Lebanon's Ministry of Energy and Water has finalized power purchase agreements (PPAs) for 165 MW of solar energy, marking a significant milestone in the country's renewable energy sector. The PPAs were awarded through a photovoltaic (PV) tender that was initiated several years ago. The tender process involved the selection of 12 projects with a total capacity of 180 MW, attracting 42 initial applications.
In 2019, the ministry shortlisted 28 applicants, and last year, licenses were issued to 11 successful projects spread across four regions: Bekaa, Mount Lebanon, South Lebanon, and North Lebanon. Each region was allowed to negotiate separate tariffs, with Bekaa, known for its abundant sunlight, attracting a bid of $0.057/kWh for all three 15 MW farms. The projects in the other regions will receive a tariff of $0.0627/kWh for 25 years from their commercial operation dates.
While these tariff prices have been established since 2021, Gabriel De Lastours, the regional head of the European Bank for Reconstruction and Development (EBRD), stated that they could potentially be subject to change. The extended duration of the tender process can be attributed to Lebanon's ongoing financial and political crisis, which has raised concerns about the bankability of the recently signed PPAs and the ability of investors to secure financing.
De Lastours emphasized that the availability of international debt financing will depend on the implementation of structural reforms and acknowledged the challenges posed by the sovereign risk. The EBRD is actively collaborating with the government and stakeholders from various sectors to develop an innovative framework that addresses the heightened sovereign risk associated with the PPAs. Despite these challenges, the signing of the 11 PPAs represents a significant achievement, building upon successful regional examples and the dedicated efforts of the Ministry of Energy, with the support of international experts and financial institutions such as the EBRD, during the 2017-2020 period for wind projects.
Drawing from the experience of signing 20-year PPAs for three wind farms in Akkar in 2018, totaling 226 MW, De Lastours reaffirmed the EBRD's commitment to working with the Lebanese government to enhance the bankability of the PPAs. Lebanon aims to derive 30% of its electricity and heat from renewable sources by 2030, and the recent signing of the 11 solar PPAs marks an important step toward achieving this goal, representing the country's initial venture into utility-scale solar development.
