Lebanon’s power woes compel solar solutions

17 Apr 2023
Lebanon’s power woes compel solar solutions

Solar panels appearing on rooftops across the country as Lebanese seek answers to energy deficit aggravated by economic downturn, finding support from new loans and international programs; IRENA sees potential to have 30% renewable power by '30 if reforms put in place

Lebanon is witnessing a remarkable surge in solar power adoption, supported by public and private sector investments in distributed solar power. Meanwhile, the country’s Ministry of Energy and Water (MEW) proceeds with licensing of modest sized utility-scale solar and wind power projects, although these have been slowed by a difficult economic environment.

Yet Lebanon today is seeing something of a mini solar power boom, with thousands of households and businesses finding a viable solution in solar panels. It is a promising development that has the potential to address the country's energy challenges and contribute to its economic recovery.

Support from MEW, private sector investments, and international funding are driving significant progress towards achieving Lebanon's renewable energy targets and building a more sustainable energy future.

Moving forward amidst crises

The economic crisis in Lebanon, which began in 2019 and led to the drastic devaluation of the Lebanese Lira against the U.S. dollar, has severely impacted the country's electricity sector. As a result, the state-run Electricité du Liban (EDL) struggles to provide reliable power, resulting in frequent power cuts and limited electricity availability, with some households and businesses receiving only one or two hours of grid electricity per day.

Energy demand exceeds the country's generation capacity. This has led to a large percentage of the country’s generation mix coming from private generation, mostly from diesel generators. The country relies on imports for nearly all fuels and fuel oils.

Lebanon has approximately 3.4 GW installed electricity capacity, according to data from the International Renewable Energy Agency (Irena) for 2021. The power that EDL actually provides, however, is far below this. The renewable share is 11%, according to Irena. Hydropower is by far the largest renewable energy resource in Lebanon (approx. 75%), followed by solar power (approx. 20%), and bioenergy.  

Irena says that Lebanon has the potential to source 30% of its electricity mix from renewables by 2030, which is a national goal. Yet reaching this goal will require significant policy reforms to secure project funding.

Solar loans to help

Many businesses in Lebanon rely on costly energy sources such as private diesel generators, which have negative environmental consequences. Yet various incentives have been put into place in recent years to help finance renewable energy, including incentives for distributed PV and solar water heater markets.

A new loan program aims to ease high energy bills and diversify into renewable solar power, which has gained popularity as electricity prices have risen. Launched this year, offers low- and middle-income Lebanese households access to loans of up to $13,000 to install small solar plants on their rooftops, with a five-year repayment period.

The initiative is backed by public-private Banque de L’Habitat and overseen by the Lebanese Centre for Energy Conservation (LCEC), which serves as a technical arm of MEW. In this case, the LCEC will act as the technical arm of the bank by reviewing and filtering solar projects submitted for financing.

“The demand for solar energy in Lebanon increased during the last year, as a result of the increase in the prices of electricity bills,” says Reem Irani, Project Manager at LCEC.

"The increase in electricity prices prompted Lebanese people to resort to solar energy to overcome the growing energy crisis," she adds.

“The main problem that faced the expansion of the solar energy sector in Lebanon was the difficulty of importing solar energy devices from abroad and paying for them in dollars,” says Irani.

“Therefore it was necessary to find solutions, especially since those most affected are low- and middle-income people who are suffering from high electricity bills.”

International help

To further support the growth of solar energy in Lebanon, the United States Agency for International Development (USAID) launched the Solar & Renewable Energy Fund in 2019. It is a $20 million fund to help local businesses install solar power generation systems and reduce operating costs.

In addition to the USAID initiative, the UN Industrial Development Organisation (UNIDO) has received €3.7 million in 2022 from the European Union to finance renewable energy projects in Lebanon, with the aim of supporting the country's goal to cover 30% of its energy consumption from renewables by 2030. The new donation will boost the use of renewable energy in industrial projects in Lebanon.

“It is very necessary and important to rely on alternative energy sources other than oil, which saves costs and reduces emissions and pollution,” said Georges Bouchikian, the Lebanese industry minister. “We thank the EU and the UN for this initiative as we strive to continue supporting our local businesses in the country.”

UN involvement in Lebanon’s energy sector is also seen in the EU funded UNDP CEDRO project, which supports market-based renewable energy and energy efficiency with backing for community net metering and related work.

Energy & Utilities reported in February on the Lebanese getting their first loans to install small solar plants on rooftops, under a program that derives from a MOU between the Banque de L’Habitat and the LCEC.

Hanadi Dagher contributed reporting

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