Jordan’s renewable energy market has been characterised by strong government support in recent years and the results are beginning to show. The market has transitioned in a short space of time from non-existent to being worth hundreds of millions of dollars per year. Jordan imports 96% of its energy needs and relies heavily on a region that has been going through a period of political instability. This has led to disruption to its energy supply and increased the country’s energy expenditure substantially.
The large influx of immigrants resulting from the civil war in Syria has also increased energy demand considerably, putting further pressure on its energy supply. Unlike its neighbours, Jordan has very limited resources for fossil fuels, and this means there is a clear role for renewables to boost energy security and economic growth.
The National Energy Strategy of Jordan has set a target of achieving 10% renewables in its energy mix by 2020. The emphasis is on solar and wind, with an aspiration to reach 1,200MW and 600MW from each technology respectively. Installed capacity of renewables at the end of 2015 stood at 199MW and contributed a meagre 1% to Jordan’s total generation compared to its 10% target for 2020; although it is worth highlighting that large renewable projects became operational only towards the end of the year. With a pipeline of at least 200MW of solar projects to come online in 2016, the renewable energy capacity is expected to ramp up rapidly in the next few years.
The direct proposal submission scheme has been the predominant way of attracting investment in renewables in Jordan. Total capacity of 430MW was approved in the first round, consisting of 12 solar and four wind projects. The second round of proposals, with four 50MW solar projects as winners, saw strike prices halved to $0.06-$0.08 per kWh, from the first round’s $0.17 per kWh. This resembles the experience of other countries where the first round of projects lays the foundations of confidence for investors, and is followed by much competitive offers in the subsequent rounds.
In addition to utility-scale projects, commercial-scale solar is also gaining pace thanks to the net metering and wheeling regulations that were introduced in 2014. Commercial electricity rates are unsubsidised and some sectors such as telecommunications can face tariffs as high as $0.4/kWh, encouraging consumers to seek alternative ways of meeting their energy needs.
The limitations of the grid are one of the major factors holding back renewable investment growth in Jordan. Grid expansion is needed to allow the integration of renewable energy projects and the Green Corridor project is expected to remedy this to some extent. However, further grid investment is still required as proven by the cancellation of the third round of auctions. Despite a series of significant reforms in its electricity sector, Jordan maintains its single-buyer model. Only Nepco is allowed to buy electricity from the independent power producers. This is then purchased and distributed by the three retail supplier companies.
Jordan scored 1.87 in Climatescope 2016. It took 11th place on the list of countries overall, and its highest position was on Enabling Framework Parameter I.
On Parameter I, the country took 4th place globally, with a score of 2.32. It has a wide-ranging set of policies that include utility regulation, clean energy targets, tax incentives, capacity auctions and net metering.
Jordan ranked 10th overall on Clean Energy Investment and Climate Financing Parameter II. This reflects substantial recent investment ($409m in 2015), which increased the total invested in the sector since 2011 by 44.5%.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, the country’s relatively high score reflected the presence of a number of clean energy value chains and service companies. It took 27th place globally.
On Greenhouse Gas Management Activities Parameter IV, Jordan was placed 45th overall. It has set a GHG emissions reduction target and is engaged in carbon-offsetting activity.
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