THE Asian Infrastructure Investment Bank’s (AIIB) board of directors approved March 26 a US$60-million loan to increase Oman’s renewable power generation capacity and reduce the country’s dependence on gas and other fossil fuels for electricity generation. This is AIIB’s first nonsovereign-backed financing in the country’s renewable energy sector.

The project is a 500MW greenfield solar photovoltaic power plant in Ibri being developed by a special purpose company established by ACWA Power, Gulf Investment Corporation and Alternative Energy Projects Co. It is Oman’s first utility-scale renewable energy project to be connected to the grid. The total project cost is approximately US$400 million.

Oman’s sustained economic and population growth over the past decade has led to fast-growing electricity demand and put a strain on the existing power infrastructure. The country has one of the highest solar densities in the world, providing great development potential for solar energy resources. Currently, almost all the installed electricity capacity in Oman is fuelled by natural gas, leaving a huge potential for renewable energy.

“AIIB’s investment will increase the availability of Oman’s renewable power generation capacity and contribute to filling the anticipated gap in peak demand,” says AIIB vice president D.J. Pandian. “The project will also help the country move toward a more balanced and environmentally sustainable energy mix to ensure long-term energy sustainability.”

The project is in line with AIIB’s energy sector strategy in reducing the carbon intensity of energy supply and catalyzing private capital investment in renewable energy infrastructure. AIIB’s involvement will also ensure the use of high environmental and social standards in the project.