• Home
• News Article

Economy compels rethink of solar power financing

AMMAN - Authorities are reconsidering the financing options for solar energy projects in the Kingdom in light of a difficult economic climate.

At a conference on Monday to discuss concentrated solar power (CSP) financing, experts highlighted the obstacles facing two renewable energy initiatives in the Kingdom.

The projects include a proposed 100-megawatt (MW) CSP plant in Maan and a 180-kilometre electrical transmission line running from Qatraneh to Samra to increase capacity to carry increased renewable energy projects.

During yesterday's event, attended by investors, donors, and officials, Ministry of Planning and International Cooperation Secretary General Saleh Kharabsheh noted that the World Bank's Clean Technology Fund (CTF) has set aside $112 million for Jordan to help finance the 100MW plant in Maan as well as the reinforcement of the north-south transmission line.

In order to be considered for the funds, however, the initiatives require concrete project requests and sound financing schemes ensuring their sustainability, according to the CTF.

The Maan CSP plant, which would cost $418 million and would be built on a build-operate-own basis, requires strong concessional co-financing in addition to funds from the CTF in order to get off the ground, Ziyad Jibril, head of the ministry's renewable energy department, said.

Meanwhile, the upgrade of the transmission line aims to handle an expected 100MW in solar power and 140MW of wind energy to be added onto the electricity network, in addition to 450MW of electricity expected to be imported from Egypt, according to National Electric Power Company ( NEPCO ) General Manager Ghaleb Maabreh.

"The network has to be upgraded to handle all this power," Maabreh said in a technical session, stressing that the infrastructure upgrade will also allow Jordan to export energy to neighbouring countries.

The two initiatives, however, cost $850 million in full and require a sound financing system, a major challenge both in realising solar power ventures and in making the electricity affordable for end-users.

"The cost of creating energy through CSP is still high compared to other technologies," World Bank country director, Hedi Lardbi, acknowledged during the opening of the event.

In order to overcome hurdles in CSP projects, investors and governments need to take advantage of economies of scale and increase investment in technology, he said, stressing that the viability of renewable energy depends on the incentive services the government provides in the intermediate term.

Energy and Mineral Resources Minister Khalid Irani said an adequate incentive system to promote the application of renewable energy is "critical" to the development of solar energy technology.

"It is central that we create a supportive environment to ensure viable technologies and affordability for the end-user," Irani said in a speech during the conference.

The adoption of renewable energy and reduced reliance on imported energy has the potential to save the equivalent of 5 per cent of the Kingdom's gross domestic product and create 1,300 jobs in the installation and operation of renewable energy projects, the minister pointed out.

He indicated that the ministry, along with the Electrical Regulatory Commission and NEPCO are in the process of completing bylaws and instructions laid out in the recently endorsed Renewable Energy Law to clarify terms for investors as well as to develop an appropriate pricing structure for electricity produced by renewable sources.

Without financing or exporting energy, however, the cost of electricity produced by the proposed CSP plant in Maan could run as high as 28 cents per kilowatt hour, according to Middle East and North Africa energy specialist Hussam Beides.

With a combination of soft financing and exports, the price of electricity generated by the plant will become more competitive, reaching as low as 19 cents per kilowatt hour, Beides said during the event.

By Taylor Luck

© Jordan Times 2010