Rise and shine04 / 2012, Markets & Trends | By: Sara Ver-Bruggen
Jordan: The Hashemite Kingdom of Jordan has few natural resources and imports nearly all of its energy. Now it is turning to renewables such as solar PV to provide energy security and drive economic prosperity.
Emerging from the post-World War I division of the Middle East by Britain and France, Jordan is one of a few countries in the Middle East without access to rich reserves of oil or gas and, as a consequence, imports 98 percent of its energy from neighboring states including Saudi Arabia and Egypt. Overexposure to energy supplies outside of its control is costing Jordan 20 percent of annual gross domestic product (GDP), due mainly to disruptions to natural gas supplies from Egypt.
Electricity generation in Jordan is based mainly on natural gas and other fossil fuel power plants, with total supply capacity in 2010 at roughly 2,600 MW. Electricity consumption is growing at a rate of 7.4 percent annually. To meet demand and become more energy self-sufficient, Jordan is looking to exploit the natural resources it does have, including sun and wind for renewable energy generation as well as developing its oil shale and uranium deposits.
By 2020 Jordan’s target is to import 56 percent of its energy supply. To achieve this, the energy mix will consist of ten percent renewable energy, six percent nuclear, 83 percent oil and other fossil fuels and one percent imported electricity. Jordan’s interim target is for renewables to account for seven percent of the energy mix by 2015. Parts of the country will be able to support small-scale wind, but solar will provide the biggest contribution as Jordan benefits from over 320 days of sun a year and its climate, for the most part, is very dry and pollution levels are low.
Jordan has taken steps to create a framework to facilitate development of its solar and wind resources, approving the Renewable Energy & Energy Efficiency Law in 2010. To streamline renewable energy projects the law allows companies to negotiate directly with the Ministry of Energy and Mineral Resources to develop projects outside of the public tender process. These proposals require projects to state fixed electricity tariffs. Under the law, the National Electric Power Company will be obligated to purchase any and all electricity produced by renewable energy power plants and cover the cost of connecting renewable energy projects to the national grid.
Many of the law’s provisions benefit large-scale renewable energy projects. Mohammed Al Ta’ani, General Manager of Jordanian Renewable Energy Society (JRES), says: “In Jordan, as well as utility plants, the main opportunities for solar are for rooftop installations and distributed solar energy production, though small-scale and distributed solar is not something that the temporary law adequately provided for investment in. But, within the new law this is being corrected.” To address these issues the government has been in consultation with advisors and the private sector concerning provisions to support small-scale projects. These include amendments to articles 9 and 10 of the law that deal with grid codes and net metering, allowing private and small-scale renewable energy projects to sell excess electricity back to the grid at retail value. While provisions were made in the law at the time of passing, the Electricity Regulatory Commission is tasked with implementing these. Article 11 of the legislation stipulates that a Renewable Energy and Energy Efficiency fund be established in Jordan with the aim of financing utility-scale renewable energy projects and measures and innovations designed to rationalize energy use. The fund will be placed under the control of the Ministry of Energy and Mineral Resources instead of original plans to make the fund financially and administratively independent of the government. The new renewable energy law is expected to be granted Royal approval by Q2 2012.
Since the enactment of the 2010 law companies, spanning local utilities to independent power producers specializing in renewables, have submitted renewable energy projects as direct proposals to the Ministry of Energy and Mineral Resources. Around 600 MW of solar PV projects have been submitted, and the government has started making provisions such as reserving part of an industrial estate for a solar park in Jordan’s southern desert, with room for several utility-scale projects. The largest project proposal submitted is by a consortium led by Kawar Energy. Shams Ma’an, costing US$400 million, will have a capacity of 100 MW with potential to expand to 500 MW. The plant is expected to be operational in 2013. Several CPV and concentrated solar power (CSP) project proposals have also been submitted for review. French CPV supplier Soitec, which has submitted a proposal, has been operating a small grid-connected system for almost two years in Jordan reaching peak efficiencies of 25 percent in temperatures of up to 45 degrees Celsius.
Jordan’s political stability and other factors are attracting companies that see long-term investment prospects across its utilities sector, including conventional and renewable energy generation.
ACWA Power is a leading developer, owner and operator of independent power and water projects, headquartered in neighboring Saudi Arabia. Last year ACWA took a controlling stake in Central Electricity Generating Company (Cegco), Jordan’s largest electricity producer. Cegco has invested in renewable energy generation in the form of wind farms and waste-to-energy plants and ACWA is involved in developing CSP and PV projects across the Middle East and North Africa (MENA) region. Recently ACWA and Cegco received statements of qualification from engineering, procurement and construction (EPC) contractors, from Germany, Spain, France, China and the U.S., for a PV project with a maximum capacity of 50 MW. ACWA has identified three sites in El Quweira, a sparsely populated area south of Ma’an, as suitable for the project, which could be developed over one or several sites.
Scalable distributed PV
Other companies joining forces in a bid to develop solar resources in Jordan include Petra Solar and Enviromena, one of the largest solar EPC firms in the MENA region by installed capacity. Petra Solar’s technology works on a completely different principle to many of the utility project proposals for developing Jordan’s solar capacity. Since being founded in New Jersey in 2006 Petra Solar has completed several contracts – mainly in the U.S. – that deploy its SmartWave solar energy technology.
The SmartWave system allows for distributed solar energy production that ties into the grid without needing an upgrade to current transmission or distribution infrastructure. The system prevents instabilities caused by intermittent renewable energy sources, allowing utilities to maintain high power quality for electric customers while expanding solar electricity production capacity. Panels can be mounted on roof space or specially designed poles. In the U.S. Petra Solar’s technology is used in the Department of Energy’s Solar Energy Grid Initiative, set up to tackle the issues created by solar energy intermittency.
While most of Jordan has grid access, the infrastructure is susceptible to de stabilization from the influx of electricity from large solar plants, without expensive upgrade investments.
Petra Solar has spent the past year developing its business in Jordan, including establishing an R&D centre in Amman and working with local governments to establish projects. To help it develop its MENA business Petra Solar acquired Jordan-based EnergyFlow Consulting in October 2011, which provides consulting, engineering, high-tech field services and training to utilities and energy consumers.
Earlier this year Petra Solar announced a tie-up with Enviromena, after the two companies were put in touch through Masdar, which contracted Enviromena to develop its ten MW plant in Abu Dhabi. Basim Saleh, Petra Solar’s General Manager International Markets says: “Enviromena’s experience and track record of project bidding will help us procure projects and we can also bring a new solar technology and approach to Enviromena’s portfolio.” Referring to the MENA region, Sami Khoreibi, Enviromena’s CEO, says: “We see a large market here for distributed solar applications, particularly where smart grid initiatives are taking place.” The two companies will also be able to pool recruitment efforts and resources such as training.
Tafileh rooftop PV scheme
Petra Solar’s big break in the region occurred a few months ago. Partnering with Jordan Enterprise Development Corporation (JEDCO) and the Royal Scientific Society (RSS) of Jordan, Petra Solar is to begin the first phase of the national Smart Solar Energy plan, which was first presented at the Jordan-U.S. Business Forum held in May 2011. JEDCO provides support for development projects and RSS is a non-governmental applied research institution.
The plan, called Let Jordan Shine, will provide a model of using technology to power economic development and social progress. Petra Solar’s commitment to using a team of engineers and scientists that includes talent from Jordan is a cornerstone of the plan. The company’s commitment to Jordan is clear, having contributed recommendations to help the government formulate its renewable energy policy, evolving from the renewable energy law passed in 2010.
Saleh explains: “We want to see solar capacity development and investment maximize local content, as this is the best way to stimulate the economy and we made reference to other countries that have done this such as Canada and Turkey. As Jordan is looking for renewables to account for a good slice of its energy mix, we felt it important to incentivize smart grid innovation, to reduce grid stress and show how lots of small-scale solar installations for distributed generation provide a scalable route to large-scale solar energy deployment.” Petra Solar can point to a track record state-side where it was awarded a US$200 million contract with Public Service Electric and Gas Company (PSE&G) in 2009, to roll out its smart solar PV systems across 200,000 utility and streetlight poles in New Jersey’s largest cities as well as rural and suburban neighborhoods. To fulfill the contract the company advertised more than 100 local jobs.
The first phase of Petra Solar’s Let Jordan Shine plan will see Petra Solar’s SunWave Smart Solar systems installed on 1000 homes in Tafileh, extending to 20,000 homes across the governorate. Residents taking part will benefit from a reduced electricity bill as each Smart Solar system installed on a rooftop will feed electricity directly into that home. The first phase is underway and should be complete within a few months. Another advantage of Petra Solar’s system is that it can be deployed where land is in limited quantity, whereas utility solar farms need lots of fields, preventing their use for farming. CSP requires not only land, but also water, which is a valuable resource across much of Jordan where rainfall levels are low and expensive desalination plants are needed for seawater processing. In addition local industries such as steel and aluminum fabrication can be deployed to produce the poles and frames needed to mount Petra Solar’s systems. Having proved its model in the U.S. and through setting up local partnerships, Petra Solar could see high demand for its technology, not only in Jordan but other regions in MENA that want scalable solar without the expense of major grid upgrades.
Commercial sector banks on PV
And it is not only the utility solar sector attracting interest. Local company Arab Shams Renewable Energy is developing solar projects for private sector clients. Demand from the mid-size solar sector, which includes factories and other commercial enterprises and organizations, has been triggered by rising electricity prices for consumers that use over 600 kilowatt hours per month. According to Arab Shams Renewable Energy Vice President Fakhri Malkawi, “with the introduction of net metering for selling excess electricity produced from panels, solar is an attractive option for the commercial sector.” The company is developing projects of various sizes up to as much as five MW. To meet demand for solar, Arab Shams Renewable Energy is training staff and also finalizing plans for building a PV factory in Jordan. The plant will have an annual capacity of 50 MW, with scope to increase to 100 MW. The factory will be built before the end of the year, ready to meet demand from next year onwards.
At least two other solar PV factories are also in the works. To incentivize investment in manufacturing, factory owners benefit from exemptions on customs duties and sales tax. Al Ta’ani suggests: “From early 2013, that is when we expect to see Jordan’s solar PV industry moving fast.” Tough economic times are not conducive to big project finance deals needed to fund large-scale utility projects and ACWA’s takeover of Cegco suggests Jordan’s energy and utilities sector is going through consolidation to provide much-needed capital.
While Jordan has significant potential for the generation of solar energy, its major value proposition lies in its potential as a hub for renewable energy and clean-tech production, sales and research. According to Jordan Investment Board (JIB) the country benefits from a significant amount of available labor, with some of the region’s most highly qualified engineers, reasonable wage rates and competitive distribution costs, which will allow investors to tap a vast market within the MENA region. Several of Jordan’s 26 universities are committed to ongoing research into PV and other renewable and clean-tech applications and can provide R&D support to potential investors. The Ma’an Development Area (MDA) was set up in the south of Jordan to foster renewable industries, including a solar value chain. The MDA includes a 750,000 square meter industrial park and links with King Hussein Bin Talal University to enhance knowledge and capability in the fields of manufacturing, science, engineering and renewable energy.
While many of its neighbors remain locked into hydrocarbons for economic prosperity and stability, Jordan is finally taking advantage of its energy poor status to establish what may emerge as one of the region’s most progressive energy industries, based on solar rather than oil or gas. The government’s approach reflects this, liaising with organizations such as JRES, EDAMA and private sector suppliers like Petra Solar, to ensure solar can meet the country’s energy needs without costing the earth and grow the economy in the process.