss the inclusion of renewable energy development within the upcoming economic development Vision 2040?
• To what extent does this Authority use the outcome of research from research institutions like Sultan Qaboos University, The Research Council, or Sohar University?
• How do you perceive RE development in Oman can be supported through the
Public Authority for Electricity and Water?
• What do you think the priority for Oman to start promoting the use of renewable energy?
• How would you differentiate between the present responsibilities of PAEW and
AER in terms of electricity and water regulations in general, and in terms of renewable energy development in particular?
Government: Ministry of Environment and Climate Affairs:
• From your experience, are there any noticeable negative impacts of anthropogenic climate change to Oman?
278 • How would you describe the present position of this Ministry/department with regards to climate change adaptation and mitigation in Oman?
• Is the climate change agenda actively considered in the political decision-making in the country’s strategic long-term economic development visions 2020 or 2040?
• What are the current commitments of your ministry to promote RE development in Oman?
• To what extent can the CDM projects help promoting the use of RETs in Oman?
• Would you like to share with us any of your Ministry/department past experience with regards of making political decisions about specific RE project?
• To what extent your institution collaborate with other research bodies in the country such as the TRC, SQU?
State-owned company: Majan Distribution Company:
• Why would your company, which is in an equivalent position to other electricity distribution companies, has an initiative to renewable energy (the roof-top project) while the other companies have none?
• What is the message that you would like to deliver having this project?
• Do you think that the initiation of RE to Oman’s electricity market should start from the distribution companies?
• Do you use the outcome of the research from research institutions: SQU TRC SU?
• Do you think that there is more governmental support is needed to help your company support the development of RE in Oman?
279 • In your view, and your experience, why do you think that Oman is not using the renewable energy technologies despite the high potentials approved by your 2008 study and other published research?
Research entity: The Research Council:
• How do you describe the role of the Research Council to support RE development in Oman?
• As a member in the Research Council, what do you perceive the challenges of conducting renewable energy research in Oman?
• Do you think that there is enough amount of research/ number of researchers in the field of RE?
• To what extent does the government use the outcomes of your research?
• The National Innovation Strategy launched recently by the TRC, to what extent, do you perceive, that this strategy would contribute in influencing the promotion of RE in Oman?
280 Appendix B: Publications, conference proceedings and selected talks during the PhD
Publications:
Al-Sarihi, A. and Cherni, J. A., (2018) Assessing strengths and weaknesses of renewable energy initiatives in Oman: An analysis with strategic niche management. Energy Transitions. https://doi.org/10.1007/s41825-018-0008-9. 1-15.
Al-Sarihi, A., and Cherni, J. A. Drivers, challenges and policy recommendations for renewable energy deployment in Gulf Cooperation Council countries: The case of Oman. Renewable Energy. Date of submission 30 April 2017 (Accepted with revisions required).
Al-Sarihi, A., (2017) Why is there almost no renewable energy in Oman? LSE Middle East Centre blog.
Al-Sarihi, A., (2016) What the plunge in oil prices means for renewable energy investments in the GCC, LSE Middle East Centre blog.
Conference proceedings:
Al-Sarihi, A. and Cherni, J. A., (2014) A potential socio-technical transition to renewable energy in hydrocarbon-rich economies: The case of Oman. ETH Academy on Sustainability and Technology, Zurich, 8 -13 June 2014.
Al-Sarihi, A., Contestabile, M., Cherni, J. A. (2015) Renewable Energy Policy Evaluation Using System Dynamics Approach: The Case of Oman. The 33rd International Conference of the System Dynamics Society, at Cambridge, Massachusetts, USA, 19-23 July, 2015.
Selected talks:
May 2013. Panellist; interactive panel discussion – Renewable Energy Focus Day: Determining the Future of Oman’s Renewable Energy Sector, Oman Power & Water Summit 2013, Al Bustan Palace, Muscat, Oman.
October 2014. The potential transition to renewable energy: The case of Oman. Lunchtime seminar, Centre for Environmental Policy, Imperial College London, London, UK.
May 2015. Drivers, barriers and strategies for renewable energy implementation in Oman: A multi-level perspective analysis. Presented at 21st Annual DPhil Day, Jubilee Building, University of Sussex, Sussex, UK.
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