The electricity scene in Lebanon is notorious for its long blackouts that leave households, retailers and industries in near-permanent anemia. For decades, chronic electricity shortages in Lebanon have been commonplace. Erratic power supplies have placed even critical services, including hospitals and essential services, in near-perpetual crisis modes.
The growing demand for electricity, usually met to some extent by private operators who supply electricity produced from diesel generators, coupled with an unprecedented collapse of the national currency, has made the electricity crisis even worse. worse.
This crippling energy crisis has been compounded by Lebanon’s reliance on imported fuels. Western sanctions against Russia blocked its ability to export energy, leading to soaring energy prices; this has made renewable energy sources very attractive.
Cause of the electricity crisis
During power outages, Lebanese businesses and households depend on access to electricity by subscription from private diesel generator operators. As a result, they end up paying a lot more per kilowatt hour compared to the official electricity tariffs. The severity of power outages varies by region, which is another component of high input costs for businesses.
In 2015, the capital of Lebanon, Beirut, had an average of 21 hours of electricity per day, more remote cities, such as the Bekaa, had an average of only 12 hours of electricity per day. For businesses, operating costs increase not from direct costs resulting from bills from private generator operators, but also from indirect costs, including costs incurred for disruption of economic activity or increase in air pollution.
As for the Lebanese public electricity company, Electricité du Liban (EDL), it is not only obliged to assume high production costs resulting from imported fossil fuels, but also to keep prices artificially low in order to make them affordable for the masses. and therefore operates at a loss.
EDL also faces issues such as power theft which erodes its meager revenue and increases its losses. Since 1992, EDL has accumulated a whopping $40 billion in debt, or 43% of public debt.
The loss-making electricity industry adds to the debt-ridden Lebanese economy. In fact, over the past few decades, EDL has contributed significantly to the government’s debt, adding to its financial difficulties.
With Lebanon dependent on imported fuel for its electricity, soaring energy prices following the war in Ukraine prevented the government from subsidizing fuel, leading not only to longer power outages, but also longer queues at gas stations.
In the summer of 2021, the entire electrical industry collapsed, plunging the whole country into darkness. The army was called in to provide fuel.
Solar to the rescue
The electricity crisis has a silver lining, representing a window of opportunity for industry to embrace a mix of alternative energy sources, including solar power. The “unpredictability” of the Lebanese energy sector is pushing residents to adopt solar energy.
Retailers and wholesalers of solar power systems are seeing strong demand for this solution not only from small and medium-sized businesses, but also from citizens.
In recent months, sales of solar panels and batteries have jumped 200% from a year ago, with most orders coming from small towns and rural areas. Prices for a solar system with batteries range from $3,000 to $13,500, depending on the number of panels and size of batteries. Wholesalers and retailers offer solar power systems from 5 amps to 100 amps.
While currently the price of a solar system with batteries is beyond the reach of the common household, there are takers who are willing to shell out a premium for guaranteed long hours of electricity. In fact, they think it’s good protection against power outages, as they expect the country’s electrical scene to deteriorate in the near future, a dealer said.
Case in point: Emilio Matar, a resident of Lebanon, installed solar panels at his parents’ home near Beirut to ensure a reliable supply of electricity, independent of local suppliers who have a monopoly on power generators.
In Arsal, near the Syrian border, a Scottish and German NGO have installed solar panels to ensure continuous access to drinking water. This is available for access to local Lebanese as well as Syrian refugees.
NGOs and UN agencies are also upgrading electrical systems in schools and hospitals to avert a humanitarian crisis.
This demand has created a cottage industry with over a dozen dealers now offering a wide range of solar power systems and batteries on the market. The batteries can be charged directly by solar panels or from EDL electricity.
In mid-March, at a cabinet meeting, Lebanon approved a plan to restructure its electricity sector. This is a key driver for donors, including the World Bank, to expand funding for regional deals that could alleviate its electricity supply problems plaguing its industries. And in mid-May, the Minister of Energy and Water Walid Fayad authorized 11 companies to produce clean electricity thanks to renewable energy plants (3 in the Bekaa Valley, 3 others in the North, 3 in the South and 2 in the mountains).
The reform plan includes the creation of an electricity regulator as well as a revised version of an earlier plan to reduce electricity subsidies, leading to an increase in electricity tariffs. The plan included $3.5 billion in sunk costs to secure 24-hour electricity access across the country by 2026.
This takes on significance since Lebanon has not had access to electricity all day since the 1975-90 civil war. Periodic injections of cash into the EDL have only aggravated its huge public debt.
With Lebanon enjoying 300 days of sunshine per year, the potential of solar power has immense potential to provide a basic level of energy security to the country. Rather than opting for a wholesale replacement of fossil fuels with a solar power system, its adoption in municipalities where there are existing generators could significantly alleviate the electricity shortages faced by the Lebanese.
A decentralized community model with each neighborhood, town or city having its own solar power system could potentially circumvent the vested interests and corruption that have dominated Lebanon’s national electricity supply.
Such distributed systems, such as solar-diesel hybrid microgrids, could provide “a fair, equitable and more reliable supply of electricity”, said Jessica Obeid, an independent energy consultant.