Promoting Renewable Energy in Jordan by Employing Economic Incentives

Abstract

Renewable energy is the way forward in the medium to long-term future in Jordan. Renewable energy (RE) in Jordan has a very modest share not exceeding 0.5% of total installed capacity. This paper compares between the economics of conventional power and that of renewable power. The renewable power considered includes photovoltaic (PV), wind, and concentrated solar power (CSP). Results showed that the levelized cost is 11, 14, 20, and 21 ?/kWh for wind, CCGT, CSP, and PV, respectively. The Internal Rate of Return values (IRR), were 16.35%, 11.17%, 8.85%, and 6.28% for CCGT, wind, CSP and PV, respectively. The major outcome showed Wind power is faring well in the economic comparison with conventional power while CSP and PV are still not economically justified. Testing of the potential of two economic incentives for renewable energy was performed. The first incentive being a price premium for power purchase, illustrated a decisive change of feasibility but still the same ranking. Introducing a price premium of 15% alone led to the ranking of CCGT, Wind, CSP, and PV in priority order with both Wind and CSP feasible while PV not yet feasible. The second incentive pertaining to adding an increase of 5% to CCGT cost to cover for pollution control results in the same ranking order as before but with only Wind feasible. Finally combining both incentives results in a different ranking with Wind power coming before CCGT, then followed by CSP and PV. Moreover, in this case all RE power sources become feasible.