Lebanon’s ongoing political and economic collapse, which has led to widespread poverty and a dysfunctional electricity grid, has prompted citizens to adopt off-grid solar-plus-battery systems. In the last two years, they have installed a record 900 MW of solar power.
By the end of 2020, Lebanon fell short of the national solar capacity target of 100 MW, reaching a cumulative 89.84 MW. This shortfall reflected the dismal state of the solar energy sector and reflects the overall economic downturn.
Lebanon’s ongoing political and economic impasse continues, marked by high inflation, a failed banking system, a currency collapse, and the continued incompetence and unwillingness of Lebanon’s political forces to implement economic reforms.
By February of this year, Lebanon’s currency had lost more than 98% of its pre-crisis value. The World Bank noted in May that “the systemic failure of Lebanon’s banking system and the collapse of its currency have created a large dollarized cash economy that is estimated to account for nearly half of GDP in 2022.” The growing dollar economy — about $9.9 billion in 2022, almost half the size of Lebanon’s economy — is a significant obstacle to economic recovery, it added.
The growth of rooftop solar in Lebanon cannot be attributed to the reward system. Ayoub said that although net metering was approved by the EDL government in 2011, various technical and administrative hurdles prevented the net metering market from gaining significant traction. According to Ayoub, one of the biggest challenges is insufficient electricity supply and frequent power outages even before the collapse of the country’s economy, which often prevented net metering users from exporting excess electricity to the grid. In addition, the bureaucratic process of installing measurements at both the plant’s and the customer’s ends prevented the practical implementation of the net metering system.
Due to the economic collapse, net metering in Lebanon was already challenging, and currently, according to Ayoub, the net metering system is non-existent. Rooftop solar growth is now primarily based on off-grid solar and battery systems in the residential and small business sectors. According to Ayoub, the main disadvantage of this is “that a large part of the electricity produced by solar energy is wasted after charging the batteries”.
Institutions’ financing possibilities for installing such systems are limited. Instead, those who can afford it rely on their own private savings or receive remittances from family and friends abroad and pay in cash in US dollars, Ayoub noted. Some people even resort to selling personal possessions, jewelry and gold to cover the minimum cost of solar systems, which range from $4,000 to $7,000.
Having said that, about a year ago Lebanon’s Banque De L’Habitat started a new scheme that offers loans to help Lebanese households buy and install solar systems. The system works with LCEC’s technical support. Ayoub said that international financial institutions such as the World Bank, the European Bank for Reconstruction and Development and the European Union are currently initiating discussions on channeling new funding to the rooftop electricity sector, but they “are not yet materializing due to the accompanying risks that the country’s macroeconomic situation currently poses.”
In 2021, pv magazine reported that Lebanon’s Industrial Research Institute (IRI) reported that all used solar panels imported since October 2021 did not meet national standards for such systems. As a result, the import of used solar panels has been effectively blocked. Ayoub pointed out that despite this decision, some unregulated service providers have emerged during the crisis and continue to offer equipment (panels, inverters, batteries) that do not meet the standards set by the IRI.
Lebanon’s rooftop solar boom is a sign that people want to maintain their basic living standards and keep their households and businesses running. The country is in dire need of political reform, which also includes the energy sector.