Tuesday, March 19, 2013

Solar Energy in Palestine Reloaded

Last year I wrote about the regulatory obstacles to developing the renewable energy sector. Some things have changed meanwhile, and the first photovoltaic roofs in Palestine are being connected to the Palestinian power grid within the Palestine Solar Initiative (PSI) of the Palestinian Energy Authority (PENRA). The picture below shows an installation of ISS Solar Systems company in Ramallah. I hope they allow me to steal the photo in exchange for this advertising:

Energy Minister Omar Kittaneh proudly inaugurating a grid-connected PV roof  in Ramallah

Solar Energy Projects Hugely Differ From Each Other

Below I will give a few examples of use of solar energy in Palestine, and elaborate on the potential for growth in terms of private sector investment.

Palestine Solar Initiative

This is the PA administrations' 1000 roofs PV programme, including feed-in tariff. Details described in this document.
Public sector share: I don't have the exact figures -- if you consider an end consumer price of 0.6 Shekel per KWh and a feed-in tariff of 0.86 Shekel per KWh, that makes a 30% subsidy to your private investment, so donor money has a potential 300% leverage, that means each donor dollar will result in 3 dollar of installed PV capacity. With increasing electricity tariffs, and lower PV module prices, the leverage will increase up to the point where no subsidies are needed any more, during the coming years.

Growth potential: Private sector/household investment possible, limited currently to 1000 roofs, and to 5KW per roof, that is a theoretical maximum of 5MW total capacity. Once the limit is reached, further expansion possible.

Hana Siniora Investing in 5MW PV Plant near Jericho

Why did they chose exactly 5MW? To prove a point to PENRA, that the same impact of PSI can be achieved, but without any donor funding? In this article a private sector investment near Jericho is discussed. As far as I know, the solar park is supposed to be located in a C-Area, under Israeli administration, and the investors have obtained permission to feed in electricity according to the Israeli feed-in law, directly into the Israeli transmission grid installed in the occupied West Bank.
I am not aware of the exact agreed feed-in tariff, but let us assume a tariff of 0.6 Shekel per KWh, which roughly equals the end consumer price. Considering that the production pattern of PV is matching well with the peak demand pattern of Israel (air conditioning along coast and desert), this price reflects probably roughly an unsubsidised feed-in price. 

Public sector share: 0%, completely privately funded.
Growth potential: Great, the sky is the limit. If we go solar for 20% of Israel's electricity production, that would be 10 billion KWh per year, and Palestine would become net exporter of energy, without the need of subsidies. However any project has to submit to Israeli regulations as we talk about C-Area.

Jericho Industrial Park Project by JICA

The Japanese government has sponsored a PV plant in Jericho that was recently inaugurated and connected to the grid. Watch the launching ceremony on YouTube: Video

It is essentially a donation to the PA government worth several million dollar, and the PA's budget will benefit from the produced electricity revenues, or, if we are lucky the end customer will benefit from lower prices. 

Growth potential: Not viable for private sector investment -- every installed capacity requires 100% donor funding.

Wadi Al Nar Street Lighting

A Qatari charity has donated solar-powered street lighting for Wadi Al Nar road. See this article

Growth potential: Not viable for private sector investment -- every installed capacity requires 100% donor funding. Maybe an option once Municipalities enter public-private-partnerships for providing street lighting.

Al Ahli Hospital Hebron

Al Ahli Hospital in Hebron has a EU-funded project for wind energy. See official website. While the solar thermal infrastructure of that hospital has a very short payback period of less than 3 years, the wind turbine requires significant co-funding by EU to become feasible. Not sure about the financial details, if we exclude all the awareness and other measures, and look at infrastructure only, maybe 70% donor funding? Please comment if you know more.

Growth potential: Not clear. No market data available. Feed-in of wind energy of that scale is based on individual agreements with distributors and PENRA, not covered by Palestine Solar Initiative.

Wind Energy at Rawabi

The new city of Rawabi is contracting the company Independent Wind to install a 100KW wind plant. This is a 100% private sector investment, but most probably aimed more as a symbolic plant for demonstrational purposes, without considering commercial viability.

Growth potential: Not clear. No market data available. Feed-in of wind energy of that scale is based on individual agreements with distributors and PENRA, not covered by Palestine Solar Initiative.

Mini-Grid for Bedouins in C-Areas

The Israeli-Palestinian NGO Comet-ME has constructed several battery-buffered mini-grid PV solutions for bedouin villages in South Hebron Hills, with funding of German Ministry of Foreign Affairs. Those installations were threatened to be bulldozered by the occupying power, which caused some bad PR for Israel (see Article). To avoid further scandal, Israel has decided to stop demolition. But it is likely that Israel sent a strong message to western governments urging them to avoid future political investments like these. Those installations have more of a symbolic and a political value than being commercially viable. The operator decided to sell electricity to bedouins at the cheap price of the Palestinian grid -- that is a price that does not even cover the operating costs of the mini-grid installation, even under the circumstances that all infrastructure is paid for 100% by donor funding.

Growth potential: Not viable for private sector investment, because lacking the political backing, private sector infrastructure would be subject to demolition. Maybe a Qatari charity can fill the gap, given that western governments are hesitant to step on the feet of the occupying power?

Royal Company Hebron

An early adopter of private-sector investment in photovoltaic energy is the innovative company from Hebron, Royal. Industrial electricity is more expensive than household electricity in Palestine. The industrial consumption pattern matches well with the PV production pattern, therefore even without feed-in, a large part of the production can be consumed on site immediately.

Growth potential: Good for all industrial producers. Even if investors don't want to rely on the political risks associated with a deal with PENRA, they can make sure that most of their energy is consumed on site. I would be curious to see the commercial figures of such investments.

Jiftlik Clinic with PV Roof

Jiftlik is a Palestinian village in Area C in the Jordan valley. A donor-funded project has provided the clinic of Jiftlik with a solar PV roof, feeding into the grid. This is the document of the Israeli military administration describing the project.

Growth potential: 100% donor funded. Lowers running cost of clinic, but not designed for commercial viability.

Net Metering

Net metering means that you pay only the difference between your electricity consumption and your electricity production that you feed into the grid. In a 2012 donor meeting with Omar Kittaneh, head of PENRA, the Minister was asked whether a net metering scheme would be available for those solar installations that don't qualify for the subsidized PSI (Palestine Solar Initiative). He confirmed positively, that anybody would be able to do net metering.

So far, however, any inquiry to the electricity distributors like JDECO in regard to net metering is answered with referring to the PSI only.

Growth potential: 0% donor funding, 100% private investment. Great growth potential once PENRA implements its promise. With a retail price of 0.5 to 0.6 Shekel, the investment will be profitable with low interest rates and long term (20 years) investment. Especially larger scale installations for industry will be financially attractive once/if PENRA moves ahead with net metering.

JDECO installs solar roofs for Beit Sahour Municipality

JDECO is one of the electricity distribution companies which have a monopoly for their regional market. According to a template contract (see here), electricity distributors will offer owners of public buildings and homes an all-inclusive deal, where JDECO will be responsible for the investment, and will keep most of the profit.
This will become financially attractive for electricity distributors especially if they are able to attract donor funding for that scheme.
Other private investors may see that business model as a threat, because they will hardly be able to compete for rooftop space, given that JDECO can use donor funding for its competitive advantage, and may also be able to abuse its control over granting grid connection to its private sector competitors.

Growth potential:
Not clear. Probably reliance on donor funding. Possibly competing with net-metering. No market study available. Anybody?

Solar Thermal on Private Roofs

According to different estimates, approximately 50 to 80% of all hot water produced in Palestine comes from solar thermal installations on domestic roofs. The equipment is produced locally in Palestine, even exported to Israel, and available cheaply with pay-back periods of 2-3 years. Still technology is low tech with lots of water losses (up to 10 liters of cold water wasted until the hot water reaches your bathroom), no longer-term heat storage, and only poorly insulated flat-collectors instead of vacuum tube collectors, so during most of the cold season, people have to heat water with electricity or gas.

Growth potential: Saturated market for low-tech solar thermal, but growth potential of products that have better winter-time performance and less water losses.

Waste and Biomass

Energy-rich biomass is available from large cattle farms like Juneidi and Jebrini in Hebron. Solid waste and waste water sludge is owned by municipalities. While cattle farm owners are open to utilizing their high-energy animal waste, I did not hear of any municipality that gave access to landfills or waste water treatment plants for private companies to operate on.

Growth potential: This sector is starting at zero, and for sure there are some profitable quick wins related to animal waste, even on smaller scale. Up-scaling using municipal waste resources will be the tougher part of the exercise, as the public sector side may not be well prepared in terms of legal and procedural framework. The public-private-partnership city of Rawabi could provide some pioneering in that field.

Optimizing Leverage of Donor Funding

As illustrated by above examples, the projects' profitability ranges from an unprofitable need of 100% donor funding up to a profitable business model with 100% private funding. When designing future donor interventions, keep in mind the leverage that your project brings, that means how many donor/public sector dollars you need to trigger how much private investment, and in how many KWp of installed capacity this results.

Aid effectiveness in this case could be measured in terms of donor dollars per KWp of installed capacity.

Of course, apart from measuring the Kilowatts, you may consider additional aspects, such as job creation, know how transfer, paving the regulatory framework, as well as political objectives such as claiming C-Areas of Palestine.

Sustainable O&M Models

Apart from the aid effectiveness ratio of "KWp per donor dollar", you will want to make sure to have a sustainable operations & maintenance model. For instance, if you donate PV cells for school roofs, while the reduced electricity bills are on account of the Ministry of Education, you may face a situation after a couple of months or years, that the cells are getting dirty, the inverter is broken, and nobody comes to clean it or fix it. That would result in a very low KWh per KWp, rendering your donor investment futile.

Better to hand ownership to a company or a local community which benefits from the produced electricity, and will use the money to pay back the investment, and keep some funds aside to do the cleaning and maintenance as required.


A lot is being done, but since the same paperwork is being sold to a variety of donors, Palestinian implementers often prefer to not publish their work online. This is a call for donors to insist on online publication of all paperwork funded by them.

Here are some starting points for research:

PSSES the Palestinian Solar and Sustainable Energy Society
ISS Solar Systems, Ramallah -- a private company
Ayava Solar -- another private company and direct importer of modules and inverters
Conference Programme on Private Sector Investment in Renewable Energy by KAS
Palestine Solar Initiative project document by PENRA
A 2010 paper by Portland Trust on Renewable Energy
Heinrich Boell Stiftung Gatherings on Renewable Energy
The Feed-In law passed by PA's minister's council in 2012
The home-owner's brochure published by PERC for the PSI
Al Najah University in Nablus has a Faculty dealing with Renewable Energy. Contact Imad Ibrik.
PERC ist the regulatory body. Contact Zafer Milhem.
PENRA is the Energy Authority. Contact Omar Kittaneh.
JDECO and severeal other regional electricity distributors are responsible for actually connecting you to the grid.

Still missing online -- please comment if you find it good URLs:
  • Grid code for Palestine
  • Any private sector position papers regarding the PSI
  • Any proper market studies for the examples mentioned above
  • A clear documentation of net metering regulation


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