The shift away from an oil economy: renewable energy projects in Oman

Oman is a relatively high-income country whose development has been shaped by the hydrocarbon industry. Its economy relies on oil, natural gas, and related extractive sectors, which have supported significant economic and social development, underpinning a strong welfare state with free healthcare, education, and low taxation, and contributing to relatively high living standards. This reliance links the economy, society, and governance to global energy market volatility, exposing the country to supply chain disruptions and geopolitical shocks.

Despite modest growth in renewables, domestic capacity remains limited relative to national decarbonisation goals. The energy-intensive economy, combined with rising electricity demand and continued fossil fuel dependence, drives substantial greenhouse gas emissions and environmental impacts. Oman must therefore expand clean energy deployment while strengthening technical, financial, and regulatory capacity to meet its decarbonisation objectives.

Oman is focused on increasing renewable energy in its energy mix, supported by policy and financial incentives. The country is deploying a combination of large-scale renewable energy projects, smaller distributed generation systems, green hydrogen initiatives, and domestic clean energy manufacturing. For example, solar and wind energy projects like the North Solar 100 MW PV independent power project and the Riyah-1 and Riyah-2 wind farms, which to date collectively generating 200 MW per year. These projects, supported by Petroleum Development Oman in partnership with OQ Alternative Energy and TotalEnergies Renewables, integrate renewable generation into the national grid and reduce CO₂ emissions by hundreds of thousands of tonnes annually.  Solar-diesel hybrid systems and the Sahim program enable residential and commercial buildings to generate solar electricity and feed excess energy back into the grid. Other large-scale projects such as the Ibri-II solar PV plant and Dhofar-I wind IPP are operational or nearing completion, while additional wind projects in Jaalan Bani Bu Ali, Harweel, Duqm, and Dhofar are planned, totaling several hundred megawatts.  The green hydrogen sector, led by Hydrom and supported by international investment, is targeting production of 1.4 million tonnes per year and has launched the first hydrogen refuelling stations in 2025.

Clean energy manufacturing not only contributes to increased renewable energy use in Oman, but is also driving industrial development. A solar panel and cell factory in the Sohar Freezone is being implemented by JA Solar with an investment of approximately OMR 217 million, establishing the domestic renewable energy components industry. Similarly, the Duqm Special Economic Zone hosts a wind turbine factory implemented by Mawarid Turbine in partnership with international entities, with an investment exceeding OMR 70 million, marking the first facility in the region capable of manufacturing high-capacity turbines. These initiatives create supporting manufacturing and technology industries, supply chains, and new employment opportunities in the renewable energy sector, contributing to economic diversification and positioning Oman as a regional clean energy hub. Policy and regulatory measures, including Royal Decree No. 10/2023 allocating 65,000 km² for renewable and hydrogen projects, and Nama Energy and Water Procurement Company’s procurement of 8,010 MW in solar and wind projects through 2030, underpin these initiatives and support grid integration, electricity storage, and energy diversification.

Oman has made significant progress in expanding renewable energy capacity and building domestic clean energy manufacturing. Large-scale projects such as the North Solar PV IPP and Riyah wind farms are expected to be operational by 2026, collectively saving millions of cubic metres of natural gas and reducing CO₂ emissions by over 960,000 tonnes annually. Smaller distributed projects under the Sahim initiative are extending renewable adoption to residential and commercial users. Utility-scale projects including Ibri-II and Dhofar wind farms are already operational or nearing completion, marking a major milestone in Oman’s green energy transition. The domestic green hydrogen sector is attracting substantial investment and developing infrastructure for production, storage, and distribution, including refuelling stations. 

Meanwhile, the solar panel factory in Sohar Freezone and the wind turbine factory in Duqm Special Economic Zone are establishing new industrial and technology sectors, supply chains, and skilled job opportunities within Oman. Together, these projects support Oman’s goal of sourcing 30–40% of electricity from renewable sources by 2030 and align with the Net Zero 2050 pledge. Policy support, international investment, and the deployment of both large-scale and smaller distributed renewable energy projects, combined with the creation of local manufacturing capacity, position Oman to reduce fossil fuel dependence, cut emissions, and develop a resilient, circular, and low-carbon energy system.

Sources include links added, information given by the Ministry of Economy, and Circle Economy. (2026). The circularity gap report Oman. Amsterdam: Circle Economy.