Seeking alternatives: New legislation is supporting efforts to launch renewable energy projects

With Jordan importing an estimated 97% of its energy needs, costing up to 40% of its annual budget in recent years, development of renewable energy has become a top priority for the kingdom, particularly wind and solar power, with Jordan’s dry, sunny climate and windswept northern and eastern regions offering the perfect locale for wind turbine and photovoltaic (PV) solar projects. “For too long, Jordan has relied on a limited number of external sources for energy,” Thomas Meijssen, CEO of the Jordan Shale Oil Company, told OBG. “In recent years, the government has placed renewed emphasis on developing alternative power sources.” Renewables development was kick-started with the government’s National Energy Strategy (NES), which envisions generating 10% of total power needs via such sources by 2020. This effort is supported by the Renewable Energy and Energy Efficiency Law (REEL), passed in 2012.

Changing The Pace

Due to a decline in economic growth, Jordan has shifted renewables development from a strategy encouraging high-capacity plants built under a public-private partnership model, to smaller projects, many of which are privately owned, with government incentives including tax holidays, Customs exemptions, and the region’s first feed-in tariff programme. This has led to a proliferation of new PV solar projects, putting the kingdom on the path towards future renewables development and paving the way for the country to become a regional centre of excellence and a hub for renewables.

With fuel oil imports and electricity subsidies leading to huge financial losses for the National Electric Power Company (NEPCO), the state-owned single buyer, development of renewable power sources has become increasingly critical. The sector received its biggest boost in 2012, with the promulgation of the REEL. The law highlights five renewable energy sources in the kingdom: solar, wind, biomass, hydro and thermal. Wind and solar are expected to deliver the highest returns, and the kingdom aims to generate 1200 MW of wind power by 2020, 600 MW of solar power and 50 MW using waste-to-energy technology. Licensing of renewable energy projects is being carried out under rounds of auctions based on direct proposal submissions, with the first resulting in approval of 14 new renewables projects expected to deliver over 200 MW of capacity. Round two will see development of four 50-MW PV solar projects, with the government announcing in February 2015 that 33 bidders had pre-qualified for the projects. A third round, which would have seen construction of two 100-MW PV projects, was cancelled due to limited grid ability to absorb additional renewable energy sources before undergoing an upgrade.

Private Sector Incentives

The government’s NES, running from 2007-20, emphasises private sector development of new energy projects, and the US Commercial Service estimates the cost of new renewables development to 2020 will range between $1.4bn and $2.2bn, which will require significant private financing. The NES emphasises public-private partnerships (PPPs) in development of renewables, most likely under a build-operate-transfer model.

Projects eligible for PPP development would include any wind energy development with total capacity of 100 MW or more, and any solar plant with at least 600-MW capacity, although the government’s strategy has since shifted towards a model in which private players and individuals are permitted 100% ownership of smaller renewable projects and systems. Indeed, the REEL introduced a direct proposal submissions scheme, under which developers from around the world can submit proposals to build wind, solar, biomass and biogas projects. The law provides sales tax and Customs duties exemptions for all imported materials and equipment used in the construction of renewable power plants, and guarantees that distribution companies will purchase all power produced by licensed renewable energy power plants, although it stipulates that electricity prices will be determined by the distribution firms. The cost of connecting renewable power plants to the grid will be covered by distribution companies and the law also stipulates creation of a Promotion of Renewable Energy and Energy Efficiency Fund, which will provide loans and guarantees for new power projects.


At present, solar projects dominate Jordan’s renewables landscape and the first round of renewable auctions saw 12 new PV solar projects approved, with a cumulative installed capacity of 200 MW. All PV projects are expected to sign a 20-year power purchase agreement at NEPCO, with prices negotiated for each plant separately and tariff ceilings set at $0.169 per KWh for solar and $0.12 for wind.

Notable projects include the 52.5-MW Shams Ma’an project being developed by a consortium of private local and foreign firms. In January 2015 Qatar’s Nebras Power, together with Diamond Generating Company, a subsidiary of Mitsubishi, and Jordan’s Kawar Group, announced that the project had secured a $129m finance agreement with a group of international banks and export credit agencies including the Japan Bank for International Cooperation, Nippon Export and Investment Insurance, and Standard Chartered and Mizuho banks. Nebras Power will own 35% of the project, Diamond Generating Europe 35% and Kawar Group 30%. The company has already signed a power purchase agreement with NEPCO, and will sell its power for $0.148 per KWh.

The Quweira plant, with capacity of 65 MW, is another high-priority solar project expected to be operational by April 2016. In November 2014 the government announced it had secured the project’s site, in southern Jordan, calling for a submission of applications for an engineering, procurement and construction contract. The Ministry of Energy and Mineral Resources expects the tendering process to be completed in the first half of the year, with a contract awarded in July 2015. In February 2015 the government also finalised a list of 33 pre-qualified companies for four 50-MW PV power plants, and officially announced the four lowest bidders in June, these being SunRise PV Systems, Saudi Oger, Fotowatio Renewable Ventures and Hareon Swiss Holding. As part of this move, Modern Arabia for Solar Energy (MASE) is co-developing a project with Saudi Oger, with discussions having taken place with NEPCO on the project documents.


Although the 2020 wind power target is double that of solar, wind power projects have not developed as quickly as solar ones, with just two new wind projects approved during the first round of renewable auctions. The Tafila project in southern Jordan adds an additional 117 MW to the national grid, generating 400 GWh annually; enough power for 150,000 residents. Construction included installation of 38 turbines, with the farm expected to reduce annual carbon dioxide emissions in the kingdom by 40,000 tonnes per year when operational. The Jordan Wind Project Company, owned by France’s InfraMed (50%), the UAE’s Masdar (31%) and Cyprus-based EP Global Energy (19%), will develop the project. Commercial operation commenced in September 2015 after the farm secured $221m of financing from the International Finance Corporation, as well as the Europe Arab Bank, European Investment Bank, Eksport Kredit Fonden and the OPEC Fund for International Development. Significantly, Capital Bank of Jordan (CBJ) also participated in financing the Tafila project.

Indeed, local banks appear increasingly enthusiastic about renewables projects, with Jordanian firm Philadelphia Solar announcing in April 2015 that it had secured $15.5m in financing for a 10-MW PV plant, also from CBJ. A second project, the $112m Maan wind power plant, will be carried out by Spanish firm Elecnor, with financing from the Kuwait Fund for Economic Development. The Maan project will be a turnkey development, in which the government retains ownership of 33, 2-MW turbines. (Modafinil) Commercial production is expected by end-2015.

Individual Projects

The REEL encourages residential and commercial electricity consumers to install net-metering PV solar systems, with the law also establishing the region’s first feed-in tariff system. In February 2015, PV Magazine, citing Energy and Minerals Regulatory Commission (EMRC) data, reported that Jordan leads the MENA region in terms of installed solar capacity, with 747 PV systems totalling 23.4 MW of capacity. Up to 44 MW of additional capacity is expected by end-2016. Industrial operations are also moving to capitalise on solar incentives. In 2014 the Norwegian firm Scatec Solar and its partners inked financing agreements for three solar projects with a combined capacity of 43 MW and an investment of $135m. This was followed by an announcement that the EMRC had granted a 20-year licence to Jordan Solar One Company, which will build a 23-MW solar power plant in Mafraq Governorate.