In a significant development on December 14, the Lebanese parliament passed the Decentralized Renewable Energy Law (DRE), signaling a crucial step towards advancing the country's renewable energy sector. The legislation addresses two key regulatory aspects: net-metering and peer-to-peer contracts among private sector entities.
Pierre El Khoury, General Director and President of the Lebanese Center for Energy Conservation (LCEC) board, anticipates that the DRE law will pave the way for an additional 800 to 1,200 MW of renewable energy in the coming years.
The law introduces peer-to-peer contracts limited to renewable energy transactions, with a maximum project capacity of 10 MW. Notably, when both the buyer and seller are situated on the same or adjacent land plots, power exchanges can occur without relying on the national grid. However, projects selling electricity over longer distances must engage in power trading through the state-owned utility Electricité du Liban (EDL) grid, a process known as wheeling.
El Khoury highlighted the law's significance for urban areas like Beirut, where space constraints pose challenges. Thanks to the DRE law, entities with limited rooftop space can utilize available areas throughout Lebanon for renewable energy projects.
Projects opting for wheeling will be subject to wheeling fees payable to EDL, with the specific fee structure yet to be determined by Lebanon's energy regulator, which is still pending appointment. Additionally, the intermittent operation of Lebanon's electricity grid poses a potential challenge to the law's implementation.
El Khoury addressed the current state of the EDL, stating that it currently supplies electricity for approximately six to ten hours per day. Despite this, he expressed optimism that the increased connection of solar and other renewable energy technologies to the EDL grid would enhance supply in the near future.
The DRE law introduces various forms of net metering, including individual net metering, multiple-tenants net metering, and collective net metering. This marks a significant departure from the past, as Marc Ayoub, an associate fellow at the American University of Beirut's Issam Fares Institute, noted that net metering had previously been decided annually by the EDL board since 2011.
Ayoub emphasized that while the law represents a positive step, a comprehensive approach to reforms across all levels of the electricity sector is crucial. He stressed the need for a reliable network, constant electricity flow, and a central utility capable of installing meters and managing the electricity profiles of net-metering subscribers.
Lebanon, which installed less than 100 MW of solar in 2020, has since witnessed a surge in its solar sector, reaching a total PV capacity of approximately 1,300 MW, primarily from small solar-plus-battery systems.