Energy Ministry study recommends time-based tariffs to balance Kingdom’s power grid

AMMAN — A recent study by the Ministry of Energy and Mineral Resources has highlighted growing challenges in managing electricity demand as Jordan expands its reliance on renewable energy.

The study, titled Impact Assessment of Electricity Demand Management in Jordan, outlined three potential strategies, including maintaining the current system, implementing time-of-use tariffs, or investing in energy storage solutions, the Jordan News Agency, Petra, reported.

Jordan aims to raise the share of renewable energy in electricity generation to 31 per cent by 2030, in line with the Kingdom’s 2020-2030 energy strategy. By the end of 2023, renewables accounted for 26 per cent of electricity production, with a total installed capacity of 2,681 MW. 

"Managing this transition presents new challenges, particularly as evening peak demand coincides with declining solar power generation, despite the country having over 2,000 MW of installed solar capacity," the report said.

The study attributed rising electricity demand to population growth and evolving consumption patterns, particularly during peak hours. Increased adoption of residential renewable energy systems, totalling 1,183 MW by 2023, has led to surplus energy production during the day and shortages at night, disrupting the electricity load curve.

The National Electric Power Company (NEPCO) has faced difficulties balancing supply and demand, at times curtailing renewable energy output and operating conventional power plants at reduced efficiency to ensure adequate power during peak periods. 

The financial impact has been significant, as greater reliance on renewables, particularly by consumers benefiting from lower tariffs, has reduced NEPCO’s revenue from traditional electricity sales. Without intervention, the company may need to invest in additional conventional power plants, potentially raising electricity costs for consumers.

Since 2014, residential solar installations have surged, with 50,652 systems operational by 2022. The residential sector now accounts for 44 per cent of total electricity consumption, followed by the industrial sector at 22 per cent and the commercial sector at 0.19 per cent.

To address these challenges, the ministry aims to cut peak electricity consumption by 15 per cent between 2024 and 2027, potentially saving NEPCO an estimated JD90 million in operating costs.

The study assessed three possible solutions. Maintaining the current system would require building additional conventional power plants, and increasing electricity generation, transmission, and distribution costs. 

Implementing time-of-use tariffs would encourage consumers to shift electricity usage to off-peak hours by adjusting pricing based on demand levels, leveraging Jordan’s existing smart meter infrastructure. 

Investing in energy storage solutions would allow surplus renewable energy to be stored during off-peak periods for use when demand is higher.

The study recommended time-of-use tariffs as the most viable solution, citing minimal implementation costs beyond a public awareness campaign. The ministry has already introduced time-of-use tariffs in 2024 for sectors accounting for 15 per cent of total electricity consumption.