The political stalemate that has affected Lebanon has also taken its toll on its utility and grid connected energy sector. However, there are signs that the new government is making progress in addressing the challenges created by decades of underinvestment and welcoming 1.5 million refugees from neighboring Syria. The combination of increasing daily power cuts, decreasing cost of solar PV installations and support measures by influential stakeholders continue to support a boom in distributed solar projects.
Lebanon has a target to meet 12% of its total energy consumption from renewables in 2020 and 15% in 2030. The National Renewable Energy Action Plan targets $ 1.7 billion of investment to develop the renewables sector including 550MW in power generation projects. Meeting the targets will be challenging under current regulatory arrangements under which IPP tendering procedures suffer from considerable red tape.
Lebanon’s utility, Electricité du Liban (EDL), has a monopoly for transmission, distribution and retail of electricity in the country. On the generation side, the law authorizing independent power producers (IPPs) is pending implementation; however an exceptional decree granting the executive temporary powers to license new projects was introduced in 2014 and extended to expire in April 2018. This has allowed the launch of a first solar PV tender for between 120MW and 180MW of capacity at the start of 2017. Another three IPP license for 202MW of onshore wind projects were awarded to three projects for a price of $113/MWh in July 2017. The awarding of licenses is often a political issue as it needs to be signed off by the Council of Ministers which brings together members of Lebanon’s different parties. However, the decision to distribute tendered solar projects evenly across the country, and thus across communities, could give the technology an advantage when being reviewed as opposed to larger centralized projects.
The government does not lack of incentives to expedite the licensing process as a lack of investment in new and existing generation has led to considerable power shortages, which was exacerbated by an estimated 480MW increase in demand from the 1.5 million Syrian refugee community. 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 prices have not been changed since 1994 due to their politicization 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 23% of the electricity consumed in Lebanon. However, this has also driven adoption of small scale PV solutions which are estimated to account for more than 20MW of installed capacity in 2016 with at least a further 10MW in development. The national energy efficiency and renewable energy action, an initiative of
Lebanon’s central bank the Banque du Liban, was decisive in kicking off activity in the sector. The programme which involves 20 commerfcial banksoffers 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 government expects that between 50MW and 170MW of distributed solar PV capacity will be installed by 2020.
Performance over time
- Overall Rank
- %% statsCtrl.countryStats.overall_ranking | leadingZero:2 %%
- %% statsCtrl.countryStats.value | round:2 %%
%% mecha.name %%%% mecha.name %%