The government of Lebanon has signed power purchase agreements (PPAs) for 11 projects with a solar capacity of 165 MW. Investors have one year to reach a financial decision.
In 2019, the ministry published a list of 28 applicants. Last year, the government issued licenses for 11 successful projects, divided into four main regions: the Bekaa (including Bekaa and Baalbek-Hermel governorates), Mount Lebanon, the south (South Lebanon and Nabatiyeh governorates), and the north (including the northern region). Lebanon and Akkar).
Thanks to the tender plan, the government was able to negotiate different tariffs for each of the four tender areas. Specifically in the Bekaa, the sunniest of the four regions, one investor offered $0.057/kWh, so all three 15MW farms had to accept this tariff. Projects in the other three areas will receive a tariff of $0.0627/kWh, valid for 25 years after their date of commercial operation.
These prices have been known since 2021, “but they can be changed along the way”, Gabriel De Lastours, regional director of the European Bank for Reconstruction and Development (EBRD), told pv magazine.
The lengthy bidding process is mainly due to Lebanon’s severe and ongoing financial and political crisis, which casts doubt on the bankability of the recently signed 11 Power Purchase Agreements (PPAs) and investors’ ability to reach financial close.
“The availability of international debt financing depends on the implementation of structural reforms,” commented De Lastours, adding that “we (EBRD) believe that sovereign risk remains a challenge.”
De Lastours mentioned that the bank is working with the government and stakeholders from all sectors to create an innovative framework to counter the increased sovereign risk associated with Power Purchase Agreements (PPAs). Despite this, he emphasized that the recent signing of 11 power purchase agreements is a significant achievement, as it is based on successful regional examples and the extensive investment of the Ministry of Energy, supported by international experts and financial institutions such as the EBRD, during 2017. 2020 for wind projects.
Building on the 20-year PPAs signed in 2018 for the three Akkar wind farms with a combined capacity of 226 MW, De Lastours expressed the EBRD’s commitment to work with the Lebanese government to improve the bankability of the PPAs.
Lebanon aims to get 30 percent of its electricity and heat from renewable sources by 2030, and the recently signed 11 solar power purchase agreements mark the country’s first foray into utility-scale solar development.