Will Lebanon follow Morocco's renewable energy footsteps in light of new political momentum?

EIB Vice President: A positive political environment is always good for EIB green investments in Lebanon

Written by Rana Al-Hajj

As Lebanon groans under the heavy weight of power outages and their dire repercussions on the nation's economy, most parts of the world have been increasingly utilizing renewable energy (RE) and putting energy efficiency (EE) into the core of their transition towards low-carbon and green economy.

In this framework, Morocco has become one of the leading examples of a country making optimal use of its RE potential. The country imports more than 97% of its energy at a time that it has abundant sunshine all year round. This has pushed the government of Morocco to put in place the Morocco Solar Plan, to install 2,000 MW of solar capacity by 2020.

In its capacity as the world's largest financer of climate-related investments, persistently mobilizing finance to encourage green economies, the European Union Investment Bank (EIB) contributed a sum of EUR 250 million to the finance of three phases of the project under the Morocco Solar Plan.

Implemented by the Moroccan Agency for Solar Energy (MASEN), "Noor" aims to reach a potential capacity of 580 MW, which is equivalent to powering a city of 1,500,000 inhabitants. Once fully developed, this solar complex will be one of the largest in the world.

It is high time Lebanon opted for RE and EE generation, but the question remains: will the new political momentum help boost the dwindling investors' trust in Lebanon's fluctuating economy and shaky political grounds?

Albeit, the increase of energy efficiency and building of smart cities have proven to be major drivers en route to sustainable development and accelerated economic growth, not to mention that they don't only concern the substantial improvement of the conditions and environment in which we are living, but also help bolster a competitive national economy.

According to a study published by Friedrich-Ebert-Stiftung (FES), the current situation of the energy sector in Lebanon is critical, as the demand largely exceeds the supply and, consequently, power outages are a daily occurrence.

The state-run Electricite du Liban (EDL) is producing only 70% of the electricity needed. EDL has a strong monopoly in the supply of energy, and it suffers from severe financial problems. Therefore, it relies on the government to cover its expenditures. Concisely, this means that energy is highly subsidized by the State.

However, and in spite of this financial support, the tariffs for consumers are significantly higher than in neighbouring countries. The monthly energy bills represent a large share of the private households' expenses, as the consumers pay the EDL and often pay as well for power generators to bridge the power cuts. Apart from being expensive, these generators have high rates of emission and contribute to the already severe air pollution in residential areas. In addition, the Lebanese power sector relies mainly on fossil fuels and obsolete technologies, facing important environmental challenges like water constraints, air pollution and climate change issues.

Furthermore, Energy demand in Lebanon is estimated to grow at an average of 3-5% per year for the coming 10 years; as a result, the Lebanese electricity sector will face further challenges unless substantial investments and reorganization effort are undertaken urgently.

In an exclusive interview to NNA, EIB Vice president, Roman Escolano, voiced mounting optimism concerning the new political developments at the Lebanese scene, especially at the economic level.

"We have been following up on a lot of interesting developments in Lebanon, especially at the political front. We have been very active lately in projects with the private sector, which is probably less dependent on the political situation, particularly within the financing office that implements projects with banks. We do this in cooperation with local banks and we have been discussing with many of them different projects, some of which have been recently approved," Escolano told NNA.

Touching on EIB's activity with the Lebanese State, EIB's VP pinned great hope that the new political developments in Lebanon would pave the way for more room to approve projects within both, the private and public sectors.

"In the context of the resilience initiative, which is an initiative that the European Union has asked the EIB to develop in order to address the Syrian refugee crisis, we think that we are going to develop with both, the private and public sectors, more projects of innovative nature in the sense that we are going to require more sophisticated instruments by which the bank will be in a position to take more risk. I would like to stress again, with both, the private and the public sectors. So, yes, Lebanon is going to be one of the key priorities in the region, especially due to the highly welcomed political developments. We are clearly eager to study and analyze more projects in the country."

As for RE-related investments in the making between Lebanon and the EIB, Escolano said that due to the Bank's unique expertise in this field, the EIB didn't only play the role of a financer, "but a provider of expertise in this area," citing the example of Ouarzazate Solar Complex "Noor".

"A positive political environment is always good for EIB's green investments in Lebanon. As far as I understand, some of the projects have been perhaps facing a problem finding the right interlocutor on the other side, but let's hope that we have good political developments and atmosphere - together with all the international financers, we will be able to implement all the pending projects. We are very mindful of the importance of Lebanon in general, not only because of the Lebanese economy, which is doing well given the challenging context and the Syrian refugee crisis."

In turn, Senior EIB Loan officer Catherine Barberis told NNA, "We are always very keen to finance projects in Lebanon, and as soon as we are officially solicited on a project, we are going to respond. There is a momentum now in Lebanon and it's something recent, we need to sort of discuss this with the Lebanese authorities."

"We hope that the new political developments will help resume all EIB activity in Lebanon because we used to finance projects in Lebanon. Some of the projects are still active and under construction," she added.

The renewable energy sector in Lebanon is not well developed. 97% of the energy is imported in the form of fossil fuels, while only about 2% of the energy is generated from renewable energy resources.

Lebanon could make use of wind, water, sun, and bio-energy. The trash crisis that the country has been enduring for more than a year now has flared calls for making use of organic waste (such as agricultural waste) and even municipal solid waste, to generate RE. With the rising amount of waste in Lebanon, generating energy from the treatment of waste could be an option, despite the fact that it is very expensive.

==================R.H.