To say that vitality was a problematic sector from starting of the Lebanese post-conflict reconstruction in 1992 to the tip of the monetary inflows-fueled, corrupt cronyism system within the nation, is greater than an understatement. The sector might be described as a detrimentally backed sinkhole of state funds, catastrophically mismanaged public utility, and theme of 1 internationally flagged want and sabotaged growth technique after the opposite. The underdeveloped vitality sector, dilapidated methods of electrical energy era and transmission, and dysfunctional monopoly utility Electricite du Liban mixed into the moraine of coverage particles obstructed financial potentials and resulted in widespread vitality poverty in Lebanon. In Government’s investigation of damages, wants, and potentials of financial sectors with members of the Lebanese Non-public Sector Community, we sat down with Joseph Assad, Lebanese and regional vitality skilled and dean of the engineering division at USEK. He took us on a perforce tour of private insights which are primarily based on his advisory experiences on the Lebanese Middle for Power Conservation (LCEC) and the Ministry of Power and Water (MoEW) from 2010 to 2017 and his consulting work with worldwide businesses on vitality insurance policies and tasks in additional than a dozen nations.
Can we’ve got hope for vitality sovereignty after all of the years of stuttering and delayed adoption of renewables and tried electrical energy options inside a regionally built-in energy framework – or is vitality sovereignty at the moment nonetheless a pipedream, greater than three years after the extreme electrical energy disaster that was a part of the financial meltdown of Lebanon?
JA: You’ll want to have a look at this subject from a number of factors of view. On the coverage stage, we’re nonetheless on the similar place. De facto, nevertheless, many issues have modified as a result of [economic] disaster. The growth of photo voltaic [photovoltaic] methods has occurred in Lebanon due to the disaster. Whether or not this growth led to [installation of] 1,200 or 800 or 1,500 megawatts, that could be a massive share of photo voltaic PV in Lebanon. An enormous share of electrical energy is now being generated domestically, and this contributes to what we name vitality safety. One other issue that has contributed to the vitality safety is on the demand facet [of the equation].
How so?
Demand dropped due to three causes, the primary being the obvious within the enhance of electrical energy costs. Individuals now need to account for the electrical energy invoice on the finish of the month and thus are trying increasingly into tips on how to save vitality. The second factor is that some folks can’t afford electrical energy anymore. They’ve been chopping down on their very important electrical energy wants. The third one is the [drop in power consumption] due to the blackouts that we witnessed within the earlier interval and which are disappearing increasingly proper now. I’m speaking concerning the complete blackouts when electrical energy wants had been coated neither by turbines nor by EDL.
The third [demand reduction element] has disappeared, the second ought to disappear [as people’s access to vital energy] ought to return with the adjustment of the economic system. However the first one will stay, as a result of it’s an consciousness change and behavioral change decreasing electrical energy demand. What does this imply? We’re demanding much less electrical energy and are producing extra electrical energy domestically, which signifies that we’re growing our vitality safety and vitality sovereignty.
What else is required to really have vitality sovereignty? Is it right to say that vitality safety may very well be improved by acquisition of electrical energy and the assets to supply it from exterior the nation whereas vitality sovereignty requires native manufacturing?
On that stage of vitality sovereignty, it signifies that we’d like pure gasoline assets. Hopefully once we faucet into our gasoline assets, if any [viable ones are found], we may have full vitality sovereignty. Renewables and hydro, that are the one [domestic] sources that we’ve got at the moment, can’t present full vitality sovereignty. In any other case we have to import gasoline, which makes us face two issues, one is the load on our nationwide debt [that will be imposed by fuel payments] and our sensitivity to the fluctuations in worldwide oil costs, and secondly the political dimension of importing oil.
As to the components contributing to the discount of vitality demand, did enchancment of vitality efficiencies play a task that was along with habits modifications due to increased value?
That occurred routinely. On the coverage stage, I used to be personally accountable for drafting the chapter within the NEEAP II (four-year Nationwide Power Effectivity Motion Plan revealed in March 2016) for Lebanon the place I produced a chapter on vitality effectivity measures within the [Engineering, Procurement, and Construction] sector. I used to be personally concerned in drafting this chapter of the vitality effectivity legislation. It was not applied as a result of disaster. Throughout the NEEAP we had chapters addressing vitality effectivity in all sectors. However what we lack in Lebanon shouldn’t be coverage however implementation. For the final three or 4 years there was a legislation pending within the Lebanese parliament, the vitality effectivity legislation.
And but I’ve encountered inefficient electrical energy installations in some public buildings, the place I noticed over-sized and non-divisible energy era services in state-owned venues in Beirut.
The non-public sector is for positive far forward of the general public sector within the space of vitality effectivity. They fundamental drawback within the public sector is funds. I do know from my work that after the Beirut blast there was a big package deal of funds to solarize public establishments, for instance a World Financial institution program for the Lebanese College and initiatives with [German] businesses KFW and GTZ and in addition with different establishments from Japan. Public hospitals, public faculties, Lebanese College, Lebanese Armed Forces, and in addition at completely different ministries, in all of them you’ll find an excellent solarization charge that has been put in. Within the coming yr there might be tasks for the Palaces of Justice and the executive buildings of governorates, applied by UNDP with what I believe is EU funding.
There may be, nevertheless, an enormous drawback of [doing things] the Lebanese method the place “larger is best” the place I’ll get a two or thrice bigger generator once I want one in every of 100 kWh capability. That is figuring out that underloading a generator will eat extra gasoline and {that a} larger generator will eat extra gasoline than a small one. So in 95 p.c of establishments in Lebanon, you discover that their diesel generator is over-seized, as a result of they took an even bigger generator beneath concerns that they’d develop. [Before], there can be many Lebanese individuals who would favor to have a bigger generator simply with the intention to have the peace of thoughts of all the time have sufficient energy, quite than making financial savings on gasoline. As we speak it’s completely different. As we speak we have to think about vitality effectivity as we’re again to monetary actuality. There are a lot of examples for low value, no value operational effectivity measures.
Is that this rational pattern towards increased vitality effectivity progressing in the very best method, or is the nation nonetheless in a worst-possible state of affairs of implementation?
The [reality] is one thing in-between however I believe whether it is institutionalized and legalized, will probably be significantly better. Now it is smart financially and it’s the finest time to implement vitality effectivity in Lebanon.
However are there authorities incentives resembling tax holidays or funding assist for vitality effectivity measures?
No must go there. I’m quoting one in every of my two German vitality gurus who used to say that the cleanest and least expensive kilowatt-hour that you would be able to produce, is the one which you don’t eat. Allow us to start there after which we will focus on different points.
There have been concepts and proposals of utility scale photo voltaic farms that had been born within the 2010s and tendered later up to now decade however then stopped nonetheless earlier than the implementation stage in 2019 and 20. After I lately searched the web site of LCEC for data relating to those photo voltaic farm tenders, I encountered a stakeholder evaluation doc by the World Financial institution. It appeared to indicate a necessity to have interaction in additional consultations with stakeholders from municipalities and civil society in communities within the Bekaa that had been lately within the information not for his or her agricultural or different financial capacities. What’s the state of creating utility-scale photo voltaic PV and energy buy agreements (PPAs)?
I’ll replace you on this however let me first comment that the non-public sector in Lebanon has demanded its personal vitality sovereignty from the federal government. This was one of many fundamental drivers of the photo voltaic growth. On one facet there was the residential facet that was pushed each by want for vitality safety and, in a while, additionally by vitality effectivity. However while you have a look at the demand from the commercial and business, or C&I sector, it was pure vitality sovereignty the place lots of people had been saying, ‘we don’t wish to anticipate the federal government anymore however take issues into our personal fingers’. And I used to be simply notified that six out of 11 PPAs had been already offered to personal sector companions. There’s a massive urge for food from non-public sector gamers who wish to make investments on their very own, and the one subject at the moment why we’re not implementing the 11 PPA contracts that had been signed, is the financing.
On this regard, the Stakeholder Evaluation doc by the World Financial institution stated that you have to full the stakeholder evaluation course of earlier than you may obtain finance.
That applies if you happen to intention for worldwide financing. However what we’re seeing now in Lebanon is that [private sector entrepreneurs] will not be going for any exterior financing. They’re people who find themselves going for the PPAs as a result of they wish to themselves spend money on photo voltaic farms. So what we’re seeing at the moment is an inside urge for food of the non-public sector to spend money on the general public sector. It is a good signal: the non-public sector is coming again and participating within the resolution for the general public sector.
What you say now jogs my memory of civil society actions in some areas of Beirut when non-public initiatives began in late 2021 connecting streetlights to turbines in neighborhoods and even folks’s buildings, so that each one folks within the neighborhood may stroll in additional gentle and thus better security.
And now these sorts of initiatives are going to the subsequent stage. Now they will the extent of, let’s say, 15 megawatts of photo voltaic farms that might be feeding into the grid, as a part of the non-public sector investing into the general public sector.
Would that require the issuance of very clear additional rules so far as provision and pricing, public non-public partnerships (PPP), and all that?
The worth [for electricity purchases from private providers by the state utility] was set inside the PPA and it is extremely aggressive, I believe, while you evaluate it to the price of manufacturing in Lebanon and considering all of the dangers. I’m not a authorized skilled on the issues of PPP and PPAs. From my understanding from the authorized specialists, the one subject is within the financing. You probably have the financing, you can begin the works and it’s no secret that a number of PPAs had been purchased – [purchase of two contracts by shipping giant] CMA-CGM is already public and so they have acknowledged that they may begin implementing. I believe there’s something pending with Complete [Energies and QatarEnergy]. Nonetheless, I do know that there are also others.
Are there totally Lebanese buyers which have acquired PPA contracts? If that’s the case, does the Lebanese Non-public sector community have a stake or operate in such initiatives?
Sure, that’s the case and lots of the folks, or not less than a few them, who’re holding PPAs, are members of LPSN.
What concerning the requirement of stakeholder assessments or different political boundaries which may stand in the way in which of worldwide finance, resembling via World Financial institution packages, once we discuss municipalities the place allegiances have been with the political Hezbollah?
I can’t speak for the World Financial institution however on the Lebanese stage, the one requirement can be the social and environmental impression evaluation, which has its personal standards and may very well be run via native authorities and municipalities but additionally via native NGOs and native illustration. I have no idea if the World Financial institution has different necessities which might apply if the World Financial institution is financing, which, nevertheless shouldn’t be the case within the second. I believe since we’ve got urge for food from the non-public sector in financing that dimension of photo voltaic relays, I might preserve the World Financial institution off these tasks and concentrate on having that facet of sovereignty inside the financing of these PPAs and convey within the World Financial institution for the bigger ones the place you may want all of the processes and procedures that the World Financial institution applies.
Do you’ve any data on the damages on the vitality sector from the 2 months of open conflict?
I do know that there was a huge effect within the south – and I do know much less from the Bekaa – on the photo voltaic methods that had been particularly put in for photo voltaic[-powered] pumping. These methods, which had been already financed by worldwide donors, must be restored and we are going to want plenty of assist to rebuild them. As we should not have entry to all of the areas but, it’s too early to undertake a proper evaluation of damages.
So far as financial losses in electrical energy and renewable operations over the previous months, may these be of decrease significance? Evidently operational provision and entry to electrical energy in 2024 was, regardless of the conflict higher than in 2023 or 22?
That is for the straightforward purpose of getting elements of the nation that had been completely depopulated, which meant that we had much less electrical load and it was moved to different areas that felt a slight amelioration as a result of that they had extra hours of electrical energy. We won’t have any worldwide financing within the sector with out a macroeconomic resolution, apart from these small PPAs the place you’ll find a personal investor that may make investments 6, 7, or 8 million USD to construct a photo voltaic farm. Nonetheless, if we discuss giant scale farms and tasks of $100 or 150 million, we’d like exterior finance from worldwide monetary establishments, and people won’t come with out a macroeconomic resolution, which was delayed by the conflict.
So in your evaluation, new financing might be delayed due to the battle?
Sure, conflict is the enemy of attracting investments. Nonetheless, we’ve got seen resilience inside the Lebanese inhabitants – however is that resilience sufficient to draw direct patrons? However on a brighter facet, what we hope for, even when I’m not positive that this may be stated about any conflict, is that this conflict might be a begin of a brand new period of ending conflicts and seeing much less conflicts inside the area. From that viewpoint, we possibly getting nearer to having the IFIs and exterior buyers return to Lebanon. If then again [the next phase in the Lebanese situation] is a remake of what occurred in 2006, will probably be delaying a lot. Underneath the extra optimistic view, one of many factors that we have to focus on once we speak concerning the position of the non-public sector, is the decentralized renewable vitality (DRE) legislation.
Is the DRE legislation’s energy wheeling half working, that means the power of personal producers of electrical energy to move the facility over the grid from the place they will conveniently produce it to the place they want it, beneath the legislation that was adopted in Parliament on the finish of 2023?
No, energy wheeling shouldn’t be working. Nonetheless, what’s working, are non-public to personal energy buy agreements and I’m completely satisfied to announce that we signed the fist PPA at USEK with an organization of the non-public sector in Lebanon, which might be investing in putting in a photo voltaic system on the roof of our parking [area]. We may have a contract the place we [as USEK] purchase electrical energy for ten years and after ten years, the system will turn out to be ours. This mannequin can symbolize an important alternative for the non-public sector to take a position domestically. It’s an funding alternative and I do know that there are corporations engaged on that facet. I do know of 1 or two which are probably the most mature, however I can’t identify.
Any industrialist whom you strategy in Lebanon and ask him what the primary ache within the neck is to him, he’ll say vitality. In the event you them inform them ‘don’t make investments your self in putting in a photo voltaic farm however depart this to us and we are going to promote you electrical energy cheaper than what it prices you in your generator when you spend money on your individual enterprise’, they are going to be very completely satisfied.
In areas of renewable vitality utilization aside from working manufacturing vegetation and processing vegetation, is it possible for a transportation supplier to have a photo voltaic array powering a central charging station for battery-energized buses or supply automobiles?
Why not. We will take into consideration loads. Nonetheless, for the general public transportation sector I’ve cleaner fashions. From my viewpoint, hydrogen is significantly better for the buses when put next with putting in photo voltaic farms to cost the buses and all that.
When Government talked to the most important Lebanon-based photo voltaic PV and renewable vitality corporations again in 2021, they had been doing most or nearly all of their income exterior of Lebanon, in Center Japanese and African markets. Are these corporations concerned within the PPA offers that you just talked about?
It’s a level of delight for the vitality sector in Lebanon that corporations that had been groomed in Lebanon are working in the entire area. However these will not be the identical corporations that we’re speaking about right here. It’s about mission financing. We’re speaking about corporations which are being created to finance these those who set up photo voltaic for third-party non-public sector corporations. It’s the non-public [sector] financing the non-public to put in for the non-public.
However do we’ve got the wanted corporations with sufficient capacities to serve this demand?
Sure, and way more. Having labored with them from completely different perspective, [namely] from the general public and the non-public sector perspective and now as buyer consultant for my college, I can say that the renewable vitality [Engineering, Procurement, and Construction] EPC corporations in Lebanon are very aggressive and have the correct know-how to put in the methods, particularly once we are speaking non-public to personal sector tasks of under 1.5 megawatt, which cowl 90 p.c of the wants in Lebanon. For these system sizes, we’ve got the world’s finest corporations to put in them.
As you talked about, gasoline reserves and in addition utilizing fossil assets is essential for vitality sovereignty of Lebanon. Now we have had many speculations, rumors, and political expectations all through the 2010s and even after the crash of the native subsidies. Is that this debate of assets extra rational at the moment?
As soon as we’ve got confirmed assets – and as I scientist I can’t state my conviction however I can say that we’ve got an excellent likelihood for these reserves, placing it right into a extra scientific framework, will probably be a recreation changer for the vitality sector. I believe the Lebanese non-public sector may have an enormous position to play on that stage, not solely on stage of license holders but additionally within the large marker of providers that have to be supplied to these corporations.
Will the world round us allow us to discover our assets in peace?
Firstly of my course in every semester, I current a slide of confirmed vitality assets on the earth and one other slide the place I current the political tensions on the earth. And once I overlay these two maps, there often is 80 to 85 p.c accuracy of overlay. In earlier occasions it was water and at the moment one of many fundamental causes of conflict are vitality assets. Nonetheless, I’m personally optimistic as a result of I do know that our nation will survive as a result of it has already survived many related, larger and smaller conflicts and turmoil as we face now.
One other chapter that we have to handle is hydrogen. Hydrogen is now being pumped to Europe from North Africa. However there’s additionally an enormous potential for hydrogen manufacturing elsewhere within the area, particularly locations with pure gasoline pipelines passing via. As a result of you may combine.
Would the hydrogen manufacturing be using solar-thermal?
There are a number of methods. What known as inexperienced hydrogen is produced by utilizing renewable vitality and electrolysis of water however there’s additionally potential for blue hydrogen the place there are oil reserves. Pure gasoline from oil reserves can be utilized to supply blue hydrogen as a substitute of flaring it. It may also be pumped. Hydrogen is the vitality vector of tomorrow. It’s a vector, not a supply as a result of it may be used to shift vitality from level a to level b in geography but additionally from level a to level b in time.
Is Lebanon politically and technically cognizant of this chance?
Lebanon is among the first nations to have a hydrogen technique. I actually developed that technique on behalf of GIZ. So I believe we’re nicely positioned, however we’re not prepared but. We’re heading in the right direction however must speed up and this acceleration would rely upon [collaboration].
The LPSN has stipulated the necessity for an internationally financed, Marshall-type plan for Lebanon. Ought to there be a price range allocation to vitality in a Marshall kind plan and the way a lot in share phrases of a plan must be devoted to vitality sector growth?
I can’t provide you with a quantity however I believe that vitality must be the principle focus of any future plans inside Lebanon, as a result of it’s on the similar time one of many fundamental enablers of the Lebanese economic system and in addition in itself is turning into a sector of the economic system. I don’t know what number of sectors had been producing $5 billion per yr over the past interval. This was the non-public energy era sector that was attaining a turnover of 4 to 5 billion {dollars} per yr. If this sector is institutionalized and opened to personal sector, you open a cheap sector that might be operating billions – no one has the precise numbers – similtaneously the billions of EDL. The vitality sector shouldn’t solely be an enabler but additionally a producer and financial sector in itself.
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