Historically, Jordan’s energy sector has been dependent on the imports of fossil fuels for power generation as Jordan’s electricity generation fleet is predominantly fuelled by natural gas. In 2015, the interruption to the supply of gas from Egypt forced Jordan to import expensive and polluting heavy fuel oil to generate electricity. Today, the energy sector accounts for about 70% of the country’s greenhouse gas emissions.
Over the past five years, the Jordanian renewable energy sector has experienced a remarkable growth, increasing the RE installed capacity from about 20 MW to over 1,000 MW (with an estimated 800 MW under construction). This growth however comes with significant challenges, as Jordan needs to take measures to improve the demand-supply balance and the capacity of the grid to absorb further intermittent RE generation while ensuring the grid’s stability. The Jordanian grid operator NEPCO will be required to curtail RE generation in the future unless further adaptive measures are introduced.
This is where the NSP will intervene. While most existing initiatives focus on accelerating the deployment of RE generation itself, this NSP responds to the growing need to deal with underlying technical, operational and financial barriers relating to the integration of further RE generation into the central power grid.
The NSP will support the enhancement of the legal and regulatory framework that provides clarity for project sponsors, developers, financial institutions and government agencies in terms of grid infrastructure to support increases in RE generation capacity. Additionally, the NSP will provide investment support that helps NEPCO, other public agencies or private project sponsors to address the financial barriers to investment in enabling RE technology.
The focus of this NSP on both policy and investment barriers is intended to offer a holistic approach to RE integration in the Jordanian power grid. It is expected that the NSP will mobilize around EUR 380 million of investments in the form of commercial debt from the EBRD (up to EUR 150 million), debt from other lenders (up to EUR 130 million), and equity contributions from project sponsors (up to EUR 100 million). Examples of eligible RE-related network investments or energy storage projects may include network upgrades, battery storage, pumped hydro or molten salt as part of concentrated solar plants.
The contribution of this NSP to Jordan’s GHG mitigation ambitions is subject to a degree of uncertainty. This is due to its structure as an investment facility that comprises several sub projects, whose GHG mitigation impacts will only become more quantifiable as the sub projects emerge. The GHG mitigation potential is estimated to be up to 425,000t CO2e per annum, which represents up to 4 % of Jordan’s NDC GHG emissions reduction target in 2030.