This confidence in the potential of solar for low risk investments seemed to be paying off. A few days after the article was published, the Lebanese government concluded negotiations on feed-in tariffs for three photovoltaic solar parks in the Bekaa-Hermel region. The three solar parks were part of a 180 MW solar tender, which aimed to auction the development of 12 photovoltaic projects, each of 15 MW, in separate regions of the country.
The design of the 180 MW tender allowed the government to negotiate a different tariff for each of the four regions (Bekaa-Hermel, Nabatieh, Akkar and Mount Lebanon). The lowest bid submitted in a given region would apply to all PV projects in the same region. For Bekaa-Hermel, in particular, one group had submitted an offer of $ 0.057 / kWh, so the three 15 MW farms had to accept this tariff.
Pierre El Khoury, Director General and Chairman of the Board of Directors of the Lebanese Center for Energy Conservation (LCEC), spoke with pv magazine last year on the Bekaa-Hermel tariff.
“La Bekaa-Hermel has the highest amount of sunshine, cheap land and easy-to-install plots. The names of the three bidders (Lebanese and international joint companies) will be disclosed once the government issues the licenses; negotiations for the remaining three regions were still ongoing, ”he said. “And no surprise [the government needs] I hope for one to two months [to conclude negotiations for all 12 solar projects]. “
Tip of the iceberg
That moment never came. Instead, on August 4, 2020, a large amount of ammonium nitrate illegally stored in the Port of Beirut exploded, killing at least 218 people and leaving around 300,000 people homeless. Lebanese citizens felt that the explosion was just the tip of the iceberg of corruption, mismanagement and incompetence of the country’s elite, and demanded a new government made up of prominent figures withdrawn from the country. the political establishment.
Yet although the government has resigned and has acted only on an interim basis since then, Lebanon has failed to form a new legitimate government. In July, the country’s parliament appointed the third prime minister in a year, but it is far from certain that this new attempt to form a lasting and legitimate government will bear fruit.
The explosion, combined with Lebanon’s default and the Covid-19 crisis, has led to a situation that many see as ungovernable. Residents face severe shortages of medicine, fuel and electricity on a daily basis, as the national currency has lost about 90% of its value against the US dollar, leading to hyperinflation.
Meanwhile, the international community, led by France and the European Union, has made it clear that any financial assistance will only come on the condition of courageous political and economic reforms. The immediate question is whether Lebanon will be able to form a government that pushes through reforms, saving the economy and its people from poverty.
Gabriel De Lastours, EBRD Regional Head of Energy Projects in the Southern and Eastern Mediterranean Regions, said pv magazine that the bank prepare for what will happen when there is a stable government and Lebanon’s macroeconomic outlook improves. “We believe that investments in renewable energies are suspended until the macroeconomic situation improves. [However,] we want the model of independent power producers (IPP) supporting the Lebanese tender to move forward. So, one of the things we are currently working on is how to develop bankable solar projects based on a government-backed Power Purchase Agreement (PPA) in a comparable macroeconomic situation. from Lebanon.
For example, the EBRD is currently working closely with LCEC to examine what happened in countries like Argentina, where successful development of renewable energy was possible after access to loans and grants resumed. outside investors, said De Lastours. “We are trying to see if we should think of an additional comfort element to support government obligations in PPAs, once the macroeconomic situation improves,” he added.
Based on De Lastours’ remarks, it is no surprise that the first three projects of the 180 MW tender did not move forward. Rani Al Anchkar, Executive Director of LCEC, said pv magazine that although the first three solar parks in the Bekaa-Hermel region have reached the licensing phase, the PPA contracts have never been signed. The resignation of the government played a role, but this is “mainly due to the economic situation and the devaluation of the Lebanese currency,” Al Anchkar said.
The perseverance of the EBRD
Al Anchkar added that LCEC and the Lebanese Ministry of Energy and Water are assisted by a global consortium appointed by the EBRD to prepare all documents for a solar + storage tender, as well as a second round of tenders for wind power. However, Al Anchkar noted that an official decision to launch a tender cannot be taken by an interim government.
The EBRD’s persistence in Lebanon is perhaps the most positive news currently in the country’s energy sector. “We are staying in Lebanon,” De Lastours repeated more than once. “The EBRD started its support for the political dialogue for renewable energy in Lebanon in 2017 before the political / economic crisis hit, and we are continuing. Part of the international donor community has decided not to continue its support [to Lebanon] until the reforms take place, but the EBRD program continues. There is no deadline for the EBRD program in Lebanon, we are staying there to help with the tenders.
When asked if, apart from PPA projects, the EBRD plans to support ‘private wire’ energy projects in Lebanon, De Lastours replied that the bank had hired a consultant two years ago to draft new ones. articles which will be promulgated to allow the regulations in force. Lebanon will carry out B2B and private renewable energy projects. “The project is ready and the consultant is currently engaging with parliamentarians to promote this policy. We hope it will pass. We want to support this type of market.
In line with the EBRD’s persistence in the country, De Lastours was aiming for a positive closing remark. “The fundamentals on renewable energies that were there two years ago are still there: the shortage of electricity, the good renewable energy resources, and the good LCEC team that organizes the renewable energy program. Solar power in particular, added De Lastours, with its low costs and quick project deliveries, can help the country by offering reduced risk. Of course, the crisis Lebanon is currently facing affects the development of renewable energies. And while the explosion impacted the entire country, it also had a dramatic impact on the country’s state public service, which slowed things down. But also, concluded Delastours, “our fundamental analysis of the need and the opportunities for renewable energies in Lebanon is still there and valid”.
LCEC said Lebanon installed 14MW of new photovoltaic capacity in 2020, mainly comprising net meter roof systems. The country’s cumulative installed photovoltaic capacity stood at 90 MW at the end of 2020, which is lower than the government target of 100 MW for 2020.