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New law streamlines renewable energy investment

AMMAN - Private companies with renewable energy projects will now be able to negotiate directly with the Energy Ministry as part of a series of changes to the sector, a senior ministry official announced on Wednesday.

Investments in renewable energy will be quicker as part of sweeping changes included in the recently endorsed Renewable Energy Law, Minister of Energy and Mineral Resources Khalid Irani said at a press conference yesterday.

The long-awaited law, which the official said is designed to facilitate investment in the sector, was passed by the Cabinet on Tuesday, and will go into force after being published in the Official Gazette.

One of the major components of the legislation allows local and international companies to bypass a competitive bidding process and negotiate with the ministry directly to establish renewable energy projects.

Previously, the process was time-consuming and made it difficult for companies and the government to adjust or update projects prior to finalisation, according to officials.

Under the law, renewable energy projects will be required to clearly state fixed electricity tariffs in their proposals before being approved.

The minister underlined that the law aims to help the government reach the goals of the National Energy Strategy, which calls for 7 per cent of the Kingdom's energy mix to come from renewable energy sources by 2015, and 10 per cent by 2020.

Also under the law, the National Electric Power Company ( NEPCO ) will be obligated to purchase any and all electricity produced by renewable energy power plants, Ziyad Jibril, head of the ministry 's renewable energy department, told The Jordan Times yesterday.

According to the legislation, NEPCO will be required to cover the cost of connecting renewable energy projects, be they wind farms, solar energy stations or other technologies, to the electricity grid, Jibril added.

The law will also allow citizens with solar power or wind turbines to sell electricity back to their electricity provider.

The legislation sets out net metering policies in order to promote private and small-scale renewable energy projects, under which citizens will have the right to sell excess electricity back to their area's electricity provider at full retail price.

Another important feature of the law is the establishment of the long-awaited Renewable Energy and Energy Efficiency Fund, which will be devoted to supporting energy-saving and renewable energy initiatives, Irani highlighted.

Private sector companies or investors within or outside the country can apply to the fund, which will be funded by the state budget and international donor agencies, he added.

Under the law, the fund will be overseen by a committee, presided over by the energy minister and comprising the secretaries general of the ministries of planning, finance, environment and energy, the Electricity Regulatory Committee and three private sector representatives selected by the Cabinet, Jibril said.

The fund has already received financing from the French Development Agency, the World Bank and the Global Environment Fund, he noted, adding that other international aid agencies such as the German Development Bank and the Japan International Cooperation Agency have expressed interest in providing assistance.

The fund will begin receiving proposals once the law is published in the Official Gazette, according to the ministry .

The energy strategy, which was formed in 2007, calls for Jordan to meet 29 per cent of its energy needs from natural gas, 14 per cent from oil shale, 10 per cent from renewable energy resources and 6 per cent from nuclear energy by 2020.

In addition to 600-megawatt (MW) of wind and 300-600MW of solar energy, the government is looking to generate 30-50MW of biomass energy within the next decade to meet the strategy's goals.

The Kingdom currently imports around 96 per cent of its energy at a cost of 20 per cent of GDP..

By Taylor Luck

© Jordan Times 2010