Lebanon has plunged into near-complete darkness recently because of skyrocketing fuel prices resulting from the devaluation of the Lebanese pound towards its dollar peg.
The situation with power cuts in Lebanon is so dire that generators, solar power, and fuel became recent ‘generosity’ practices by certain political hopefuls to influence voters in recent parliamentary elections, instead of the usual bags of bread, food baskets, and medical supplies.
Some areas in Lebanon are ‘lucky’ to get 1 or 2 hours a day of power, and the remaining hours are left to the whims of generator owners, who themselves often face severe Diezel availability issues.
Things weren’t always like this. During Lebanon’s hay days, the country once refined its own petroleum products and produced enough electricity to export surplus power to Syria.
But today’s situation has created a perfect storm for a major energy market disruption to take place: Solar power.
Government’s day in the sun
Lebanon has agreed to issue 11 licenses for 165 MW of Photovoltaic (PV) capacity, as part of a larger 180 MW solar tender that the Cabinet approved recently.
The licenses are for 11 equally-sized projects across four main regions, Bekaa, Mount Lebanon, South, and North Lebanon.
Tariffs are a key element of every tender. The design of
When it comes to tariffs, the lowest bids would apply to all PV projects within the same region. In the Bekaa, a $0.057/kWh bid, the lowest, meant all three 15 MW farms there were obligated to accept that tariff bid.
Bekaa’s strategic solar irradiance, inexpensive real estate, and unencumbered locations justified such a low tariff. All other locations in other parts of the country will receive tariffs of $0.0627/kWh, for a period of no less than 25 years, following being commercially operational.
For funding purposes of licensees, Lebanon’s Central Bank will issue funds spread 70% in US dollars, and 30% in local currency.
Solar power not a luxury anymore
Solar power is no longer a luxury to have. It’s a must. In fact, it is a miracle that Lebanese have only now viewed solar as a solution to decades of power cuts and expensive power generation fees.
A private generator subscription of 10 amps amounts to 9 million Lebanese Pounds (LP) per month. At 30,000 LP per $1, this amounts to $300 monthly payments, exorbitant to most people, knowing that over 70% of the population is below the poverty line today.
Better late than never and now, dotted around Beirut, mountain villages, and the Bekaa valley, rooftop and balcony solar panels are quite the refreshing sight, or eye sores, depending on how you see them.
Installing a five-amp solar panel can cost a one-off payment of between $2,000 and $2,500. The cost rises as the output increases and can reach around $5,000. Where will these funds come from?
People are borrowing, getting loans or selling gold and belongings to secure this.
The country’s Housing Bank has made available a 5-year ‘solar energy loan,’ ranging from 75 million to 200 million LPs, carrying a five percent interest.
These loans are exclusive to Lebanese with limited income and are financed by the Arab Fund for Social Development in Kuwait, and Lebanon’s Central Bank.
Solar panel suppliers and installers are overwhelmed with requests for installations and solar panel systems have become cherished imported commodities.
Will this make a dent in the economy?
Fuel subsidies, before being discontinued, had cost the country around $3 billion per year with the power sector accounting for nearly 40% of government debt since 1992.
Considering these numbers, solar is sure to have some impact on the economy and relieve some of the burdens of carrying a dilapidated and decimated system that has essentially shut down.