Islamic Banks Financing for Solar Projects in Jordan Reality and Ways of Activation

Abstract

This study aimed at discussing the Barriers of Islamic banks financing for solar energy projects in Jordan, and to indicate the appropriate ways to activate the financing of Islamic banks for solar energy projects and proposing suitable financing methods by Islamic banks for solar energy projects. To achieve the objectives of the study, the descriptive approach and the analytical method were used. The study was divided into four main sections: solar energy and the requirements of investment in it, Islamic banks and the investment in solar energy in Jordan, financing of solar projects in Jordan and activating the role of Islamic banks in financing solar energy projects in Jordan.The study founded that the sources of funding were limited to external grants, government funding and funding from private external sources. It founded that there were challenges to financing these projects, such as the high risk of these projects, and the lack of real encouragement for investment by energy sector actors. In order to activate the role of Islamic banks, it was necessary to emphasize the role of Islamic banks in financing development, in addition to enhancing the expected returns from solar energy, not to mention activating the role of the government in providing the appropriate investment, projects' environment. The study suggested a range of financing methods suitable for the solar sector, such as Murabaha, Musharaka, Mudaraba, Leasing, Istisna'a, repurchase agreements, asset backed securities and the establishment of investment funds to finance solar projects.