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Energy security at a crossroads

by Rouba Bou Khzam

Across the globe, access to reliable and affordable energy underpins the very fabric of society. The International Energy Agency (IEA), a leading intergovernmental organization on energy, defines energy security as the “uninterrupted availability of energy sources at an affordable price.” For Lebanon, however, with its long-plagued energy sector, continuous and financially accessible energy remains a distant dream. For years, the nation has grappled with rolling blackouts, crippling infrastructure, and a dependence on volatile import markets, leaving its citizens and businesses in the perpetual twilight of energy insecurity.

IEA frequently emphasizes three pillars of energy security in its publications and reports – availability, affordability, and accessibility. All three are far from sturdy in the Lebanese context marked by political dysfunction, economic volatility, and a glaring lack of long-term planning. Considering Lebanon’s energy morass, which is further complicated by a new and bloody regional conflict, it remains a critical question if Lebanon can truly achieve a secure and sustainable energy future.

The triad of availability, affordability, and accessibility

As of March 2023, Lebanese households endured an average of 12 hours of daily blackouts, with some areas experiencing total blackouts for up to 24 hours. This unstable power supply significantly disrupts daily life, hampering businesses, hindering work-from-home options, and jeopardizing access to vital services like healthcare and education. While not as disastrously bad as during the first months after forced total withdrawal of energy subsidies in 2021, public electricity supply has not matched political promises for more extensive electricity provision by state utility Electricité du Liban (EDL) in exchange for higher usage fees. The broken promises of the government to solidify “consistent energy availability” became glaringly apparent as inadequate infrastructure, financial mismanagement, and overdependence on volatile fuel imports left citizens grappling in the dark.

The introduction of the new EDL tariff in November 2022, involves the second and third pillars of energy security, namely affordability and accessibility. Testimonies collected by Executive from electricity consumers, however, suggest that with regard to either the second or third pillar, the situation of Lebanese private households has not improved and often is perceived as worse when comparing 2023 to 2021/2. 

Lebanon’s economic struggles, marked by dwindling foreign reserves and an overwhelming annual fuel expense of $1.5 billion, according to the World Bank 2022 report, have thwarted efforts to ensure a steady supply of fuel. According to the latest Energy Security report from Executive, one analysis entitled False promises of improvement takes a behind-the-scenes look at several stalled regional agreements that would have offered Lebanon an energy lifeline via fuel transports from Jordan and Egypt via Syria. The failure of these agreements has contributed to the deterioration of domestic energy infrastructure, difficulties in securing more economical fuel alternatives, and consequently a notable escalation in electricity expenses for households and businesses alike.

Designed with the intention of achieving greater fairness, the new tariff structure introduced a tiered system based on electricity consumption. However, the overarching impact was an overall increase in rates, ranging from 20 to 50 percent or even higher, depending on consumption levels and geographical location. This significant rise in electricity costs exacerbated the financial burden on already struggling households and businesses, amplifying the challenges posed by Lebanon’s ongoing economic crisis.

EDL’s new billing system, linked to the volatile parallel market dollar, has caused monthly electricity bills to soar above 1,000,000 LL, a significant increase from the previous range of 50,000 LL to 300,000 LL.

This surge was due to hiking of taxes and assorted fees, and directives from the central bank compelling the EDL to convert its revenues from pounds to dollars. As a result, subscribers bore the brunt. The disparity between electricity supply hours and costs pushed bills higher than those from private generators. Faced with this fiscal dilemma, consumers responded by removing meters or suspending operations for two years, reflecting widespread dissatisfaction.

In a statement issued on January 11, 2024, EDL announced a cautious step towards brightening Lebanon’s electricity landscape. The state-owned provider revealed a “gradual increase” in power supply, bringing one gas unit back online and pushing production capacity to 400 megawatts. While this news offers a welcome respite from chronic blackouts, it’s essential to recognize the fragile nature of this progress.

EDL emphasizes the need to maintain this “up to 400 megawatts” limit to avoid regulatory hurdles in mid-February. This cautious approach reflects the uncertainties surrounding future fuel shipments. While a recent tender promises additional fuel by February 27th, delays can quickly plunge the country back into darkness. Furthermore, the expected “additional quantities” from the Iraqi swap agreement were stalled by bureaucratic roadblocks, highlighting the precariousness of relying on external agreements.

Despite these mixed signals, the increased power supply provides a much-needed reprieve for basic facilities like airports, ports, and hospitals, and translates to fewer blackouts for households. However, it’s crucial to remember this is a temporary win, not a permanent solution. Lebanon’s electricity saga requires more than a quick fuel fix.

Lebanon’s solar revolution in focus

Lebanon’s energy landscape in 2023-2024 is a tale of rooftop solar panels blazing with promise and the ever-present shadow of the dysfunctional national grid. Crippling blackouts and skyrocketing bills have fomented a rushed, citizen-led pursuit of alternative solutions, mainly solar photovoltaic (PV). 

In addition to the increased energy self-sufficiency that accompanies the switch to solar, financial relief is an equally compelling motivation as public electricity costs soar. Estimates by the Lebanese Center for Energy Conservation (LCEC) in their 2023 report suggest homeowners can expect average returns on investment (ROI) of 15 percent to 20 percent per year over the system’s life. While not directly comparable to cost savings, this impressive ROI translates to significant long-term financial benefits, with some calculations even pointing to potential savings of up to 25 percent annually. This financial allure, coupled with the promise of escaping unreliable grids and soaring bills, is making solar a compelling and increasingly viable option for many Lebanese households and businesses.

While a growing environmental consciousness may be an earnest secondary or tertiary motivation fueling Lebanon’s solar surge with its promise of reduced carbon emissions, the picture isn’t entirely rosy. One concern lies in the e-waste disposal. While solar panels typically have long lifespans of 25 to 30 years, their ultimate disposal raises questions. Lebanon, currently lacking a robust e-waste (or general waste) infrastructure, faces the risk of these discarded panels and their accompanying components – including inverters and batteries with significantly shorter lifespans – contaminating the environment. Lead, arsenic, and other harmful elements could leach from improperly disposed-of equipment, negating the environmental benefits solar energy was meant to deliver.

Furthermore, the integration of solar energy into our grids demands meticulous planning and strategic upgrades. The surge in solar adoption necessitates a forward-thinking approach to grid management, involving not only infrastructure enhancements but also the implementation of smart systems to ensure stability and efficient energy distribution. Overlooking these critical aspects could indeed undermine the overall effectiveness of the solar surge. It’s also crucial to underscore the significance of safe installations in this context, as ensuring the safety of solar setups is an integral part of fostering a sustainable and reliable energy landscape. 

Ultimately, embracing solar energy in Lebanon demands a holistic approach that balances its undeniable environmental benefits with potential downsides. Investing in e-waste recycling infrastructure, promoting responsible manufacturing practices, and prioritizing grid integration will be crucial to ensuring a truly sustainable and successful solar revolution in the country.

DRE law to save the day?

Enter the Distributed Renewable Energy (DRE) Law, passed in December 2023. It purportedly has the potential to revolutionize the country’s energy sector by legalizing net metering and peer-to-peer trading of renewable energy. This could significantly increase Lebanon’s reliance on clean energy sources and decrease its dependence on expensive and polluting fossil fuels. The DRE law would allow renewable energy producers from the private sector to connect their systems to the central EDL grid and sell electricity. Increased renewable energy installations would create jobs across the spectrum, from panel manufacturing and installation to maintenance, injecting much-needed dynamism into the Lebanese economy and attracting green investments. 

However, as the history of several nationally beneficial laws and imposition of supposedly independent regulatory authorities has demonstrated in the past twenty years, political changes to the original draft of the DRE law have become grounds for deep skepticism about the new law’s timely implementation. Some argue that hurdles preventing the application of the DRE law are nearly insurmountable. In what critics see as the biggest hurdle, the ratified DRE law is linked to the establishment of an Electricity Regulatory Authority (ERA), which is still pending in Lebanon despite Law 262 of 2002 which meant to create an independent ERA. Setting tariffs, issuing licenses, and enforcing regulations are all crucial functions the ERA should perform, but as of now it has yet to be created despite a December 2022 paper produced by the Ministry of Energy and Water detailing the roles and functions of the pending ERA.

Another challenge is that Lebanon’s unreliable electricity grid, prone to frequent blackouts and disruptions, poses a threat to renewable energy infrastructure such as solar panels. Although the government has expressed commitment to enhancing the grid, as outlined in the EDL statement issued on January 11, 2024, substantial time and investment are required to fortify it sufficiently for large-scale renewable energy expansion.

Despite these barriers, the DRE Law heralds a positive trajectory for Lebanon’s energy sector. It has the potential to foster job creation, stimulate economic development, and diminish reliance on fossil fuels. If it reaches execution, the DRE Law could propel Lebanon toward achieving its ambitious target of generating 30 percent of its electricity from renewable sources by 2030, as indicated in a report by the International Renewable Energy Agency (IRENA).

Governance: the missing measure

Ultimately, the obstacles barring the way to implementation of the DRE law—and most of the country’s energy issues—come down to a lack of governance, the Lebanon’s oft-repeated stumbling block. Despite having considerable hydrocarbon reserves, the corruption and lack of transparency that the energy sector has become notorious for in addition to general political deadlock serves as a hindrance, impeding the country from developing these resources, exploring offshore gas reserves, and achieving energy self-sufficiency. Lack of accountability within the energy sector and public sector corrodes public trust and investor confidence. 

Renewable energy advocate and policy expert Christina Abi Haidar emphasizes – see “Oil Wealth: One Last Chance for Lebanon” comment in the October/November 2023 issue of Executive Magazine – the urgency of exploiting these gas reserves as a vital economic lifeline. While acknowledging the environmental risks involved, there is the importance of pursuing responsible development strategies centered on sustainability and equitable distribution of benefits. Echoing a recurring theme, she advocates strongly for robust governance, highlighting the necessity of transparent institutions, anti-corruption measures, and streamlined processes to effectively manage this potential wealth.

Lebanon’s energy security remains precariously balanced. While challenges seem daunting, glimmers of hope emerge through citizen and private sector-led initiatives and the newly ratified DRE law, which, if implemented—a big if—would have significant positive implications for Lebanon’s energy future. Ultimately, addressing the crucial missing element – robust governance – and implementing responsible development strategies are keys to unlocking the potential for a secure, affordable, and sustainable energy future. It’s a challenging tightrope walk, but one Lebanon cannot afford to ignore.

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Rouba Bou Khzam

Rouba is a journalist at Executive magazine

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