In February 2018, the Ministry of Energy and Water, representing the Government of Lebanon, had signed Power Purchasing Agreements with three wind farm developers for the development, installation, and operation of wind power generators in the Akkar region with a cumulative capacity of wind power of 226 MW. According to the terms of the agreement, the first units of power produced by these projects were supposed to be injected into the national electricity grid, and not a moment too soon, considering the current state of the electricity sector in the country.
Sadly, the project was delayed and has not seriously kicked off to date. The present financing difficulties make it unlikely it will resume unless outside funding is secured.
If the project were to be carried out, it would generate more than 800 million kWh of power annually, enough to power 200,000 Lebanese homes, operating over the hills and ridges of Akkar. It would employ in excess of 600 people during the construction period, mostly comprising local talents and skills, and provide stable rent incomes to dozens of landowners and several municipalities over the 20-year period of the agreement.
A VISION BLOWN IN THE WIND
Against all odds, the plan was, and still is, to build a state-of-the-art power generation project in one of the most pristine areas in Lebanon: Akkar. We, as developers, dreamt big. In addition to the wind farm, our vision includes an eco-tourism attraction that celebrates the history of the region and integrates hopes for the future. This consists of a leisure and educational hub that brings people from all over the country. A learning center offers resources to schools and community groups, as well as educational activities. The site also includes 40 kilometers of biking trails, as well as multi-purpose graded trails built from the recycled waste generated during construction are intended for picnics, sightseeing, and events planning.
Yes, it is a mega infrastructure project but one with a clear and beneficial social and environmental footprint.
Unfortunately, that did not happen. By end 2019, and after the project had secured early on letters of intent from international supporting financing parties, the abrupt financial meltdown occurred, with its devastating consequences on all levels, consequences with which we are all too familiar.
Where do we go from here? Shall we, as private sector investors call it quits? Shall we give up after preparing all the necessary studies and investing vast amounts of money to de-risk the electricity sector in Lebanon, to secure the necessary land for the wind farm project and keep them secured even up to this day?
There is no question about it: Lebanon needs power desperately. We are ready to resume our enterprise. Give us stability and the wind farms will be up and running in 18 months.
What is needed for this?
Immediate action and at a large scale. We need to move ahead with renewable energy projects. This is not limited to wind farms but also includes solar power projects.
Ideas for financing are always available if we think collectively outside of the box. Carol Ayat, a respected energy finance professional and investment banker, has presented an innovative plan in that regard (see story page 40). Her paper on a new funding model to finance electricity projects across generation, transmission, and distribution deserves serious stakeholder discussion. Her win-win proposal opens up the possibility for depositors in the Lebanese banking sector to invest their “lollars” in such projects. The central bank Banque du Liban (BDL) would swap these “lollars” with part of the remaining hard currency it still holds to finance these projects.
Another idea worth considering is for the Government of Lebanon to explore the possibility of using part of the International Monetary Fund’s newly allocated Special Drawing Rights to Lebanon to provide either soft loans and/or the necessary guarantees for such projects to get financed. By that scheme, the Government would invest this money and achieve returns on it.
We need to vamp up renewable energy. We need to start and finish the wind farm project we started eight years ago.