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July 2 2022 2:58 AM ˚
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Why fight renewable energy?

Nabeel Abu Ata (Photo: Jordan News)
Nabeel Abu Ata (Photo: Jordan News)
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The cost of energy tops all other issues when discussing the national debt of Jordan, a country with vast desert landscapes that sit above sea level and enjoy outstanding solar irradiation, (the power per unit area received by the Sun) at the rate of 6 kilowatts per hour (kWh), per square meter over 365 days a year. All that, in addition to a climate free of sandstorms and coastal humidity has made Jordan an exceptional environment for renewable energy investments.اضافة اعلان

In 2007, the state issued a national energy strategy and started examining the feasibility of exploring oil shale and uranium reserves. By the end of Egypt’s revolution and the bombing of the gas pipeline, this proactive strategy had turned reactive to mitigate damage in pursuit of energy security.

Perhaps the best legislative achievement of the past decade was the issuance of the legal frameworks to regulate the renewable energy industry and to allow for power purchase agreements (PPAs), (a contract between two parties where one party generates electricity and the other agrees to buy it),  to finance solar and wind power plants. At that time, the government made the decision to be a leader in bringing cutting-edge technology into the country by setting an attractive purchasing price to entice investors to build and transfer the know-how of renewable energy projects to Jordan by capitalizing on its plentiful sunlight and wind.

The government named those early projects Phase I projects, and they represented an early willingness to adopt renewable energy.

A few days ago, Jordanian MP Muhammad Al-Fayez appeared on social media in a video criticizing the government’s performance in handling the energy file. He accused the "five big whales", (a whale being the Jordanian reference to a corrupt business tycoon), of monopolizing renewable energy PPAs.  Perhaps the diligent MP was right in his description of the modest management of this critical file, but his accusation had no grounds and his technical and financial analysis was not accurate.

The MP and other critics build their arguments on the assumption that electricity from renewable or conventional power stations are bought at market prices but they do not factor in the enormous cost directly related to the purchase of land, design, construction, financing, operation, and maintenance.

The final price of the electricity produced by such projects, (or the tariff), is a result of an equation that considers the cost of procurement of components, shipping, contracting, insurance, and labor at the time of construction, all of which are actual inputs into financial models that yield a specific tariff to render the project feasible and bankable.

To illustrate the variation of costs, Tracking the Sun, a renewable energy policy group, reports that building a 6.5 kilowatts photovoltaic systemin the United States used to cost more than double to build in 2010 than it does in 2020. In addition, 6.5 kilowatts is around enough to power a small home. If we were to compare that with large solar plants, the price difference over the decade would be three times cheaper today.

How would one expect the developers of those solar and wind power stations to adjust their prices to match current tariffs when they have completed the development and construction of their stations at the costs of eight or nine years ago. The lenders of these projects have agreed to their terms, signed binding contracts with developers, and tied their long-tenure loans at hedged high-interest rates.

In fact, the high-tariff electricity generated from Phase I renewable energy projects only affects the average cost of a kWh by a fraction, since Phase I output merely composes 1.8 percent of the electricity generation in Jordan. It is easier to demonize renewable energy by singling out Phase I projects’ high tariffs, since no one calculates the average tariff that the government purchases electricity at from all the existing renewable energy’s PPAs, which does not exceed 49 fils/kWh.  

The undoubted truth is that the cost of paying off the debt of the National Electricity Company (NEPCO), and its capacity charge dues is the real cause hindering renewable energy and the diversification of the energy mix.

In the midst of the recent crisis, for which the government and NEPCO tried to shirk responsibility, Ahmed Al-Hiyasat, a former director of NEPCO, appeared on Roya TV saying that the renewable energy input feeding the national grid during the infamous blackout Friday was surprisingly high, which led to the power outage.

Although former minister Khaled Irani, in the same TV program, refuted Hiyasat’s analysis. It seems that this ungrounded theory is currently gaining popularity among unspecialized talk shows’ guests and being used in technical debates aimed at tarnishing renewable energy.

In fact, such voices gain momentum when they witness the government’s unwarranted tactic to deny licenses for projects larger than 1 megawatt, a decision made in 2019, which was a death sentence to the fastest growing industry at the time. A sector, which placed Jordan at the forefront of green economies encouraging investments in solar and wind energy.

In simple math, the implementation of one or two solar PV projects from the Phase III tenders would have significantly reduced the average cost of power from renewable energy PPAs. Instead of jumping on the opportunity to lower the cost using a lower tariff offered at 17 fils/kWh for Phase III projects, the ministry canceled the government guarantee in the Power Purchase Agreements rendering financing for such projects impossible.

Furthermore, the ministry unjustifiably turned its back on an unprecedented offer to purchase electricity at 18 fils per kWh, which was the lowest tariff in the world for a wind project at the time. Moreover, the allocation of a 100-megawatts for a shared plant aimed at assisting industrialists in reducing the cost of energy to increase competiveness, hasn’t seen the light of day since it was announced two years ago.

Aware citizens should ask why the ministry canceled such projects that enforce sovereignty and offer sizeable savings.

An official justification would always blame the inability of the national grid to absorb higher quantities from an irregular energy source. This justification, however, does not allude to the available solution that lies in the energy storage option, particularly one that uses batteries. The diligent experts at the Ministry of Energy have worked for more than 18 months, since 2016, to assess the feasibility of a battery storage pilot project. The tender for this project was canceled as well, throwing away a remarkable opportunity to transfer knowledge.

Well-informed Jordanian scholars who specialize in renewable energy engineering do not have a shadow of a doubt about the feasibility and value of renewable energy to any economy around the world.

The upcoming generation will not beat around the bush by wasting energy on conspiracy theories, whales, and huge birds nesting on the grid. They are straight shooters who will form a jury that will seek clear answers to why the current energy officials sacrificed a free source of energy, such as wind or solar, in favor for burning hard currency to import gas and diesel, which have no defined tariff.

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