May 09, 2014
Bright future for Jordan's solar segment
Two landmark deals sealed in March have paved the way for JordanвЂ™s power authority to begin buying solar electricity from the private sector, supporting the kingdomвЂ™s long-running efforts to boost renewable energy production.
With a reliance on imports for 96% of its energy requirements, identifying new generation sources is a critical issue. Further agreements are in the pipeline, which should strengthen JordanвЂ™s bid to reduce its reliance on fossil fuels.
The first agreement, finalised on March 17th, saw the Energy and Mineral Resources Ministry agree to purchase electricity from a 52.5-MW solar photovoltaic facility earmarked for the MaвЂ™an Development Area.
Once fully operational, the $150m solar farm project, which is being developed by Shams MaвЂ™an Power Generation, will have the capacity to generate 160m KWh of electricity per year, enabling it to provide power for around 35,000 homes. The initial power purchase agreement (PPA) is set to run for 20 years, after which Shams MaвЂ™an and its US partner, First Solar, will be able to renegotiate the terms of their deal with the government and the National Electric Power Company (NEPCO).
Shams MaвЂ™an CEO Hanna Zaghloul believes the solar plant, which should be completed by 2015, will play a part in JordanвЂ™s bid to achieve energy independence.
A second contract, signed the following day, has cleared the way for the joint Jordanian-Spanish-South Korean venture, Arabia One for Clean Energy Investments, to build a $24m solar-run power generation plant. The facility, which is also set to be located in the MaвЂ™an region, will have a 10-MW capacity and should start feeding power into the national grid towards the end of 2015.
While news of the solar project agreements is welcome, JordanвЂ™s fuel costs, which currently equate to around 20% of the kingdomвЂ™s GDP, are giving cause for concern.
Data issued by the Department of Statistics in March showed the energy imports bill has soared of late, with costs for fuel derivatives and electricity imports in January up 46.6% on the same month last year. Much of the increase came from heightened demand for diesel, which has been needed to fire generators and offset a decline in natural gas imports following further disruptions in deliveries from Egypt. The import bill could edge higher still in the near term if the country is forced to continue bridging gaps in gas deliveries.
George Hanania, general manager of Hanania Energy, told OBG that JordanвЂ™s energy import costs were unsustainable. вЂњThis cannot continue,вЂќ he said. вЂњIt is imperative to move towards alternative energy solutions as quickly as we can.вЂќ
While solar and wind power are attractive options, adding nuclear to the energy mix will have a much bigger impact on helping Jordan alleviate its dependence on imported fuel. In late 2013 the government announced it had awarded the contract to build JordanвЂ™s first nuclear power plant to a Russian consortium. The facility will have two reactors вЂ“ the first is expected come on-line in 2020, the second by 2025 вЂ“ with a combined capacity of 2000 MW.
Eyeing energy independence
The Renewable Energy and Efficiency Law, which Jordan adopted in 2012, provides a guarantee that all power generated under PPAs will be purchased by either consumers or NEPCO, while offering investors added support and incentives.
The legislation will be instrumental in supporting JordanвЂ™s drive to increase the part that renewables play in the kingdomвЂ™s energy mix. As part of its strategy for the industry, the government aims to boost the contribution made by the renewables segment to 20% by 2020.
Hanania described the governmentвЂ™s plans as positive, adding that the law вЂњshould alter our energy mix for the better, and should see Jordan become more energy independentвЂќ.
The national drive towards self-sufficiency looks set to gain further momentum in the coming months, as the government moves to finalise agreements with private investors on 10 additional solar energy projects. Energy Minister Mohammad Hamed said the 12 ventures combined would offer a total capacity of 200 MW, representing a $350m investment.
вЂњAll renewable energy projects are to be linked to the grid by 2018,вЂќ the minister said in an interview with the local media in early March. вЂњThese projects will significantly increase JordanвЂ™s electricity production capacity, which stands now at 3200 MW.вЂќ
Image Credit: sxc.hu
Oxford Business Group
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