Jordan should allow third party electricity production to boost sector — report

AMMAN — While Jordan has achieved “substantial” progress in attracting investments in the renewable energy sector, allowing third party supply of electricity would further boost the sector, a recent report said.

Jordan ranked second in the 2016 Arab Future Energy Index (AFEX) Renewable Energy, scoring 66 out of 100 points, while Morocco topped the list, scoring 71 per cent.

The index, which is based on 9 factors and 30 quantitative and qualitative indicators, seeks to monitor and analyse sustainable energy competitiveness in the Arab region.

In this year’s index, Jordan scored 56 per cent in the market structure category, 61 per cent in policy framework, 69 per cent in institutional capacity and 76 per cent in finance and investment.

“An interesting shift can be noted for Jordan compared to AFEX 2015, where the [photovoltaic] PV target for 2020 has been increased from 800 [megawatts] MW to 1000MW,” according to the report, published by the Regional Centre for Renewable Energy and Energy Efficiency.

Jordan is not only the sole country in the region to implement a full separation of its power sector’s ownership, but it has also improved its Grid Access factor since the 2015 AFEX report by being the most advanced country in the region in establishing grid codes and their related technical specifications, the report said.

Meanwhile, energy prices in Jordan are among the highest in the region, the report added.

However, the electricity pricing reform recently enacted by the Jordanian government will help attract more investments in the renewable energy sector, particularly within the Maan Development Area, the report predicted.

“Jordan should also open its power generation market to allow private-to-private sale of electricity from renewable sources,” the report said, noting that authorising Independent Power Producers to produce electricity for third-party sales would push the sector forward.

Egypt, the United Arab Emirates and Palestine followed Jordan on the list, scoring 55 per cent, 54 per cent and 51 per cent respectively, while Syria (20 per cent) and Libya (18 per cent) were at the bottom of the list.  

Jordan, along with Morocco and the UAE, has set up entities that offer equity products to new and established companies focusing on renewable energy projects. 

In Jordan, the JEDCO Governorates Development Fund supports startup companies by allowing up to 80 per cent equity in their renewable energy projects. Yet, these funds have not been heavily used, according to the report.

Other institutions provide capital subsidies for renewable energy projects, including the Jordan Chamber of Industry through its Factories Support Programme, as well as the Higher Council for Science and Technology Industrial Research and Development Fund.

Commenting on the report, Ruba A. Al Zu’bi, CEO of EDAMA Association, a Jordanian business association that seeks innovative solutions for energy and water independence, said the full reform plan recently started in Jordan seeks to remove subsidies to energy prices, a matter that increased electricity prices.

While direct proposal submission and the national net metering regulations have accelerated the process for mega power generation projects, the expert noted the need to continue efforts to enable individual customers to adopt renewable options.

The expert highlighted a multiplicity of private and public financing possibilities to renewable energy solutions for low energy consumers and households, citing the Jordan Renewable Energy and Efficiency Fund as a major official provider of eased loans for the implementation of renewable projects.

The Central Bank of Jordan has also supported commercial banks to provide eased loans to customers, as well as green products alongside technical assistance options.

Meanwhile, Zu’bi underlined a need for advisory bodies to carry out behaviour-changing awareness campaigns to consumers in order to further spread the “green culture”.