Sohar Locks Financing for Oman's First Direct-Supply Industrial Solar Plant

Key Takeaways

• Financial close achieved on May 21 for a 93 MW solar plant at Sohar Industrial City, financed by Ahli Islamic Bank. (Times of Oman)
• The project is the first in Oman to supply industrial cities with solar power under a direct-supply model, putting clean electricity directly into factory meters rather than routing it through the national grid. (Zawya)
• Over 60 percent complete, with approximately 150,000 solar panels installed. Commercial operation is expected by September 2026, serving more than 200 industrial facilities. (Times of Oman)
• Madayn manages 15 industrial cities across Oman. If the Sohar model works, the intent is to replicate industrial solar across the network. (Oman Observer)
• Three days earlier, O-Green signed a 2.7 GW power purchase agreement with Nama Power for a separate wind, solar, and storage project at Mahmout and Duqm, targeting commercial operations in summer 2028. (PV Magazine)

What Is New

The financial close was announced on May 21 under the patronage of Mohsin Al Hadhrami, Undersecretary of the Ministry of Energy and Minerals. (Times of Oman) Financial close is the stage at which lending terms are finalized and funds become available for drawdown. It converts the project from a construction-in-progress initiative to one with committed bank capital behind it.

This matters because industrial solar in Oman has, until now, operated through grid-level procurement. The national grid's renewable capacity, approximately 1,550 MW from four large projects (Dhofar Wind I, Ibri II, Manah I, and Manah II), feeds into the main interconnected system and is distributed through the regulated tariff structure. (Zawya) The Sohar project works differently. It puts solar electricity directly into the industrial city's distribution network, serving factory tenants without passing through the national grid.

Delivery Machinery

O-Green is the developer. The company was established by the Sultanate of Oman in 2025 and is jointly owned by Naqaa Sustainable Energy and OQ Alternative Energy. It manages 3.3 GW of operational generation projects and 2.3 GWh of energy storage capacity, with a development pipeline exceeding 10 GW across 12 countries. (PV Magazine)

Madayn (the Public Establishment for Industrial Estates) is the strategic partner and the entity that manages all 15 of Oman's industrial cities. If the Sohar model demonstrates commercial viability, Madayn is the institutional owner positioned to drive replication. Separately, industrial solar capacity targets of 500 MWp within Oman have been outlined under broader Madayn planning. (Oman Observer)

Ahli Islamic Bank is providing the project financing. The bank has been expanding its sustainable finance portfolio, including a prior partnership with the Sustainable City Yiti net-zero community. (Solar Quarter) The use of Sharia-compliant financing for industrial solar is a practical test of whether Islamic banks in Oman can be a scalable channel for clean energy capital alongside conventional project finance.

The Ministry of Energy and Minerals provided official patronage through the Undersecretary, signaling government alignment with the behind-the-meter industrial solar model as a complement to grid-level renewable procurement.

The Broader O-Green Pipeline

The Sohar financial close is not an isolated event. Three days earlier, on May 19, O-Green signed a 2.7 GW power purchase agreement with Nama Power and Water Procurement for a continuous renewable energy project combining solar, wind, and battery storage at sites in Mahmout and Duqm. (PV Magazine) That project targets commercial operations in summer 2028.

Nama's CEO, Ahmed bin Salim Al Abri, stated at the time that the procurement company is targeting approximately 7 GW of solar, 3 GW of wind, and 3 GW of storage by 2030. (PV Magazine) The 2.7 GW PPA represents a significant share of that pipeline. O-Green's dual role as both a grid-level developer and the behind-the-meter industrial supplier positions it as one of the central execution vehicles in Oman's renewable energy build-out.

Where This Sits in Oman's Energy Build-Out

Oman's grid ran on 9.46 percent renewable energy in 2025, up from 1.95 percent in 2021. The current official target is 10 percent by end of 2026 and 30 percent by 2030. (Zawya) The Authority for Public Services Regulation (APSR) has earmarked RO 8.8 billion in utility investment for the 11th Five-Year Plan (2026 to 2030), of which RO 7 billion is for the electricity sector. (Energetica India)

The 93 MW Sohar plant is behind-the-meter industrial supply. It may not directly count toward the official grid renewable share tracked by APSR. But it reduces fossil fuel consumption in the industrial sector and tests a delivery model that does not depend on the grid procurement pipeline. If scaled across Madayn's 15 industrial cities, behind-the-meter industrial solar could become a meaningful parallel track alongside grid-level renewable deployment.

Regional Comparison

The UAE's D33 Industry Friendly Power Policy allows factories to size rooftop solar up to full connected load and compensates at 10.5 fils per kWh, shortening payback periods to under four years. (UAQ Free Trade Zone) However, this is primarily a per-facility rooftop model, not a dedicated zone-wide solar farm supplying hundreds of tenants through a shared distribution network.

Saudi Arabia's industrial zone authority, MODON, has focused more on manufacturing-side investments and utility-scale grid projects rather than on-site generation for zone tenants.

Oman's zone-level direct-supply model occupies a different niche. A clean comparison across the three countries is difficult because the delivery mechanisms are structurally different. What Oman is testing is whether centralized, zone-scale solar can lower energy costs for an entire cluster of factories at once, a more collective approach than the UAE's per-facility rooftop model.

Risks and Data Caveats

• Project value not disclosed. The financial close announcement did not include the total investment figure, making it difficult to assess cost per megawatt or compare with benchmark projects.
• The direct-supply model is untested at this scale in Oman. Questions remain about offtake pricing for 200-plus tenants, demand variability across factories, grid backup arrangements, and whether the commercial model can sustain adequate returns over the asset's lifetime.
• 93 MW is small relative to grid-scale projects. Scaling the model to hundreds of megawatts across 15 industrial cities requires substantially more capital and a demonstrated track record from this first project to attract it.
• Regulatory treatment unclear. The relationship between behind-the-meter industrial supply and Oman's official renewable energy targets, which are tracked at the grid level by APSR, has not been publicly clarified. The project may reduce industrial fossil fuel consumption without appearing in headline renewable share figures.
• No emissions reduction estimate published. The announcement did not include projected CO2 reductions, which would help assess the project's contribution to Oman's updated Net Zero Strategy target of a 33 percent emissions cut from the 2024 baseline by 2035.

Why This Matters for Oman

Vision 2040's manufacturing and industrial diversification goals depend on competitive input costs. Electricity is one of the largest operating expenses for factories in Oman's industrial cities. If direct-supply solar can demonstrably lower those costs, it strengthens the case for manufacturers to locate in Oman rather than elsewhere in the Gulf.

The financial close also signals that Islamic sustainable finance can back clean energy infrastructure in Oman at a meaningful project scale. Ahli Islamic Bank's role as lender on a 93 MW project, following its earlier Sustainable City Yiti involvement, suggests a domestic banking channel for renewable energy capital that does not rely entirely on international project finance or sovereign funding.

The most consequential question is not whether this one plant reaches commercial operation. It is whether the template holds across Madayn's full network and can be scaled. If it does, industrial solar becomes one of the more practical vehicles for decarbonizing Oman's manufacturing sector, one factory zone at a time.