February 2021 February KINGDOM OF KINGDOM

THE HASHEMITE

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SPINE SPINE Renewable Readiness Assessment: The Hashemite Kingdon of Jordan © IRENA 2021 Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyright holder. Material in this publication that is attributed to third parties may be subject to separate terms of use and restrictions, and appropriate permissions from these third parties may need to be secured before any use of such material.

Citation: IRENA (2021), Renewable Readiness Assessment: The Hashemite Kingdom of Jordan, International Agency, Abu Dhabi. ISBN: 978-92-9260-277-2

About IRENA The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future and serves as the principal platform for international co-operation, a centre of excellence and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy – including bioenergy, geothermal, hydropower, ocean, solar and wind energy – in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.

Acknowledgements This report was prepared by IRENA in close collaboration with the Government of Jordan, as represented by the Ministry of Energy and Mineral Resources (MEMR). The report benefited from the input of various experts, notably from Denis Korchunov (UNDP), Stephen Gitonga (UNDP), Reem Al Masri (EDAMA), Ahmed Bassam (JREEEF), Rasmi Hamzeh (JREEEF), Yacoub Marar (MEMR), Ziad Hammoudeh (MEMR) and Ziad Jebril (ex MEMR). IRENA colleagues who provided valuable review and support include: Abdulmalik Oricha Ali (ex-IRENA), Imen Gherboudj, Dolf Gielen, Nadeem Goussous, Ricardo Gorini.

Main Contributors: Zoheir Hamedi, Reem Korban, Gürbüz Gönül, Divyam Nagpal (IRENA consultant) and Samer Zawaydeh (National Co-ordinator).

Disclaimer

This publication and the material herein are provided “as is”. All reasonable precautions have been taken by IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of its officials, agents, data or other third-party content providers provides a warranty of any kind, either expressed or implied, and they accept no responsibility or liability for any consequence of use of the publication or material herein.

The information contained herein does not necessarily represent the views of all Members of IRENA. The mention of specific companies or certain projects or products does not imply that they are endorsed or recommended by IRENA in preference to others of a similar nature that are not mentioned. The designations employed and the presentation of material herein do not imply the expression of any opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. THE HASHEMITE KINGDOM OF JORDAN Renewable Readiness Assessment: Foreword from the Minister of Energy and Mineral Resources

The contribution of renewables to Jordan’s electricity mix has grown impressively in recent years, rising from just 1% in 2014 to 13% in 2019. Renewable energy systems feeding into the national power grid reached 1 558 megawatts (MW) by 2019 and have since swelled to some 2 200 MW, or 20% of our overall electricity mix.

The integration of renewables reflects extensive preparation via the legislative and procedural framework, coupled with the progressive strengthening of human capacity and formation of partnerships with the private sector. Jordan’s recently launched National Energy Strategy for 2020-2030 aims to ensure energy security, affordability and sustainability, along with increased use of domestic energy resources.

After close consideration of various possible scenarios for 2030, the strategy promotes a high independence scenario as the most compatible with achieving broader strategic objectives. These include diversifying our energy sources, boosting the use of domestic energy resources, increasing energy efficiency and reducing energy costs throughout the national economy, and continuing to develop the Jordanian energy system. The strategy calls for increasing renewables to 21% of power generation within the year and 31% by the end of the decade.

The National Energy Efficiency Action Plan, adopted in 2014, created the Jordan Renewable Energy & Energy Efficiency Fund (JREEEF), which helps farmers, households, industries, hotels, mosques, churches, schools and communities optimise their energy consumption and use more renewable power.

The International Renewable Energy Agency (IRENA) has helped us evaluate our current position, including successes and achievements, as well as our challenges. The resulting Renewables Readiness Assessment outlines key measures and solutions to enable us to move forward and meet our renewable energy targets. The recommendations are consistent with our 2020-2030 energy strategy. Moreover, the groundwork behind this report is reflected in our latest implementation plans.

Our ambitious targets for the energy sector require a strong partnership between the public and private sectors. We are eager, also, to work with international friends and partners to make renewables a prominent pillar of Jordan’s energy system.

Hala Zawati Minister of Energy and Mineral Resources, Jordan

4 The Hashemite Kingdom of Jordan Foreword from the

IRENA Director-General FOREWORDS

As governments plan for the post-COVID future, the transition to renewable energy offers the prospect of rapid job creation, intensified economic development and enhanced social equity and welfare. For Jordan, diversifying the and reducing energy costs with renewables promises to strengthen long-term socio-economic and industrial development, without putting added strains on public finance.

For a country with abundant renewable energy resources, the envisaged transition would improve energy security and reduce costs to consumers, as well as improving environmental preservation. Jordan’s energy strategy for the decade reinforces the diversification policy with an updated target of 31% renewable power capacity by 2030. Renewables Readiness Assessment: Jordan, prepared in collaboration with the Ministry of Energy and Mineral Resources (MEMR), identifies key challenges as the country pursues environmentally and economically sustainable power and heat. It offers recommendations in seven key action areas, aiming to scale up renewables for power generation, transport, industrial uses and the heating and cooling of buildings. The net result would be greatly increased renewable energy use, improved energy security and lower costs.

While Jordan made major strides over the past decade, the linkages and synergies could be strengthened between renewables and efficiency measures, as well as with grid upgrades, domestic industrial development, and the diversification of energy sources for transport and mobility. National financing institutions and project developers need their capacity built up to unlock faster investment in renewables.

Since 2011, nearly 40 countries, spanning the Middle East, Africa, Asia and the Pacific, Latin America and the Caribbean, have undertaken similar assessments, exchanging knowledge and fostering international co-operation to accelerate the deployment of renewables. Each process has been country-led, with IRENA providing technical expertise, highlighting regional and global insights, and facilitating consultations among a range of national stakeholders.

IRENA appreciates the vital input and engagement of the MEMR team on this study. Numerous national stakeholders and international partners also made valuable contributions. I sincerely hope the present report helps to accelerate Jordan’s shift to a sustainable energy future.

Francesco La Camera Director-General, IRENA

5 Renewable Readiness Assessment: Contents

Figures 6

Tables 7

Boxes 7

Abbreviations and acronyms 8

Executive summary 12 1 Introduction 16 Energy sector landscape 18

2.1 Energy sector institutions and responsibilities 18

2.2 Trends in primary energy supply 22

2.3 Trends in the power sector 23 2 2.4 Trends in final energy consumption 27 • Industry 27

• Transport 28

• Households 28

2.5 Drivers for energy diversification 29

Renewable energy resources and use 31

3.1 Renewable energy resources 31

• Solar 31

• Wind 31

• Bioenergy 33

3 • Geothermal 33

• Hydropower 33

3.2 Renewables in the power sector 33

3.3 Renewables in heating/cooling and transport 36

3.4 Conclusion 37

6 The Hashemite Kingdom of Jordan

Renewable energy policies and investment: 38 Current landscape and emerging issues

4.1 Adapting the policy and regulatory environment for future renewables growth 38 CONTENTS • Plans and target 39

• Policies and regulations for deployment 40

• Power sector: Direct proposal submissions 41

• Power sector: Government-owned projects 42

• Power sector: Wheeling and net metering projects 42

• Power sector: off-grid and cross-sector projects 44

• Heating/cooling 44 4 • Transport 46 • Policies and regulations for integration 46

• Transmission and distribution infrastructure 47

• Storage 48

• Sector coupling and load-shaping 49

• Policies and regulations to maximise benefits 49

4.2 Catalysing investments to meet renewables ambition 51

• Financing utility-scale renewable energy projects and infrastructure 52

• Financing self-consumption and small-scale renewables 54

• Financing renewable energy enterprises 55

4.3 Conclusion 56

Key challenges and recommendations 58

5.1 Provide the conditions for renewables grow in the power sector 60

5.2 Foster the continued growth of renewable power generation 61

5.3 Plan for the integration of higher shares of renewable power 64

5 5.4 Incentivise the use of renewables for heating and cooling 67

5.5 Support renewable options for transport and mobility 68

5.6 Catalyse Renewable Energy investment 69

5.7 Strengthen local renewable energy industries and job creation 71

References 74

7 Renewable Readiness Assessment: Figures

Figure ES1 Overview key recommended action areas 13 Figure 1 TPES, by fuel (2009-2018) 22 Figure 2 Installed capacity in the power sector, by source (2014-2018) 23 Figure 3 Total electricity generated, by fuel 24 Figure 4 Electricity consumption, by sector (2010-2018) 25 Figure 5 Total electricity consumption, by sector (2018) 26 Figure 6 Final energy consumption, by sector 27 Figure 7 Final energy consumption in industry, by fuel (2018) 28 Figure 8 Total final energy consumption in households, by fuel (2018) 29 Figure 9 Comparison of solar PV bids under three rounds with average cost of power procurement 30 (USD/kWh) by NEPCO Figure 10 Spatial distribution of global solar irradiation in kWh/m2 resource maps for Jordan 32 Figure 11 Spatial distribution of wind irradiation in Jordan 32 Figure 12 Renewable energy capacity, by source (2014-2019) 34 Figure 13 Renewable energy generation, by source (2014-2018) 34 Figure 14 Policy mix to reach substantially higher shares of renewable energy 39 Figure 15 Measures to integrate high shares of variable renewables in the power mix 47 Figure 16 Investment in renewable (2010-2018) 51 Figure 17 Overview of key thematic areas of recommendations 59 Figure 18 Innovative solutions in power system 64

8 The Hashemite Kingdom of Jordan Tables

Table 1 Overview of selected institutions in Jordan’s energy sector 19 Table 2 TPES shares by fuel 22 Table 3 Solar PV and wind project status (as of January 2020) 34 Table 4 Overview of stakeholders and main areas of financing activities 52 Table 5 Insights on financing structure of selected utility-scale projects 53 FIGURES, TABLES AND BOXES FIGURES, TABLES

Boxes

Box 1 Transmission grid development to facilitate renewable energy integration 35 Box 2 Bylaws and instructions for the implementation of the Renewable Energy and Energy 40 Efficiency Law No. 13 of 2012 Box 3 Facilitating development of distributed solar on public buildings 43 Box 4 Addressing energy poverty through renewable energy: The case of the Schools Heating 45 Program and refugee camps Box 5 Assessment of pumped water storage 48 Box 6 Revolving fund for solar water heaters: The case of UNDP-GEF and SEED project 50 Box 7 Framework for energy efficiency in Jordan: Key aspects and emerging issues 55 Box 8 Contextualising Jordan’s energy transition within Covid-19 recovery 57

9 Renewable Readiness Assessment: Abbreviations

°C Degree Celsius CBJ Central Bank of Jordan CBO Community based organisation CEGCO Central Electricity Generating Company

CO2 Carbon dioxide CSH Concentrated solar heat CSP DEG German Development Bank DLS Department of Land and Survey EBRD European Bank of Reconstruction and Development EDCO Electricity Distribution Company EESCO Energy efficiency service company EMRC Energy and Minerals Regulatory Commission EPC Engineering, procurement and construction ESCO Energy service company EU European Union FMO Netherlands Development Finance Company GAM Greater Municipality GDP Gross domestic product GEF Global Environmental Finance GIS Grid impact study GWh Gigawatt-hour IDECO District Distribution Company IFC International Finance Corporation IPP Independent power producer IRENA International Renewable Energy Agency JCI Jordan Chamber of Industry JEDCO Jordan Enterprise Development Corporation JEPCO Jordan Electric Power Company JGBG Jordan Green Building Guide JICA Japan International Cooperation Agency JISM Jordanian Institution for Standards and Metrology JNBC Jordan National Building Council

10 The Hashemite Kingdom of Jordan

JOD Jordanian dinar JREEEF Jordan Renewable Energy and Energy Efficiency Fund K-Exim Export-Import Bank of Korea km Kilometre ktoe Kilotonne of oil equivalent ABBREVIATIONS kW kilowatt kWh Kilowatt-hour kWp Kilowatt- peak LED Light-emitting diode LNG Liquefied natural gas m2 Square metre MEMR Ministry of Energy and Mineral Resources MENA Middle East and North Africa m/s metre per second MSW Municipal solid waste mtoe Million tonnes of oil equivalent NDC Nationally determined contribution NEEAP National Energy Efficiency Action Plan NEPCO National Electric Power Company NREAP National Renewable Energy Action Plan O&M Operation and maintenance PPA Power purchase agreement Proparco Promotion and Participation for Economic Cooperation PV Photovoltaic REES Renewable Energy Establishments Society RRA Renewables Readiness Assessment RSS Royal Scientific Society SCADA Supervisory control and data acquisition SEED Sustainable Energy and Economic Development SEPCO Samra Electricity Power Company SHAMCI Solar Heating Arab Mark and Certification Initiative SME Small and medium-sized enterprise TPES Total primary energy supply TWh Terawatt-hour UNDP United Nations Development Programme USD US dollar

11 Renewable Readiness Assessment: Executive summary

Rapid population growth is bringing the economy Renewable energy in Jordan: under immense pressure in the Hashemite Kingdom of Drivers and status Jordan. New engines of economic development must be found, along with long-term spill-over benefits for Jordan’s most abundantly available renewable energy the current population of 10.6 million as well as future resources are solar and wind, with smaller potentials generations. While Jordan’s economic challenges are for bioenergy, hydropower and geothermal. further compounded by the COVID-19 health crisis, the country is resolved to advance the use of domestic The Renewable Energy and Energy Efficiency Law No. energy resources. 13 of 2012 and its amendments form the backbone of Jordan’s policy landscape for renewable energy and Indeed, energy is central to the growth of the Jordanian energy efficiency. Bylaw (79) year 2019 for Climate economy, which relies on imports to meet energy Change set requirements for stakeholders to report needs. This reliance strains the economy and poses greenhouse gas emissions. energy supply security risks. These vulnerabilities drove the development of the Master Energy Strategy Jordan’s nationally determined contribution (NDC) 2007 2020, which called for greater utilisation of commits to a 14% reduction in greenhouse gas domestic resources, including renewable energy. emissions by 2030. The NDC’s actions include developing and utilising renewable energy sources The share of electricity from renewables in Jordan while encouraging investments in renewable energy. grew from 0.7% in 2014 to over 13% in 2019, making Jordan a regional front-runner in renewable energy. Purely from a cost perspective, substantial reductions The country has established the necessary policies in the cost of renewable energy technologies over and regulations to support renewables, including solar the past decade offer a compelling case for the photovoltaic (PV) and onshore wind development. government to pursue a greater role for renewables in the future energy mix. In Jordan, the results of the The updated Master Strategy for the Energy Sector latest (third) round of direct proposal submissions in 2020-2030, developed by the Ministry of Energy and 2018 yielded bids as low as USD 0.03 (US dollars)/ Mineral Resources (MEMR), calls for a sustainable kWh (kilowatt-hour). In comparison, the average cost future energy supply, diversification of the national of electricity purchased by National Electric Power energy mix, increased dependency on the share Company (NEPCO) in 2018 was (USD 0.114/kWh). of domestic energy resources, enhanced energy security, and reduced energy dependence and cost Jordan’s record shows that decarbonisation of the of electricity supply. The strategy targets a 31% share energy mix can be achieved while securing a reliable for renewables in total power generation capacity and energy supply. In 2018, electricity generated from 14% of the total energy mix by 2030. solar PV and wind avoided nearly 1.5 million tonnes of carbon emissions. Renewable energy use for heating/ The Renewables Readiness Assessment report cooling applications has been limited – and based prepared by, prepared by the International Renewable mostly on solar water heaters – the launch of the Energy Agency (IRENA) in close co-operation Jordan Renewable Energy and Energy Efficiency Fund with MEMR highlights existing challenges and key (JREEEF) has catalysed the market for these heaters. opportunities as the country aims for greater energy security, supply diversity and sustainability. Recovery In addition, the government supports the adoption of plans amid the COVID-19 crisis could also align closely electric vehicles, even while expansion of the charging with clean energy and other sustainability goals. infrastructure is needed.

12 Figure ES1. sector. since January2019 hasintroduced uncertainty to the suspension ofnew projects over 1 of thecountry’s energy sector. However, theindefinite Sector provides along-term visionfor theevolution energy mix.The Master Strategy for theEnergy Clarify thetrajectory for renewables inJordan’s grow inthepower sector 1: Provide theconditionsfor renewables to energy security andreducing thecost ofsupply. higher share ofJordan’s energy mixwhileimproving The outcome is for renewables to comprise a much creation are alsoaddressed, asillustrated inFigure ES1. investments andlocalindustry development andjob cooling for buildingsandindustry. Renewable energy applications spanningpower, transport, andheating/ potential ofrenewables inseven key areas, with realise thefulleconomic, socialandenvironmental The report gives key recommendations for Jordan to end-uses willalsobecrucial. is needed.Demandcreation andelectrification of integration and enabling conditions at the sector level growth, abroader policy mixfocusing ondeployment, crisis. To supportthenext phaseofrenewables strengthening Jordan’s recovery from theCOVID-19 supply, advancing environmental preservation and improving energy security, reducing thecost ofenergy Renewable energy solutionswillbeinstrumental in Advancing renewable energy inJordan Overview key recommended actionareas Foster megawatt (MW) Catalyse Plan Provide 13 and limitgovernment subsidy costs. The electricity social impact, reduce consumer energy expenditure Such programmes shouldbescaledupto increase consumers currently undernational welfare schemes. deploy rooftop solarPV systems for smallresidential Government programmes have alsobeenlaunchedto processes. playing field for private participation infuture tender and completion ofland acquisition –canlevel the (e.g., bird migration studies inthecaseofwind) specific environmental andsocialimpact assessments interconnection infrastructure, conduct ofsector- developing sites – including the development of grid Standardising landacquisition processes by pre- to establish afixed milestone-based timeframe. commissioning can be several years. Steps are needed needed between expressing interest andproject and small-projects are affected differently, thetime that addto risksandtransaction costs. While utility- Shorten approval processes and project timelines power generation 2: Foster continued growth ofrenewable can helpto achieve this. ministries, distribution companies andmunicipalities energy poverty alleviated. Partnerships among ministries, cross-sector applications improved, and electrification ofend-usesshouldbepursued between policies for electricity demandstimulation through the mix andlow energy costs, integrated plansand To achieve high shares of renewables in the energy Strengthen Incentivise Support The Hashemite KingdomofJordan

EXECUTIVE SUMMARY Renewable Readiness Assessment:

tariff design and charges (e.g., wheeling rates) for Improve load management through demand-side renewable energy projects should accurately reflect solutions. The increasing share of variable renewable the true cost of the services delivered by the network. power in Jordan’s electricity mix will require active measures to match demand and supply in a manner Strengthen linkages to energy efficiency. Despite that reduces overall system costs and incremental numerous bylaws enacted to advance energy efficiency integration infrastructure investment. A renewable measures – as well as the JREEEF and the Jordan energy peak-load strategy must be developed and Chamber of Industry’s targeted financing programmes implemented to address peak demand in buildings for energy audits – renewable energy penetration has and industry through solar PV and storage, when been limited. Therefore, the industrial sector’s capacity this is competitive with expensive peaking plants. In could be developed to implement energy efficiency parallel, the feasibility of time-of-use tariffs must be (and renewable energy) measures and institute assessed to facilitate demand shifting towards low- industry-specific benchmarks and best practices. load periods.

In power generation, for instance, combined heat 4: Incentivise the use of renewables for and power applications can dramatically improve heating and cooling efficiencies and can offer cost-effective energy alternatives, especially in industries where both Support greater adoption of renewable solutions in electric and thermal energy are consumed. Pilot buildings and industry. applications projects already exist, such as in Wadi Shalala in Irbid; remain the most mature forms of renewable usage therefore, dedicated regulations are needed to scale in heating/cooling, but deficiencies in targets for up the adoption of such solutions. deployment, enforcement of mandates and codes, and a long-term financial incentive programme addressing 3: Plan for the integration of higher shares of end users’ present challenges. The development renewable power of a clear, long-term solar water heater penetration strategy for the residential, commercial and industry Strengthen national transmission and distribution sectors is recommended, as is annual reporting of the infrastructure. The lack of capacity to handle higher data collected from the sales of such systems. shares of renewables in the transmission and distribution infrastructure is a key hurdle for further 5: Support renewable options for transport growth. Tools – such as the IRENA FlexTool – are and mobility available to analyse a power system’s flexibility needs, determine least-cost solutions and integrate them Start to diversify energy use in the transport sector.The into the strategy. Liaising with other ministries related transport sector – Jordan’s largest energy consumer to industry, agriculture, transport and water is crucial – relies mainly on diesel and gasoline. Government for identifying regions with existing and upcoming efforts to decrease energy use in the sector rely on power demand potential. incentivising high-efficiency vehicles. However, the development of charging infrastructure has lagged. In the short-term, Jordan should identify priorities An improved business case for the private sector’s for the distribution network, mobilise investments to participation in charging infrastructure development strengthen infrastructure and unlock network capacity is needed urgently. Time-of-use pricing should also be to integrate renewables and other loads, such as those enacted to avoid additional burden on the grid. from electric vehicle charging stations. 6: Catalyse renewable energy investment Introduce a storage code for grid management at the transmission and distribution level. Storage brings Build the capacity of local financing institutions and substantial value for grid management, whether as a project developers. Local financial institutions have stand-alone asset or when integrated with a renewable low involvement with utility-scale renewable energy power supply. Therefore, the formulation of a dedicated financing. On lending and risk mitigation facilities storage code provides regulatory guidance for the by international financing institutions can increase development of battery storage infrastructure at the local banks’ experience and mobilise larger shares of generation, transmission, distribution and end user domestic capital for renewable energy development. levels, as well as instructions to connect to the grid. Moreover, developing the capacity of green lending These actions must be taken at the ministerial level units in local commercial banks will improve the in consultation with the system operator, distribution implementation of programmes from JREEEF and companies and other stakeholders. the Central Bank of Jordan, as well as widen access to

14 technologies, new opportunitiesfor value creation Beyond the manufacturing of renewable energy development. policies, skills development, and research and focus ondeployment alone. These includeindustrial requires a broad mix of policies beyond those that of arenewable energy-based energy transition renewable energy jobcreation. Achieving thebenefits Leverage capacity from othersectors andmaximise in renewables 7: Strengthen andcreate localindustries jobs of Banks. be undertaken incollaboration withtheAssociation additional international financing. These actions can 15 to becloselyassessed. effectiveness, andinfluence on cost andquality need a localcontent regulation isinplace, itsdefinition, market growth potential of local enterprises. While of new projects over 1MW–negatively impact the Finally, abrupt policy changes – such as the suspension workforce. industry inamannerthat ensures agender-equal by partneringwithtraining institutes, universities and needs ofarapidly growing renewable energy sector The sector must buildadequate skillsto meet the metering andhydrogen infrastructure. solutions suchasindustrial automation, smart engineering and financial services to innovative range from operation andmaintenance, design, The Hashemite KingdomofJordan

EXECUTIVE SUMMARY Renewable Readiness Assessment: Introduction

The Hashemite Kingdom of Jordan is located in the heart of the Arab world with a population of over 10.6 million people (Jordan Department of Statistics, 2020a). The country is divided into 12 governorates and shares borders with the Kingdom of Saudi Arabia, the State of Palestine the Republic of and the Syrian Arab Republic. Over the past decade, the Jordanian economy has weathered several challenges, such as the financial crisis of 2009, instability due to regional conflicts, an energy crisis following the natural gas supply disruption in 2011, closure of trade routes and an influx of over 1.4 million refugees (Economic Policy Council, 2017; Chan and Kantner, 2019).

Economic growth in the kingdom slowed from an average of 6.5% between 2000 and 2009 to 2.5% from 2010 to 2016, reaching under 2% in the third quarter of 2019 (Jordan Department of Statistics, 2020b). Unemployment has been rising. In the first quarter of 2020, the unemployment rate stood at 19.3% compared to 12.5% in 2010 (Jordan Department of Statistics, 2020c). The country’s social services system and its economy are under heavy stress from sudden population growth, and the Covid-19 health crisis has further compounded the Kingdom’s economic challenges. To meet these challenges, the country needs to identify new engines of growth, generate employment and create prosperity for all.

The services sector has consistently accounted for a majority of the gross domestic product (GDP), exceeding a 60% share for most of the last six decades. The manufacturing sector contributes about 20% of GDP (Jordan Department of Statistics, 2020b). Jordan’s Economic Growth Plan 2018-22 strongly emphasises developing key infrastructure and economic sectors, such as water, energy, transport, industry, tourism, agriculture, and micro, small and medium-sized enterprises, as well as social development aspects related to education, labour rate participation and health care (Economic Policy Council, 2017). Sectors such as agriculture, pharmaceuticals and tourism are also seen as central for rapid recovery from the Covid-19 economic crisis (Royal Hashemite Court, 2020).

As Jordan reinvigorates economic growth and long-term development, energy will play a crucial enabling role. A secure, stable, affordable, environmentally sustainable and inclusive energy system underpins the social and economic development objectives. The lack of domestic fossil fuel resources has resulted in Jordan relying exclusively on imports for meeting its energy needs, which places substantial strains on the economy and poses risks for the security of supply in terms of affordability, reliability and accessibility. In 2018, Jordan imported 92% of its primary energy needs, with the cost accounting for about 10% of its GDP (2019a).

The disruption in the supply of natural gas in 2011 – a mainstay of Jordan’s energy mix – resulted in the use of expensive alternatives, such as heavy fuel oil and diesel, for several years and led to substantial financial losses for the state-owned off-taker NEPCO, severely burdening the economy. This illustrates the vulnerability of the Jordanian economy to disruptions in fossil fuel supplies and has strengthened the resolve to advance domestic energy resources at a brisk pace.

16 and in co-operation with the Ministry of Energy and Renewable Energy Agency (IRENA) on request from This assessment, conducted by the International further raise renewables’ share inJordan’s energy mix. renewable energy andidentifies theactions needed to a comprehensive evaluation oftheconditions for Readiness Assessment (RRA) for Jordan provides side, suchasstorage and smartgrids.This Renewables technologies at boththesupply-side anddemand- use sectors, andleverage energy management and transport, pursue deepelectrification ofend- grid integration, increase usefor heating/cooling be neededby different stakeholders to support To supportfuture renewables growth, actions will advance environmental preservation objectives. increase thecompetitiveness oflocalindustries and energy costs for consumers, enhance energy security, renewables use in the energy sector to reduce opportunity to furtheraccelerate thescale-upof investment in the region. Jordan now has a unique Jordan afrontrunner inattracting renewable energy 2019). This growth hasbeenimpressive, making electricity from renewable energy by 2021 (Marar, Jordan willhave successfully integrated 20%of under thecurrent trajectory ofrenewables growth, competitive withconventional energy options.Even solar photovoltaic (PV) andwind,substantially more technology costs have made renewables, in particular 2019 over ashortspanoftime. Rapidreductions in generated from renewables reached over 13%in policy andregulatory action, theshare ofelectricity the energy diversificationBacked agenda. by strong 2030 positionsrenewable energy asacentral pillarof The Master Strategy for theEnergy Sector 2020- economic relief, reduce carbon dioxide (CO to theadvancement ofclean energy andothersustainability crisis, recovery planscanbemosteffective iflinked closely goals. Investments inrenewables, energy storage andgrid modernisation, alongwithbuildingefficiency retrofits, can strengthen socio-economicresilience, provide immediate the foundations for adecarbonised, climate-safe society. Amid thecoronavirus (COVID-19) healthandeconomic Renewables andCOVID-19 management crisis 17 in January2020. from the RRA were validated in a workshop organised IRENA andtheMEMRinOctober 2019. The findings by anexpert consultation workshop co-organised by to-face interviews with around 40 experts, followed organised. These includedanin-depthsurvey andface- entities. Extensive stakeholder consultations were MEMR andotherrelevant publicandprivate sector The RRA benefitted from the valuable guidance ofthe consultations. validated through several rounds ofmulti-stakeholder (Chapter 5).The recommendations have been development andmaximisesocio-economic benefits the government to support accelerated renewables term recommendations andpriority action areas for report concludes withaset ofshort- andmedium- policy andregulations, aswell asinvestments. The emerging issues andchallengesinrenewable energy transport sectors. Chapter 4delves deeperinto the on applications inthepower, heating/cooling and trends inrenewable energy adoption,focusing energy diversification (Chapter 2).Chapter 3discusses challenges in the energy sector and the drivers for Jordan process. Ithighlights thekey trends and This report presents theoutcomes from theRRA Strategy 2020-2030, released inJune2020. the background ofthegovernment’s National Energy solutions to existing barriers. Itcomes intandemwith to renewable energy deployment andto devise multi-stakeholder dialogue to identify challenges led, consultative process. Itprovides aplatform for Mineral Resources (MEMR),benefitted from a country- 2 ) emissionsandlay The Hashemite KingdomofJordan

INTRODUCTION Renewable Readiness Assessment: Energy sector landscape

Energy represents a central pillar of Jordan’s economy, both as a key input for growth and development as well as a major cost. Between 2014 and 2018, final energy consumption grew by 22% and electricity use by 14% (MEMR, 2019b). Devoid of domestic fossil fuel reserves, energy demand has largely been met through reliance on imports. About 92% of Jordan’s energy supply in 2018 was imported (MEMR, 2019b). This comes at a substantial cost to the economy – 10% of GDP in 2018 – as well as concerns over long-term energy security to support sustainable economic growth and development. This chapter analyses Jordan’s energy sector, providing insights on the institutional landscape and trends in primary energy supply, the power sector and final energy consumption. It aims to provide insights on fuel supply and consumption across different sectors of the economy, and highlights key risks and opportunities for the long-term security of energy supply. It concludes with an analysis of the key drivers of the government’s energy diversification objective and renewable energy’s role in this drive.

2.1 Energy sector institutions and responsibilities

The institutional landscape of Jordan’s energy sector involves multiple stakeholders across the power, petroleum, gas and minerals sectors. Table 1 provides an overview of the key institutions in the energy sector and their responsibilities. At the top of the institutional hierarchy lies the Ministry of Energy and Mineral Resources (MEMR), which provides the strategic vision for the development of the energy sector in terms of planning, policy formulation and implementation. It takes on the responsibility for developing the Jordan National Energy Strategy and the subsequent laws, bylaws and instructions for implementation. It is entrusted with ensuring the development of various energy resources and providing the conditions for attracting investments in , oil production and refining, and utilisation of domestic resources, including renewable energy and . The MEMR is also responsible for energy efficiency in Jordan and the management of the Jordan Renewable Energy and Energy Efficiency Fund (JREEEF).

Several other ministries play crucial roles in the effective implementation of strategies and policies introduced by the MEMR. The Ministry of Environment, Ministry of Public Works and Housing, Ministry of Transport, and Ministry of Industry and Trade and Supply, as well as local municipalities, are all significant partners in the institutional framework of Jordan’s energy sector.

The regulatory function is fulfilled by theEnergy and Minerals Regulatory Commission (EMRC), which is a legal entity with financial and administrative independence established under Law No. (8) for the year 2017, Law of Energy and Minerals Regulatory Commission. As a result of the government institution restructure plan in 2014, the EMRC is a legal successor of the erstwhile Electricity Regulatory Commission, the Jordan Nuclear Regulatory Commission and the Natural Resources Authority. It serves as the regulatory and monitoring body for the electricity, nuclear safety and security, and mining sectors, and therefore ensures

18 Table 1. and oilproducts for electricity generation, aswell importer ofliquefiednatural gas(LNG),pipeline service different partsofJordan. NEPCO isthesingle in industry andthree distribution companies that generation companies andsellsto bulkconsumers or-pay” clauses, NEPCO procures power from the Under power purchase agreements (PPAs) with“take- of electricity. Italsomanagesthetransmission system. state-owned company, isasingle-buyer, single-seller The scale solarPV connected to thedistribution network. generation includelarge industries, imports and small- power producers (IPPs). Othersources ofelectricity (SEPCO), and renewable and other independent state-owned as companies withpublicandprivate sector holding,such participation. The generation segment comprises unbundled with amixofpublicandprivate sector In the power sector, the generation segment is within thesesectors. instructions anddirectives specific to the regulation the application andenforcement oflaws, by-laws, policy making Planning and Planning, policy makingand regulation Segment Central Electricity Generating Company National Electric Power Company (NEPCO), a Overview ofselected institutionsinJordan’s energy sector Samra Electricity Power Company Municipalities Co-operation and International Ministry ofPlanning Works andHousing Ministry ofPublic Environment Ministry of Resources (MEMR) and Mineral Ministry ofEnergy Institution according to theinstructions issued on1April2013. including installation ofsolar water heaters innew construction Control buildingzoning andsolarPV projects installed onbuildings, efficiency tothe Zaatari andAzraq campsandother vulnerable areas. 2022, whichincludesthepromotion ofrenewable energy andenergy Facilitator for theimplementation oftheJordan Response Plan2020- relevant ministries andgovernment institutions. donors andinternational financialinstitutions, andliaisingbetween Responsible for formulation ofpoliciesto enhance relationships with Guide, 23codes related to energy have beenissued. issues theBuildingCodes. Inadditionto theJordan Green Building Responsible for theJordan National BuildingCouncil (JNBC), which contributions (NDCs). mitigation andadaptation efforts, includingnationally determined energy andotherenergy projects, aswell asfor climate change Responsible for theEnvironment Impact Assessment for renewable resources. and policy formulation for thedevelopment ofenergy andmineral Responsible for strategic visionofcountry interms ofplanning Mandate (CEGCO) , 19 financing institutions. industry associations, non-profits andinternational also key stakeholders intheenergy sector, including of Jordan. Several non-governmental entities are collect Egyptian natural gasfrom to thenorth Co. Ltd. builds,operates andowns thepipelineto Egyptian Fajr for Natural Transmission Gas &Supply the operation ofrefineries inJordan. The Jordanian are responsible for oilandnatural gasexploration and Beyond thepower sector, publiclyowned companies for thelargest share. procured from NEPCO in2018, withJEPCO accounting Together they accounted for 90%ofallelectricity and southern parts of the country, respectively. companies licensed to service thecentral, northern Company (EDCO) –are allpublicshareholding Company (IDECO) andElectricity Distribution Power Company (JEPCO) , The three distribution companies –Jordan Electric of thetransmission network inJordan. the construction, operation andmaintenance (O&M) neighbouring countries. NEPCO isalsoresponsible for as managerofthecross-border electricity gridwith The Hashemite KingdomofJordan Irbid District Distribution

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

Segment Institution Mandate

Planning, policy making and regulation

Energy and National entity mandated to develop laws, legislation and executive Minerals Regulatory decisions governing energy, electricity tariffs for consumers, sale price Regulation Commission of electricity between NEPCO and distribution companies and minerals (EMRC) sectors, including those of relevance to renewable energy.

Electricity sector

National Electric Upstream fuel Single importer of LNG, pipeline gas, and oil products for electricity Power Company supply generation, for its own gas-fired generation and IPPs. (NEPCO) Central Electricity Majority private holding generator. Contributed 9% of total electricity Generating generated in 2018. Company (CEGCO) Samra Electricity Power Company State-owned generator. Contributed 37% of total electricity in 2018. (SEPCO) IPPs (Amman East, Qatrana Power Company, Amman Asia, AES Levant, Private generators. Contributed 39% of total electricity in 2018. Attarat Power Generation Company – under construction) Renewable energy Solar PV, wind, hydro and biogas generators accounting for 13% of power producers total generation in 2019. Large industries generating power accounting for 4% of total Industrial sector generation in 2018. Imported electricity through interconnection with , accounting Electricity imports for about 1% of generation in 2018. On-site renewable Accounted for 590 gigawatt-hours (GWh) in 2018, representing about energy generation 3% of electricity consumption. by consumers Transmission System operator, transmission provider and market operator. Single network state-owned transmission system operator and the only authorised NEPCO System energy off-taker at the wholesale level. Responsible for management operator of interconnections. Jordan Electric A 20-year licensed public shareholding company that distributes Power Company electricity in central Jordan. Accounted for 55% of total electricity (JEPCO) consumption in 2018. Irbid District A 25-year licensed public shareholding company that distributes Distribution Distribution electricity in northern Jordan. Accounted for 17% of electricity and retail Company (IDECO) consumption in 2018. Electricity A 25-year licensed public shareholding company that distributes Distribution electricity in southern Jordan. Accounted for 18% of electricity Company (EDCO) consumption in 2018.

20 and Survey, Chamber ofCommerce, andRoyal Society for theConservation ofNature Standards andMetrology, Geographic Center, Industrial Zones Authority, Ministry ofMunicipalities,Ministry ofTransport, Aqaba Special Economic Zone, Department ofLand Contractors Association, Department of Antiquities, Civil Aviation Authority, Council of Ministers, Higher Council for Science and Technology, Customs Department, Jordan Institute for Note: This isnotanexhaustive list ofinstitutions intheenergy sector. Several others are involved invarious capacities,includingtheJordan Engineers Association, Jordan Construction 1 Financing Electricity sector Segment (NGO) organization governmental or non- organisation International Non-profit association Industry Non-governmental entities and supply transmission Natural gas Refining extraction Oil andgas Oil, petroleum, gas,andmineral ore institutions A numberofinternational finance institutions, commercial banksandmicro-finance institutions are also present inthesector todeliver financing forenergy projects at different scales. 1 Institution Refugees Commissioner for United Nations High Energy society Jordan Renewable Society (RSS) Royal Scientific Industry (JCI) Jordan Chamberof Society (REES) Establishments Renewable Energy EDAMA Noble Energy Supply Co. Ltd. TransmissionGas & Fajr for Natural Jordanian Egyptian Refinery Company Jordan Petroleum Company National Petroleum Jordan Central of Bank (JREEEF) Efficiency Fund Energy andEnergy Jordan Renewable Mandate provides 80 supply infrastructure. For instance, a12.9 Management ofrefugee campsand development ofassociated energy in renewable energy technologies. expertise. Alsopromotes nationally recognised education andtraining tasked to create awareness andfacilitate technology transfer and A globalplatform ofresearchers, entrepreneurs, anddecisionmakers communications technology services. well asstandards, consultations, training, andinformation and RSS provides expert testing services for technology quality as Jordan. Itisleadinga100 of industries andsmallmedium-sized enterprises (SMEs) in JCI was established in2005to supportthegrowth anddevelopment market improvements. Environment. Itprovides aplatform for companies, advocacy and REES was established in2014 underthepurview oftheMinistry of the green energy andwater sector. EDAMA isabusiness association comprising private sector entities in NEPCO undera15year agreement. Provides supplyofpipelinenatural gasfrom theLeviathan Fieldto Gas plants andindustries. in Aqaba through thepipelineandtransfers andsellsthegasto power pipeline from Aqaba to northernJordan. Collects Egyptian natural gas A limited liability company whichbuilds,operates andowns thegas products, includingasphalt,fuels,lubeoilandspecialproducts. Operates theonlyoperational refinery inJordan to produce various Iraqi borders, includingtheRishagasfield. responsible for prospecting oilandgasinnortheast Jordan andthe A publiccompany owned by thegovernment intheconcession area JOD 4million(Jordanian dinars). Provides concessional financing for renewable energy up to financing. Provides capacity buildingfor professionals inrenewable energy the central bank. Provides softloanswithsubsidisedinterest rates withthesupportof and energy efficiency solutions. loan guarantees andequity financing, to advance renewable energy Provides aset offinancialproducts, suchas revolving credit, grants, 000 refugees withelectricity. 21 MW solarPV project specifically for industry. The Hashemite KingdomofJordan MW plant at Za’atari Camp

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

2.2 Trends in primary energy supply of high-priced oil products to bridge the energy gap has had far-reaching consequences for the financial Total primary energy supply (TPES) grew at an health of NEPCO, highlighting the case for pursuing average annual pace of 3% between 2010 and 2017, diversification through domestic energy resources reaching 10 million tonnes of oil equivalent (mtoe) (discussed further in Chapter 2, Section 5). in 2017 (Figure 1). In 2018, it fell by 3%, reaching 9.7 mtoe due to stagnating consumption across certain Driven by strong policy action towards the end-use sectors. This is discussed further in Chapter 2, diversification of energy supply, the share of Section 4. Oil accounted for more than half of all energy renewables in TPES has gradually grown from around supply in 2018, followed by natural gas and electricity. 1.8% in 2009 to about 8% in 2018. Since 2013, the coal Crude oil and its derivates are predominantly used supply has also grown – due to rising use in industry in the transportation sector, where fuel demand has – with its share ranging between 2% and 5% of TPES. grown rapidly amid population growth, increasing urbanisation and greater economic activity. Despite a reduction in 2017, the MEMR estimates that primary energy supply will grow from 9.7 mtoe in 2018 The share of natural gas in TPES has varied greatly to 10.3 mtoe in 2020 and 12.4 mtoe in 2030 (MEMR, over the past decade, falling from 40% in 2009 to 2019b). The import dependence of TPES has remained 4% in 2014 and rising to 35% in 2018 (MEMR, 2019). high over the past decade, peaking in 2014 to reach The fluctuation is a result of supply disruptions in 99.9% and 92% in 2018. The Master Strategy of the imported natural gas from Egypt in 2011. The reduction Energy Sector 2020-2030 aims to increase the share in natural gas share in TPES was compensated with of domestic energy resources in primary energy to oil products, such as heavy fuel oil and diesel, for use 48.5%, primarily through the use of renewable energy primarily in the power sector. Resorting to imports and oil shale.

Table 2. TPES shares by fuel

Energy source % share in 2009 % share in 2018 Natural gas 40% 35% Average annual Oil share 58% 55% growth of TPES Coal share - 2% at 3% Renewable energy share 1.6% 2.9

Figure 1. TPES, by fuel (2009-2018)

12

10

8 e o

t 6 m

4

2

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Oil Coal Natural Gas Electricity Solar energy Bioenergy

Source: MEMR (2019b)

22 geopolitical conditions andtheirimpact onfuel during this period owing to changesinthe regional 2018 (Figure 3).The fuelmixhaschanged dramatically 15 terawatt-hours (TWh) in2010 to nearly21 grown steadily over thepast decadefrom about Total generation inJordan’s power sector hasalso 2020a). the peakloadhitahistorical highof3.6 3.2 2018 was 3GW compared to awinter peakloadof and distributed). The summerpeakloadinJordan in capacity additionsofwindandsolarPV (utility-scale share oftotal installed capacity isdriven primarilyby 31% by 2030 (MEMR,2019a). The riseinrenewables’ in 2014 to over 20%in2018. Itisexpected to reach power capacity hasgrown, risingfrom under1% capacity at 16%in2018. The share ofrenewable Diesel accounted for a marked share of total installed for thelargest share ofinstalled capacity at over 50%. (Figure 2).Combined cycle power plants accounted Source: NEPCO (2019a) Figure 2. in Jordan was 5.2 By theendof2018, thetotal installed power capacity 2.3 Available installed capacity (MW) GW. InJanuary2020, dueto extreme cold weather, 4 6 5 3 2 1 Trends inthepower sector 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Installed capacityinthepower sector, by source (2014-2018) 2 GW, growing from 3.9 0 1 S 4 t e a m N a t u r a l

g 2 a 0 s GW (NEPCO, 1 5 GW in2014 C TWh in o m b i n e d 23

c y c l primary fuelanddieseloilasthesecondary fuel. developed by ACWA Power usingnatural gasasthe combined-cycle was commissioned and private sector as IPPs. Recently, the 485 are underdevelopment through partnerships withthe government. New natural gas-basedpower projects infrastructure hasbeenakey priority for the Making investments innew power generation 2020a). 15-year agreement withNobleEnergy (Jordan Times, from theLeviathan Fieldbegantrialsaspartofa Gas by 2018. InJanuary2020, pipelinenatural gassupply gas inelectricity generation was restored to over 80% in Aqaba beginning in mid-2014, the share of natural With importsofLNGthrough theportofAl-Sheikh the share ofnatural gashadfallen to alittle over 7%. oil accounted for over 90%oftheelectricity mix,while As a result, by the end of 2014, diesel and heavy fuel and dieselfuelfor electricity generation. in 2011, Jordan turnedto greater useofheavy fueloil electricity generation inJordan. Following disruptions 2009, natural gasaccounted for nearly80%oftotal supply for domestic electricity generation. Until 2 e 0 1 6 D i e s e l H y d r o 2 0 The Hashemite KingdomofJordan 1 7 Wi n d S o l a r MW new

P 2 V 0 1 8 B i o g a s

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

Figure 3. Total electricity generated, by fuel

25 000

) 20 000 h W G (

d e

t 15 000 a r e n e g

y

t 10 000 i c i r t c e l

E 5 000

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Natural gas Diesel Heavy Fuel Oil Hydro Biogas Solar PV Wind

Based on: NEPCO (2019a, 2018)

The growing reliance of the power sector on a single, largely imported fuel has resulted in concerns for long- burning of oil shale for power generation. It is term energy security and the affordability of supply. estimated that oil shale will meet up to 15% of Jordan’s In recognition of these concerns, the government electricity needs by 2021 (Jordan Times, 2019). has taken important steps towards the diversification of the energy mix, as exemplified in the updated Grid interconnection with neighbouring countries National Energy Strategy 2020-2030. It sets a target and the region broadly is also an important pillar of for increasing the share of renewable energy in the diversification for Jordan. The interconnection with electricity mix to 31% by 2030 (3 200 MW), up from Egypt has a 500 MW capacity and is the strongest 20% by 2020 (2 400 MW) (MEMR, 2019a). in terms of volume of electricity traded in recent years. In 2018, electricity imports amounted to over Backed by strong policy support, renewable energy, 188 GWh, up from 51 GWh a year earlier but down especially solar PV and wind, has grown tremendously substantially from 604 GWh in 2015 (NEPCO, 2019b; over the past few years in the power sector. Total NEPCO, 2018). In promoting Arab and regional electricity generated from renewable sources has electrical interconnection, NEPCO has recently grown multifold, from 125 GWh in 2015 to 2 188 GWh signed memorandums of understanding with the Gulf in 2018, driven in large part by the development of Electrical Interconnection Commission and the Saudi solar and wind projects (discussed in greater detail in National Electricity Transmission Company. Chapter 3). In light of the low growth in electricity consumption The government is also pursuing diversification domestically and a strong pipeline of power projects through other fuels. The National Energy Strategy due to come online over the next two to three years, 2020-2030 includes a share of 2% of total electricity cross-border electricity exports are a key part of the generation coming from coal by 2030, in line with strategy for stimulating demand. In October 2019, the 2% share presently available. Accordingly, work is Jordan signed an agreement with State of Palestine underway for the development of a 30 MW capacity to increase its export capacity of electricity from coal power plant – the first of its kind in Jordan 30 MW to 100 MW (Xinhua, 2019a). Jordan and Iraq (Ghazal, 2016). Additionally, the Kingdom is looking are also working towards integrating electricity grids to exploit its oil shale reserves for power generation. and enabling Jordan to export electricity by the end The Attarat Power Company project comprises two of 2021 (Jordan Embassy, 2019). In 2019, the volume generating units – each with a capacity of about of exported electricity increased by 4.7% to about 235 MW – which are being constructed for direct 98 GWh (NEPCO, 2020b).

24 Source: MEMR(2019a) Figure 4. from 2.3 capita annualconsumption ofelectricity hasfallen From anelectricity consumption perspective, theper a four-year period(2017-2020). electricity consumption to 2 000 GWh per year over Energy Efficiency Action Plan,the target is to reduce generation for captive use. Underthesecond National including energy efficiency andtherise ofdistributed Several factors are potentially behind the slowdown, the growth stagnated, reaching 17.5 annual pace ofabout4%since 2010. However, in2018 Electricity consumption hasgrown at anaverage electricity consumption growth. per capitaconsumption leaves substantial scope for access (discussed furtherinthenext chapter). The low increasingly deployed to provide immediate energy 2019a). Distributed renewable energy solutionsare energy services for electricity andheating (UNHCR, often lackaccess to sufficient, reliableand affordable Energy poverty isalsoseeninrefugee camps,which proportion ofthepopulation lives inenergy poverty. around 0.77 Per capitahouseholdelectricity consumption was a world average of 3.2 a result ofrapid population growth. This compares to Electricity consumption (TWh) 2 1 1 0 0 0 5 5 MWh in2014 to 1.7 Electricity consumption, Electricity by sector (2010-2018) 2 0 MWh in2018, suggesting that alarge 1 8 MWh per capita (IEA, 2017). 2 0 1 7 MWh in2018 primarilyas TWh (Figure 4). 2 0 1 6 D A o g m r i c e u s l t t i u c 2 r

a e 0 n

1 a 5 d 25 n

d g

o w v crucial, asseenincreasingly across theMiddleEast. energy supplywithwater infrastructure willbecome project, desalination), coupling affordable renewable are needed(e.g., -DeadSeawater conveyance water demand grows and energy-intensive solutions agriculture sector (discussed furtherinChapter 3).As solar-powered solutionsfor water pumpinginthe programmes have alsobeenimplemented to deploy power consumption to 10%by 2025. Several other 2025 andraising theshare ofrenewable energy in power consumption for water supplyby 15%by to improve energy efficiency by reducingthespecific pumping, theMinistry ofWater andIrrigation aims of water. To reduce theenergy costs ofwater meet needsfor extraction, transport andtreatment the world, sothesector ishighlyenergy-intensive to Jordan isoneofthemost water-scarce countries in consumer, accounting for 15%oftotal consumption. Water pumpingisalsoasignificant electricity sector consumes about14%ofallelectricity. are cement, phosphate andfertiliser. The commercial account for a considerable share of electricity use total consumption. Amongthemajorindustries that largest consumer, accounting for about a quarter of 2018 (MEMR, 2019a) (Figure 5).Industry isthesecond for nearlyhalf(46%) oftotal electricity consumption in According to data from MEMR,householdsaccounted a e t r e n r m

p e 2 u n 0 m t 1

4 p b i u n i g l d i n g 2 0 S I 1 n 3 t The Hashemite KingdomofJordan d r e u e s t t

r L y i g h t i n 2 C 0 g o 1 1 m m e r c i a l

a 2 n 0 d 1

0 h o t e l s

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

Figure 5. Total electricity consumption, cost-recovery for NEPCO through tariff adjustments and by sector (2018) other measures (Fairbanks, 2019). In December 2017, 2% the EMRC started applying a new tax called Fuel Price Increase. This is an additional expense for all electricity consumers consuming above 300 kilowatt-hours (kWh)/ 15% month. The amount of this tax is based on the fluctuation of international fuel prices. It is announced by the EMRC at the end of each month. 14% 46% During the first few months of 2018, the tariff increase was on average USD 0.034/KWh, but in 2019 it was reduced to USD 0.014/KWh (IMF, 2019). The response of the public to growing energy prices and electricity 22% tariffs led the government to suspend some increases and even lower tariffs in the second half of 2018 and early 2019. Furthermore, high tariffs for large Household Industry Commercial Water pumping Street lighting consumers negatively impacted the competitiveness of local industries, and have incentivised some to Source: MEMR (2019a) invest in renewable power for self-consumption, leading to a loss of high-paying consumers.

The retail tariffs in the power sector are presently Addressing NEPCO’s legacy debt and long-term structured differently for 18 consumer groups, including financial sustainability will be critical for the growth domestic, commercial, agriculture, small and medium of Jordan’s power sector and its macro-economic industries, the telecommunication sector, and hotels. stability. The World Bank Group and the International A stepped-up tariff design is in place with varying Monetary Fund are supporting a Roadmap for tariff levels depending on monthly consumption. For Financial Sustainability of the Electricity Sector that medium-size industries and agriculture, day and night includes a host of measures, including rationalising tariffs are in place, as are peak load charges (JOD the cross-subsidised tariff structure, adopting cost- per peak kW per month). In general, cross-subsidies reflective charges, restructuring debt and addressing from industry and large consumers are used to keep the accumulation of money owed by NEPCO. tariffs for low-income households at affordable levels. Currently, the average tariff is almost at cost-recovery Looking ahead, MEMR has estimated that electricity but still insufficient for debt service of the state-owned demand will grow at an average annual pace of 4% NEPCO. In its 2018 Annual Report, NEPCO reported until 2030 (MEMR, 2019b). The recent stagnation in annual losses of JOD 106 million (~USD 150 million) electricity demand, likely to be further compounded (NEPCO, 2019a). by Covid-19 impacts, points to the importance of several factors that drive demand growth, including NEPCO has accumulated substantial debt (~18% of cost of supply that catalyses industrialisation and national debt) due to high crude oil prices between economic growth. Therefore, reaching electricity 2011 and 2014 and imports of expensive fuel alternatives demand projections and ensuring utilisation of power as a result of disruptions in the supply of natural gas capacity will require several measures, including from Egypt. High consumer subsidies and the “take reducing energy costs to stimulate demand and or pay” structure of contracts with power generators promoting the electrification of different end-uses, have resulted in NEPCO absorbing a large part of the including in industry and transport. To shore up increases in energy supply costs. Even as crude oil prices electricity demand, in October 2019, the government have plummeted in recent years, natural gas supply from introduced preferential tariffs for those industries that Egypt has resumed and new LNG supply options have increase consumption over the previous year as part become available, there is a continued focus on ensuring of the financial incentive package.

26 Source: MEMR(2019b) Figure 6. towards coal to reduce operating costs (USGS, 2019). prompted some producers to shiftaway from fuel oil In thecement sector, thehighcost ofenergy has supplied through fueloil,diesel andcoal (Figure 6). thermal energy demandswhichare predominantly levels. Most oftheindustries inJordan have high products andservices at thelocal,regional andglobal strongly influences the competitiveness of Jordanian reliable energy isacriticalinputfor industry andit the second-largest consumer ofelectricity. Low-cost, Industry isthethird-largest energy userinJordan and Industry reduced by 5%year-on-year (MEMR,2019b). declines. Energy consumption inthehouseholdsector the household,service andtransport sectors allsaw 2% growth in energy consumption in 2018. Meanwhile, use in2018. Compared to 2017, industry registered a provides insights ontheslowdown observed inenergy A closerlookat thefinalenergy consumption by sector the past decade. in industry hasfluctuated withlimited growth over remained constant. Meanwhile, energy consumption sector infinalenergy consumption haslargely and diesel.The share ofhouseholdsandtheservices primarily ofcrudeoilderivatives, includinggasoline The transport sector isthelargest energy consumer, 5 The finalenergy consumption inJordan grew from 2.4

mtoe mtoe in2009to nearly7 0 4 6 8 2 5 3 2 7 1 0 Trends infinalenergy consumption 09 Finalenergy consumption, by sector 2 0 1 0 2 mtoe in2018 (Figure 5). 0 1 1 I n d u 2 0 s t 1 r 2 y T r a 2 n 0 s 1 p 3 o 27 r t at theRashadiya cement plant (LafargeHolcim, 2017). 15.6 Cement, for instance, hascompleted construction ofa to solarPV to meet partoftheirelectricity needs.Lafarge environmental impact, several large industries are turning (NEPCO, 2019a). Inaneffort to reduce electricity costs and accounting for almost 6%ofthecountry’s total consumption industries consumed over 970 and phosphate andpotashminingprocessing. These bulk industrial consumers ofelectricity includecement, and garments sectors (Ali Ayasrah, 2018). The largest construction, food, packaging, furniture, mining,andleather the plastic and rubbersector, andover aquarter for the as ashare ofalloperating costs canbenearlyhalffor Electricity remains akey fuel for industry –electricity costs sector (discussed furtherinChapter 3,Section 3). potential to displace non-domestic fueluseinagrowing while itsuseisstill innascent stages, itoffers tremendous deployed to meet heating/cooling needsinindustry and, (NEPCO, 2019c). Solarthermaltechnologies are alsobeing years, according to criteria set by theMinistry ofIndustry from thespecial tax imposed onnatural gas for three the companies that switch to natural gasare exempted gas for industries hasbeenreduced from 16%to 7%,and on thetype offuelsubstituted. The specialtaxonnatural to reduce energy costs infactories by 25-55%, depending Company/Nuqul Group. The useofnatural gasisestimated Aqaba andtheAlSanawbar Paper Sanitary Manufacturing to theSouthernIndustrial Complex ofJordan Phosphate in Jordanian-Egyptian Fajr Company to provide natural gas natural gas.Recently, NEPCO signedanagreement withthe government hasbeenencouraging industry to switch to on industries and improve their competitiveness, the In aneffort to reduce theburden oftheenergy bill H 2 o MW solarPV project to cover partoftheelectricity needs 0 u 1 s 4 e h o l d 2 0 S 1 e 5 r v i c The Hashemite KingdomofJordan e s 2 0 1 O GWh ofelectricity in2017, 6 t h e r s 2 0 N 1 o 7 n - e n e r g y 2

u 0 s 1 8 e

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

Figure 7. Final energy consumption in Electric mobility is also being piloted for public industry, by fuel (2018) transportation in tourism sites (e.g., archaeological park). Some challenges faced in accelerating electric vehicle adoption include, but are not limited to, raising awareness about the cost effectiveness and benefits of such vehicles and the large-scale development of 35% charging infrastructure (El Issa, 2017). Opportunities for the development of liquid and gaseous biofuels, as TFEC in industry 43% (2018) well as hydrogen, have not been explored at scale yet.

954 ktoe Households

The residential sector in Jordan accounts for 21% of 22% total final energy consumption and 46% of electricity consumption (MEMR, 2019b). Urbanisation, growing population and improvements in living standards are Oil Coal Electricity driving up demand for energy in households. Electricity accounts for the largest share of energy consumed in Note: ktoe = kilotonne of oil equivalent. the sector for lighting and powering appliances such Source: MEMR (2019b) as refrigerators, air conditioners and water heaters (Figure 8). Jordanian households own an estimated 1.4 million refrigerators, 1.6 million TV sets, 1.4 million washing machines and 205 100 freezers. As much as 61% Transport of households surveyed as part of a demand load survey in 2015 owned electric water heaters (USAID, 2015). The transport sector is the largest consumer of energy in Jordan. Gasoline and diesel use account for nearly Solar water heating solutions are used in a growing 90% of all final energy consumption. Rising population number of households for the provision of hot water, numbers and greater movements of passengers, providing around 4% of final energy consumption in goods and services all result in the significant use households. The growth of solar water heaters is a result of these fuels in the sector. Between 2007 and 2018, of large-scale programmes by JREEEF in partnership the number of operating vehicles doubled from with other donors that has led to the deployment of over 842 000 to 1.6 million (Jordan Department of 26 000 installations so far (discussed further in Chapter 3, Statistics, 2019). Over 70% of the vehicles are saloons, Section 3). More than 60% of energy consumed in followed by vans and trucks, which account for 18%. households is used for space heating and cooling. In Private ownership vastly dominates public ownership, high-income areas, central heating using diesel oil and air accounting for 93% of all vehicles. Vehicle ownership conditioners using electricity are common, while in lower- is expected to continue, largely relying on fossil fuels. income areas, small stoves using kerosene or LPG are Reducing Jordan’s reliance on imported fuels will used (Al-Sallami and Al-Hinti, 2017). depend on a substantial shift in energy use patterns in the transport sector. Some efforts are being made Energy poverty among households is a key area of concern. to tap into alternative energy sources in the transport Several programmes are in the process of addressing low- sector, including the promotion of hybrid and electric income households living in energy poverty. For instance, vehicles. programmes for the adoption of solar PV systems have been launched, including for 85 000 households under Electric vehicles were piloted in Jordan in 2014 with national welfare programmes. Public infrastructure, the establishment of the first electric charging station. including schools and clinics, also suffers from poor Since then the number of electric vehicles has grown energy access, which impacts the delivery of services from 9 that year to 18 000 in 2018 and up to 30 000 such as education and healthcare. The Royal Initiative for by the end of 2019 (Khalaileh, 2017). The government Heating in Schools seeks to address this challenge (see introduced several incentives, including waiving of Box 4). Furthermore, a large population of refugees live in import duties on the vehicles and components for non-permanent settlements with limited access to energy charging infrastructure, as well as instructions for for heating and cooling. Various programmes have been installing dedicated electricity meters for electric launched to support solar-based solutions for lighting and vehicles providing electricity at USD 0.19/kWh. water heating in these settlements.

28 (MEMR, 2019a). targets a31%share oftotal installed capacity by 2030 the Master Strategy outlinedabove. The Strategy technologies. Itcontributes to allfour objectives of will bethedevelopment ofrenewable energy A key pillar of the energy diversification strategy ensure competitiveness. secure andenvironmentally sustainable energy to agriculture, willrequire access to low-cost, reliable, including manufacturing, transport, construction and The new enginesofeconomic growth inJordan, recovery from theimpacts oftheCovid 19crisis. (Economic Policy Council, 2017) andensure arapid in theJordan Economic Growth Plan2018-2022 realise Jordan’s development potential” astargeted important to “recapture thegrowth momentum and These mutuallyreinforcing objectives are critically iv. iii. ii. i. 2030 hasset outclearobjectives to bepursued: The 2.5 Source: MEMR(2019b) Figure 8. 4 3 In2019, globalelectricity costs from utility-scale solarPV fell 13%year-on-year, reaching USD0.068 perkWh. Onshore windfell about9%year-on-year, reaching USD0.053/kWh for NEPCO. 2 Jordan implemented thefirst National Energy Efficiency ActionPlan(NEEAP) in 2013and reduced to400 GWh. The second NEEAP (2017-2020) is expected to reduce electricity Lithium-ion battery costs have reduced 85%inthe2010-18 period,according to Bloomberg New Energy Finance (2019a). renewable energy projects, especiallysolarPV (IRENA,2019a). consumption to 2 000 GWh, in addition to decentralised solar PV and 20 000 solar water heater (SWH) in 2018-2019. This has reduced electricity demand by 0.6% in 2018, according to reduce thecost ofelectricity supply. achieve sustainability dependency ondomestic energy resources diversify thenational energy mixandincrease secure asustainable future energy supply Master Strategy for theEnergy Sector 2020- Drivers for energy diversification Oi l households, by fuel(2018) Total finalenergy consumptionin Electricity 47% 11% household (2018) 1 464ktoe TFEC in 4% Solar energy 38% B i o energy 29

1. heating/cooling andtransport: sector, aswell aspenetrating otherend-usesectors e.g., further accelerating renewables adoptioninthepower There isastrong casefor leveraging thismomentum and 2. Economics: Substantial reductions in the cost of combined withdecreasing costs ofstorage, are favourable inthepower sector (Figure 8) and, economics ofrenewable energy, especiallysolarPV, procurement. Purely from acost perspective, the and, therefore, are notreflected inNEPCO’s cost of the third round have notyet beencommissioned to note that therenewable energy projects from conventional sources (NEPCO, 2019a). It is important compared to 0.082 USD 0.114 /kWh). energy 0.081 averaged JOD/kWh 0.076 was The cost ofelectricity purchased from renewable 2018 in average cost ofelectricity purchased by NEPCO as low asUSD/kWh direct proposal submissions in2018 yieldedbids In Jordan, theresults ofthelatest (third) round of heat solutionsfor industry. strong, especiallyfor solarwater heaters andsolar in theheating/cooling andtransport sectors isalso based solutions.The economic casefor renewables viable alternative to bothimported anddomestic fuel- efficiency and renewable energy measures. 94%, inpartdueto theimplementation ofenergy has decreased inthepast few years from 99%to Dependence onimportsfor meeting energy needs accessibility, affordability andlong-term permanence. different elements ofenergy security: availability, and oilshale). Renewable energy solutionsbenefit developing domestic resources suchasrenewables gas from othersources) andenergy fuels(e.g., diversifying energy sources (e.g., importofnatural the government demonstrate theimportance of implications for thefiscalhealthofbothNEPCO and fluctuation vulnerabilities. Disruptionsandtheir economic costs, supplydisruptionrisksandprice comes from imports. This comes withsubstantial Energy security: The majority of Jordan’s energy lowest-cost source ofnew power generation. In most partsoftheworld today, renewables are the greater role for renewables in the future energy mix. offer a compelling case for governmentsa to pursue renewable energy technologies over thepast decade The Hashemite KingdomofJordan JOD/kWh USD 0.026. Incomparison, the JOD/kWh USD 0.12 /kWh) from 0.11/kWh) 2

4 3 offer a offer

ENERGY SECTOR LANDSCAPE Renewable Readiness Assessment:

Figure 9. Comparison of solar PV bids under three rounds with average cost of power procurement (USD/kWh) by NEPCO

0.250 O 0.200 0.193 P C 0.176 E 0.175 PV EOI#1, 0.167 N

y b ) 0.150 0.158 t

n 0.118 W h 0.115 k m e / 0.099 e D r 0.100 0.089 S u PV EOI#2, 0.069 c ( U o r p

f 0.050 PV EOI#3, 0.026 o

t s o

C - 2011 2012 2013 2014 2015 2016 2017 2018 Average power procurement cost for NEPCO (USD/kWh) PV EOI#1 PV EOI#2 PV EOI#3

Note: EOI = Expression of interest Based on: NEPCO (2019a); NEPCO (2018) for cost of procurement

3. Socioeconomic benefits: Diversification of the energy systems, storage vessels, coating, connection boxes mix brings opportunities for job creation and the and cables (IRENA and ESCWA, 2018). To maximise development of new industries. The socio-economic the socio-economic benefits of renewable energy, dimension of renewable energy is critically important different measures are needed, such as visibility for emerging economies looking to maximise the on long-term deployment, targeted incentives for benefits from the transition in terms of job creation domestic manufacturers, enterprise- and human- and local value creation.5 Since 2013, close to 300 capacity development, and partnerships in technology licensed companies have been established in solar PV transfer and research and development. Across the design, procurement, installation and O&M, providing Middle East and North Africa (MENA) region, jobs full-time employment to several thousands of people. in the renewable energy sector have the potential For a 50 MW solar PV plant, for instance, a total of to expand from an estimated 542 000 in 2017 to 229 055 person-days are needed. O&M workers are 1.2 million in 2030 and 2 million in 2050, accounting for needed throughout the project lifetime, and therefore nearly 30% of all energy sector jobs (IRENA, 2020d). represent the bulk of the labour requirements (56% of the total). Equipment manufacturing (22%) and 4. Climate and NDCs: Jordan, in its NDC, committed to installation and grid connection (17%) also require a reduction of its greenhouse gas emissions by 14% significant labour inputs (IRENA, 2017). The jobs up to 2030 (1.5% through its own resources and 12.5% exist across the value chain in Jordan, including conditional on the receipt of international financial in manufacturing. Philadelphia Solar, a company aid and support) (UNFCCC, 2015). Bylaw (79) year involved in solar PV module assembly and mounting 2019 for Climate Change set requirements for the structure manufacturing, employs 250 people full- different stakeholders to report their greenhouse gas time. Across the segments of the value chain for emissions. The development of renewable energy is different renewable energy technologies, such as a central pillar of decarbonising the energy mix while solar PV, onshore wind and solar water heaters, also securing a reliable energy supply. In 2018 alone, varying skills and material inputs are required. electricity generated from solar PV and wind avoided nearly 1.5 million tonnes of carbon emissions.6 Existing industries can be leveraged and integrated Substantial additional benefits of diversification are into renewable energy supply chains to create local also recognised in terms of reduced air pollution in value. In the development of CSP, for instance, at least urban areas from increased adoption of hybrid and 30% (by value) of a project could be manufactured electric vehicles and the use of electricity and cleaner locally, including steel support structures, piping fuels for heating and cooling.

5 IRENA’s Leveraging Local Capacity series quantifies the labour and skills needs, as well as material inputs required, for the development of illustrative renewable energy projects, including solar PV, onshore wind, offshore wind and concentrated solar power (CSP).

6 Based on a grid emissions factor of 690 grams of carbon dioxide (CO2) per kWh and accounting only for emissions during electricity production stage.

30 RESOURCES AND USE RESOURCES AND RENEWABLE ENERGY irradiation of1 with about300sunny days peryear, whichcorresponds to anannualaverage solar Average dailysolarirradiation ranges between 4and7 Solar bioenergy, hydropower andgeothermal. available renewable energy resources are solarandwind,withpotential alsofor viability ofprojects. Owingto itsgeographical position,Jordan’s most abundantly of renewable energy. Itgreatly influences theoperational performance andfinancial The presence of abundant resources isacrucialstarting point for the development 3.1 and challengesthat needto beaddressed to scaleuprenewable energy adoption. enabler for adoptionandintegration –and theinvestment landscapeto identify gaps for anin-depthdiscussion inthenext chapter on policiesandregulations –akey in deployment inthepower, heating/cooling andtransport sectors. Itsets thestage This chapter discusses therenewable energy sector inJordan, analysing thetrends from current levels. – heating/cooling andtransport –willabsolutely needto bescaledupsubstantially on imports and bring down energy costs, renewables in non-power end-use sectors as noted intheprevious chapter. To diversify Jordan’s energy mix,reduce reliance in thepower sector. Electricity alsorepresents only22%offinalenergy consumption right enablingconditions for integrating highershares ofelectricity from renewables greater. The next phaseofrenewables growth inJordan could focus onbuildingthe The potential for renewable energy to contribute to Jordan’s energy mixismuch commitment andaction to diversify theprimaryenergy mix. share in2012. The growth hasbeenmadepossible largely dueto strong government accounted for over 13%oftotal electricity generated in2019, upfrom anear-zero it has deployed renewable energy, especially in the power sector. Renewables Jordan is a front-runner in theregion in terms of the speed and scale with which technical potential of3.6 16% ofthetotal country’s landare suitablefor windpower production, with atotal to astudy carriedoutby theMEMRandRoyal Scientific Society, approximately (m/s)to 8 Average windspeedsare site-specific andgenerally range from 6metre persecond Jordan has significant windenergy resources to exploit for electricity generation. Wind generated from new projects. regional andinternational levels. This isalsoreflected inthelow cost ofelectricity have allowed Jordan to benefitfrom someof the most conducive solarsites at the Renewable energy resources m/s in goodlocations intheKingdom(Marar, 2019) (Figure 11).According 400-2 300 kWh/m GW (AlRahahleh, 2018). 31 2 (Figure 10).The favourable climate conditions The Hashemite KingdomofJordan kWh/square metre (m 2 ),

RENEWABLE ENERGY RESOURCES AND USE Renewable Readiness Assessment:

Figure 10. Spatial distribution of global solar irradiation in kWh/m2 resource maps for Jordan

Legend Jordan_ghi_annual (kWh/m2) 2038 2074 2111 2147 2183 2219 2256 2289 2317

Based on: IRENA Global Atlas, Solar PV Map Data: World Bank Group, 2018, Global Horizontal Irradiation kWh/m2 World 1 km

Figure 11. Spatial distribution of wind irradiation in Jordan

Legend Wind speeds at 100m height in m/s 2038 2074 2111 2147 2183

Based on: IRENA Global Atlas, Wind Map Data: Technical University of Denmark Global Wind Atlas, Average Wind Speed 1 km at 100 m height

32 elevation difference between the Red Seaandthe available headofreturning cooling seawater. The turbines with6 Power Station hasbeenequipped withhydropower plant –with7 to theKingTalal Dam–thecountry’s only hydropower Jordan’s hydropower resources are currently limited Hydropower and resorts inthevicinity. temperatures range from 53-63°C, with many hotels the eastern margin oftheDeadSeaRift,where a locallyavailable energy resource for heating along the border withSyria and Iraq. The former represents of theeast DeadSeaescarpment andanothernear Celsius perkilometre) –oneintheimmediate vicinity regions withhighgradients upto 50°C/km(degrees geothermal gradient map of Jordan shows two distinct thermal wells inthecentral andeastern plateau. The and wells) spread along the Rift Valley, in addition to Jordan has several thermal water resources (springs Geothermal (Mercy Corps, 2017). supply in theseregions is around 19 000 MT annually as fuelorfeed. Estimates suggest that thetotal jift available inIrbidandAl-. Itcanbeusedeither – awaste product from olive oilharvesting –isalso Amman, Al-Mafraq andIrbid(Barilaro, 2019). Jift concentrated infour northerngovernorates: AlZarqa, production, mainlyfrom cattle, poultryandsheep, is cooking purposes.More than80%oftotal manure municipal waste –onasmallerscalefor heating/ albeit with a lower resource potential compared to Animal waste alsohaspotential for utilisation – waste for thetransport sector alsoexists. 7 capacity isexpected to reach 6 in Amman.With theexpansion ofthelandfill, in theGhabawi landfill,the mainsolid waste landfill biogas project by usingthemethane gascaptured Greater AmmanMunicipality plansto implement a of 3.5 resource. A pilot plant using MSW with a capacity increasing population andrepresents animportant municipal waste israpidly growing asaresult ofthe form ofmunicipalsolidwaste (MSW). The amount of Bioenergy resources inJordan exist primarilyinthe Bioenergy 8 7 MW in 2022. The opportunity to utilise biogas from Based onMEMRpresentationBased (January 2020). andSwarieh onSaudi Based (2015). MW hasbeenoperational since 2000. The 7 MW ofinstalled power capacity. Aqaba MW oftotal capacity usingthe MW in2020 and 33 schemes (MEMR,2020). connected underthenet metering andwheeling to thetransmission system, whileabout573 wind capacity installed, about985 and windcapacity hit373 solar PV installed capacity hadrisento about1.2 capacity upto nearly700 plant – were commissioned, taking the total solar PV round projects –alongwiththe103 capacity were commissioned. In 2018, the second- first round ofdirect offers comprising 200 2016. Inthesameyear, solarPV projects from the followed by the80 In 2015, the117 additions ofonshore windandsolarPV technologies. rapid growth hasprimarily beendriven by capacity quarter oftotal installed power capacity inJordan. This 2020 (Figure 10).Renewables now account for over a about 500MWin2016 andto over 1.5 hydropower. Total renewables capacity hadgrown to stood at about14 capacity ofrenewables inthecountry’s power sector Efficiency Law (13). Until 2014, the totalinstalled introduction oftheRenewable Energy andEnergy for electricity generation camein2012 withthe A strong impetus for theadoptionofrenewables 1.125 since 1998,withthefirst windenergy farm of Renewable energy inthepower sector has existed 3.2 projects (see Box 5). a view to establishing pumped storage hydro power tests onJordan’s existing damsandreservoirs with flexibility, MEMRhas recently conducted feasibility Canal project. Meanwhile, to improve power system exploited viatheproposed Red SeaDead of anestimated of400-800 Dead Seaalsoprovides apotential hydro resource (Figure 11). wind (32%), hydropower (3%)andbiogas(0.3%) generated from renewables, followed by onshore PV represented well over half (65%) of all electricity 2018, accounting for about11%ofallgeneration. Solar generated from renewables reached 2 has grown, sohasgeneration. Total electricity As thecapacity ofrenewables inthepower sector MW operational at Hofa innorthernJordan. Renewables inthepower sector MW Tafila windproject cameonline, MW, comprising predominantly The Hashemite KingdomofJordan MW Ma’an windproject in 8 MW. Ofthetotal solarand MW. By theendof2019, MW, whichcould be MW are connected MW Quweira GW by early 187 GWh in MW are MW of GW

RENEWABLE ENERGY RESOURCES AND USE Renewable Readiness Assessment:

Figure 12. Renewable energy capacity, by source (2014-2019)

1 800 1 600 1 400

) 1 200 W M ( 1 000 1 185 y t i c 800 a p

a 699

C 600 400 396 286 200 280 373 118 198 198 0 2014 2015 2016 2017 2018 2019* Hydropower Onshore wind Solar photovoltaic Biogas

* Reported as of January 2020. Note: Hydropower and biogas generation capacity remained the same throughout the reporting period at 12 MW and 3.5 MW, respectively. Source: NEPCO (2019a); MEMR(2019b)

Figure 13. Renewable energy generation, by source (2014-2018)

2 500 12% ) % (

) n h 10% o i

2 000 t W a G r (

e n 8% n e o i g t

1 500 l a 1 441 a r t e o

n 6% t

e n g i

e 1 000 E l 907 R b 4% f a o w 421 e e r n 500 a e 2% h

R 720 391 448 S 121 0 0% 2014 2015 2016 2017 2018 Hydropower Onshore wind Solar photovoltaic Biogas % share

Based on: Data from NEPCO and MEMR Note: In 2018, hydropower generation amounted to 23 GWh, while biogas supplied 3 GWh.

Table 3. Solar PV and wind project status (as of January 2020)

Energy source Under construction Operational Utility- scale wind 247 MW 373 MW Utility-scale solar (direct proposal) 250 MW 612 MW Wheeling solar projects - 222 MW Distributed solar PV net metering projects - 351 MW

34 projects. InFebruary 2019, commercial operations in thedevelopment ofgrid-scaleenergy storage Kingdom hasalsobeenapioneerintheMENAregion under development, isonesuchexample (Box 1).The (Bellini, 2018). The Green Corridor Project, presently centres andthereinforcement ofexisting gridnetworks evacuate power from resource-rich regions to load of adedicated transmission gridinfrastructure to through various measures includingthedevelopment growing share ofelectricity generated from renewables Jordan hassofar managedto integrate therapidly to rise. share ofrenewable electricity isestimated to continue approved net metering andwheelingprojects, the and due to come online by 2021, as well as already scale solarPV andwindprojects underconstruction negligible starting point. With nearly500 years, reaching around 11%oftotal supplymixfrom a renewables hasgrown rapidly over thepast four Figure 13 shows that electricity generation from consumption ofunder200units. are undernational supportandthat have electricity of 2 the FilsAlReef initiative, over 2 distribution companies (Jordan Times, 2020b). Under than 15 energy solutionsfor self-consumption projects. More provided furtherimpetus for investments inrenewable wheeling projects (discussed indepthChapter 4)has Targeted policy supportthrough net metering and solar generation andto cutemissions (Wartsila, n.d.). to reduce engineuseandassociated fuelsduringpeak PV isanticipated to beconnected to theexisting plant light fuel oil and natural gas. However, 46 originally designedto betri-fuelusingheavy fueloil, 250 conventional fueluseduringpeak-load hours. AESJordan’s integrating solarPV projects into the fuel mix to reduce scale renewable energy projects, multi-fuelIPPsare also 9 250 is composed primarilyofsolarPV andwind.About The pipelinefor utility-scale renewable energy projects and wheelingprojects). currently underconstruction (notincludingnet metering Based onMEMRpresentationBased (January 2020). MW IPP project was commissioned in 2014 and was MW ofsolarPV and247 kW size are alsobeinginstalled inhouseholdsthat 300 applications have beenapproved sofar by 9 Besides stand-alone utility- MW ofwindprojects are 000 solarPV systems MW ofutility- MW of solar MW of solar

35 in Chapter 4. management. These willbediscussed ingreater detail storage, electrification ofend-usesanddemand-side demand, as well as integration measures such as generation mixwillrequire efforts to stimulate Raising the share of renewables in the electricity measures into itslong-term strategy (EDAMA, 2019a). additional power andincludedappropriate integration MEMR hasstudied theability ofthegridto absorb renewable energy projects exceeding 1 2019 was issued to suspendgranting approvals for concerns. ACabinet Resolution dated 9January pipeline ofprojects hasraised gridintegration Raising theshare ofrenewables beyond thecurrent cancelled (Colthorpe, 2020). however, inApril2020 itwas confirmed to have been Qualified bidders were announced inJanuary2020; which proposals have beenreceived (MESIA,2019). announced a30 variability and allowing load-shifting. MEMR had also of storage to supportintegration by smoothingout project intheMENAregion. Itdemonstrates thevalue is thefirst utility-scale solarand storage combined storage project beganintheAl-Mafraq region. This of theexpanded 23 connecting thesesubstations. constructing thenecessary transmission linesfor airport substations (132/33) kVinadditionto (kV), andtheexpansion oftheQatrana andthe of anew substation inMa’an (400/132) kilovolt project isunderway that includestheconstruction transmission infrastructure. AGreen Corridor to supportthedevelopment ofadequate solar PV andwind,measures are beingtaken To facilitate theintegration ofutility-scale Box Transmission 1. griddevelopment to Source: NEPCO (2018) facilitate renewable energy integration MW/60 The Hashemite KingdomofJordan MW/12.6 MWh project inMa’an for MWh solarPV plus MW until the

RENEWABLE ENERGY RESOURCES AND USE Renewable Readiness Assessment:

Off-grid renewable energy solutions are also being Despite the progress, solar water heater penetration in deployed for the provision of electricity services in Jordan is lower compared to countries such as Lebanon villages, border points, telecommunication stations, and State of Palestine on a per 1 000 inhabitants’ basis desert camps and rural communities in Jordan. with similar resource potential (Weiss and Spörk-Dür, Although the national electrification rate is close to 2020). The solar thermal program in the 2007-2020 100%, a number of households located in remote areas energy strategy set a target to increase household are unconnected to or under-served by the grid. For penetration from 15% to 25% by 2015, but the target has those areas, off-grid solutions are deemed suitable not been met (Abu-Dayyeh, 2015). This has primarily and economical to deliver basic electricity services. been a result of a lack of enforcement of regulations that came into effect in 2013 which made it solar Distributed renewable energy solutions are also water heaters installation mandatory for households, increasingly being adopted across sectors such as apartments and offices above a specific area. agriculture and water. Under the European Union (EU)-funded Renewable Energy and Energy Efficiency Besides solar water heaters, concentrated solar heat II Programme, 214 solar pumps were installed in the (CSH) applications for the provision of process heat Jordan Valley and 106 in the Highlands. The project in industries has been piloted. In 2015, a CSH Fresnel was developed by the National Energy Research collector pilot was installed in Sahab. It had a thermal Centre and the Ministry of Environment. The energy capacity of 223 kWh and provided process steam at costs of large water conveyance projects, such as the 160 degrees with suitable applications for drying and Red Sea project, can be prohibitively high. sterilisation processes in the pharmaceuticals industry The Ministry of Water and Irrigation has taken steps (Solar Concentra, 2017). JTI (Jordan), the largest to tap into low-cost renewable energy, reducing its cigarette manufacturer in Jordan, has installed a solar electricity costs. steam generation unit which covers 85% of the annual steam consumption and 30% of cooling and heating 3.3 Renewables in heating/cooling needs. It saves over 2.8 GWh of LPG energy consumption and transport and 1.6 GWh of electricity per year (JTI, 2018).

Renewable energy use for heating/cooling applications In February 2020, the Solar Heating Arab Mark and has been limited compared to that of the power Certification Initiative (SHAMCI) mark and certification sector. The market for renewable energy heating in for solar thermal systems was endorsed. SHAMCI Jordan is based mostly on solar water heaters dating is the first Arab certification scheme providing a back to the 1970s. The solar water heater industry regional industrial and regulatory compliance for is well developed, catering to domestic, industrial policy makers, industry and end-consumers (RCREEE, and commercial applications. The domestic sector 2020). dominates, with solar meeting hot water requirements for residential use. Other applications include those Geothermal-based heating and cooling solutions for swimming pools, hospitals, hotels, universities, have also been piloted. The American University of schools and sports facilities, as well as for space Madaba, about 50 km south of Amman, has deployed heating. In industry, solar heating solutions deliver two geothermal systems to meet the cooling load of process heat and pre-heating systems (e.g., in dairy) 1 680 kW and heating load of 1 350 kW of two

(CRES, 2008). buildings. It is estimated to reduce CO2 emissions by 223 tonnes annually, a 47% reduction compared to In 2016, the total number of solar water heaters conventional chiller/LPG boiler (Laylin, 2012). reached 3 500 systems with the installed capacity of water collectors reaching nearly 880 Megawatt- The transport sector accounts for nearly half of all thermal (MWth)) (IEA-SHC, 2019). This number almost energy consumed in Jordan. Direct renewables use tripled, reaching 16 000 installed solar water heaters in transport is very limited. Jordan inaugurated its by the end of 2018 with at least 24 000 systems now first solar-powered charging station for electric in place (JREEEF, 2020). The market for solar water cars as early as 2012 at El Hassan Science City. heaters grew organically for several decades and Incentives have been offered for the adoption of was catalysed with the launch of dedicated financing hybrid and electric vehicles although these are not programmes. The JREEEF financing programme for coupled with renewable power for charging. Jordan the installation of over 22 000 solar water heaters was has experienced a surge in the adoption of electric completed in 2019 with the next phase being rolled vehicles, from around 9 000 in 2016 to 18 000 in 2018 out in partnership with commercial banks (discussed with a compounded annual growth rate of up to 34% further in Chapter 4) (Jordan Times, 2019b). by 2025 (Friedrich-Ebert-Stiftung, 2019).

36 total installed power capacity grew from under 1%in especially in the power sector. Renewables’ share in energy sector hasseenrapid growth since 2012, Backed by strong government action, therenewable resources, andenhance environmental protection. resources, reduce dependence onexternal energy national energy mixandincrease theshare oflocal a sustainable future energy supply, diversify the Strategy for theEnergy Sector 2020-2030: to secure these resources supportsallfour pillars oftheMaster resources, inparticularfor solarandwind.Developing Jordan has abundant domestic renewable energy 3.4. transport sectors. facilitating storage andintegration inindustry and as they cancreate new electricity demandwhilealso energy carriers, suchashydrogen, may alsoberelevant the excess power generation scenario inJordan, municipal waste andliquidbiofuelsalsoexists. Given for fuellingtransport through biogasgenerated with Besides electrification, renewable energy potential reach 30%offleet size withelectric vehicles. exemptions, useofpubliccharging infrastructure) to taxi operators and provided incentives (e.g., fee fast charging stations. GAMhasalsoworked with part oftheconsumption) andisworking oninstalling 120 charging stations (five utilisingsolar to cover The Greater AmmanMunicipality (GAM) hasset up Photograph: MEMR Al-Rajif windplant 86MW1 Conclusion 37 energy mix. much highershares ofrenewables intheprimary current barriers and accelerate progress towards Jordan andthemeasures available to address the further expansion oftherenewable energy sector in The next chapter tackles emerging issues facing the electric vehicles, are already present inthemarket. solutions, suchasCSHfor industrial applications and such assolarwater heating systems, aswell asnew and transport. Mature renewable energy applications, much greater adoptionofrenewables-based heating reliance on imported fuelswillinevitably require of finalenergy consumption and,therefore, reducing Non-electricity end-usesectors comprise over 60% demand stimulation andelectrification ofend-uses. cross-sector policy makingandstrategies aimedat by theCovid-19 crisis.Demandstimulation requires been slow inrecent years andisfurthercompounded upon thegrowth ofelectricity demand,whichhas sector, thefuture growth ofrenewables iscontingent mix grows. Underthepresent conditions inthepower solutions as theshare of renewables intheelectricity of short-, medium-andlong-term integration power sector will call for a stronger look at a portfolio Sustaining continued growth ofrenewables inthe (MEMR, 2020). risen rapidly to over 13%during the sametimeframe electricity generated inJordan, renewables’ share has 2012 to 20%by theendof2019. Concurrently, oftotal The Hashemite KingdomofJordan

RENEWABLE ENERGY RESOURCES AND USE Renewable Readiness Assessment: RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES

As seen in the previous chapters, Jordan has made remarkable progress over a short span of time in deploying renewable energy, especially in the power sector. A robust deployment policy has played a crucial role in driving the development of utility-scale and distributed renewables capacity, as well as selected applications across end-use sectors (e.g., solar water heaters). This chapter will discuss the policies and investment frameworks that will be instrumental for achieving a much deeper penetration of renewables in Jordan’s energy mix. It will analyse the present landscape, identify the emerging issues and challenges, and highlight the pressing issues that require action.

4.1 Adapting the policy and regulatory environment for future renewables growth

The policy and regulatory landscape strongly influence the appeal of the renewable energy sector to attract investments and scale up deployment. Country experience has shown that to harness the full potential of renewables and reach majority shares of renewables in the electricity and energy mix, deployment policies alone are not sufficient. A wider policy mix is needed, as illustrated in Figure 14, that also includes policies for integration of renewables in the energy system and for supporting long- term sector development and maximising local benefits.

This holistic view of the policy and regulatory environment is particularly crucial in the context of Jordan, which is on track to reach a relatively high share of renewables in the electricity mix and whose future growth will rely strongly on demand growth and implementation of a wide range of integration measures across the energy sector. This chapter will first discuss planning and target setting, followed by a detailed assessment of the policy mix in Jordan needed to achieve a much deeper penetration of renewables in the coming decades.

38 on thevisionfor therenewable energy sector to 2030 way for a NREAP, which would provide greater insights The updated National Energy Strategy would pave the synergies withenergy efficiency (MEMR, 2019a). through storage), demandstimulation andharnessing improving flexibility oftheelectricity system (e.g., capacity by 2030. This involves setting avisionfor will make up31%thetotal installed power generation sector andincludesanupdated target that renewables provides long-term clarity ontheevolution oftheenergy developed andreleased inJune2020. The strategy The National Energy Strategy for 2020-2030 was to theNational Energy Strategy for 2020-2030. NREAP was notadopted inlight oftherecent update Plan (NREAP) for theperiod2018-2023. However, the of developing theNational Renewable Energy Action the technical assistance oftheEU, undertook thetask 2015-2025 strategy, the government ofJordan, with mix by 2025. To advance the implementation of the 20% ofrenewables share intheelectricity generation Strategy for Energy Sector, thetarget was updated to 10% by 2020. Aspartoftheupdated 2015-2025 Master contribution intheprimary energy mixby 2015 and set an objective of reaching 7% of renewable energy The Jordan National Energy Strategy 2007-2020 Plans andtarget Source: IRENA,IEAandREN21(2018) Figure 14. Policy mixto reach substantially highershares ofrenewable energy

P

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RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Box 2. Bylaws and instructions for the others (electricity wheeling) and for wheeling implementation of the Renewable Energy charges (costs of the electricity wheeling). and Energy Efficiency Law No. 13 of 2012 5. The instructions issued based on Article 2 of Several bylaws, instructions and directives have Renewable Energy and Energy Efficiency Law been issued to support the implementation of 13/2012 for the reference pricelist record for the the Renewable Energy and Energy Efficiency Law calculation of electrical energy purchase prices No. 13 of 2012. These address different aspects of from renewable energy sources. renewable energy development, including conditions and procedures for developing, connecting and 6. Bylaw No. 49/2015 concerns the establishment remunerating projects of different scales and of the Jordan Renewable Energy and Energy applications. Some important bylaws and instructions Efficiency Fund, which aims to provide funding issued are:10 for the preparation of projects and programmes for the purpose of exploiting, implementing and 1. Bylaw No. 50 of 2015 and its amendment in developing renewable energy sources. 2016 sets the conditions and procedures of the renewable energy direct proposal submission and 7. Bylaw No. 10 of 2013, amended in 2015, 2017 and connection to the grid. 2018, concerns tax exemptions for renewable energy and energy efficiency systems and 2. Instructions for costs of connecting renewable equipment. A list of imported and locally energy sources to the distribution system in the manufactured equipment is attached to the cases of competitive bidding and direct proposals bylaw. related to the Article 9/B of the Renewable Energy and Energy Efficiency Law. 8. Intermittent Renewable Resources Distribution Connection Code at Medium Voltage: MEMR has 3. Instructions governing the sale of electrical energy set the rules and designed a contract for projects generated from renewable energy systems related interconnecting renewable energy with the to the Article 10/B of the Renewable Energy and transmission network. Energy Efficiency Law (net metering system). 9. Guidelines for interconnection of renewable 4. Instructions governing electricity wheeling for energy sources on distribution and transmission energy generated from renewable energy sources, grids as well as on electric meters for net metering for consumption purposes and not for sale to apply to both distribution and transmission grids.

10 In addition to those listed, several other important bylaws and instructions were issued, including the mandatory Environmental Impact Assessment by the Ministry of Environment; Mandatory Licensing of companies working in RE by EMRC; Mandatory Licensing of Solar companies working in construction by the Jordan Construction Contractors Association; Optional Certification of Design and Supervision Engineers working in Solar PV by the Jordan Engineers Association; and the Mandatory Zoning check by Greater Amman Municipality and the municipalities.

The policy and regulatory framework for renewables Policies and regulations for deployment deployment in the power sector is among the most advanced and elaborate in the MENA region. The policy and regulatory landscape for renewable Renewable energy projects are mainly developed energy in Jordan is composed mainly of laws whose through three routes: direct proposal submission implementation is undertaken through a series of (build-own-operate projects offered through supporting bylaws, instructions and directives. The competitive bidding), government-owned (offered Electricity Law No. 64 of 2002 lays down general as engineering, procurement and construction [EPC] rules for generation, transmission and distribution contracts for the private sector) and self-consumption activities. There is no specific Heat Law that guides (wheeling and net metering projects). Off-grid the utilisation and retailing of heat. The Renewable projects, including those for solar water pumping, are Energy and Energy Efficiency Law No. 13 of 2012 and also being pursued. Each of these will be discussed its amendments form the backbone of the policy in depth in this section, followed by the policy and landscape for renewable energy and energy efficiency regulatory landscape for renewables deployment in in Jordan (Box 2). heating/cooling and transport end-use sectors.

40 Regular updates ofthebylaw (e.g., theDirect Proposal strong driver ofrenewables growth inthepower sector. The rounds ofdirect proposal submissions have beena USD auction were announced andarecord-low bid of country. In September 2018, the results of the Round and 100 to develop 200 the third round oftender was launched,planning (Infrastructure Journal,2013). At theendof2016, site was deemedsuitablefor gridinterconnection transmission ordistribution company whether the the project location andascertain from therelevant the grid.MEMRrequired interested partiesto identify and eastern partsoftheKingdomto easepressure on Update, 2015). The projects focused onthenorthern low prices ofUSD It awarded four projects of50 switched from afeed-in tariff to competitive bidding. The second round was launchedinAugust 2013 and Ma’an Development Area. applicable regulatory andadministrative regime inthe was attractive from aresource standpoint aswell asthe MEMR focused onthesouthernregion ofMa’an, which was awarded at USD0.148/kWh). Inthefirst round, for solarPV (barringthe52.5 signed for USD at Tafila was signedin2013. The 20-year PPAs were the first winddirect proposal submission for 117MW (Infrastructure Journal,2013). Further, thePPA for cumulative capacity ofabout200 a feed-in tariff. Twelve solar PV projectsa with The first expression ofinterest in2012 offered EMRC. is calculated based on a methodology issued by the must belower thantheceiling reference price, which tariff bids. For thefirst round,thesubmitted tariffs listed developers to prepare proposals and submit experience andability, andthetender stage for short- the pre-qualification stage to confirm developer Each round comprises atwo-stage tender process: appropriate opportunity to conduct anew round. the Direct Proposal Bylaw 50/2015 to identify the Committee was established by theprovisions of the capacity to becontracted. The Direct Proposal place in rounds defined by theMEMR considering direct proposal submission by theprivate sector takes energy projects andpropose theseto MEMR.The can identify anddevelop grid-connected renewable Under thedirect proposal submission route, investors Power sector: Direct proposal submissions 248.9/kWh was submitted (RES4Med,2019). MW ofwindprojects inthesouth ofthe 0.12/kWh for windandUSD MW ofsolarPV intheMa’an area 0.0613-0.0767/kWh (New Energy MW Ma’an project, which MW eachat record- MW were approved 0.169/kWh 3 3

41 take place. rounds ofdirect proposal submissions are unlikely to energy poverty andelectrification of end-uses, future such asincentivising electricity consumption, reducing contracts withIPPs.Without demandgrowth measures, grid infrastructure capacity and existing take orpay to theoverall electricity demandgrowth, available of subsequent rounds, including uncertainty related factors are contributing to aslowdown intheissuance average cost ofelectricity procurement. Indeed,several is substantially cheaperthanthe NEPCO’s current benefit from electricity from renewable energy that of direct proposal submissions needto beissued to an outlookto 2021, beyond whichsubsequent rounds The current pipelineofutility-scale projects provides minister offinance. committee intheDLSandhasto beapproved by the DLS. The exact leasingprice isdetermined by aspecial should approach MEMRwhich willinturnliaisewith required undertheDirect Proposal Scheme, developers and Survey (DLS) inJordan and where such land is Public landsare managedby theDepartment ofLand the landwhichranges from JOD 5-8 persquare metre. required to pay afee for changeinthe“type ofuse”for project delay anddisruption.Further, developers are than through formal institutions, whichposesrisksof to negotiate directly withlocalcommunities rather land for renewable energy, anddevelopers often have The Direct Proposals Bylaw prioritisestheuseofprivate activities. fees andany instalments resulting from financing general salestaxthat may ariseoninterest payments, Jordanian investors andfinanciers from income taxand goods, material andservices; exemption for non- withholding taxonincome relating to localorimported stamp duties;exemption from general salestaxand duties, taxes, fees, returns andlevies; exemption from for ten years; exemption from allcustoms andother company (from resource assessment to construction) relief from income taxnormallylevied ontheproject been introduced. These include, for instance, 75% Third, a slew ofpreferential taxation schemeshave GuaranteeAgreement. Grid Connection Agreement andtheGovernment package, including the PPA, Land Lease Agreement, contractual documents were madepartofthetender the PPAs to address off-taker risks.Second, template investment risks.First, agovernment guarantee backed the government took additionalsteps to address key attract theprivate sector to participate inthetenders, undertaken basedonthelessons learnedsince 2012. To Bylaw (50) year 2015 and Bylaw (66) year 2016) were The Hashemite KingdomofJordan

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

However, important steps have already been taken Power sector: Wheeling and net metering to ensure the benefits of low-cost electricity from projects renewable energy can be passed on to sectors presently most vulnerable to high energy costs. Industries, for The development of renewable energy projects for instance, can already benefit through earmarked self-consumption is guided by the wheeling and net renewable energy projects. The 100 MW solar project metering programmes depending on the location of in East Amman is an example in this regard where land the generation facility with respect to the consumption has been allocated for lease to generate low-cost solar site. The capacity of projects under the programmes power to improve the competitiveness of industries grew from around 250 MW at the end of 2018 to (Jordan Times, 2020c). It is, however, important to 573 MW in January 2020.11 At over 35%, Jordan has ensure equitable access to low-cost renewable power among the highest percentages of wheeling and net for small and medium enterprises, including those most metering projects relative to total renewable installed at risk due to high energy costs. capacity.

Existing and future industrial zones should pursue The Electric Power Wheeling Scheme has been dedicated renewable power supply coupled with energy devised to encourage large consumers to develop efficiency and storage. The expedited development of renewable energy for self-consumption with a renewable and storage projects as well as strategically view to reducing energy costs and increasing positioned development of new projects such as these competitiveness. The scheme allows the user to install can facilitate deployment with limited stress on the the renewable energy system in a different location grids for integration. of the consumption facility and connect it to the transmission or distribution grid. The directive for the Power sector: Government-owned projects scheme was issued in 2013 and later amended in 2015 (EMRC, 2015). As of January 2020, wheeling projects Renewable energy projects developed under this totalled a capacity of over 222 MW,12 with strong route include those that are government-owned and interest from large consumers. The Jordanian telecom publicly financed through grants and loans provided operator Orange Jordan, for instance, has announced a by governments and development agencies. For 37 MW solar project to help meet part of its electricity such projects, MEMR issues a tender to select an EPC needs. The capacity is spread across three sites in the contractor. The EPC contractor is responsible for all King Hussein Bin Talal Development Area, the Mafraq activities from design to engineering, procurement, and the Amman governorate (Willuhn, 2019). construction, commissioning and transferring the renewable energy plant over to MEMR. However, Beyond commercial entities and industry, refugee renewable energy developers licensed by EMRC must camps have also been able to benefit from the apply for government tenders in partnership with an wheeling scheme, with the Azraq and Zaatari camps accredited contractor listed by the MEMR. meeting a large share of total electricity needs through solar projects (UNHCR, 2020). The solar plant in Azraq The total installed (or under construction) capacity refugee camp was inaugurated in May 2017 while the of government-owned commercial power plants has one in Zaatari camp opened in November 2017. The reached 149 MW from PV and 169 MW from wind. Azraq refugee camp is now powered by a 5 MW solar Besides solar PV and wind, either government-owned PV project which covers 70% of the total electricity or through public-private partnerships, projects focused required. In the case of the Zaatari refugee camp, the on biogas and hydro have also been developed in the solar project connects all shelters in the camp and past. The Jordan Biogas Company has a landfill project provides 12 hours electricity per day. The projects help in Rusaifa, with further plans by the Greater Amman UNHCR save an average of USD 6 million annually in Municipality to implement a biogas project using the electricity costs while bringing an improved electricity methane gas captured in the Ghabawi landfill. supply to those living in these camps (UNHCR, 2019b).

11 Based on MEMR presentation (January 2020). 12 Based on MEMR presentation (4 January 2020).

42 JOD 3) that are paying highelectricity tariffs(reaching residential consumers andpublicbuildings(Box Net metering ismost attractive for high-consuming billing andremuneration for users underthisscheme. new users, aswell asspecifiesthemechanism for provides guidance ontheconditions for existing and Generated from Renewable Energy Systems, which Directive Governing ofElectrical Energy theSale to thedistribution grid.The schemeisbasedonthe own consumption andconnect thesystem mostly for allmetered consumers to cover upto 100%oftheir development ofrenewable energy, mainlysolarPV, The designed for smallandzero feed-in systems. (EDAMA, 2019b). Simplified processes may also be as istheuseofonlineplatforms where possible is beingexplored to complete allnecessary processes, potential for aone-stop shopfor project proponents and are unableto increase capacity to address this.The companies are faced withhighloadsofapplications technical andgridimpact studies (GISs). Distribution then undertake areview andconduct therequisite generally submitted to distribution companies, which implementation-related challenges.Applications are rapid capacity deployment, aswell asseveral and net metering) programmes has resulted in Substantial interest in self-consumption (wheeling subsidisation mechanism(Vinter andNorman,2019). from theelectricity gridrisksunderminingthecross- commercial and industrial electricity consumers important to note that theexodus ofhigh-paying kWh (USD by thedistribution company isset at 0.12 The tariff for purchasing surplus renewable electricity basis, where thesurplusisrotated to thenext year. the electricity imported from the grid) or on an energy can beeitheronafinancialbasis (capped to 10%of known as“bankingofpower”. The annualsettlement excess electricity isrotated to thenext month, also In caseexport ishigherthanconsumption, thenthe company according to theprevailing tariff structure. the extra consumed electricity to thedistribution electricity exported, thentheconsumer pays for consumed from thegridishigherthanrenewable (IEA, 2020). For themonthly billing,iftheelectricity must not exceed the average monthly consumption to beconnected to thegrid,expected generation exported to thegrid.For thetotal installed capacity between theelectricity consumed from thegridand undertakes monthly billingandannualsettlement For net metered users, the distribution company 0.30 [USD Net Metering schemeisfocused onthe 0.17 perkWh) for solarPV systems. Itis 0.42] perKWh). JOD per

43 exports to reduce stress onthegrid. regarding integration ofstorage orlimitsonelectricity projects. This includes,for example, conditions to consider providing conditional approvals for is available onthegridandfor distribution companies communicating information regarding where capacity private sector hasstrongly noted theimportance of companies owing to limitations onthegrid.The part ofthecapacity appliedfor, by thedistribution often notapproved, orapproval isgranted for only capacities. Even those under1 the capacity oftheelectrical gridto integrate further until thecompletion oftechnical studies to assess on thedistribution network have beensuspended absorb furthergeneration, new projects over 1 However, owing to uncertainties ingridcapacity to projects mostly connect to thedistribution network. Under boththewheelingandnet metering schemes, grid withoutpaying dues. as ensure that buildingsare ableto connect to the bills to beutilisedfor otherbudget lines,aswell contracting, allow savings from annualelectricity (ESCOs), which carry out energy performance financing schemes. Energy service companies energy efficiency measures through dedicated public buildingsto adoptrenewable energy and Incentives canbeintroduced for managers of covering over 500buildings. same withtheMinistry ofEducation andHealth for energy efficiency. It has implemented the for allgovernment buildings,hasamethodology Public Works andHousing,whichisresponsible and energy efficiency measures. TheMinistry of audits andimplementing renewable energy inhibits publicbuildingsfrom conducting energy budget inexisting areas onelectricity bills key challenge. The lackoftransparency inavailable have been launched, enforcement has remained a costs. While several mandates andprogrammes holds immensepotential for reducing electricity energy efficiency measures forpublicbuildings The implementation ofrenewable energy and Box 3.Facilitating development ofdistributed solar onpublicbuildings The Hashemite KingdomofJordan MW are reportedly MW

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Wheeling and net metering projects will play a In addition, several cross-sector projects have also fundamental role in the growth of Jordan’s renewable been developed. In June 2017, the Jordanian Ministry energy sector. Such projects allow end-consumers of Agriculture signed an agreement with the National to benefit directly from the low cost of electricity Energy Centre of the Royal Scientific Society to from renewable energy and, in the case of large develop over 320 solar water pumping systems private sector entities, improve the competitiveness on farms in the Jordan Valley and valleys of the of products and services. The freeze on projects over south and 100 on the high plateaux (Azraq, Mafraq, 1 MW due to grid limitations highlights the need to Madaba). While the majority operate in an off-grid identify pathways through which wheeling and net configuration, some are connected to the grid under metering projects can continue to expand, while the net metering programme (MEDENER, 2019). integration challenges are addressed (discussed in greater detail in Chapter 4, Section 1, “Policies and As discussed in Chapter 2, water pumping accounts regulations for integration”). The transition also brings for 15% of all electricity consumed in Jordan. Electricity challenges for incumbent distribution companies and is a major cost for water utilities, and the Ministry of bulk power suppliers as high-paying commercial and Water and Irrigation has pursued the development of industrial end-users essentially utilise only the carriage solar projects to cover its electricity costs. However, a (network) and reduce power consumption from 50 MW proposed solar project was cancelled in light traditional suppliers. In this context, it is important to of the technical challenges related to the grid and the ensure that the allocation of costs is fairly distributed prevalent oversupply situation in the power sector. A across the end-consumers. joint committee between the Ministry of Water and Irrigation and MEMR has been constituted to discuss Since 2012, even as electricity generated from several issues related to the management of water renewable energy has grown substantially, the and energy, (pumped) storage and desalination. electricity tariff structure has remained unchanged. Tariffs need to appropriately reflect the grid usage Heating/cooling of self-consumption renewable energy projects (net metering and wheeling) to ensure proper allocation Chapter 3, Section 3 discussed the diversity of of network costs with other consumers and the renewable energy applications in the heating/ distribution companies. As renewables continue to cooling sector. These included solar water heating grow, the distribution companies will face greater for domestic, commercial and industrial applications, challenges. EMRC will need to adapt regulated as well as geothermal and solar for space heating. tariff design structures to ensure viability for the Several projects already exist, with a strong presence distribution companies in the long-term, even as of local system manufacturers and installers, and distribution companies also evolve business models demonstrated benefits in terms of reduced energy with the changing structure of the energy system. consumption, decreased expenditures, improved reliability of supply and emissions reduction. Power sector: Off-grid and cross-sector projects Despite the potential, the policy and regulatory landscape for renewable energy in heating/cooling With rapidly decreasing technology costs and is not as developed as that of the power sector. scalability of solutions, diverse renewable energy The adoption of solar water heaters has grown applications are also emerging in off-grid and cross- gradually over the past decades with a number of sectoral contexts. The first zero feed-in project of local enterprises deploying systems for residential, 9 MW was recently given approval. From a regulatory commercial and industrial applications. Partnerships perspective, zero feed-in systems are permissible with financing institutions were developed to deliver with the approval of the distribution company, with end-user financing for such systems. With the NEEAP EMRC developing a relevant bylaw. As battery storage and JREEEF programme, the sector received a strong costs continue to fall, it will become increasingly impetus with end-user financing available through a competitive for certain categories of consumers (e.g., network of community based organisations (CBOs). commercial establishments with majority day-time The JREEEF programme deploying 22 000 systems loads) to transition towards zero feed-in distributed concluded in 2019, with the next phase in partnership solar. To facilitate this, instructions will need to be with the commercial banks in the early stages of issued by distribution companies and design codes. implementation.

44 less than100 based heating/cooling technology applications. needed to improve awareness ofrenewable energy- focusing on local suppliers and manufacturers is needs discussed earlier, capacity building initiatives production asprocess heat. Inadditionto thefinancing been deployed inpharmaceutical and cigarette energy sources already exist. CSHapplications have In industry, several projects using heat from renewable financing linesthrough commercial banks. and industrial consumers may benefitfrom dedicated for domestic consumers was effective, commercial While thedelivery ofend-userfinancingthrough CBOs financing approach to supportsolar water heaters. segment. Eachmarket segment requires atailored of solarwater heaters, especially inthedomestic has ledto asubstantial slowdown intheadoption user financing,asopposed to CBOsinthefirst phase, partnerships withcommercial banksto provide end- focus ofthenext phaseoftheJREEEFprogramme on of capacity to ensure compliance. Furthermore, the mandates, thelackofstringent penaltiesandthelack in Jordan hasbeentheenforcement ofexisting A key challengefor solarwater heater penetration of 2020. requirements willbeissued andreleased by theend zoning requirements. Anupdated version ofthe regulation ensures that installed systems to satisfy building rooftops, vacant landsandparkinglots. This regarding solarsystem installation requirements on Municipality issued aspecialregulation in2015 At themunicipality level, theGreater Amman energy. points for integrating more than 20% renewable mentioned in the guide, and users can acquire eight 2018). Renewable energy integration inbuildingsis high levels ofenergy andwater savings (Zawaydeh, gives extra floorarea ratio for buildingsthat achieve building rating system. The incentive programme Guide (JGBG), providing the basisfor alocalgreen Housing Council issued the first Jordan Green Building In addition,in2013, theMinistry ofPublicWorks and 250 m area greater than150 heaters becamecompulsory for apartments withan buildings exceeding apre-defined area. Solar water issued to deploy solarwater heaters onallnew Efficiency Law No. 13of 2012, mandates were also In follow-up to theRenewable Energy andEnergy 2 were exempted. m 2 andprivate dwellings withless than m 2 . Commercial offices with 45 the AnnualReport oftheMEMR. should becollected andreported regularly aspartof the data collected from thesalesofsuchsystems deployment. To improve reporting ontheprogress, programmes (and accompanying subsidies) for market, especiallygiven thedependence onpublic provides localsuppliers visibility into thefuture currently lacksaclearlong-term target that Renewable heat use, includingsolarwater heaters, living andimproving tenure security. installed inrefugee households, reducing thecost of efficiency. Additionally, 710solar water heaters were for refugee students, aswell asimproved energy schools, thusreducing thecost ofadditionalshifts grid-connected solarPV systems in34public and Energy Efficiency Program in 2015. Itinstalled Council, for instance, initiated a Renewable Energy education, healthcare). The Norwegian Refugee associated publicservice infrastructure (e.g., to address energy poverty inrefugee campsand Renewable energy solutionshave alsobeenapplied also beingconducted. conservation andrenewable energy applications is for students, teachers andthecommunity onenergy upgrading electrical wiring.Awareness campaigns windows, installing energy efficient lights and school buildingsby improving insulation, changing efficiency improvements haveto beenmade solar water heating solutions.Inaddition,energy based space heating andcooling unitsalongwith The schoolshave beenequippedwithsolar-PV covered over 134publicschools. implemented through theJREEEF, andhasnow Jordan’s publicschools.The programme hasbeen expand thescope oftheproject to over 3 extreme cold conditions. The second phase would heating would beinstalled in50schoolslocated in to roll outin two phases.Inthefirst phase, central heating inpublicschools.The project was envisaged (King AbdullahIIInitiative) was launchedto provide In February 2015, theSchoolsHeating Program Box 4.Addressing energy poverty Source: MEMR (2019c), MESIA (2018), Royal Hashemite Court (2015), NRC (2020) refugee camps of theSchoolsHeating Program and through renewable energy: The case The Hashemite KingdomofJordan 700 of 700 of

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Transport Coupling the electrification of transport with renewable power will be important to diversifying energy use The transport sector accounts for the largest share in the sector. This will require strong co ordination of energy consumption in Jordan. Efforts to diversify between the Ministry of Transport and MEMR, as well the energy mix in the sector have focused mostly as a holistic strategy or long-term roadmap which sets on incentivising the purchase of hybrid and electric targets for the electrification of private vehicles, fleets vehicles through sales tax and customs exemptions. and public transportation. It should further guide the Fiscal incentives have been used extensively as a tool development of complementary infrastructure and to facilitate adoption. Electric vehicles were exempted skill sets. Municipalities, such as GAM, have taken from clearance taxes on import for five years until steps to set targets for taxi fleets. the end of 2018, which improved their attractiveness substantially and has driven adoption. However, the Policies and regulations for integration clearance tax of 25% was reinstated in April 2019, which reduced sales sharply. In November 2019, the The integration of higher shares of variable renewables government reintroduced the incentives based on the has emerged as a primary concern holding back battery capacity of the electric vehicles. Those with continued growth of the sector. By 2021, it is a capacity of 250 kilowatts (kW) and lower (which anticipated that renewable energy will account for 30% represent 95% of the electric vehicles in Jordan) saw of total installed power capacity and 20% of electricity clearance taxes reduce from 25% to 10%. Meanwhile, generated in Jordan (Marar, 2019). Concerns over the taxes on vehicles with a capacity above 251 kW ability of the grid to integrate renewables beyond were reduced to 15% (Xinhua, 2019b; Zeidan, 2019). the existing pipeline have led to the suspension of The impact of this tax reduction on electric vehicle new projects above 1 MW since January 2019. This sales remains to be seen; however, stability in policy has contributed to uncertainty in the sector and, support is seen to be crucial for the sustained growth importantly, not allowing large consumers to benefit of the sector. from a low-cost energy supply from renewable energy.

To support the adoption of electric vehicles, Some steps have been taken towards integration in simultaneous efforts are needed to expand the Jordan, which has enabled the integration of a rapidly charging infrastructure. The EMRC currently provides growing share of electricity generated from renewables licenses to public and private electric vehicle charging over the past few years. These have largely focused stations. So far, the commission has issued licenses to on developing and strengthening the transmission 16 charging stations and announced intentions for all and distribution infrastructure, as well as introducing new gas stations to have electric charging facilities. dedicated regulations for injecting renewable power To achieve large-scale and rapid electrification of the into the grid. vehicle fleet in the Kingdom, the rollout of charging infrastructure has to be substantially accelerated. However, further growth in the share of renewables in the electricity generation mix requires a wider range The economics of electric mobility are fast evolving of actions to improve overall system flexibility in the with rapidly decreasing costs of storage technologies short-, medium- and long-term. As illustrated in Figure and improving maturity of applications across the 15, the measures range from reinforcing transmission different transport segments. In the specific case of and distribution infrastructure to increasing storage, electric buses, for instance, these have been found managing the demand side, and incentivising flexible to be a technically and financially feasible option generation, as well as introducing sector coupling with substantial co-benefits in terms of reduced air (IRENA, 2018; IRENA, OECD/IEA and REN21, 2018). pollution and GHG emissions, as well as dependence The optimum mix of measures varies from context on imported diesel fuel (GGGI, 2018). Pilot projects to context and should form part of a holistic strategy across specific routes will improve the understanding to improve system flexibility in a least-cost manner of operational viability of electric buses for intra- and and be backed by dedicated regulations to guide inter-city transport. deployment and operation.13

13 The IRENA FlexTool is a detailed tool that analyses the flexibility needs of a power system covering traditional options (e.g., flexible thermal and hydro generation with high ramping capability and very low start-up time), as well as other innovative technologies (e.g., flexible demand, energy storage and sector coupling). The FlexTool is capable of analysing current system operations and performing future analysis with high penetration of variable renewables, thereby proposing the optimum possible flexibility solutions. Country-level analysis has so far been conducted for Colombia, Panama, Thailand and Uruguay (IRENA, 2018).

46 level. managing renewables integration at thetransformer network canhelpimplement atailored approach to grid systems, includingmetering, across thedistribution associated charging infrastructure. Investments insmart crucial given thegrowth ofelectric vehicle salesandthe for upgradation andmodernisation. This isparticularly to identify network bottlenecks that require investments will needto beconducted by thedistribution companies capital anddevise atime-boundplan.Asimilarexercise ministries, to develop the necessary infrastructure, raise stakeholders, includingthe private sector andother and development strategy shouldoffer ablueprint for assessed andplannedfor. NEPCO’s network expansion term. Amuchhighershare ofrenewables alsoneedsto be to 2030, gridinfrastructure needsto planfor thelonger While theNational Energy Strategy provides anoutlook improved system management. upgradation ofequipment (e.g., transformers) and strengthening thedistribution infrastructure through rich regions to loadcentres (e.g., theGreen Corridor) to transmission corridors between renewable resource- integration varies from constructing dedicated The scope ofinfrastructure work neededfor effective have to keep pace withrenewable energy development. The expansion andstrengthening ofgridinfrastructure Transmission infrastructure anddistribution Source: IRENA(2018a) Figure 15. Measures to integrate highshares ofvariable renewables inthepower mix Transmission Distribution Storage Demand-Side F Management Generation l S e P y x o s ibili w t e e m r t y 47 utilisation andenablingloadshifting. by smoothening generation, increasing network on site storage) canfurthersupportintegration capacity. Hybridprojects (e.g., solar-wind, solar- (e.g., industrial zones) orregions withavailable grid energy projects in areas of close proximity to loads into deployment policy designby setting uprenewable mix. Integration measures canalsobemainstreamed higher shares ofvariable renewables intheelectricity network management duringthetransition towards the distribution companies can ensure optimum Effective co-ordination between MEMR, NEPCO and dedicated transmission corridors The scopeofinfrastructure work needed for effective integration improved system management. upgradation ofequipment and rich regions to loadcentres to between renewable resource- strengthening thedistribution varies from constructing infrastructure through co S e u c p t l o i n r g Vehicles Electric Heat The Hashemite KingdomofJordan (e.g .,Hyd H Gas rog en)

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Storage Pumped hydropower storage is being closely considered, with several sites being studied for Managing the increasing share of renewable energy development (Box 5). Key issues remain to be in Jordan’s electricity mix will require active measures resolved between MEMR and the Ministry of Water and to match (existing and new) demand and supply Irrigation in terms of ownership of water resources and in an optimum manner that reduces overall system regulations to govern the operation and remuneration costs (e.g., need for peaking plants) and incremental of services provided by the pumped hydro facility. integration of infrastructure investment. Energy storage costs are expected to decrease by 2030. With rapid construction times and lower social and environmental impacts, energy storage could be a solution to some of the challenges of integrating renewable energy Grid-scale energy storage (IRENA, 2020b). In Italy, for instance, Terna installed infrastructure can provide a 38.4 MW/240 MWh sodium sulphur batteries for wide range of grid services. transmission investment deferral. Over 330 MW of such The benefits are already projects had been deployed by 2017 and are expected demonstrated by the solar PV to reach around 14.3 GW by 2026 (IRENA, 2020b). Li-ion battery storage project in The level of flexibility storage can offer for Jordan’s the Al-Mafraq region. power system needs to be studied closely. Broadly, two storage options are available – battery storage and pumped hydro – each offering its unique set of characteristics and flexibility services.

Developing battery storage at the transmission and Box 5. Assessment of pumped water storage distribution levels and on the demand side can increase self-consumption and reduce variability for the grid. Under the EU-funded Renewable Energy and When combined with renewable power and energy Energy Efficiency II programme, an assessment efficiency, storage can reduce peak-load demand and of pumped-hydro storage was conducted for help achieve “zero-to-grid” configuration for buildings, five reservoir/dam sites in Jordan. Among the commercial sites and industries. In the specific case sites assessed, Wadi Mujib, Wadi Arab and King of the residential sector, which accounted for 46% Talal reservoirs were found to have the highest of total electricity consumption in 2018, the daytime potential for pumped-hydro development. The peak-demand load can be reduced through energy turbine capacity at each site is 215 MW, 95 MW and efficiency measures, coupled with growing solar PV 225 MW, respectively, and the assessment was generation and storage, thus reducing the need for conducted based on the energy storage capacity, expensive peaking plants. Having a renewable energy fulfilment of grid service re equipments (NEPCO) peak strategy with targets is critical to cover part of the and potential transmission line losses. Wadi Mujib peak requirements. was found to have the highest potential among all dams in Jordan. Grid-scale energy storage infrastructure can provide a wide range of grid services, including renewables Given that Jordan is a water-stressed country, smoothing, arbitrage and ancillary services. The benefits the development of pumped-hydro infrastructure are already demonstrated by the solar PV Li-ion battery has to equally consider other uses of the dam storage project in the Al-Mafraq region. While bids for a such as supply of water for irrigation, industry larger solar-storage project are in the evaluation stage and domestic purposes. Mujib Dam, for instance, by MEMR, there is presently no long-term strategy or is a multipurpose water source and serves as an target for storage deployment in the Kingdom. There important water supply source in central western is also no regulatory framework to facilitate and guide Jordan. Co ordination between MEMR and the storage deployment at the transmission, distribution Ministry of Water and Irrigation will be needed and end-user-level. With storage costs falling, the to address issues related to water resources and business case for storage adoption will become strong, minimise conflict between different end-uses. both at the utility scale and behind the meter, and Further, EMRC will need to issue adequate codes enabling regulations will be needed for rapid adoption. for the operation and remuneration of services The distribution company, JEPCO, began receiving provided by pumped-hydro storage. applications for storage in January 2020.

48 electrical, mechanical andcivilInstallation to quality the supplychain,ranging from design,procurement, More than5 renewable energy and associated sectors in Jordan. Presently, hundreds of companies are working in the such assmartgridsandmetering. financial services, anddevelopment ofnew solutions operation andmaintenance, design,engineeringand new opportunitiesfor value creation alsoexist in manufacturing ofrenewable energy technologies, and theregion (EIBandIRENA,2015). Beyond opportunities –key political prioritiesintheKingdom chain, develop new industries andcreate employment opportunity to localisesegments oftheenergy value fuels withdomestic energy resources offers the 2020 and40%by 2025. Importsubstitution ofenergy energy istargeted to grow from 8%in2017 to 15%by The share ofdomestic energy sources inprimary Policies andregulations to maximisebenefits will bealsocrucialto enableloadshaping. consumer groups. Increased digitisation ofsystems is currently fixed-consumption based for various reducing peak-load demand.Jordan’s tariff structure certain loadsduringtimesoflow loads,thusalso of-use tariffsare important market signals to shift management 2018). (IRENA,IEAandREN21, Time- demand to variable supplywithdemand-side Load shapingincludesmeasures to match electricity necessarily coincide withpeakrenewable generation. electric vehicles inthetransport fleet, may not new electricity demand, for example from growing side management andloadshaping.The growth in needs to beaccompanied by strategies for demand- drive demandgrowth. However, itsmanagement The electrification ofend-usesectors canpotentially fully explored (IRENA,2018b). use intransport andindustry are yet to mature andbe production of energy carriers, such as hydrogen, for such asutilisingexcess low-cost electricity for the complementary infrastructure. Otheropportunities been limited intheabsence ofstricter mandates and have beentaken; however, thescaleofadoptionhas towards incentivising theadoptionofelectric vehicles reduced tariffs for theindustry. Asnoted, steps took measures in2019 to stimulate demandthrough “take or pay” contracts in the sector. The government companies given existing tariff structures and nature of still posechallengesfor NEPCO andthedistribution new renewables capacity to lower energy costs will In anenvironment ofslow demandgrowth, deploying Sector couplingandload-shaping 000 peopleare estimated to beworking in 49 to 35% witheachsubsequent round – its definition place –and theshare hasgradually beenincreased and financiers. While alocal content requirement isin projects canoften crowd outlocalsuppliers, developers Domestically, thescaleandstructure ofutility-scale transition. products andservices demandedto drive theenergy could become animportant exporter ofthevarious agreements, such astheJoint Arab Market, Jordan and international markets. By leveraging regional level theplaying field for competition indomestic such asexemptions andconcessional loans,that cables) canbestrengthened through incentives, The competitiveness ofexisting industries (e.g., benefit allindustries, including renewable energy. industry andintroduce incentives for exports which Recent packages encompass programmes to support by thegovernment in2019 to stimulate theeconomy. build ontherounds ofincentive packages introduced ventures andtechnology transfer. Suchapolicy should creation of industrial clusters and facilitation of joint changing energy sector through dedicated incentives, development ofarobust, localindustry around a needed that provides anactionable visionfor the local industry, acomprehensive industrial policy is markets suchastheUnited States. To supportthe already exporting products anddelivering EPCin module manufacturing capacity of800 – suchasPhiladelphiaSolar, whichhasacombined as internationally. Domestic modulemanufacturers to meet the sector’s requirements domestically as well strength oftheexisting domestic manufacturing base There issubstantial potential for leveraging the renewable energy sector. and product/service diversification inJordan’s businesses and investments incapacity augmentation water heaters – strongly impact the sustainability of design offinancingsupportprogramme for thesolar in place since January2019 andthechangesin connected to the distribution network that has been such asthesuspensionofnew projects over 1 constraint. Instability inthepolicy environment – the limited size ofthelocalmarket isasignificant mounting structures andsolarwater heaters –although renewables isstrong in many areas –modules,cables, Jordan’s existing domestic manufacturing basefor PV systems andsolarwater heaters. renewable energy, inparticularfor distributed solar to respond to thegrowing domestic market for companies have established new business lines and maintenance (EDAMA, 2019c). Many existing control, safety, commissioning andoperation The Hashemite KingdomofJordan MW –are MW

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

and effectiveness needs to be closely assessed. It was third-party testing and certification centres need to reported that the 35% requirement can be fulfilled by be accessible for renewables equipment, as well as procuring the necessary value of the project through for raising awareness among consumers on product local contractors even if the products and services are standards available in the market (e.g., through labelling being imported. The design of tenders, both public and of solar water heaters). private, are also known to introduce challenges for local enterprises to actively participate in due to barriers Building adequate skills for the growing renewable such as the inclusion of material origin requirements. energy sector is crucial to ensuring quality installations When possible, these should be reviewed to ensure and long-term permanence. Identifying the current a level playing field for local technology and service and future skills needs and partnering with training providers to participate in the sector’s development. institutes, universities and industry are important for the development of curricula and delivering quality Standards and quality assurance frameworks are crucial training for the workforce (Box 6). With the expansion for a sustainable and renewable energy market. New of the renewables sector in the recent past, skills regulations issued in July 2019 mandate the testing of availability in the sector is projected to be satisfactory all modules at the Jordan Institute for Standards and with several universities having integrated energy- Metrology and the Royal Scientific Society. Affordable, related programmes.

Box 6. Assessing skills needs across value chain: shows that 56% of the total jobs are in O&M, 22% The case of solar PV are created in manufacturing and 17% are in installation and grid connection. Notably, while jobs IRENA’s Leveraging Local Capacities studies assess in manufacturing and installation are temporary, skills and occupational requirements along the those created in O&M last throughout the lifetime renewables value chain. For solar PV, IRENA analysis of the project.

Distribution of human resources required along the value chain for the development of a 50 MW solar PV plant by activity

2 % 1 % Decommissioning Project planning

TOTAL

22 % 229,055 Manufacturing and person-days procurement

2 % 56 % Transport Operation and maintenance

17 % Installation and grid connection

Source: IRENA (2017)

50 Source: Climatescope/BNEF (2019) Figure 16. USD investments rose in2013 to USD passed. Beginningfrom anegligiblebasein2012, Energy andEnergy Efficiency Law (13)of 2012 was have grown substantially since the Renewable Investment flows into the renewable energy sector 4.2 the previous section. developed underthevarious schemesdiscussed in were targeted at solarPV andwindprojects being in 2018 (Figure 11).Alarge share oftheinvestments USD million 1 935 renewables ambition Catalysing investments to meet 0 4 6 9 8 5 3 2 7 1 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 2 million in2016 andreaching USD580million 0 1 0 Investment inrenewable energy inJordan (2010-2018) 2 0 1 1 300 2 0 1 2 million, risingto 2 0 1 3 51 2 main areas offinancingactivities. provides anoverview ofthemainstakeholders andthe Foundations andNational Development Table Banks. 4 entities, aswell asanumberofdonoragenciessuch and Energy Efficiency Fundand enterprise development of Jordan,Bank NEPCO, the Jordan Renewable Energy banks, development finance institutions, the Central These usuallyinvolve localandinternational commercial greatly dependingonthescaleandnature oftheproject. the renewable energy financingecosystem inJordan vary (Climatescope/BNEF, 2019). The key actors involved in institutions especiallyintheutility-scale segment at 75%, withlimited participation ofthelocalfinancial The share offoreign investment inthesector ishigh 0 1 4 2 0 1 5 The Hashemite KingdomofJordan 2 0 1 6 2 0 1 7 2 0 1 8

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Table 4. Overview of stakeholders and main areas of financing activities

Transmission Technical and SME assistance Utility-scale Distributed distribution financing and capacity infrastructure building Local commercial banks (e.g., Cario Amman Bank, Bank al Etihad, Arab X X X Bank, Bank of Jordan) International commercial banks (e.g., X Standard Chartered, Shinhan Bank) Development finance institutions (e.g., EIB, EBRD, Netherlands Development Finance Company FMO, X X X X German Investment Corporation – KfW DEG, ADFD, IFC, JICA) Government grants (e.g., EU, Spain) X X X Foundations/Donor agencies (e.g., X X X IKEA Foundation, NRC) X Central Bank of Jordan (on-lending) NEPCO X JREEEF X X X Jordan Enterprise Development X X Corporation Jordan Chamber of Industry X Factories Support Programme

Note: denotes relevant area of financing activity

Financing utility-scale renewable energy commercial banks (e.g., Europe Arab Bank) and projects and infrastructure development finance institutions (e.g., Development Energy Bank, Netherlands Development Finance International development finance institutions have Company [FMO], Proparco [subsidiary of the French actively participated in the financing of utility-scale Development Agency]). The International Finance renewable energy projects. Unless developed under Corporation (IFC) has also played a key role in the government-to-government agreements, the majority financing of renewable energy projects in Jordan as of the utility-scale plants have been developed under a direct financier as well as a lead arranger for project a project financing structure. Table 5 provides an financing. overview of the financing structure of selected utility- scale solar and wind projects in Jordan, as well as the While some local banks are co-financing large Green Corridor transmission project. projects with multilateral development banks, the local financial institutions are still not very actively The European Bank of Reconstruction and involved with utility-scale renewable energy financing, Development (EBRD) has played a key role as especially related to non-recourse financing that a financier of renewable energy projects and requires larger volumes of investment, longer tenor infrastructure in Jordan. EBRD has committed over and unique documentation. Over time, capacity is USD 350 million so far for a total of 392 MW of utility- being developed as the understanding of the sector scale wind and solar projects in Jordan.15 The majority improves. Increasingly, local banks are involved in of the investments are in the form of senior secured refinancing projects that initially received international loans, in partnership with other financiers involving financing.

15 www.ebrd.com/work-with-us/project-finance/project-summary-documents.html?1=1&filterCountry=Jordan

52 Source: RahimandEid(2017); Carvalho (2018); EBRD(2016); Maisch(2017), EBRD(n.d.) Table 5. Type ofproject Onshore wind infrastructure Transmission Solar PV Insights onfinancingstructure ofselected utility-scaleprojects area, Mafraq region Bin Talal development 60.3 MWKingHussein 50 MWRisha Mafraq 133.4 MWFRV Al 51 MW AlSafawi 103 MWAlQuweira 200 MWBaynouna Company Ltd.” “Daelim Energy Company Ltd.” & Southern Power Wind –“Korea 50 MWNew Tafileh 89.1 MWFujeij Green Corridor 45 MWShobak 82 MWAl-Rajef Project Two USD USD EBRD provided aseniorsecured limited recourse loanofupto Proparco. Mafraq IIreceived financialsupporttheEBRDandSociety for Arab Bank. Mafraq Ireceived financingfrom theIFC, FMOandtheEurope Up to USD Dhabi Fund for Development. The project is fundedby MEMR through agrant from theAbu International Development andDEG. lenders includedFMO, Europe Arab theOPEC Bank, Fund for including JapanInternational Cooperation Agency (JICA). Other loan from theIFC andUSD An IFC-arranged financingpackage includedaUSD met therestBank ofthe financing requirements. The IFC is1)providing aUSD between EBRDandFMO. USD from itsManagedCo-Lending Portfolio Programme, aswell as in project financing;and3)mobilisingloansofUSD 2) structuring anequity bridgeloanofUSD (K-Exim) andaUSD USD 6milliondirect loanby theExport-Import ofKorea Bank from Korea’s ShinhanBank. EBRD extended aUSD USD 52 million. Provision ofasenior secured loanby EBRDofupto provided by DEG. USD 50mproject financing.AUSD EBRD approved aUSD68millionloan,whileProparco provided funded by commercial banks. Ltd. Equity bridgefacilities ofacombined USD by Ltd. MizuhoBank andSumitomo Corp. MitsuiBanking Europe USD and theEUprovided agrant ofUSD 27.6 27.7 55 million softloan,NEPCO contributed USD million from Standard Chartered andUSD Bank million. The GermanDevelopment (DEG) Bank andArab 27 53 70 million loans:Aloanfrom EBRDandBloanfrom FMO. million seniorsecured loansplit 52 72 million K-Exim covered facility provided Financing structure million loan,Proparco provided a 134 10 million from otherseniorlenders, million loanfor itsown account; 19 The Hashemite KingdomofJordan 20.2 million loanwilllater be million. 26 million –itsfirst 81 million are being 12.6 26 54 million, million million 8 million

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

Financing self-consumption and JREEEF implements dedicated public financing small-scale renewables programmes for renewable energy and energy efficiency. JREEEF offers financial support to The scale of self-consumption renewable energy consumers through loan guarantees, interest rate projects can vary from tens of megawatts of wheeling subsidies and grants for solar water heaters and PV projects to a few kilowatts of net metered installations systems, as well as for implementing energy efficiency for use by households or public buildings/institutions. measures (e.g., solar streetlights, energy audits in With the exception of a few large wheeling projects industries). JREEEF had a programme that offered loan – such as the 37 MW Orange Jordan project, which guarantees and covered interest on loans, while also follow a similar financing structure to large utility-scale offering grants of up to 50% for solar water heaters projects – self-consumption projects generally see a and 30% for solar PV (up to 2 kilowatt -peak (kWp) stronger participation of local financing institutions. through 220 local CBOs building on the experience Such projects also benefit from several government of the Global Environmental Finance (GEF) Small finance promotion programmes by the Central Bank Grants Programme (Box 7). Over 24 000 solar water of Jordan (CBJ) and the JREEEF. heaters have been installed under the now-concluded programmes (JREEEF, 2020). Since 2011, the CBJ has offered a credit facility with reduced interest rates to support economic activities A new programme for 30% support on solar water in nine key sectors, including renewable energy and heater and solar PV systems up to 3.6 kW was issued energy efficiency. It offers a low interest rate to local in November 2019 (Bellini, 2019). For this phase of banks of around 1.75% for projects in Amman and 1% the programme, JREEEF is partnering with local for projects outside Amman, allowing these banks to commercial banks, such as the Jordan Islamic Bank, on-lend at final interest rates up to 4.5% for projects for the provision of soft loans for renewable energy up to a limit of JOD 4 million (USD 5.6 million). As part systems including household PV systems and solar of the post-Covid-19 recovery plan for Jordan, interest water heaters (Bank of Jordan, 2017). The banks offer rates of around 0.75% are offered inside Amman and attractive loans to cover 70% of the system costs, while 0.5% outside Amman. The facility offers the loan JREEEF takes 30-50% of the cost of the system or the for a period that can reach ten years with a one- full grant for end-users with limited creditworthiness year grace period. As of December 2018, more than so that the beneficiaries receive almost interest-free 270 renewable energy and energy efficiency projects loans. have been financed, amounting to JOD 182 million (USD 257 million). The CBJ’s concessional financing A key difference between the subsequent JREEEF scheme can only be accessed by the beneficiary and programmes has been that end-users are now able not the project implementor. With certain beneficiaries to select among different accredited technology unwilling to take debt against their balance sheets, suppliers and access financing by approaching various several developers have asked the CBJ to consider commercial banks. This compares to the earlier case expanding the programme for them to take loans on wherein a single supplier had been selected through behalf of end-users. a competitive process to supply all systems deployed through CBOs. A key challenge with the new phase While the CBJ programme for renewable energy and has been that the customers looking to secure energy efficiency is part of a broader package to financing from commercial banks are not able to support economic activities, it serves as an important meet the bankability requirements, which are more blueprint for tailored financing programmes for sectors stringent compared to lending through CBOs. Further, covering specific end-use sectors and applications limited experience among participating banks and (e.g., dedicated funding line for industries, portfolio the challenge faced by installers to unlock financing financing of developers). Such programmes will available for end-users through the new JREEEF support the objective of local banks being more programme have been identified. Targeted capacity aggressively involved in financing non-utility-scale building programmes are needed to strengthen renewable energy projects. A key lesson from the Green Lending Units within financing institutions by CBJ programme has also been the need to focus on improving awareness of technologies and financing capacity building of project proponents on project programmes (at the branch-level) and understanding documentation preparation, including costings and of accurately estimating the risks and costs of feasibility analysis. renewable energy projects.

54 several to install 2 The MEMRhasissuedReef). thefirst round outof established istheRural Electrification Fund (FilsIl Another publicfinancinginstrument that hasbeen saving measures andenergy-use indexes. develop industry-specific recommended energy- from theenergy auditswiththeopportunity to of theaudit.There are lessons that canbeextracted conducting energy audits.Itcovers 50%ofthecost JREEEF alsoprovides financialsupport to industry for digitisation. storage, smartgrids,demand side management and as well ascomplementary technologies suchas facilitating innovation in the renewable energy sector play acatalytic role insupportinglocalindustry and The development ofdedicated enterprise fundscan (IRENA, 2018; RCREEE,2018). in Jordan and upto 35% iftheproduct isimported to 50%oftheproduct costs iftheproduct ismade by installing smallprojects. The subsidycovers up objective isto familiarise industry withthetechnology Industry Factories SupportProgram. The programme’s water heaters isoffered by theJordan Chamberof enterprises lookingto install eithersolarPV orsolar A non-refundable capital subsidy for small industrial (World 2017). Bank, ups across several sectors, includinggreen energy designed to provide earlystage financing for start- 49 millioninco-financing from theCBJ. Ithasbeen a USD50millioninvestment complemented by USD the Innovative Startups Fund Project inJordan with up (RCREEE,2018). The World alsolaunched Bank profits. However, thefundhasnot seengreat take- because JEDCO requires onlya10%return onany as SMEs.The cost ofequity issignificantly reduced 80% ofequity inrenewable energy projects, aswell supports start-up companies by allowing upto Development Corporation (JEDCO), for instance, and established companies. The Jordan Enterprise established entities that offer equity products to new energy value chainthey are partof. Jordan has needs dependingonthepartofrenewable Renewable energy enterprises have varying funding Financing renewable energy enterprises monthly electricity consumption under300 support (approximately 85 sufficient roofspace, thosewho are on national that willbeinstalled at nocost for applicants with 113 solarPV systems of2 000 families) andhave kWh. kW size 55 systems and12solar water heaters. clinics were equipped with 150 In addition,sixpublicschoolsandfive health 987 on-grid solar PV systems have been installed. far, over 1 the community after theproject concludes. So revolving fundfor CBOsto continue supporting CBO. The proceeds from theinstalments create a the remainder ispaidininstalments to thelocal 25% asdown-payment, 50%iscapitalsubsidyand water heaters andsolarPV: thebeneficiarypays CBOs to designafinancingprogramme for solar measures. SEEDworked inpartnership with local uptake ofrenewable energy andenergy efficiency the Jordan Valley andAjlounregions through resilience of poor anddisadvantaged groups in It aimsto improve thelivelihoods, well-being and Affairs Canada andJREEEFfrom 2016 to 2020. SEED isaprogramme fundedby theGlobal outcomes andbiodiversity conservation. deforestation andemissions, improved health lower expenditure ontraditional fuels,reduced of impacts oftheprogramme have beenmultifold: worth (JOD 406000) investments inrenewable energy systems. The USD 579 000 over – small grants of USD 50 use oftherevolving fundfinancinginstrument systems have beendeveloped since 2009. The 435 solar water heaters and100 energy solutions.Through theprogramme, over local communities onthebenefitsof renewable on buildingawareness andcapacity among energy projects. Inaddition, thegrants focus to set uprevolving fundsto finance renewable communities includingCBOsandotherNGOs grants ofupto USD50 The GEF Small Grants Programme provides Box 7. Revolving fundfor solarwater heaters: (SEED) project Energy andEconomic Development Programme (UNDP)-GEF andSustainable The caseofUnited Nations Development 300 solar water hearing systems and The Hashemite KingdomofJordan 000 directly to local 000 – has mobilised kWp on-grid PV kW solarPV

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment:

4.3 Conclusion As argued in this chapter, to support the next phase of growth for renewables in Jordan, a broader policy The renewable energy sector in Jordan has grown mix will be needed that focuses on deployment, rapidly over the past decade on the back of a robust integration and the enabling conditions at the policy and regulatory framework. The sector is at an sector level to maximise benefits (e.g., local industry important juncture. There is a strong track record development, skills). Further, to unlock future growth of deploying renewables in the power sector, with a of renewables, efforts for demand creation and growing number of applications being demonstrated electrification of end-uses will be crucial. Based on the in heating/cooling and transport. Jordan can leverage analysis and extensive stakeholder engagement, the the momentum and deepen the energy transition next chapter summarises the key recommendations towards renewables. A continuing pursuit of renewable for policy makers to scale up renewables deployment. energy promises that a more secure, resilient and Renewable energy should be seen in tandem with environmentally sustainable energy system can also energy efficiency as mutually reinforcing components be affordable, support industrialisation and bring a for Jordan to reach higher shares of local energy wide range of socio-economic benefits. resources in the energy mix and reduce dependence on imported fuels. Box 7 outlines the current framework for energy efficiency in Jordan, highlighting the key aspects and emerging issues.

Risha PV plant 50 MW Photograph :MEMR

56 (EESCOs) anddeveloping thecapacity of industry- environment for energy efficiency service companies spend on energy audits, improving the regulatory With lackofawareness andend-users’ hesitance to index. develop tools such as a sector-specific energy-use energy audits and draw meaningful lessons to Industry-specific expertise isalsolacking to conduct very low dueto lackofenforcement andawareness. energy audits; however, thepenetration has been of Industry have targeted financing programmes for a key challenge. The JREEEF and Jordan Chamber large consumers. However, enforcement hasbeen Bylaw 73 (2012) mandates energy auditsfor all industry andcommercial andservices. be delivered from theresidential sector, followed by year period2010-2014. Halfofthereductions will annual average electricity consumption ofthefive- by 17.5% by 2020 (1 setting a target of reducing electricity consumption to update theNEEAPfor theperiod2018-2020, originally targeted (Hamzeh, 2018). Jordan decided success, reaching about40%ofthereduction and street lighting. The programme met withsome residential, industrial, commercial, water pumping and 2010). The target was dividedacross sectors: (relative to theaverage consumption between 2006 reducing energy consumption by 7.1% by 2014 covered theperiod2012-2014. Itset atarget of In 2013, Jordan adopted itsfirst NEEAP, which and postpone theneedfor new investment. also to improve energy efficiency to reduce imports of theNational Energy Strategy 2007-2020 was cost-effectiveness ofenergy supply, a key objective In additionto improving thereliability, security and renewable energy and energy efficiency in tandem. (13) of2012 underlinestheimportance ofpursuing The Renewable Energy andEnergy Efficiency Law Box 8. Jordan: Key aspects andemerging issues Framework for energy efficiency in 975 GWh) compared to the 57 Jordan. regulate thequality of LED lights imported into for Standards andMetrology (JISM) andRSS to have been established at the Jordanian Institution sizing andcosts. Light-emitting diode(LED) labs renewable energy installations to reduce system audits andefficiency measures tobesucceeded by buildings. Recommendations have beenfor energy and efficiency measures across more than500 government buildings,hasrolled outenergy audits of PublicWorks andHousing,whichmanagesall identify energy efficiency interventions. TheMinistry Supply conducted audits for 17 institutions to buildings. The Ministry ofIndustry and Trade and rolled outby several ministries covering public Energy efficiency programmes have already been compliance, awareness andstronger incentives. enforcement mechanismsandcapacity for ensuring been akey challengethat requires putting in place set of codes and incentives, enforcement has appliances since 2017. Despite acomprehensive have alsobeenintroduced for large household lighting inhomes(Khaberni, 2019). Energy labels launched a programme to replace 150 Building Codes. In2019, MEMRandJREEEF Insulation Code andJordan Energy Efficiency other mandatory codes, such as the Jordan Thermal D undertheJGBGalsoensures compliance withall terms of increase in floor area ratio. Meeting Level levels (A to D), eachoffering aspecificincentive in was approved in2015. The buildingguidehasfour programme for theadoptionofgreen buildings codes. The JGBGwas issued in2013, andanincentive is responsible for thedevelopment ofthebuilding In buildings,theJordan National BuildingCouncil the competitiveness oftheindustry. energy efficiency standards) without compromising import exemptions for equipment meeting set ensuring that certain standards are followed (e.g., equipment, incentives canplay animportant role in With regard to theenergy efficiency ofindustry specific auditspecialists shouldbepursued. The Hashemite KingdomofJordan 000 units of

RENEWABLE ENERGY POLICIES AND INVESTMENT: CURRENT LANDSCAPE AND EMERGING ISSUES Renewable Readiness Assessment: KEY CHALLENGES AND RECOMMENDATIONS

Diversification of Jordan’s energy mix and reductions in the cost of energy are fundamental to ensure long-term industrial and socio-economic development. The Master Strategy for the Energy Sector 2020-2030 targets a share of 48.5% of primary energy from domestic sources, up from about 15% in 2019 (MEMR, 2020). Further, it sets a target of reaching a 31% share of renewables in the electricity generation mix by 2030 (MEMR,2019a). With increasing cost-competitiveness and abundantly available resources, renewable energy solutions will be instrumental in achieving the objectives of improving energy security, reducing the cost of energy supply for consumers and advancing environmental preservation. The transition to low-cost renewable energy will also strengthen Jordan’s recovery from the Covid-19 crisis (Box 9).

Box 9. Contextualising Jordan’s energy transition within Covid-19 recovery

The Covid-19 pandemic is compelling governments to simultaneously manage a health crisis of unprecedented proportions and the subsequent economic and social fallout. As governments deliberate on recovery plans amid significant public financing constraints, especially in emerging economies, strategic investment choices need to be made that yield long-term socio-economic dividends. In particular, the plans must foster economic development and job creation, promote social equity and welfare, as well as advance resilience to future shocks.

Due to a significant decrease in energy consumption as a result of the Covid-19 pandemic, the renewable energy sector has been negatively impacted. Following the lockdown, the network has been exposed to technical challenges which were the result of a decrease in electricity consumption at a time when there was an increase in electricity supply from renewables. This greatly affected the network and led to increased volatility and threatened the stability of the network. In addition, NEPCO reduced electricity consumption from government- owned renewable energy projects during the first period of Covid-19 to alleviate impact on the grid. Faced with this situation, renewable energy systems have been disconnected from all the sectors, including the health, tourism and communication sectors, which has resulted in great economic and financial losses for renewable energy companies.

To mitigate these effects, MEMR is working with all relevant stakeholders to reconnect renewable energy projects. The wheeling-based renewable energy systems were progressively reconnected and became fully operational over the period of March to May 2020, as the country eased Covid-19 restrictions and energy demand increased.

As the economy gradually reopens, Jordan is continuing to pursue its efforts to achieve a needed energy transition and reap its socio-economic benefits (EDAMA, 2020).

58 Figure 17. However, increasing theshare ofdomestic resources renewable energy globally(Bloomberg NEF, 2019b). in fact become oneofthemost attractive markets for 0.7% in 2014 to over 13% in 2019. The Kingdom has share of electricity from renewables, jumping from Jordan hasexperienced animpressive increase inthe support renewable energy development now inplace, With thenecessary policiesandregulations to emerging economies globally. leverage thetransition and serve asalighthouse for in place inJordan. The country iswell positionedto the buildingblocksofsuchatransition are already With theimpressive gainsmadeover thepast decade, disruption over thelong-term canalsobesignificant. displaced imported fuelsandalower riskofsupply creation throughout theeconomy. Savings from improve theircompetitiveness andsupportjob energy supplywillalsocatalyse domestic industries, sectors. Alow-cost, secure andless-volatile renewable manufacturing, transport, construction andagriculture recovery plan,whichcentres onbuildingupthe transition inJordan isinalignment withitseconomic The acceleration ofarenewables-based energy Overview ofkey thematicareas ofrecommendations Foster Catalyse Plan Provide 59 and reducing thecost ofsupply. Jordan’s energy mixwhileimproving energy security is for renewables to reach amuchhighershare of mutually reinforcing –thecollective outcome ofwhich presented undereachthematic area are seen to be Figure 17. The actions andrecommendations and jobcreation are alsoaddressed, asillustrated in energy investments, local industry development in buildingsandindustry, andtransport. Renewable applications inthepower sector, for heating/cooling under seven thematic areas that address renewables renewable energy presents. Itoffers recommendations economic, socialandenvironmental opportunity that key recommendations for Jordan to realise thefull stakeholder engagements, theRRA presents the renewable energy landscapeandextensive Building onanassessment ofthecountry’s energy consumption. and transport), whichaccount for over 75% ofJordan’s as well asinotherend-usesectors (heating/cooling deploy andintegrate renewables inthepower sector, the cost ofsupplywillrequire continuing efforts to in theenergy mixinlinewiththetargets andreducing Strengthen Incentivise Support The Hashemite KingdomofJordan

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

5.1 Provide the conditions for renewables Recommended actions: grow in the power sector • Provide a vision for renewable energy sector development with medium- and long-term targets The Master Strategy for the Energy Sector provides for renewables in the overall energy mix and end- a long-term vision for the evolution of the energy use sectors (power, heating/cooling and transport). sector in Jordan. It identifies the key objectives for The long-term vision for renewables must include the energy sector; sets targets; and defines priorities a just transition. Therefore, employment, economic for different domains of the energy sector, including welfare and land-use models should be integrated oil and gas, renewable energy, energy efficiency, within the Master Strategy for the Energy Sector. and transmission and distribution infrastructure. The update of the Master Strategy provides an outlook • Formulate disaggregated renewable energy for the sector to 2030 and 2050 while also setting targets for the industry, building, residential and intermediate targets. transport sectors and integrate these within the NREAP for the implementation of the Master Action 1: Clarify the trajectory for renewables Strategy. in Jordan’s energy mix • Devise a plan for electricity demand stimulation The release of the updated Master Strategy provides through the electrification of end-uses, especially stakeholders in the sector with clarity on the trajectory in industry, residential and transport, improving of renewable energy in the short-, medium- and long- cross-sector applications (e.g., in water, agriculture) term. The indefinite suspension of new projects over and addressing energy poverty. 1 MW since January 2019 has added to the uncertainty in the sector. • Strengthen multi-stakeholder consultation, especially with the private sector, civil society On the one hand, renewables are key to meeting and cross-sector entities, during the formulation the government’s objective of increasing the share of the action plans, implementation bylaws and of domestic energy sources in the energy mix and instructions. For example, Chile’s Ministry of reducing the cost of the energy supply. However, the Energy incorporates citizen participation in every renewable energy sector also faces several challenges step of the long-term energy scenario (LTES) to further expansion due to a confluence of factors development. Meanwhile, in the United Kingdom, at the level of the energy sector: sluggish electricity a co ordinated process is in place for both energy demand growth, high capacity margin and limited and climate (IRENA, 2019b). capacity on the grid. • Pursue integrated plans and policies between The likelihood that renewable energy will reach ministries to reach the objectives of having high much higher shares of Jordan’s primary energy shares of renewables in the energy mix and a low mix is closely intertwined with the trajectory of the cost of energy. Examples include partnerships broader energy sector. The Master Strategy addresses between MEMR and the Ministry of Public Works critical holistic issues, including the trajectory towards and Housing to address enforcement challenges; long-term viability of the power sector enabled by MEMR and the Ministry of Water and Irrigation to regulations that ensure cost-of-service recovery develop pumped-hydro storage and replace diesel at all stages; electricity demand stimulation (e.g., pumps with renewable energy; MEMR, distribution through electrification of end-use sectors, elimination companies and the Ministry of Transport to of energy poverty, cross-sector integration in water, develop a roadmap to strengthen distribution grid agriculture, transport); rapid roll-out of storage infrastructure to support electric vehicle charging and demand side management for smooth grid stations; and with municipalities to advance urban integration; as well as the incorporation of future fuels planning that promotes the electrification of such as green hydrogen. mobility and mass transport.

• Study the long-term potential of energy carriers, such as green hydrogen, and its use in industry and transport, where direct electrification and other renewable applications may not be feasible.

60 16 accommodate furtherrenewables covering integration power sector, aholistic approach may beneeded to integrating renewables andtheoversupply inthe Given theapparent limitations onthegridfor shoring uppower demand. term andpositively impact electricity tariffswhilealso contribute to decreasing bulksupplycosts inthelong- cost electricity from renewable resources, whichcould of direct proposals could establish apipelineoflow- sector. Undertheright conditions, subsequent rounds demand growth andexcess capacity inJordan’s power is a result of several factors, including reduced power third round, there have beennofurtherrounds. This cost ofelectricity procured by NEPCO. Since the for new solarare substantially lower thantheaverage reflected intheelectricity mix yet. The realised prices solar PV (USD 0.0255/kWh); however, these are not took place in2018, achieving record-low prices for The latest (third) round ofthedirect proposal auction direct proposal schemeprovides anoutlookto 2021. The current pipeline ofutility-scale projects underthe schemes direct proposal, netmetering andwheeling Action 2: expand theproject pipelinethrough linkages to energy efficiency. as onaddressing project development challenges and schemes withafocus oneffective integration, as well expanding thepipelineofprojects underthevarious sector willrequire wide-ranging actions that focus on Advancing furtherrenewables growth inthepower challenges related to integration. cost electricity from renewable energy aswell as scale of opportunity in Jordan, with access to low- Efficiency Law No. 13of 2012 hashighlighted the since theenactment ofRenewable Energy andEnergy buildings andhouseholds.The impressive growth such asindustries, commercial enterprises, public on theself-consumption of various end-consumers wheeling andnet metering scheme, whichisfocused substantial capacity isbeingdeployed underthe through subsequent rounds ofdirect proposals, and and regulations. Utility-scale projects have advanced of renewable energy facilitated by enablingpolicies The power sector inJordan hasseenrapid uptake 5.2 JOD 50million(Jordan Times, 2020b). Annual electricity tariffsubsidies for theagriculture sector amount to JOD40million, whilethose for small-scaleindustries are JOD29million andmedium-sized industries are around renewable power generation Foster thecontinued growth of 61 • • Recommended actions: network. reflect thetrue cost oftheservices delivered by the rates) for renewable energy projects shouldaccurately electricity tariffdesignandcharges (e.g., wheeling expenditure andlimitgovernment subsidycosts. The up to increase socialimpact, reduce consumer energy welfare schemes.Suchprogrammes shouldbescaled small residential consumers currently undernational launched to deploy rooftop solarPV systems for residences. Government programmes have alsobeen offices, mosques, hospitals, commercial entities and potential inpublicbuildings, includinggovernment governments. Rooftop solarhassubstantial untapped could represent awin-win solutionfor consumers and effective distributed renewable energy solutions agriculture, low-income households and SMEs, cost- With significant annualelectricity subsidies for cost ofenergy supply. utilities) and those most vulnerable due to the high all, includingSMEs,non-energy entities (e.g., water the available gridcapacity isequallyaccessible for wheeling projects, akey challengeisto ensure that the Ma’an Development Area. For industry-specific with storage, buildingonthemodelfollowed for could pursue dedicated wheelingprojects coupled future industrial zones (e.g., between Jordan andIraq) Existing (e.g., inQastal, MadabaandSahab) and to cater to specificdemands (e.g., industrial parks). and gridmanagement issues for projects developed with on-site generation canhelpaddress variability and energy efficiency. Forinstance, combining storage demand generation (e.g., electrification ofend-uses) measures (e.g., storage, network upgradation), cost ofenergy. for SMEsandthosemost vulnerable to thehigh capacity on the grid is equally accessible, including solar PV for theindustrial sector. Ensure available building onthemodelof100 for new wheelingprojects for large consumers, Support thedevelopment ofdedicated areas projects. and theavailability ofgridcapacity for large-scale conditional uponanincrease inelectricity demand for end-consumers. Subsequent rounds will be pipeline, andreduce bulkpower costs andtariffs to develop along-term renewable energy project Implement subsequent rounds ofdirect proposals The Hashemite KingdomofJordan MW community

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

• Support the development of small-scale renewable For utility-scale projects, land acquisition can be energy projects to maximise social impact and a challenge for developers. Standardising land reduce energy expenditure. acquisition processes by pre-developing sites – such as the Ma’an Development Area and Mafraq Development • Design renewable energy projects with a focus on Area for utility-scale solar PV projects – including the effective grid integration through hybrid solutions development of grid interconnection infrastructure, (e.g., solar-storage, solar-wind) building on conduct of sector-specific environmental and lessons from existing storage projects in Jordan. social impact assessment (e.g., bird migration IRENA finds that renewable energy hybrid projects studies in the case of wind) and completion of land have higher capacity utilisation factors and make acquisition, can level the playing field for the private more use of the grid, thereby reducing grid sector participating in future tender processes. At integration costs. In 2018, India’s Ministry of New present, the private sector integrates perceived land and Renewable Energy issued a National Wind- acquisition costs into their bids, which may affect fair Solar Hybrid Policy that sought to optimise the competition. utilisation of infrastructure and better match the generation of renewable energy with the demand A key challenge for the development of net metering profile. Not only was the project able to meet a projects is the waiting period for applications and capacity factor of 30%, the bids received for the subsequent smart-meter installations. Applications nationwide auction were as low as USD 38.7/MWh for the development of projects are submitted to (IRENA, 2019a).17 the distribution companies, which then undertake a review and conduct the requisite technical and grid • Activate existing bylaws and instructions for the impact studies. Waiting periods for applications, GIS adoption of rooftop solar PV and energy efficiency and smart metering installations can be time-intensive solutions in government buildings through a (up to three months) even for smaller projects (e.g., combination of incentives and enforcement. In this 10 kW). Distribution companies are faced with high regard, address the challenge of outstanding bills loads of applications, having approved over 15 300 to distribution companies that inhibits government applications by the end of 2019. Developers could buildings from connecting rooftop solar PV to the potentially bring in third-party studies; however, there grid through tailored repayment schemes or public are several challenges to this such as lack of data and financing outlay. software availability with third parties and a trust issue wherein studies conducted by the distribution • Assess and support renewable energy other than companies are preferred. solar PV and wind, including geothermal and waste-to-energy for municipalities, as well as Recommended actions: applications across sectors (e.g., replacement of • Consider the use of online platforms for project diesel pumps for irrigation, water supply pumping developers of net metering and wheeling projects systems). to complete all necessary processes. Simplified processes and a separate grid code may be Action 3: Address project development designed for small and zero feed-in systems. challenges • Introduce a clear plan to reduce the waiting period Lengthy approval processes and project development for applications and smart metering installation. timelines increase developers’ transaction costs and Consider augmenting in-house capacity within risks. These affect utility-scale and small-scale projects distribution companies to undertake GIS and differently. The time between an expression of interest reduce time for processing. and project commissioning can be several years, and efforts are needed to establish a fixed milestone-based • Improve access to outcomes from grid impact timeframe. For renewable energy projects where studies and consider conditional approvals for interaction with distribution companies is required, projects based on certain pre-requisites (e.g., it is important that EMRC ensures the processes are integration of storage, control systems). streamlined across the companies and simplified for small and zero feed-in systems.

17 In May 2020, a record-low bid of INR (Indian rupee) 2.9 per kWh (USD 0.038 per kWh) for the first year (with 3% escalation each year) was received for 400 MW of “round-the-clock” supply through wind, solar or hybrid solutions with storage: www.rechargenews.com/transition/india-hails-renewable-milestone-after-first-deal-for-24-7-green-power/2-1-806047.

62 all thecodes. Despite Jordan’s comprehensive energy Meeting Level DoftheJGBG isequivalent to abiding by adoption ofgreen buildingsbeingapproved in2015. issued in2013, withanincentive programme for the Building Council needto beenforced. The JGBGwas For buildings,thebuildingcodes issued by theNational sufficient capacity, suchasJISM, may be considered. annually. Shiftingthisresponsibility to entities with limited capacity to review thousandsofenergy audits responsibility for reviewing theaudits,butMEMRhas has beenthat thebylaw outlinesthat MEMRbear the penetration hasbeen limited. Akey challenge financing programmes for energy audits;however, large consumers. The JREEEF and JCI have targeted Bylaw No. (73) alsomandates energy auditsfor all discussed furtherinChapter 5,Section 3. Enforcement, however, hasbeenakey challenge, as heaters from April2013 onpre-specified buildings. making compulsory theinstalment ofsolarwater by design,withtheEnergy Efficiency Bylaw No. (73) renewable energy andenergy efficiency were made measures in the Kingdom. Some linkages between the foundations for advancing energy efficiency (73) for theyear 2012 andtheNEEAPshave provided pursued intandem.The Energy Efficiency Bylaw No. Renewable energy andenergy efficiency shouldbe efficiency Action 4: Strengthen linkages to energy • • • participating intheauction process. can level theplaying field for theprivate sector Authority to provide infrastructure management allowing entities like theMa’an Development wheeling projects, pre-developing sites and renewable energy projects. For utility-scale and Develop andissue instructions for landusefor monitoring andevaluation plans(IRENA,2019a). program, andletters ofsupportaswell asreporting, a community engagement strategy, abenefitsharing sharing guidelinethat includesasocialriskanalysis, to support community engagement and benefit project developers are required to submit evidence minimise landacquisition processes. InSouthAfrica, involvement canincrease socialacceptance and beyond price (IRENA,2019a) findsthat community Renewable energy auctions: Status and trends maximise socialimpact. Inthiscontext, IRENA’s Engage localcommunities around project sites to grid for small-scalerenewable energy projects. process ofsecuringaconnection to thedistribution Separate city planning requirements from the 63 • • • • • Recommended actions: users, especiallygovernment buildings. with substantial cost-saving opportunitiesfor end- efficiency programmes canbesubstantially scaledup programme. Benefitingfrom the experience, energy rolled outanenergy auditandenergy efficiency responsible for all government buildings, has also The Ministry ofPublic Works andHousing,whichis replacement ofinefficient lighting in households. to deploy LEDstreet lighting inmunicipalitiesand on energy efficiency through dedicated programmes On the consumption side, progress has been made scale uptheadoptionofsuchsolutions. Irbid. However, dedicated regulations are missing to Pilot projects already exist, suchasinWadi Shalalain where bothelectric andthermalenergy isconsumed. effective energy alternatives, especiallyinindustries can drastically improve efficienciesand offer cost- instance, combined heat andpower applications the need for fuel imports. In power generation, for primary energy needs,thereby directly reducing energy sector andthewidereconomy directly impact Large-scale improvements inefficiency across the remain to beaddressed. efficiency framework, challenges of enforcement benchmarks andbest practices. audits, consider development ofindustry-specific energy) measures. on findings from Based energy implement energy efficiency (and renewable Develop capacity withintheindustrial sector to audits. available to specificindustries to undertake the that multiplelicensed andspecialisedentities are for large industry consumers. MEMRshouldensure Improve compliance with energy auditrequirements with theUNDP’s ongoingprogramme inJordan. inspection for new construction inco ordination building sector. Supportthermalinsulation Incentivise compliance withJGBGin Jordan’s NEEAP beyond 2020. also working towards issuing theupdate to the 2018-2020 andreporting onperiodicbasis while Ensure effective implementation of the NEEAP devised by MEMR. well-designed strict penaltiesandincentives This can be achieved through a combination of existing codes andtheEnergy Efficiency Bylaw. and public buildings, as well as households, with Improve compliance ofindustry, commercial The Hashemite KingdomofJordan

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

• Encourage the adoption of energy-efficient Addressing the integration challenge will require equipment in industries with due consideration for a wide range of actions to improve overall system their market competitiveness. flexibility in the short-, medium- and long-term. In Jordan’s context, these include building and upgrading • Scale up the adoption of energy-efficient transmission and distribution infrastructure, deploying streetlights and replacement of inefficient battery and pumped-hydro storage, promoting residential lighting, building on the programmes demand-side management, and incentivising being undertaken by municipalities and MEMR. electrification of end-uses. These measures cannot be pursed in silos and must form part of a holistic • Introduce dedicated regulations and codes for strategy to improve the flexibility of the power system combined heat and power applications that can to integrate higher shares of renewables. Several tools substantially increase energy efficiency by building are now available to analyse the flexibility needs of a on existing pilot projects. A dedicated heat law power system (e.g., IRENA’s FlexTool) and identify the would enable NEPCO to sell heat as a commodity least-cost flexibility solutions and integrate within the as with electricity, thus equipping itself with the strategy. ability to supply industrial areas with electricity and heat through combined heat and power.

5.3 Plan for the integration of higher shares The integration challenge of renewable power requires a wide range of actions to improve system flexibility. The share of electricity from renewables in Jordan’s power mix has grown rapidly over the past decade. These include building and Concerns have emerged over the ability of the power upgrading transmission and system to integrate renewable shares well beyond distribution infrastructure, 25%, resulting in the suspension of new projects over battery and pumped-hydro 1 MW and no additional direct proposal rounds since storage, promoting demand-side 2018. The integration challenge is further exacerbated by slow electricity demand growth and the nature of management, and incentivising “take or pay” PPAs with conventional IPPs, resulting electrification of end-uses. in capacity charges and adding to integration costs.

Figure 18. Innovative solutions in power system

Information flow

Interconnections Aggregators Battery storage Smart metters Smart charging

GENERATION TRANSMISSION DISTRIBUTION PROSUMERS

Source: IRENA (2019c)

64 • • Recommended actions: end-use sectors suchastransport. which isnecessary withlarge-scale electrification of measures canalsoallow effective loadmanagement, integration of higher shares of renewables. These and data acquisition [SCADA] systems) cansupport technologies (e.g., smartmeters, supervisorycontrol coupling generation with storage and adopting digital are congested. Strengthening distribution networks, connect to thedistribution grid,large partsofwhich majority ofthenet metering andwheelingprojects Palestine Arabia andSaudi –willalsobecrucial.The building onexisting agreements withEgypt, State of and enhancement of regional electricity trade – high capacity factors, measures for demandcreation the Kingdomfaced withsluggishdemandgrowth and to ensure power isevacuated inatimelyway. With scale projects andloadcentres (e.g., industrial zones) infrastructure development withthoseofnew utility- term planningisneededto alignthetimelinesof is long(usuallyfive to six years). Therefore, long- the development timeframe for suchinfrastructure renewable power from the south of the Kingdom, Green Corridor project for transmission of As seen in the case of the yet-to-be-commissioned management. management to reduce losses andenableactive load higher shares, aswell asimprovements ingrid to existing distribution infrastructure to accommodate renewable energy projects andloadcentres, upgrades corridors between areas withhighconcentrations of involves thedevelopment ofdedicated transmission key hurdle to further growth. Strengthening networks capacity to handlehighershares ofrenewables isa The lackoftransmission anddistribution infrastructure infrastructureand distribution Action 5: Strengthen nationaltransmission energy projects. requirements inthe east for future renewable is neededontransmission infrastructure from thesouthofKingdom.Greater focus for transmission ofrenewable power generation Expedite the commissioning of theGreen Corridor power demand potential. identifying regions withexisting andupcoming agriculture, transport andwater are crucialfor end-uses. Other ministries related to industry, share ofrenewable energy andelectrification of management to managefuture increases inthe Upgrade the transmission network and system 65 framework to supportlarge-scale deployment at the storage intheKingdomislackofaregulatory the mainshortcoming for thefuture growth of solar-battery project operating since February 2019, While Jordan hashada23 of electricity from renewable energy. distribution infrastructure to integrate highershares for reducing theinvestment needsintransmission and part ofaholistic strategy, storage alsohasthe potential demand andallow load-shifting.When deployed as grid“ installations insomecases), reduce peak-load increase self-consumption (even enabling“zero-to- hydro storage canreduce thevariability ofrenewables, with arenewable power supply. Battery andpumped- as astand-alone asset aswell aswhenintegrated Storage bringssubstantial value for gridmanagement leveldistribution management atthetransmission and Action 6: Introduce storage codefor grid • • • • • reaping thefullbenefitsofgrid digitisation. the implementation of smart gridsand facilitates consumption. Suchdata form thebedrock for smart meter rollout andbetter understand management to leverage data emerging from Develop astrategy for data andknowledge thereby to reduce losses anddowntime. improve gridmonitoring andmaintenance and with NEPCO andthedistribution companies, to measure shouldbeledby EMRC,inconsultation bylaws for smartgridimplementation. These rollout ofsmartmeters, issue regulations and Upgrade NEPCO control centre and,building on IDECO. successes ofdistribution companies suchas to improve grid management, building on the Increase therate ofpenetration ofsmartmeters stations. other loadssuchasfrom electric vehicle charging network capacity to integrate renewables and to strengthen infrastructure andunlockfurther congestion, in the short-term. Mobilise investments network – especially in industrial zones – with high Identify priority areas withinthedistribution of Palestine, Arabia Saudi andLebanon. on recently signedagreements withEgypt, State development to facilitate electricity trade, building Continue to focus onregional infrastructure The Hashemite KingdomofJordan MW/12.6 MWh Li-ion

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

generation, transmission, distribution and end-user Action 7: Improve load management through levels. The current scope of energy storage projects demand side solutions is largely utility-scale, with high untapped potential for combining storage with distributed renewables The increasing share of variable renewable power in in buildings (public, private and commercial), and Jordan’s electricity mix will require active measures small and medium-sized industry. The regulation to match (existing and new) demand and supply in is important to guide investments in storage with an optimum manner that reduces overall system private sector participation, as well as to create costs (e.g., need for peaking plants) and incremental market mechanisms for storage solutions to provide integration infrastructure investment. At present, there additional grid services related to demand response, is no peak-load strategy, which leads to expensive, ramp controls, ancillary services and power quality. flexible generation (e.g., diesel, oil-fired generators) being procured during high-load times to balance Recommended actions: demand and supply. This increases the overall cost • Conduct a comprehensive flexibility needs of electricity supply and, if passed on to consumers, assessment to identify least-cost storage solutions, would be reflected in rising consumer tariffs. including battery storage, pumped-hydro needed at the transmission, distribution and end-user Further demand-side management measures could levels, and supply-side flexibility (e.g., CSP with shift parts of the load to non-peak times of the day molten salt storage). with use of incentives such as time-of-use tariffs. With the growth in demand for electric vehicles, for • Formulate a dedicated storage code to provide instance, offering lower charging tariffs during high the regulatory guidance for the development of solar generation/low-load times (11 a.m. to 2 p.m.) battery storage infrastructure at the generation, can facilitate load shifting and reduce peak load transmission, distribution and end-user-levels and demand. At the same time, the cost of charging can instructions to connect to the grid. The actions have be substantially higher during off-peak solar periods, to be taken by MEMR and EMRC in consultation leading to increased revenues for the electricity with the system operator (NEPCO), distribution companies. companies and other stakeholders with relevant experience. Recommended actions: • Develop and implement a renewable energy peak- • Integrate utility-scale and distributed energy load strategy to address peak demand in buildings storage into the overall Energy Sector Master and industry through solar PV and storage, when Strategy, including targets, which clarifies the competitive with expensive peaking plants. services storage can provide within the power sector (e.g., spinning reserve, arbitrage, load- • Set targets for renewable energy and storage to shifting, peak shaving) and the remuneration meet a certain share of peak-load demand. models. • Assess the feasibility of time-of-use tariffs to • Prioritise the development and financing of facilitate demand shifting towards low-load combined renewable energy and storage projects periods. Incentivising electric vehicle charging in regions where grid congestion is high and low- and high industrial loads during low-load/high- cost energy supply is a priority (e.g., industrial renewable generation periods with low tariffs, and zones, SMEs, public buildings). correspondingly higher tariffs during high-load periods, can support integration efforts. • Take steps towards the implementation of a project in collaboration with the Ministry of Water and • Create new demand streams from electric water Irrigation Building on outcomes of the assessment heaters. In Oregon, a smart grid enables water of reservoirs for developing pumped-hydro storage heaters to be fitted with a two-way communication conducted under the EU-funded Renewable response system such that a “fleet” of water heaters Energy and Energy Efficiency II Programme. can be used as a virtual battery (Routefifty, 2020).

66 facilitating energy auditsandraising awareness. by reducing loadsandsizingofsystems, aswell asby Insulation, among others, plays acomplementary role Energy Efficiency andtheJordanian Code for Thermal for deployment. The enforcement oftheBylaw for and commercial sectors andto lay outthe mechanisms renewable heat applications across domestic, industry heat bylaw to provide long-term targets for various On theotherhand,there isalackofdedicated users andlocalvendors. commercial sectors is limited on the part of both end- and applications ofrenewable heat inindustry and coal. Ontheonehand,awareness oftheeconomics need for traditional fuelssuchasLPG,electricity and solutions have thepotential to substantially reduce the and tobacco plants, amongothers. Inindustry, such installations are already inplace inpharmaceutical solutions meeting process heat needs.Several This isalsothecaseinindustry, withCSPandCSH public infrastructure (e.g., hotels, swimming pools). other end-usesegments suchascommercial and There isalsosubstantial untapped potential across financial incentive programmes for end-users. of mandates andcodes, andabsence oflong-term lack oftargets for deployment, lackofenforcement sector. Someofthechallengesfaced includethe be supported to continue deployment inthedomestic over 26 programmes inJordan have successfully installed mainly inthedomestic sector. The solarwater heater mature form ofrenewable usefor heating/cooling, Solar water heating applications remain themost renewable andbuildings solutionsinindustry Action 8: greater Support adoptionof potential for renewables usefor heating/cooling. successful programmes, there isstill large untapped solutions to provide process heat inindustry. Despite and, to alesser extent, concentrated solarheating solar water heating systems for domestic applications to meet heating energy needshaslargely involved across different end-usesectors. The useof renewables use ofrenewables for meeting energy needsfor heat the cost ofenergy requires astronger focus onthe resources intheKingdom’s energy mixandreducing energy consumption. Increasing theshare ofdomestic accounts for less than a quarter ofJordan’s final As discussed in earlier chapters, the power sector 5.4 heating andcooling Incentivisetheuseofrenewables for 000 systems (asof2018), andtheseshould 67 • • • • • • • Recommended actions: poverty. public buildingsandhouseholdsfaced withenergy has thepotential to bescaledupto includeother other infrastructure upgrades. The programme improving insulation ofschoolbuildings,among delivering heating andcooling services, whilealso distributed renewable energy solutionsfor an important step to tacklethischallenge, utilising The Royal Initiative for Heating in Schools represented poverty isakey challenge. and cooling requirements inareas faced withenergy Given Jordan’s climatic conditions, meeting heating specifically inindustry. heating/cooling technology applications, manufacturers on renewable energy-based Improve awareness among local suppliers and inform target setting. feasibility studies to increase awareness and to conduct industry-specific techno-economic energy solutions, including CSH andwater heaters, dataGather from industries usingrenewable development ofsolar roofs. Support capacity buildingofarchitects for the compliance withallmandatory buildingcodes. Implement theJGBG(Level D), whichincludes (MRV) protocols). the useofMonitoring, Reporting andVerification institutions (e.g., training ofstaff/inspectors on incentives andcreating sufficient capacity within mandates through acombination ofpenalties, mechanism to improve compliance withexisting Address enforcement challengesby developing a renewable energy. pools andindustrial processes) to shift towards conventional boilers for heat (e.g., inswimming enforcing existing andnew facilities that are using Develop aprogramme for incentivising and Report oftheMEMR. and reported regularly aspartoftheAnnual from thesalesofsuchsystems shouldbecollected implemented in2018 and2019. The data collected on lessons learnedfrom theprogrammes and industry sectors backed by targets building penetration strategy for thedomestic, commercial Develop aclear, long-term solarwater heater The Hashemite KingdomofJordan

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

• Make accessible and affordable infrastructure for initiatives taken by various municipalities, there is testing and certification of technology through presently no incentive or regulation that encourages specialised entities such as the RSS. Quality the shift. Furthermore, awareness of the techno- marks and logos, such as the SHAMCI developed economic and environmental opportunity presented for solar water heaters jointly by MEMR, NERC, by the electrification of fleets is limited. This lack of JSMO and RCREEE, need to be devised for various awareness potentially impacts key decisions related technological applications. to upcoming public transport procurements, including the Amman Bus Rapid Transit. • Build on the success of the Royal Initiative for Heating in Schools by expanding the coverage of The development of charging infrastructure – a renewable energy solutions among buildings and critical feature of the electric vehicle ecosystem households where energy poverty is prevalent. – has lagged. EMRC was the first in the region to introduce instructions for licensing electric vehicle 5.5 Support renewable options for charging stations in 2014, but their rollout has not transport and mobility kept pace with the requirements necessary to meet a rapidly growing market segment. There is an urgent The transport sector is the largest energy consumer need to improve the business case for private sector in Jordan and is reliant mainly on crude oil derivatives participation in charging infrastructure development such as diesel and gasoline. Government efforts to in partnership with distribution companies and decrease energy use in the sector have primarily relied municipalities. on incentivising high efficiency vehicles, including non-plug-in hybrids and fully electric vehicles. While The rapid growth of electric vehicle adoption offers the adoption of hybrid and electric vehicles has grown both challenges and opportunities. Incentivising rapidly over the past few years, they still represent electrification of the transport sector provides the a small share of the overall transport fleet. Rapidly benefit of coupling with cost-effective renewable scaling up the use of hybrid and electric vehicles will power and addressing slow electricity demand growth. require a holistic approach that focuses on different However, increasing charging load during non-solar vehicle segments, concurrent charging infrastructure peak hours will place additional burdens on the development and smooth integration with the grid. grid. Through measures such as time-of-use pricing, Additionally, other domestic energy sources also need charging can be incentivised to take place during low- to be tapped, including gaseous and liquid biofuels, as load hours and peak solar PV generation. With smart well as green hydrogen in the long-term. metering and digitisation, electric vehicles also have the potential to participate actively in providing grid Action 9: Start to diversify energy use in the services, including storage. transport sector To harness these opportunities, however, a long-term To reduce reliance on imported fuels and tackle energy diversification strategy for the transport sector environmental pollution, the government has since is necessary that also considers other alternatives 2008 offered varying levels of incentives to support such as biogas for large municipality vehicles and the adoption of hybrid and electric vehicles. This green hydrogen. The Ministry of Transport will be resulted in the purchase of over 30 000 such private the nodal agency at the national level responsible vehicles by the end of 2019. However, this represents for integrating alternate mobility solutions within a small fraction of the overall fleet of road transport in the national transportation strategy. Experience from the Kingdom. The adoption of electric vehicles remains emerging economies is now available on designing highly sensitive to fiscal incentive schemes introduced holistic electric vehicle policies that include long- by the government, and sales have fluctuated with term targets (by segment), incentives for vehicles, changes in policy. models for private and public charging infrastructure development, vocational training, and research and The economic and environmental case for electrifying development. Furthermore, end-of-life management fleet vehicles, in particular public buses and fleets, is of batteries also needs to be considered for sustainable stronger than the case for private vehicles. It offers recycling and disposal. The absence of such a strategy the opportunity to benefit from economies of scale, and the lack of a clear roadmap with targets and higher utilisation of vehicles and displacement of siloed policies are substantially slowing down the polluting vehicle stock (e.g., public buses). Aside from energy transition in the transport sector.

68 18 • Recommended actions: • • • • • • • http://www.trt.it/en/PROGETTI/development-of-long-term-national-transport-strategy-for-jordan/ Long-Term National Transport Strategy. Master Strategy for theEnergy Sector andthe plan for thetransport sector inline with Jordan’s Devise along-term energy diversification action by smartmetering anddigitisation. including storage anddemand-shifting,enabled electric vehicles into providing gridservices, an electric vehicle-to-grid strategy that integrates between 11a.m.and2p.m. Furthermore, devise low-cost tariffs for charging duringpeaksolar PV electric vehicles into thepower system by offering Adopt aholistic strategy to effectively integrate private sector investments. charging stations to improve thebusiness casefor 2014, aswell astheelectricity tariff structures for Adapt thelicensing instructions issued by EMRCin for distributed charging. new buildingsto develop necessary infrastructure National BuildingCode, incentivising existing and Integrate electric mobility within the Jordan business) andmunicipalities. sector, distribution companies (asnon-core infrastructure development ledby theprivate for rapidly scaling up public and private charging Identify themost appropriate business models procurements. making regarding upcoming publictransport and undertake pilotprojects to inform decision- environmental assessment ofelectric publicbuses Conduct acomprehensive techno-economic and building ontheexperience ofGAM. adequate measures to facilitate thetransition, transition to electric vehicles andputinplace Introduce mandates for large fleet owners to development andcapacity buildingfor O&M. private vehicles andaddress charging infrastructure the electrification ofpublictransport, fleets and should includetargets andstable incentives for adoption andreduce airpollution.The policy Develop a holistic electric vehicle policy to facilitate stable policiesandincentives. hydrogen. Suchastrategy shouldbebacked by liquid and gaseous biofuels, as well as green alternative fuelssuchasrenewable electricity, should includetargets for anappropriate mixof 18 The plan 69 reaching acumulative USD since 2012, investment flows have grown rapidly, With theexpansion oftherenewable energy sector 5.6 • • institutions to mobilisegreater capitalfor thesector. is neededto increase thecapacity oflocalfinancing Jordan’s renewable energy sector, focused attention international financinginstitutions participating in grids, and storage. With a strong track record of charging infrastructure, transmission anddistribution infrastructure development, suchas electric vehicle be needed in energy efficiency and complementary cooling sectors. Substantial investments willalso power sectors, as well as in transport and heating/ mobilised inboththeutility-scale anddistributed greater levels ofdomestic capital willneedto be To scaleuprenewable energy adoption, much energy consumers. been madeavailable to conduct energy auditsinlarge CBJ andtheJREEEFprogramme. Financinghasalso rooftop solar PV andsolarwater heaters, through the small-scale renewable energy applications, suchas in theimplementation ofpublicfinancingschemes for banks andco-operatives have played acatalytic role development finance institutions, local commercial However, withstrong supportfrom donors and secure more attractive capitalfrom external sources. and theability ofinternational project developers to energy projects, thescaleofinvestments required, local banksto project-finance utility-scale renewable These factors includealackofcapacity andskillswithin the mobilisation ofdomestic financing for thesector. development finance. Several factors have limited international sources, involving bothcommercial and (MEO, 2020). The bulkofinvestments have beenfrom freight, for whichelectrification isnot feasible. segments ofthetransport sector, suchaslarge municipality vehicles) andgreen hydrogen for such asliquidandgaseousbiofuels(e.g., for large Support thedevelopment ofalternative fuels alone orgrid-connected applications). stationary electricity storage applications (stand- associated capacity building, includingre-use for batteries withincreasing electric vehicles and Plan for end-of-life management oflithium-ion investment Catalyse Renewable Energy The Hashemite KingdomofJordan 5 billion by theendof2019

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

Action 10: Build the capacity of local • Increase awareness among financing institutions financing insitutions and project developers (including branches of banks) on the scope of technologies covered under various financing While some local banks are co-financing large programmes. projects with multilateral development banks, local financial institutions are still not very actively involved • Encourage international financing institutions, with utility-scale renewable energy financing. This is including multilateral development banks and especially true of financing related to projects that national development banks, to establish co- require larger volumes of investment, longer tenor lending and risk mitigation facilities to increase and unique documentation. Over time, capacity is the experience and exposure of local banks to the being developed as understanding of the sector renewable energy sector. improves. On-lending and risk mitigation facilities by international financing institutions, including • Design capacity-building initiatives for developers multilateral development banks and national on the preparation of bankable project proposals development banks, can play a key role in increasing and business plans covering renewables, energy the experience of local banks and mobilising larger efficiency and emerging technologies (e.g., shares of domestic capital for renewable energy storage). development. • Consider lending requirements for local banks Beyond financing renewable energy projects, large to meet in certain priority sectors, including investment needs exist for energy efficiency (e.g., renewable energy. LED lighting, industrial equipment replacements) and complementary infrastructure development Action 11: Improve access to public (e.g., distributed storage, electric vehicles, charging financing programmes infrastructure). The distributed nature of these investments means that local financing institutions To support the implementation of Law No. 13 of will have to play a fundamental role in designing 2012 concerning the Renewable Energy and Energy financing products to meet these investment needs. Efficiency Law and subsequent revisions, several For instance, vehicle financing departments within public financing schemes have been established with banks must consider dedicated lending lines for the involvement of the CBJ, JREEEF, co-operatives, electric vehicles, home loan financing to be linked commercial banks and donors. with rooftop solar and enterprise financing with energy efficiency investments. The lack of capacity The CBJ’s concessional financing facility is delivered within local banks to understand emerging financing through commercial banks for an amount up to opportunities strongly inhibits their ability to design JOD 4 million. A challenge faced in accessing the tailored products and services for various consumers. financing is that the loans can be accessed only by end-consumers and not by the project developers Capacity gaps also exist among developers and themselves. Some end-consumers are unwilling to take proponents of renewable energy projects. The limited on debt leading to less uptake, while the programme skills to prepare project documents, develop business also does not benefit from portfolio lending to plans, undertake accurate project costing and seek project developers. Other challenges faced by project financing are leading to low-quality proposals proponents are the varying levels of awareness among reaching financing institutions. local bank branches on the terms of the programme and their capacity to evaluate proposals in a timely Recommended actions: manner. Finally, the due diligence standard applied • Develop the capacity of green lending units in local while assessing project applications is the same, commercial banks with regard to renewable energy irrespective of the magnitude of financing sought, and energy efficiency as well as new technologies leading to long lead times and higher transaction (e.g., storage, electric charging infrastructure, costs for smaller projects. energy efficiency in industries). The increased capacity should improve the implementation Regardless, the CBJ concessional lending facility has of programmes from JREEEF and CBJ, as well received a strong response and has played a catalytic as access to additional international financing role in developing projects not large enough for project (e.g., climate finance). This can be undertaken in financing and yet not small enough for alternative collaboration with the Association of Banks. financing programmes by JREEEF and donors.

70 • • • • • Recommended actions: lending programmes. and capacity within banks to implement small-scale is presenting challenges given the lack of awareness JREEEF ispartneringwithcommercial banks,which next phaseoftheprogramme for solarwater heaters, for installing over 20 has partnered withseveral entities includingCBOs In implementing thefinancingprogrammes, JREEEF heating for schools;andenergy auditsfor industry. households, publicbuildingsandcommercial entities; covering solarwater heaters; rooftop solarfor implemented anumberoffinancingprogrammes institutions anddonors. JREEEFhassuccessfully funds andcontributions from international financing systems andislargely capitalisedby domestic JREEEF’s scope of coverage applies to small-scale in industry, commercial, transport). renewables andenergy efficiency across sectors (e.g., play acrucialrole inaccelerating thedeployment of and provisions for allowing portfolio lending could Tailored lendingfacilities withhigherinvestment limits heaters inOctober 2019. programme launchedby JREEEFfor solarwater Increase awareness among consumers onthenew in AjlounandDeirAlaa. water heaters, suchasintheprojects ofCo-Water implementation oftherevolving fundfor solar development. Lessons canbedrawn from the consumers and contribute to long-term market that reduce uncertainty for theprivate sector and based oninstruments, suchasrevolving funds, Design incentives for renewable energy solutions under various modelssuchasESCO. heaters, building ontheJREEEFexperience and renewable energy applications, suchassolarwater Introduce sector-specific funding facilities for projects. reduce time andtransaction costs for smaller banks dependingonthesize oftheproject to for proposals seekingfinancingfrom commercial Develop differentiated duediligence standards of theCBJprogramme. finance institutions and building on the experience transport) inpartnership withdevelopment specific sectors (e.g., inindustry, commercial, portfolio lendingto supportdeployment across investment limits and provisions for allowing Design tailored lendingfacilities withhigher 000 solarwater heaters. Inthe 71 offer clarity for domestic and international investors Master Strategy for theEnergy Sector isexpected to growth potential oflocalenterprises. The updated over 1 changes, in particular the suspension of new projects and export market. At thelocallevel, abruptpolicy manufacturing’s attractiveness isthesize ofthelocal several challenges. A key determinant of domestic However, localenterprises continue to face axis tracking andbifacial modules). opportunities (e.g., solarwater heating withPV, single structures andsolarwater heaters –withseveral new is strong insomeareas –modules,cables,mounting existing domestic manufacturing basefor renewables the introduction of localcontent requirements. The to support local industry development, including The Kingdom has implemented several initiatives and development. industrial policies,skillsdevelopment, andresearch on deployment alone. These include, for instance, a broad mixofpoliciesbeyond thosethat focus opportunities. Achieving thesebenefits requires manufacturing industries and generate employment opportunity to develop new manufacturing andnon- A renewable energy-based energy transition offers the job creation sectors andmaximiserenewable energy Action 12: Leverage capacityfrom other well asontheregional andglobalscale. services neededfor theenergy transition inJordan, as right ecosystem to provide the diverse products and Targeted actions canensure that localindustry hasthe people across different segments of the value chain. registered companies employing several thousand industry hasstrong foundations, withhundreds of economic benefits.Jordan’s renewable energy thus contributing to job creation and wider socio- participation of the local renewable energy industry, transition canbemaximisedby ensuringtheactive preservation objectives. The benefitsoftheenergy contributing to energy security andenvironmental to reduce the cost of energy in Jordan, while also Renewable energy technologies offer theopportunity andjobcreationindustries 5.7. • development. financing to supportlong-term market JREEEF, utilisingdomestic andinternational Ensure capitalisation of existing funds, such as

Strengthen localrenewable energy MW, have negatively impacted themarket The Hashemite KingdomofJordan

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment:

to plan for capacity augmentation locally, as well as • Create a national master plan for the development of product/service diversification to cater to local and local job creation in the renewable energy industry regional markets. While a local content regulation is in in collaboration with the MEMR, the Ministry of place,19 its definition, effectiveness, and influence on Higher Education and Scientific Research, the cost and quality need to be closely assessed. Ministry of Labour, the EMRC and the Ministry of Industry, Trade and Supply. The master plan should Aside from the manufacturing of renewable energy identify future skills needs across the renewable technologies, several new opportunities for value energy value chain, including manufacturing and creation exist. These range from various O&M, design, O&M, as well as complementary technologies such engineering and financial services to the development as battery storage and electric vehicles. of new solutions such as industrial automation, smart metering and hydrogen infrastructure. A key challenge • Focus on education and training programmes and for the sector is also building adequate skills to meet partnerships between universities and industry to the needs of a rapidly growing renewable energy ensure skills availability in the sector. sector. Identifying future skills needs and partnering with training institutes, universities and industry Action 13: Raise awareness and strengthen are important steps for developing curricula and the information base on renewable energy delivering quality training for the workforce. Skills development and training opportunities should be The lack of awareness among different stakeholders equally accessible to both men and women, with a on the costs, benefits and opportunities of renewable view towards greater participation of both genders in energy solutions is a key impediment for the expansion the renewable energy workforce. of the sector. The sector is rapidly evolving, with costs falling and new technologies and applications Recommended actions: emerging for residential, commercial, industry and • Devise a comprehensive industrial policy providing transport end-uses, leading to information asymmetry a vision for the development of a robust local among policy makers, industry and consumers. This industry (manufacturing and non-manufacturing, directly impacts effective decision-making and the including O&M) around renewable energy, energy uptake of renewable energy solutions despite a strong efficiency and complementary solutions (e.g., economic case for adoption. Lack of awareness is also storage, smart grids, green hydrogen). seen among consumers regarding existing policies and financial incentives offered by the government. • Provide a longer-term outlook for renewables Integrating much higher shares of variable renewables, demand to enable the private sector to plan for creating end-user awareness, changing behaviours capacity augmentation and product/service and fostering the ability to adopt new technologies diversification. (e.g., electric vehicles) will be crucial for successfully diversifying Jordan’s energy mix. • Review existing public procurement processes to identify design features, such as origin of Access to up-to-date data is important for planning, equipment requirements, that present challenges effective decision-making and developing awareness for local suppliers to participate in the sector. programmes. Yet disaggregated data related to energy use and consumption at the subsector level is • Strengthen the export incentives available for local not easily accessible. In industry, for instance, access renewable energy products and services, building to plant-level energy use data can be instrumental for on regional agreements such as the Joint Arab national and regional benchmarking, for informing Market. planning processes at the national level as well as for assessing the viability of renewable energy and energy • Assess how local content regulations and their efficiency measures. The enforcement of requirements definition, effectiveness, and influence on cost and for energy audits under the Energy Efficiency Bylaw quality can be optimised. No. (73) for the year 2012 already provides a sound basis to gather standardised data disaggregated at • Develop innovation hubs and pilot projects to the industry level. address solutions needed for renewable energy integration across sectors to build knowledge and experience.

19 Currently set at 35% for utility-scale solar PV and 20% for wind projects.

72 • • • • • Recommended actions: industry-specific energy data. a nationwide effort to standardise andgather of Industry andCommerce isneededto conduct collaborative effort with MEMRandthe Chamber is authorisedto gather data; for industry, a industry. By law, theDepartment ofStatistics energy useat thesubsector level, especiallyin Strengthen thedata andinformation baseon environmental benefitsof renewable energy. information agenciesonthesocio-economic and Increase outreach through mediaandpublic with casestudies ofbenefits realised. opportunities for renewables adoptionsupported (e.g., hotels), residential andwater sector, to share groups, suchasinindustries, commercial businesses campaigns aimedat highpotential end-user Design focused outreach programmes and financing schemes. their costs andbenefits,as well asaccessible around theavailable renewable energy options, Design tailored publicawareness raising campaigns other relevant institutions. as thoseat MEMR,theMinistry ofEnvironment and governmental andlocal-level decisionmakers such should be effectively communicated by both and environmental benefits. This key message energy inJordan anditslong-term socio-economic Convey theconvincing business casefor renewable 73 The Hashemite KingdomofJordan

KEY CHALLENGES AND RECOMMENDATIONS Renewable Readiness Assessment: References

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