The political stalemate that has affected Lebanon in recent years has also taken its toll on its utility and grid connected energy sector. However, the combination of increasing daily power cuts, decreasing cost of solar PV installations and support measures by influential stakeholders are bringing about a boom in distributed solar projects.
Lebanon’s utility, Electricité du Liban (EDL), has a monopoly for transmission, distribution and retail of electricity in the country. On the generation side, independent power producers (IPPs) are authorised by law but it is unclear which institution is mandated to award licenses. Consequently, new generation capacity from IPPs has been very limited – two 203MW power ships from Turkish company Karadeniz Holding. Another IPP license for a first onshore wind project was also being negotiated for several years (Q2 2016). In any case, the awarding of licenses is still very political and an acceleration of projects was not to be expected in the short run. This is a major issue for Lebanon as a lack of investment in new and existing generation has led to considerable power shortages. Similarly, a lack of investment in grid upgrades and maintenance is causing an estimated 30% loss of power during its transport. Consequently, urban populations in Lebanon are suffering from several hours of outages every day, and rural areas are not electrified for at least half of the day. The main reason behind this massive gap in investment is the fact that the retail price have not been changed since 1994 due to their politicisation and range from $ 0.6/kWh to $ 0.97/kWh. This is far below the cost of generation in a country that has had to almost entirely rely on oil imports for producing electricity. When global oil prices were above $100 per barrel the annual deficit exceeded $2bn per year.
Historically, this situation has created a boon for retailers of diesel gensets and even, despite it being illegal, retailers of electricity produced by groups of diesel gensets. Together they are estimated to generate around 30% of the electricity consumed in Lebanon. However, the national energy efficiency and renewable energy action, an initiative of Lebanon’s central bank the Banque du Liban, is looking to tap into the same dynamics that have spurred the activity in the genset sector to drive adoption of distributed solar PV solutions. The programme offers quasi-interest free loans (around 0.6%) of up to $20m that can be combined to grants for periods of no more than 14 years including a grace period of up to 4 years and 6 months. The programme is by far the highest prospect for Lebanon to grow its clean energy capacity. As of November 2015 more than 200 solar PV projects had been supported for an installed capacity of around 6.6MW. The success of the programme has attracted attention and the European Union as well as France have guaranteed more funding to it in 2016.
Lebanon scored 1.02 in Climatescope 2016, placing it 40th on the list of countries overall. Its highest ranking was on Low-Carbon Business & Clean Energy Value Chains Parameter III.
On Enabling Framework Parameter I, the country ranked 51st , reflecting its low power prices and small volume of clean energy generating capacity. It has energy generation targets and a policy on net metering, as well as debt/equity incentives.
On Clean Energy Investment and Climate Financing Parameter II, Lebanon took 32nd place, thanks chiefly to the relatively low average cost of debt at around 7%. There is no record of any clean energy investment between 2011 and 2015.
Lebanon performed well on Parameter III – it ranked 26th overall – thanks to the diversity of the sector’s value chains and the number of service providers.
The country took 33rd position on Greenhouse Gas Management Activities Parameter IV. Its score was supported by a strong showing on the Clean Development Mechanism indicator and the presence of a GHG emissions reduction target.
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