Amman- Jordan. January 24, 2020 by
Serene Zawaydeh, MBA.
On January 21 and January 22, 2020,
different players in Jordan’s energy sector gathered to discuss and validate
recommendations of IRENA’s Renewable Readiness Assessment 2020-2025 for Jordan.
The workshop was highly interactive and allowed experts and participants from
different organizations to share their input on each recommendation in IRENA’s
renewable readiness assessment 2020-2025. It was an opportunity to discuss the
huge potential of the sector, business opportunities, current challenges,
possible solutions and requirements needed to achieve desired targets.
Representatives from different ministries attended the workshop including the
Ministry of Energy and Mineral Resources, Ministry of Planning and
International Cooperation, the Ministry of Labor, the Central Bank of Jordan,
Jordan’s Water Authority, among other ministries and companies in the energy
sector.
Jordan
is taking steady steps in the renewable energy sector. The National Energy
Strategy is being updated to reflect new targets to increase the share of
renewable energy for 2020-2030.
In
addition to Jordan’s role as part of a global effort to reduce carbon
emissions, the renewable energy sector has an important role in Jordan’s
economy. Increasing renewable energy production will reduce Jordan’s dependence
on imports of fossil fuels and gas. It will create business and investment
opportunities. Capacity building will develop skills and will create new
jobs.
Energy
efficiency measures and energy audits need to be implemented prior to executing
renewable energy projects. More than fifty building codes are already in place
and need to be implemented. To start with, government buildings and
municipalities need to implement energy efficiency measures. An example of a
successful initiative in the renewable energy sector, is installation of solar
PV cells on mosques in the kingdom.
The
recommendations highlighted the role of renewable energy in electricity
generation from different renewable resources. Jordan has an abundant source of
solar energy, and implemented projects in Wind Energy. Other renewable
resources still need to be utilized and create opportunities for investment,
such as biofuel. Recycling still needs to be developed in Jordan. Food waste
can be used to generate electricity and biofuel can also be used in the
transport sector for operating machinery.
The
automotive industry is heading towards electrification and moving away from
conventional fuel. Electrification of the transport sector will reduce CO2
emissions; reduce the number of cars on the road, saving time and money.
Maintenance fees for electric vehicles is one third the maintenance fees for
conventional vehicles. Electrification will create a cleaner environment, which
improves individuals’ health. Infrastructure projects are underway for the high
speed bus in Amman, which will reduce congestion once completed. In order to
pave the way for further electrification of transport, infrastructure needs to
be developed to recharge electric vehicles while parked at work, homes and
other public locations. The regulatory framework needs to be developed to
determine charging tariffs. There is also a need for stability in the
regulatory framework as changes to customs fees and taxes affect EV purchases.
Equipped with Lithium Ion batteries, electric cars represent an energy storage
facility and can also feed electricity to the grid. Energy storage plays a
vital role in the intermittent renewable energy resources. Smart meters will
allow adjustment of consumption patterns.
In
addition to generating electricity, heating will utilize excess capacity of
renewable energy. The educational sector awaits improvement, as thousands of
schools need to be alleviated from energy poverty. Penetration of solar water
heating has room for expansion.
The
financial industry plays an important role in the sector, as there is a need to
provide funding for individuals, small to medium enterprises, on top of
opportunities for large scale projects. The Central Bank of Jordan
provides financial institutions with lending at an interest rate of 1% to 1.75%
for loans extended to 9 industries including the energy sector. The limit for
the renewable energy sector is JD 4 million instead of JD 2 million for small
to medium enterprises. Jordanian banks are more risk averse, and the amount of
credit is limited compared to other markets. On an individual level, the market
is still more cash based. Capacity building and increasing understanding of
energy efficiency and renewable energy in the financial industry is beneficial.
The cost of fuel is an important part of operating cost and reducing these
costs will improve a company’s financial position and improves its capacity to
repay its debt, reducing the lender’s risk. The cost of renewable energy
projects such as solar and wind has been declining, cutting down the payback
period of renewable energy projects, which are becoming more and more feasible.
Incentives
for renewable energy projects are a driver for demand increase, such as
claiming the cost of installed renewable energy systems in income tax returns.
Meanwhile, it should be noted that reduction in the cost of renewable energy
are still not reflected in the end user’s bill. While the cost of the system is
important, there are other costs that need to be taken into account, which
contribute to the final cost to the end users, such as connection to the grid
and transmission.
Jordan’s
energy transition and increasing the share of renewable energy from
the energy mix is an excellent opportunity to develop the local industry and
exports of renewable energy products. Increasing Jordan’s Renewable energy
production capacity above the local market’s needs means that Jordan can
increase its share of electricity exports, for which there is a need.
Palestine, Syria, Iraq and Lebanon can utilize Jordan’s energy exports. Local
manufactures, such as Philadelphia solar, are exporting solar panels to gulf
countries. Maintaining quality of products is key to sustain a competitive role
in global markets.
There
is a need to increase the public’s awareness on the importance of renewable
energy. Universities can collaborate with the industry, training graduates
based on market needs. Individuals’ and corporate involvement in the renewable
energy needs to be seen as part of a national and international effort to
reduce green house gas emissions, as a result of climate change. International
funding supports large scale projects in the framework of climate finance.
IRENA
will be reviewing the recommendations to integrate discussed comments. The
upcoming report will be an important reference for Jordan’s energy transition.
https://www.linkedin.com/pulse/renewables-readiness-assessment-jordan-2020-2025-irenas-zawaydeh/
https://www.linkedin.com/pulse/renewables-readiness-assessment-jordan-2020-2025-irenas-zawaydeh/
