TABLE OF CONTENTS TABLE OF CONTENTS 2 LIST OF ACRONYMS 4 1. SITUATION ANALYSIS 5 1.1. Context and Global Significance ................................................................................................... 5 1.2. Baseline, barriers and current government policy to address the root causes and threats ...... 6 1.3. Market Analysis and Current Status of Small Decentralized RE Applications in Lebanon ......... 9 1.4. Institutional Framework and Stakeholder Analysis .................................................................. 12 1.5. Other Related Past and On-going Activities .............................................................................. 14 2. PROJECT STRATEGY 17 2.1. Project Objective, Outcomes and Outputs ................................................................................ 17 2.1.1. Outcome 1: Investments in decentralized renewable energy power generation increased 17 2.1.2. Outcome 2: A supportive policy and regulatory environment enforced for attracting investments for privately-owned, grid-connected renewable energy power generation 19 2.1.3. Outcome 3: Monitoring and quality control of RE-based decentralized power generation introduced and sustained 20 2.2. Project indicators, Risks and Assumptions ................................................................................ 21 2.3. Expected Global, National and Local Benefits ........................................................................... 22 2.4. Project Rationale and GEF Policy Conformity ............................................................................ 23 2.5. Country Ownership: Country Eligibility and Country Drivenness ............................................. 24 2.6. Financial Modality and Cost-Effectiveness ................................................................................ 24 2.7. Sustainability (including Financial Sustainability) ..................................................................... 25 2.8. Replicability ................................................................................................................................. 26 3. PROJECT RESULTS FRAMEWORK 27 3.1. Project Outputs and Related Target(s) / Sub-target(s), as applicable ...................................... 29 3.2. Total Budget and Workplan........................................................................................................ 30 3.3. Budget Notes ............................................................................................................................... 32 3.4. Summary of Funds: ..................................................................................................................... 32 3.5. Summary of project co-financing (in USD) ................................................................................. 33 4. MANAGEMENT ARRANGEMENTS 35 5. MONITORING FRAMEWORK AND EVALUATION 38 5.1. Project Start ................................................................................................................................ 38 5.2. Quarterly ..................................................................................................................................... 38 5.3. Annually ...................................................................................................................................... 39 5.4. Periodic Monitoring Through Site Visits .................................................................................... 39 5.5. Mid-term of Project Cycle ........................................................................................................... 39 UNDP Environmental Finance Services Page 2 5.6. End of Project .............................................................................................................................. 39 5.7. Learning and Knowledge Sharing ............................................................................................... 40 5.8. Communications and Visibility Requirements ........................................................................... 40 5.9. M & E Workplan and Budget ...................................................................................................... 41 6. LEGAL CONTEXT 43 7. ANNEXES 44 Annex 7.1. Offline Risk Log .................................................................................................................... 44 Annex 7.2. Agreements .......................................................................................................................... 49 Annex 7.3. Terms of Reference ............................................................................................................. 51 Annex 7.4. Greenhouse Gas Emission Reduction Analysis ................................................................... 57 Annex 7.5. Major Elements of the Current Energy Policy................................................................... 63 Annex 7.6. Potential for and Current Status of Renewable Energy Use and Planning in Lebanon ... 65 Hydro Power 65 Wind Power 66 Bioenergy / Biomass 68 Photovoltaic (PV) 69 Geothermal 69 Annex 7.7. Tables .................................................................................................................................. 70 Annex 7.8. List of Solar Thermal Companies (Solar Water Heaters) in Lebanon Compiled by the Lebanese Center for Energy Conservation (LCEC) .................................................................................. 74 Annex 7.9 List of Solar Photovoltaic Companies in Lebanon Compiled by the Lebanese Center for Energy Conservation (LCEC) .................................................................................................................... 83 Annex 7.10. List of Wind Energy Companies in Lebanon Compiled by the Lebanese Center for Energy Conservation (LCEC) .................................................................................................................... 87 8. ENVIRONMENT & SOCIAL SAFEGUARDS 89 SIGNATURE PAGE 98 UNDP Environmental Finance Services Page 3 LIST OF ACRONYMS BoT Build, Operate and Transfer CEDRO Country Energy Efficiency and Renewable Energy Demonstration Project for the Recovery of Lebanon CO UNDP Country Office CO2 Carbon dioxide CoM Council of Ministers CSP Concentrating Solar Power EE Energy Efficiency EENS Expected Energy Not Supplied EU European Union GDP Gross Domestic Product GEF Global Environment Facility GHG Greenhouse Gas HQ UNDP Headquarters IEA International Energy Agency ICT Information and Communication Technology LCEC Lebanese Center for Energy Conservation LGBC Lebanese Green Building Council LOLE Loss of Load Expectation M&E Monitoring and Evaluation MoEW Ministry of Energy and Water MRV Monitoring, Reporting and Verification NAMA Nationally Appropriate Mitigation Action NEEREA National Energy Efficiency and Renewable Energy Account NGO Non-Governmental Organisation ODS Ozone Depleting Substance O&M Operation & Maintenance PIR Project Implementation Review PMU Project Management Unit PPG Project Preparation Grant PPP Purchasing Power Parity PSC Project Steering Committee PV Photovoltaic QPR Quarterly Progress Report RCU UNDP Regional Coordination Unit RE Renewable Energy RTA Regional Technical Advisor SWH Solar water heater TPR Tripartite Review TTR Terminal Tripartite Review TWh Terawatt hour WB World Bank UNDAF United Nations Development Assistance Framework UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UNDP Environmental Finance Services Page 4 1. SITUATION ANALYSIS 1.1. Context and Global Significance 1. The Lebanese Electric Power System (LEPS) has been suffering from technical and financial deficiencies for decades. It mirrors the problems encountered in many developing countries suffering from inadequate or no power systems planning, resulting in incomplete and poorly-operating infrastructure and enduring the consequences of political instability, significant debts, unavailability of financing for desired projects and inefficiency in operation. 2. The current energy supply of Lebanon relies almost entirely on imported fossil fuels, primarily oil products. Lebanon’s greenhouse gas emissions in 2009 were estimated at 19.33 million tonnes (mega- tonnes, Mt) of CO2eq, equivalent to 4.52 tonnes per capita and 0.75 kg per USD2000 of GDP. These can be 1 compared with the OECD average of 9.83 tonnes per capita and 0.38 kg per USD2000 of GDP . 3. While the transport sector is the main source of urban air pollution, electricity generation is the largest source of Lebanon’s greenhouse gas emissions3. Ageing power plants burn dirty heavy fuel oil and private back-up diesel generators also contribute significantly to local air pollution. 4. The LEPS is operated by a vertically-integrated, publicly-owned utility, Electricité du Liban (EdL). The results of an energy analysis prepared for the Electricity Sector Policy Paper in 20092 revealed that the Expected Energy Not Supplied (EENS) was 3,495 MWh, representing 25% of the estimated energy demand of 15 TWh; and the Loss of Load Expectation (LOLE) was 8,714 hours per year, indicating that the available generating capacity was only capable of meeting demand for few hours per year. Since then, the situation has deteriorated further. The Greater Beirut area is currently suffering from power cuts for about 3 hours per day on average and the rest of the country for about 10 hours per day (compared to 7 hours in 2011 and