Feasibility study of low carbon energy investments in Jordan By : Bashar Zagha

1. Feasibility Study of Low-Carbon Energy Investments
in Jordan
Prepared by: Bashar Al-Zagha
Supervised by: Prof. Andrew Tylecote
The University of Sheffield
Management School
September, 2010

2. Sheffield MBA
Abstract
The aim of this research is to investigate the feasibility of low-carbon energy investments
in Jordan. The research is divided in to two main sections: one examines the effectiveness
of policies adapted by the Jordanian government to promote renewable energy
investments, and the other inspects the challenges facing the nuclear program in Jordan.
Together, these two factors will play a major role in determining the future of low-carbon
energy mix in Jordan.
The literature review will shed light on issues attached to the current consumption of
primary energy resources and how this could affect the future of the planet. In addition,
the literature will compare and contrast the different insights concerning the advantages
and disadvantages of low-carbon energy resources and outline Jordan’s national energy
strategy as well as the country’s political, financial and economic background.
Since this is qualitative research, it was decided to gather primary data through conducting
semi-structured interviews with top personnel from private and public organizations. This
method will provide diverse perspectives regarding the research topic and will allow the
researcher to develop a holistic view of the situation and develop his own analysis.
Based on the findings, Jordan has a desperate need to diversify its energy resources in
order to avert an energy crisis in the near future. However, there are still barriers and
challenges attached to low-carbon energy investment that still need to be addressed. Along
with different strategies that the Jordanian government must consider in order to create an
investment friendly atmosphere and achieve its national energy mix objectives.
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Acknowledgement
I owe my deepest gratitude to my supervisor Prof. Andrew Tylecote for his unlimited
support, encouragement and guidance. Prof. Andrew provided me with invaluable insights
and ideas that widened my knowledge in relation to the research topic, and it would have
been next to impossible to write this thesis without his help and support.
I would also like to show appreciation for the valuable time given by all the interviewees
who took part in the research, and whose responses provided precious data that were
essential to the research.
I am also deeply thankful to my family and my MBA class mates as they have been a
source of support and inspiration. I also offer my regards and blessings to all those who
supported me in any respect during the completion of the project.
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Table of Contents
Chapter 1 – Introduction ....................................................................................................... - 4 -
Chapter 2- Literature Review ................................................................................................ - 7 -
2.1 Global Energy ........................................................................................................ - 7 -
2.2 Global Warming ..................................................................................................... - 8 -
2.3 Renewable Energy ................................................................................................. - 9 -
2.4 Solar Energy ......................................................................................................... - 11 -
2.5 Economic Efficiency ............................................................................................ - 13 -
2.6 Energy in Jordan .................................................................................................. - 14 -
2.7 Renewable Energy in Jordan................................................................................ - 15 -
2.8 Nuclear Energy .................................................................................................... - 16 -
2.9 Nuclear Energy in Jordan ..................................................................................... - 19 -
Chapter 3- Research Methodology ..................................................................................... - 21 -
3.1 Research Method.................................................................................................. - 21 -
3.2 Data Collection..................................................................................................... - 22 -
3.3 Research Limitations and Boundaries.................................................................. - 24 -
Chapter 4- Results ............................................................................................................... - 25 -
Chapter 5- Discussion ......................................................................................................... - 32 -
Chapter 6 –Conclusion and Recommendations .................................................................. - 36 -
References ........................................................................................................................... - 40 -
Appendix ............................................................................................................................. - 46 -
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Chapter 1 – Introduction
Energy is a fundamental element in our universe and has become an indispensable part of
our daily lives. Energy has empowered the progression of developed societies from
providing the basic needs of heat and light to complex activities like transportation,
communication and industrial processes.
However, today’s energy sources are predominantly from fossil fuels, and with the current
growth of energy demand and the global economic expansion these unsustainable
resources will become depleted in the near future. In addition, the ignition of non-
renewable energy resources is responsible for the anthropogenic greenhouse effect which
is the main cause of global warming. Having foreknowledge of these consequences,
countries and governments have identified that the key to solving the energy problem is
through renewable energy investments, which has recently experienced a surge of interest
due to falling costs of installation and advances in technology (Development, 2000).
Jordan, a Middle Eastern developing country with a population of six million, would be on
the brink of an energy crisis if it were to keep relying on its current energy generating
capabilities and technology. Jordan is a net energy importer with very limited resources, as
it is one of the few countries in the Middle East with no oil reserves. Currently the
kingdom is importing about 96 per cent of its energy at a cost of 18 per cent of its growth
domestic product (EDAMA, 2009); consequently, this has imposed further pressure on the
energy sector, especially since the volatile rise of crude oil and gas prices and the financial
crisis that struck the world recently (Luck, New law streamlines renewable energy
investment, 2010).
According to NEPCO (2009), by the end of the year 2009 Jordan was generating about
14.3 TWh of electricity, with a total generating capacity of 2749 MW, which is predicted
to grow to 3600 MW of electricity by 2015, doubling by 2030 (Jordan – uranium hotspot,
2010). Anxious not to fall into an energy deficit in the future, the Jordanian government
formed an energy strategy in 2007 to avoid the crisis. The strategy highlights the
significance of supplying 14 per cent of its energy from oil shale, 10 per cent from
renewable energy resources and 6 per cent from nuclear energy by 2020.
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Early in 2010 the Jordanian government released a new law that aims to promote the
investment in renewable energy projects in order to achieve the energy mix goals of the
national energy strategy. The new energy strategy requires that 7 per cent of the energy
mix should be derived from renewable resources by the year 2015 and 10 per cent by
2020. This newly released law aims to accelerate the deployment of renewable energy
investments by providing a wide range of benefits in terms of competitive bidding priority,
long-term funds, connectivity costs, tax cuts and more (Luck, New law streamlines
renewable energy investment, 2010).
In addition, the year 2007 became a turning point for the future of energy in Jordan due to
the discovery of uranium deposits in the kingdom estimated at 65,000 tonnes, excluding
an extra 45,000 tonnes from phosphate reserves, which collectively accounted for 2 per
cent of the global total uranium reserves (JAEC, 2010). Jordan’s higher committee for
nuclear energy has developed a program that is intended to supply 30 per cent of
electricity from nuclear power by 2030, as well as driving a desalination plant for
supplying water in a country which is characterised by a severe lack of water (IFandP
Newsroom, 2010).
Renewable energy and nuclear energy present wide scope for research; however, this
research will seek to provide answers to certain questions that may define the future for
low-carbon investments in the Hashemite Kingdom of Jordan. These questions are:
Q1. How Jordan’s recently released renewable energy law might play a role in
encouraging local/foreign investors to invest in renewable energy in the kingdom?
o What are the benefits that the new renewable energy law will provide to investors
in the renewable energy sector?
o What are the limits and boundaries of the newly released law in terms of funding,
incentives and subsidy levels, and how could it affect the deployment of renewable
energy projects?
o Would the government modify the renewable energy law if it were not able to meet
its energy strategy objectives?
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Q2. Will investing in renewable energy projects in Jordan yield good return on
investment?
o What are the risks that face renewable energy investments in the kingdom?
o What is the potential of photovoltaic and wind energy in the kingdom as renewable
energy sources?
o What will be the cost of generating electricity from renewable energy projects, and
who will bear the additional costs of the electricity generated from renewable
resources?
Q3. What are the challenges facing the deployment of a nuclear program in Jordan?
o What are the costs and benefits of implementing a nuclear energy program in the
kingdom?
o What are the differences in generating energy from renewable sources or nuclear
sources in terms of environmental aspects and economic efficiency?
o How could the discovery of new uranium deposits and the launching of a civil
nuclear program in Jordan affects the interest in renewable energy investment in
the kingdom?
A mind map was constructed to visualize and structure ideas related to the research
questions that will assist the researcher in his interpretation and analysis (see Appendix
A).
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Chapter 2- Literature Review
This chapter will construct the corner stone of the research by presenting the literature
related to low-carbon energy investment. The chapter will start by stating some facts about
the global energy consumption rate, and how the increased consumption rate of fossil fuels
is raising concerns over environmental issues such as global warming. Then it will discuss
how the world is moving towards renewable energy sources as an alternative to fossil
fuels, whilst also presenting the different perspectives on implementing this technology.
Following that, the chapter will define the current energy issues faced by the Kingdom of
Jordan and how the government is adjusting its policies and strategies to support
renewable energy investments.
The chapter then concludes with discussion of global nuclear energy utilization as well as
the costs and benefits incurred in implementing this technology, along with Jordan’s
ambition to start its own nuclear program as a source of energy and how this could play a
part in the future of energy mix in the kingdom.
2.1 Global Energy
Energy is the life blood of modern civilization; it amplifies the human capability to travel,
work, communicate and undertake daily tasks in an effortless manner. Energy provides
mankind with the necessary power to manufacture goods, generate electricity and provide
diverse energy services. However, the global demand for energy is growing day by day
and at a record pace, due to acceleration in population growth and industrialisation rates
(Snead, 2008). According to Al-Qahtani (2007), “the global energy demand will grow by
about 50 per cent over the next 25 years”.
Fossil fuels such as crude oil, coal and natural gas are considered to be the main sources of
energy used today. However, as fossil fuels require millions of years to form, at the
current consumption rate, fossil fuels are being depleted at a faster rate than they are being
formed; that is why they are also known as non-renewable energy sources.
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In 2008, the world total energy consumption consisted of 78 per cent fossil fuels, 2.8 per
cent nuclear energy and the remainder came from renewable energy sources (see figure 1)
(REN21, 2010). Hence, more than three quarters of the energy supplied to the world is
based on a finite source of energy that is estimated to last for only about 140 years at the
current consumption level (Al-Qahtani, 2007).
Renewables
19.0%
Nuclear
2.8%
Fossil fuels
78%
Figure 1 Global Energy Consumption, 2008 (REN21, 2010)
In addition to the global hunger for energy and the anxiety over meeting future energy
demands, the current exploitation of traditional energy resources has a negative impact on
the environment and the planet’s ecosystems. The burning of fossil fuels releases harmful
emissions and pollutants in to the atmosphere. Therefore, unless countries take drastic
measures to diversify their reliance upon fossil fuels, humanity will have to expect
economic and environmental tragedies in the near future (Kaltschmitt, Streicher, & Wiese,
2007).
2.2 Global Warming
Global warming involves a slow and steady rise in the temperature of the Earth and its
atmosphere, mainly as a result of incineration of fossil fuels and other associated human
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activities. Concern over this phenomenon has mounted recently due to its significant and
drastic economic, environmental and social impact (Climate change, 2009).
The atmosphere surrounding the earth consists of a layer of gases that act as a protective
shield, allowing sunlight to pass through while trapping heat. This natural phenomenon,
which is essential in keeping the Earth’s surface warm, is known as the greenhouse effect
(Quaschning, 2005).
Over millions of years nature maintained a balance of greenhouse gas concentration in the
atmosphere which consists mainly of water vapour (H2O), carbon dioxide (CO2), methane
(CH4), nitrous oxide (N2O), halocarbons and ozone (O3). However, the concentration of
these gases is increasing due to various human activities: mainly involving fossil fuel
combustion, which in turn is amplifying the greenhouse effect (The National Academies,
2008).
The additional greenhouse gases emitted to the atmosphere will alter the global climate by
warming it up rapidly. According to the European Commission (2009), this increase in
temperature will lead to catastrophic consequences such as the meltdown of polar ice caps
leading to a rise in global sea water levels, thus threatening the existence of coastal areas
and islands. In addition, global warming can be linked directly or indirectly to extreme
weather conditions around the world, including floods, heat waves, droughts and storms,
therefore jeopardising food production and leading to water scarcity in different regions
around the globe, resulting in famine and migration.
If no significant actions are taken to reduce the anthropogenic greenhouse gas emission,
the concentration of carbon dioxide in the atmosphere will double by the end of this
century, thus yielding a mean global temperature rise of more than 2 degrees Celsius
(Sawin & Moomaw, 2009). Mankind needs to address the necessity of reducing these
gases emissions and start searching for alternatives to present energy sources.
2.3 Renewable Energy
Renewable energy refers to “the energy derived from natural processes that do not involve
the consumption of exhaustible resources such as fossil fuels and uranium” (BP, 2010).
Renewable energy has lately started to make a major contribution to global energy
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supplies; thus, by 2009, renewable energy accounted for 18 per cent of global power
production and 25 per cent of global power (electricity) capacity (REN21, 2010). Despite
the rapid growth of renewable energy, renewable energy sources such as wind and
photovoltaic energy still lag behind and supply only a small fraction of the energy
consumed globally, as they are constrained by high investment costs and intermittent
supply (see figure 2).
Figure 2 Renewable Energy Shares in Global Energy Consumption, 2008 (REN21, 2010)
In the last decade, governments have started to deploy different policies to promote
renewable energy investment, while establishing future renewable energy targets. By early
2009, at least 64 countries had policies in place for promotion of renewable power
generation, to address challenges posed to global communities of enhancing energy
security and meeting future energy demands (REN21, 2010).
Renewable energy can be divided into three main categories: solar energy, gravitational
energy and geothermal energy. Depending on the technology employed, these sources can
be either used for heating purposes or electricity generation. The next section will
introduce environmental and economic data on renewable energy implementation,
focusing mainly on solar energy and specifically on wind power and photovoltaic
technology.
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2.4 Solar Energy
Solar energy is considered to be the most significant source of renewable energy, since the
sun provides the earth with unfathomable amounts of energy. According to Zweibel,
Mason & Fthenakis (2007), “in one hour the earth receives more energy from the sun than
the world's population uses in a whole year”.
The utilization of solar energy can be divided into two forms: direct and indirect. Direct
solar energy is energy coming directly from solar radiation, whereas wind power, wave
movements and biomass are all forms of indirect solar energy. This research will shed
light only on two renewable technologies for utilizing solar energy: wind turbines and
photovoltaic cells.
Wind Power
Wind power is an indirect form of solar energy, created as a result of different pressure
areas in the air due to different temperature levels on the earth’s surface (Quaschning,
2005). Wind power is considered to be clean, reliable and, due to its lower capital costs
compared to solar thermal and PV technologies, is the only power generating technology
that can deliver the needed CO2 cuts by the year 2020 (GWEC, 2010). By the end of
2009, global wind turbines were generating 340 TWh of electricity annually, which is
equivalent to 2 per cent of the global electricity consumption (World Wind Energy
Association, 2010).
Wind power can play a part in the fight against global warming, enhancing energy security
and creating thousands of jobs. However, there are drawbacks in relying completely on
this form of energy. Wind power is characterised by intermittency, hence, wind turbines
will generate power only when the wind is blowing and the blades are spinning. Since
there is no effective or economic mean for storing the excess energy produced from wind
power yet, it would be impractical to depend totally on wind energy (Quaschning, 2005).
From the environmental aspect, wind power is not as carbon free as it is claimed to be,
since it relies entirely on fossil fuels for manufacture, assembly, transport and
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maintenance, along with the necessity of having a fossil fuel powered backup to balance
the fluctuations of wind power output (Lang, 2009). Nevertheless, wind energy is
considered to have the shortest energy payback time, as only a few months are required to
pay back the energy needed for manufacture and installation (Milborrow, 1998).
Photovoltaic Power
Photovoltaic (PV) technology is used to generate electricity by converting solar radiation
or sunlight into a direct current electricity using silicon solar cells. PV is considered to
have very high potential, as in theory it is assumed to have the capability to meet the
demands of the entire world (Quaschning, 2005).
By 2009, the solar PV grid tied industry had grown by 53 per cent compared to the year
2008, despite the financial crisis and lower oil prices (see figure 3). In addition, solar PV
had the fastest average growth compared to any other renewable technology over the last
five years (REN21, 2010). Nevertheless, PV is considered to be an expensive method for
electricity production compared to other forms of conventional power plants; therefore,
and in order to cut the high technology costs and make it a more competitive market
option, governments started to introduce new incentive schemes and medium-term
financial support to endorse PV investment and promote mass production (Luque &
Hegedus, 2003).
Figure 3 Solar PV, Existing World Capacity 1995-2009 (REN21, 2010)
Energy generated by PV technology is also intermittent, since it only feeds electricity to
the grid as long as the sun is shining; as a result, the output efficiency of PV cells depends
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significantly on factors like daylight hours, sun elevation, altitude and weather conditions
(Aglietti, Redi, Tatnall, & Markvart, 2009) .
Neither is PV as totally carbon free as it is purported to be. Even though PV power
generation is free of greenhouse gas emissions, mining and refining semiconductors used
in PV cells as well as the manufacture and transportation of PV systems all depend on
energy obtained from fossil fuel sources (Luque & Hegedus, 2003). However, according
to Black (2005) the energy payback for most PV systems is in the range of two to four
years, which is relatively low in terms of a PV system’s life span that ranges between 20
to 25 years.
2.5 Economic Efficiency
Investment in the renewable energy sector has become one of the top choices for energy
investors and developers, driven by effective government policies, enhanced technologies,
and growing concerns about global warming and exhaustion of fossil fuels. Accordingly,
between the years 2004 and 2008, global renewable energy investment increased more
than fourfold, from 35 billion to 155 billion US dollars, reflecting the growing interest in
the renewable energy sector (Sawin & Moomaw, 2009).
One of the major concerns when considering any form of investment is economic
efficiency; the same applies for renewable energy investments. Economic calculations
need to be made in order to identify the renewable energy source that can best provide the
desired energy at the lowest cost, thereby ensuring high economic return on the investment
(Quaschning, 2005).
When carrying out economic calculations on renewable energy, all expenses must be
computed; that includes costs of installation, operation, maintenance and disposal. These
expenses should then be divided by the total number of kilowatt-hours generated during
the plant’s life span. The resulting figures will represent the cost for one unit of energy,
which can be expressed in terms of $/KWh (Quaschning, 2005).
Unlike conventional sources of energy, the costs of renewable energy investment are more
or less fixed: since the fuel sources for renewable energies such as wind and solar are
totally free, thus avoiding any uncertainties of fuel cost variation. Nevertheless, as
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renewable energy projects extend over a long period of time, inflation must be included in
the equation (Quaschning, 2005).
Like all other investors, renewable energy investors expect a return on their capital.
However, renewable projects are usually characterised by demand for high rates of return
as a result of the high risks coupled with them. Renewable energy projects are considered
to be risky due to unpredictable changes hiding on the horizon: from policy changes to
unforeseen technical issues and overestimation of the availability of renewable energy
resources (Quaschning, 2005).
2.6 Energy in Jordan
The Hashemite Kingdom of Jordan is a small Arab country in the Middle East with few
natural resources, except for phosphate and agricultural produce. The country’s economy
and its 6.3 million inhabitants mainly depend on services, tourism and foreign aid (BBC
News, 2010). Although Jordan is surrounded by oil rich neighbours such as Saudi Arabia
and Iraq, it has no oil of its own; therefore, the lack of conventional fossil resources
combined with the rapid economic growth experienced by the country has created a high
level and costly dependency on imported energy (EDAMA, 2009).
Jordan relies on external resources for almost 96 per cent of its energy supplies, deriving
from fossil fuels, and these account for almost 21per cent of Jordan’s imports and 18 per
cent of its gross domestic product. Although Jordan’s contribution to global warming is
below the world average, this almost exclusive dependence on fossil fuel sources means
that its greenhouse gas emissions accounts for over 20 million tonnes of carbon dioxide
per year (EDAMA, 2009).
In addition to the above, Jordan is facing a very grave environmental challenge due to
scarcity of water. On per capita basis, Jordan is considered to have the lowest level of
water resources in the world, and this level is predicted to decline further, leading to an
absolute water shortage by the year 2025 (Royal Hashemite Court ).
The dearth of energy resources combined with water poverty and the accelerating demand
for electricity has forced the Jordanian government to change its energy strategy mix, and
it is currently planning to meet 29 per cent of its energy needs from natural gas, 14 per
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cent from oil shale, 10 per cent from renewable energy sources and 6 per cent from
nuclear energy by 2020 (see figure 4) (Ministry of Energy and Mineral Resources, 2007).
Domestic: 4% Domestic: 25%
Imported: 96% Imported: 75%
Domestic: 39%
Imported: 61%
Figure 4 The Energy Mix in Jordan (2009-2020) (Sabra, 2010)
2.7 Renewable Energy in Jordan
The Ministry of Energy and Mineral Resources (MEMR) has stated its objectives of
diversifying its energy sources, reducing green house gases, encouraging renewable
energy investments and complying with the kingdom’s national energy strategy for 7 per
cent of its energy mix to come from renewable sources by 2015 and 10 per cent by 2020.
To that end, it has recently endorsed a new stream of legislation under the name of
“Renewable Energy & Energy Efficiency Law of 2010”. The new law aims to facilitate
investment in the renewable energy sector by providing a variety of incentives from tax
exemption to government land grants and funds, while allowing investors to negotiate
directly with the MEMR for establishing renewable energy projects: which was in the past
a time consuming process. In addition, the new law obliges the National Electric Power
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Company “NEPCO” to purchase the electricity produced by renewable energy projects
throughout the entire lifetime of the renewable project as well as covering the expenses for
connecting these projects to the electricity grid (Ministry of Energy and Mineral
Resources, 2010).
Conversely, the new law states that potential investors must provide a development and
financial plans for the project, while stating clearly the proposed tariff for the electricity
units sold by these facilities. The tariff must be fixed and expressed as an amount per
kilowatt hour within an acceptable range in terms of the reference pricelist (Ministry of
Energy and Mineral Resources, 2010). In addition, all investors need to have previous
experience in developing similar renewable energy facilities in order to gain approval.
2.8 Nuclear Energy
Nuclear energy has been projected as a technological miracle that can generate carbon free
electricity at low rates; nevertheless, the use of nuclear energy for civil purposes has long
been surrounded by controversy. The utilization of nuclear technology was linked with
fears of potential nuclear accidents, radiation effects on human health, nuclear waste
disposal risks and nuclear proliferation, thus posing a dilemma for environmentalists
(Walker, 2006).
According to Writers (2009), the next decade will witness a growing appetite for nuclear
energy utilization, since the International Atomic Energy Agency (IAEA) is expecting 25
nations to start developing nuclear facilities by 2030 (Tirone, 2010). The recent growing
desire to acquire nuclear technology could be associated with the increase in concerns over
global warming, increase in fossil fuel prices and the need to meet future energy demands.
In this respect, nuclear energy would be the best option in providing clean, competitively
priced base load electricity (Henriques, 2010). As of 2007, almost 6 per cent of the
world’s energy was derived from nuclear power (Agency, 2009), and there are currently
about 436 nuclear commercial power reactors operating in 30 countries, providing almost
15 per cent of the world’s electricity on a continuous basis (World Nuclear Association,
2009).
What is nuclear power? Nuclear power is formed by non-explosive nuclear reactions in a
process called nuclear fission by which uranium atoms are split; the high temperature
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released by these reactions is used to heat up water and produce steam which subsequently
rotates turbines to generate electricity. Uranium is a radioactive metal that occurs
throughout the earth’s crust and is the source of fuel for nuclear power; however, nature
does not provide uranium in a form that can be utilized directly in nuclear power plants.
Uranium found in uranium ore contains two forms of isotopes: uranium-238 with 99.3 per
cent concentration and uranium-235 with 0.7 per cent concentration. However, only
uraniuim-235 can be used to power nuclear reactors and it has to be within a concentration
that ranges between 2 to 4 per cent. This percentage of uranium can be acquired in a
process known as uranium enrichment (Quaschning, 2005).
To investigate the sustainability of nuclear energy, four key components need to be
considered, these are: nuclear fuel supply, environmental consequences, political aspects
and economic efficiency.
Nuclear power was considered to be a limitless source of energy in its early days
(Paffenbarger, 2009). However, it was found that earth has limited reserves of uranium
and according to IAEA as cited by Henriques (2010), uranium deposits will last for a
further 100 years if consumed at the current rate. This indicates that with the current
technology employed in nuclear reactors, nuclear energy is still considered, like other non-
renewable energy sources, to be finite source of energy (Paffenbarger, 2009).
On the environmental front, nuclear power has been projected as a two-edged sword; on
one hand, the technology was promoted as a cheap, clean source of power with zero
greenhouse gas emissions, thus making a major contribution to the reduction of
environmental pollution and the effects of global warming. On the other hand, nuclear
energy was associated with a number of environmental issues, including the disposal of
high-level radioactive waste. Hence, a 1GW nuclear power plant can produce about 30
tonnes of high-level radioactive waste per year, which needs to be securely managed and
stored (OCED, 2008). Moreover, Caldicott (2007) states that nuclear power is not as free
of carbon as it is claimed to be, since processes such as mining and enriching the uranium
needed to fuel the nuclear reactors and transportation and storage of nuclear wastes, all
rely on fossil fuels. Nevertheless, the greenhouse gas emissions from a nuclear power
plant equate to only one third of those emitted from a fossil power plant.
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Nuclear reactor accidents are also recognized to be a major environmental risk, as the
occurrence of such an incident could lead to catastrophic damage to the environment and
human health, as in the incidents at Three Mile Islands in 1979 and the city of Chernobyl
in 1986 (Caldicott, 2007). Nevertheless, the risk of accidents has been reduced by the
imposition of strict precautions and regulations.
Political challenges have a significant effect on the future of nuclear energy (International
Energy Agency, 1998). As access to nuclear technology might be used for military
purposes like developing an atomic bomb, which could provoke an international crisis by
destabilizing international relations and ultimately lead to atomic warfare. Hence, imagine
what might be the consequences if nuclear technology were to be accessed by politically
unstable nations (Quaschning, 2005). According to Caldicott (2007), even if the nuclear
technology were to be used for civil purposes, it could still be dangerous. As a 1 GW
nuclear reactor has the ability to produce 500 pounds of plutonium annually, and only 18
pounds of plutonium is needed for one Nagasaki type bomb, countries that acquire nuclear
reactors for civil purposes will thereby also acquire the technology needed to develop
nuclear weapons, which is the situation faced by Iran today.
On the economic front, nuclear power plants, once they are built, have the ability to
provide low-cost, reliable electricity which is often cheaper than that produced by other
generating means (OCED, 2008). In addition, nuclear energy is characterised by lack of
fluctuation in the generating costs, since, as only a small amount of uranium is needed to
produce a large amount of energy, it is considered to be a highly inelastic commodity, thus
making the fuel cost a minor part of the nuclear plant equation (Regheb, 2010).
Nevertheless, nuclear power plants have various charges attached, including high
construction costs, compliance to nuclear regulations, waste disposal costs and
decommissioning costs (World Nuclear Association, 2009).
Nuclear energy is currently at a crossroads, in balancing concerns about public health and
environmental consequences from wastes and hazards on one side, and the great promise it
holds as an environmental technology that can lower greenhouse gas emissions and reduce
mankind’s dependence on fossil fuel sources on the other (OCED, 2008).
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2.9 Nuclear Energy in Jordan
Jordan relies for 96 per cent of its energy needs on imports, at an annual cost of almost 4
billion US dollars, and is considered to be one of the poorest five countries in terms of
water reserves in the world. However, the year 2007 brought great news for the Hashemite
kingdom through the discovery of 65,000 tonnes of uranium. This extract could boost up
to a total of 110,000 tonnes, if uranium extracted from phosphate deposits was considered,
representing almost 2 per cent of the global uranium reserves (JAEC, 2010). This
discovery led King Abdullah, the ruler of Jordan, to command a drastic reshaping of the
energy mix strategy, which presently calls for 30 per cent of Jordan’s energy mix to be
derived from nuclear power by the year 2030.This will consequently utilize the country’s
natural resources and reduce its dependency on foreign oil.
The nuclear program will help Jordan to supply its water needs, increase its economic
stability and meet the growing demand for electrical load. Jordan plans to build its first
nuclear plant by 2019; nevertheless, the Jordanian government’s enthusiasm to employ
nuclear energy is affected by various environmental, economic and political challenges
(JAEC, 2010).
Jordan’s public finances suffer from persistent distortions and deficits, hence by the end of
May, 2010 Jordan's public debt rose to 14 billion US dollars (Jordan News Agency- Petra,
2010); therefore the Jordanian Atomic Energy Commission (JAEC) might need to start
searching for sources of self funding in order to avoid overburdening the state treasury
(JAEC, 2010).
On the environmental front, a nuclear program would reduce Jordan’s greenhouse gas
emissions to the atmosphere, although Jordan contributes only 0.1 per cent of the total
global carbon emissions (Irani, 2009). As for the site of the nuclear facility, it is proposed
that the reactor be located close to the Red Sea port city of Aqaba to meet the requirement
for water for the cooling process (Toukan K. , Challenges Facing Emerging Nuclear
States: Jordan as a Case Study, 2010). Aqaba with its 23 Km of shoreline is considered to
be a major destination for tourism in the country; therefore, precautions and preventive
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measures must be put in place to prevent any alteration to the marina’s coastal
environment and any potential accidents.
The political front could have a major impact on the future of Jordan’s nuclear program.
Although the Obama administration is supportive of Jordan’s nuclear ambitions, the
United States is still worried that the spread of nuclear power will open the door to the
proliferation of nuclear weapons, especially in Middle Eastern countries. Therefore, the
United States will only secure a nuclear agreement with Jordan if and only if Jordan
surrenders its right to enrich its own uranium fuel (BBC News, 2010).
However, even though Jordan may have the right to enrich its own fuel under the nuclear
non-proliferation treaty, it still lacks technology and finance to enrich uranium on its own.
Nevertheless, the Jordanian government is currently focusing on developing a nuclear
power plant as a first step in cooperation with nations such as France and South Korea,
and purchasing the uranium fuel from the open market, without surrendering the right to
enrich uranium in the future (Solomon, 2010).
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Chapter 3- Research Methodology
This chapter presents an outline of the research methodology utilized throughout the
dissertation and describes the methods used for data collection. It further lists potential
limitations and restrictions that can be incurred during the research process.
3.1 Research Method
Research method is “simply a technique for collecting data” (Bell & Bryman, 2003). The
research method primarily depends on the extent of the clarity about the theory used in the
research, and research methods can be divided into two main approaches:
• Deductive approach.
• Inductive approach.
The deductive approach should be used when the researcher develops a theory and then
develops a strategy to test the correctness of this theory, whereas the inductive approach
starts with observations and data collection, which will then be analysed to develop a
theory or a hypothesis (Lewis, Thornhill, & Saunders, 2007). Since the nature of this
research is evaluative judging the effectiveness of certain policies, strategies and laws an
inductive approach will be applied; though there will always be an element of deduction in
the research: as it is impractical to collect data without at least having a model in mind
(Veal, 2005).
The inductive research method uses qualitative data to arrive at the research objectives.
Qualitative data is content-rich information collected from a small number of people or
organizations, thus allowing the researcher to experience the research issues from the
respondents’ perspective and to become a part of the research process through
understanding these issues (Veal, 2005).
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3.2 Data Collection
Research data can be collected in a variety of ways and methods, but, since the nature of
this research is qualitative, it was decided that the best method for data collection would
be through semi-structured interviews combined with documents and articles from
different resources (Veal, 2005).
Data sources can be classified into two main categories: primary data and secondary data.
However, a combination of both is usually required to provide sufficient data for the
researcher to analyse and answer the research questions (Lewis, Thornhill, & Saunders,
2007).
Secondary data refers to “the information gathered by someone other than the researcher
conducting the study” (Sekaran, 2000). Secondary data can save the researcher time and
money in acquiring information that can assist in answering the research questions.
However, the drawback of using secondary data is that it might not fit the research
problem and sometimes might not be of the desired quality (Lewis, Thornhill, & Saunders,
2007). There are different sorts of secondary data, but for this research annual reports,
government publications and research reports will be used as well as books and
periodicals.
Primary data refers to new information collected as a part of the research project. There
are different methods for collecting primary data, including questionnaires, surveys, focus
groups and interviews. However, the primary data for this research will be based on
interviews as they are flexible and can provide the kind of detail essential to the research.
Interviews can be divided into three main categories (Lewis, Thornhill, & Saunders,
2007):
• Structured interviews
• Semi-structured interviews
• Unstructured or in-depth interviews
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Each of these categories has its own criteria, advantages and disadvantages. However, for
this research, face-to-face semi-structured interviews were given priority over other
methods, since this type of interview can drill deep into the topic and help to extract rich
information from the interviewee. In addition, and in view of the fact that only three
interviews were conducted for this research, it would be meaningless to have a structured
interview with a fixed list of questions.
Instead, thirty minutes were allocated to each interview session and a check list of
questions and themes was prepared to guide the researcher through the interview process.
The interviewees were also asked to sign a participants’ consent form to prove their
participation in the research and to adhere to the university ethical standards (see
Appendix B).
The first interview was conducted with Mr. Hanna Zaghloul the chief executive officer of
Kawar Group. Kawar Group is a potential investor in the renewable energy sector in
Jordan; the company is currently executing a technical and economic study concerning
investment in a project called (Sham Ma’an), under which there are plans to install a 100
MW PV Power plant in the Ma’an desert in Jordan. The interview was intended to provide
the researcher with information regarding renewable energy investment, expenses and
return on capital as well as issues faced by the private sector in terms of law and
government policies.
The second interview was held with Eng. Ziad Jibril; Mr. Jibril is the director of the
renewable energy and energy efficiency department in the Ministry of Energy and Mineral
Resources. The purpose of the interview was to investigate the newly released renewable
energy law, discuss the incentives offered and inspect how the public sector can work side
by side with the private sector to achieve national energy strategy goals.
The third interview was conducted with Dr. Khaled Toukan, the chairman of the Jordan
Atomic Energy Commission. Dr. Toukan would help in providing the latest updates about
the advancement of the nuclear program in Jordan, as well as stating any obstacles and
challenges that might stand in the way of establishment of a nuclear reactor in the
kingdom from economic, environmental and political perspectives.
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3.3 Research Limitations and Boundaries
Investment in low carbon energy in Jordan is still in the initial stages; therefore, with the
existence of so few potential investors, the data collected could not be generalised. In
addition, this research is investigating confidential issues related to political and economic
views, which might lead interviewees to refuse to answer sensitive questions due to
confidentiality concerns.
Furthermore, data and statistics relating to the energy sector are changing constantly with
time, price fluctuations, new technologies ...etc; as a consequence there is a risk that data
might be out of date and this could affect the research analysis and the outcomes.
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Chapter 4- Results
The main objective of this research was to gain a deeper understanding of the feasibility of
low-carbon investments in Jordan. To achieve this, face to face semi-structured interviews
were conducted with top directors from both private and public organizations. The
interviews were designed to gather the latest information and data related to the research
topic while filling in any gaps in the secondary data and helping the researcher to answer
the questions posed in chapter 1.
The interviews were conducted with two public organizations, MEMR and JAEC, and a
private company. This combination would allow the researcher to develop a holistic view
of the situation and comprehend the different perspective communicated by each
interviewee. The interviews, conducted in Arabic, were not tape recorded, given that the
themes and questions discussed in the interviews were a bit sensitive and using a tape
recorder might have disconcerted the respondents and hindered them from speaking freely;
therefore, notes were taken instead. The next section will summarize the main findings of
these interviews and present them in the form of quotations since the data is qualitative:
Interview #1
To understand the feasibility of renewable energy investment in Jordan it was necessary to
investigate a company that was already engaged in renewable energy investment.
However, most of the renewable energy investments in Jordan were either of a small scale
or off-grid projects and therefore could provide only limited and imprecise information.
Nevertheless, a consortium comprising Amman-based Kawar Energy and the Italian firm
Solar Ventures has recently become involved in the development of a 100 MW solar
power plant that is expected to become the world’s largest photovoltaic plant. The cost of
the project, known as “Shams Ma’an”, is estimated to be up to 400 million US dollars and
it should help Jordan to achieve 25 per cent of its targeted 7 per cent renewable energy
contribution toward the kingdom’s power capacity by the year 2015, and it could reduce
annual carbon dioxide emissions by up to 160,000 tonnes (Luck, Plans for world’s largest
photovoltaic power plant unveiled, 2010).
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Kawar Group is currently examining the feasibility of Sham’s Ma’an and, therefore, their
findings will shed the light on the feasibility of renewable energy investment in Jordan in
terms of the estimated return on investment and potential risks. The following presents
crucial parts of the interview that was conducted with Mr. Hanna Zaghloul (Zaghloul,
2010).
Mr. Hanna, please can you update us on the progress of the Shams Ma’an project and
when it will be in production?
“As you know the project will be carried out in four phases: evaluation, pilot, feasibility
study and implementation. Up to now we have completed the research into the location
and the economic feasibility of the project. However, we still have to decide which type
of technology we need to use for PV cells between regular solar cells and concentrated
solar technology. The project is expected to be completed by the end of 2012.”
As an investor, what was your main objective in engaging in renewable energy
investments?
“I will tell you that making profit is a central part of engaging in any investment.
Nevertheless, Kawar group has always been a pioneer in investing in new technologies
and delivering innovative solutions. Therefore, we would like to be the first to step up and
invest in this type of business, which has the potential to reduce the carbon footprint and
provide a sustainable source of energy, and that is exactly what we are aiming for.”
How much are you expecting as a return on the investment from Sham’s Ma’an?
“Usually energy companies expect an internal rate of return that ranges between 15 and 17
per cent. However, we are going to be moderate by only expecting a 10 per cent rate of
internal return.”
Can you provide us with a copy of the economic feasibility study, or any data related to
the estimated costs, expenses, etc...?
“I am sorry, but I cannot give you any data regarding the economic study as it is
confidential. All that I can say is that the selling price of one unit of electricity KWh will
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be in the range of 25 cent/KWh, and this might increase if annual inflation is to be taken
into consideration.”
Why did Kawar Group decided to engage in PV technology rather than wind energy, even
though wind is globally more competitive?
“It is true that wind power is cheaper. However, this is not the case in Jordan due to the
high prices attached to wind power from transporting wind turbines, land capturing and
high fluctuation in wind energy output. This can be observed through the fact that both the
AL-Fujaj and Al-Kamshah wind farm projects, that were supposed to have been
implemented a long time ago, have not yet been executed. Therefore, if you are
considering a large scale renewable energy project it would be more reliable to use PV
technology. In addition, Ma’an desert in the south of Jordan has an excellent irradiation
index, since it is located at an attitude of 1100 meters above sea level with at least 300
sunny days per year.”
Did the renewable energy law released recently have any effect on your decision to engage
in renewable energy investment?
“The law is still new, and we started the research and the feasibility study long before the
law was issued. As for the law, it is still very general as there are no details of incentives
or funds; therefore it still requires time to mature.”
Interview #2
The second interview was conducted with Eng. Ziad Jibril, director of the renewable
energy and energy efficiency department in the MEMR. The interview provided a clear
insight into the new released law along with the challenges facing the MEMR.
What are the targets of the national strategy for establishing investment from renewable
energy resources?
“The government should cover 10 per cent of its energy mix from renewable energy
sources by the year 2020 and these should be divided into the following: 600-1000 MW
wind energy, 300-600 MW solar energy and 30-50 MW waste energy”
With a choice between wind power and PV technology, which technology would you
consider more feasible for implementation in the kingdom?
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“Both of them are considered to be good options; however, there are issues attached to
wind power relating to the high cost of acquiring land and high fluctuations in wind
energy. For example, in a recent study four wind turbines were placed 100 meters apart
from each other; however, the energy output difference between the first and the fourth
turbine was almost 25 per cent, which is a huge difference. As for PV technology, the
Ma’an desert in the south of Jordan has almost 300 sunny days a year with almost 10
hours of sunlight per day, hence the estimated energy per square meter of land is in the
range of 6 - 7 KWh/m²/day, which is about 2000 - 2500 KWh/m² of electricity per year”
What does the reference list that is mentioned in article 6 of the renewable energy law
refers to?
“The reference list consists of a range of renewable energy estimated prices which help the
ministry in negotiating with private investors over the proposed price of energy supplied.
However, the reference list is not ready yet and it is expected to be completed at the end of
this year.”
I conducted an interview with Mr. Hanna Zaghloul and, according to him, Kawar group is
planning to sell one unit of electricity for 25 cents, what are your comments regarding
that?
“According to the law, NEPCO is obliged to purchase all the power generated by these
renewable investments, but the cost of the supplied electricity will be decided through a
negotiation process with reference to the reference list. However, 25 cents is way too
much, our figures suggest that is should be in the area of 13 cents/KWh.”
Then Eng Ziad continued:
“NEPCO has already incurred a loss of 45 million JD in 2009 due to the fluctuation of oil
prices, and thus the government had to pay them for the loss. Furthermore, the government
is currently experiencing a deficit in its budget, so it would be impossible for it to purchase
units of energy at the figure that you just have mentioned. In addition, we already have a
gas source from Egypt that can generate electricity at a low rate of almost 7 cents/KWh. so
why should we incur additional losses and burden both the government and citizens with
extra expenses. This could have been an option if the factories building the PV cells were
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Jordanian: in that case we would be encouraging domestic investment. However, this is
not the case as all PV equipment and tools come from outside the country”
What is the relation between NEPCO and MEMR, as, according to my knowledge,
NEPCO is a private company?
“That is right, NEPCO is a private company under private management; however, there is
a bond between the company and the government that allows the government to decide the
electricity tariff, and therefore any losses incurred by the company will be compensated by
the government.”
Is MEMR obliged to achieve its 10 per cent renewable energy objective, and will it do the
max to arrive at that figure?
“Like any strategy, there are always objectives to achieve, but this does not mean that the
government needs to pay from its own pocket to achieve that figure. Currently, Jordan
does not have the financial capability to do that. The main objective of the law was to
create a friendly environment to encourage investors, and that could be by providing free
government land, customs exemption, as well as helping with the grid connection
expenses.”
Interview #3
The last interview was conducted with Dr. Khaled Toukan, the chairman of Jordan Atomic
Energy Commission. The interview provided the latest updates on the nuclear energy
program in Jordan and the different challenges facing its implementation (Toukan K. ,
Nuclear Energy Program in Jordan, 2010).
Dr. Toukan, would you kindly enlighten us as to the latest updates on the nuclear energy
program in Jordan?
“The nuclear program is moving on various major fronts; the first is mining. In 2010, we
established a joint venture with Arriva for uranium mining as well as resource estimation
and a feasibility study for different areas in Jordan. The estimated resources of central
Jordan are 65,000 tonnes and the field studies done so far indicate that, hopefully, we
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should be able to achieve this figure and confirm it for the whole of central Jordan. We
expect to build the mine by the end of 2011 and the mining will be in production by the
beginning of 2013 at the latest. We are also working in parallel on the extraction of
uranium from phosphoric acid.”
Do you have any data regarding the extraction costs and the production rate of uranium?
“Uranium is found in most of the Jordanian desert. However, it is available at different
concentrations; the most developed uranium project so far is the one in central Jordan,
where 60 per cent of the resources is buried at 0 to 5 meter and, therefore, extraction costs
are expected to be low and revenues and profit coming from this mining activity should be
quiet substantial. So the exploration and mining of nuclear materials is one of the main
parts of the project and we believe that uranium mining will be a major resource for the
country in terms of providing future nuclear fuel for our reactors and substituting this for
imports coming from outside the country. Uranium production should be around 2,000
tonnes per year and we expect the mine to last for 30 years.”
Dr. Toukan then carries on:
“The second front will be the construction of nuclear power plant with 1GW capacity. We
are now planning to build two units; we have started the site study and characterisation
and we except to finish the site characterisation work by the end of 2011 in order to issue
the construction permit. In parallel we started technology selection, taking into
consideration the cost and the power of the plant as well as the financing of the plan. So
now we are going into serious negotiation with the different suppliers, in coming up with a
reasonable financial plan that will allow Jordan to build its plant and produce electricity.
Our aim is that one of the units, one of the 1000 MW electrical units, will be used to meet
the electric power energy growth; the other one will be used maybe for water distillation.
Now if things go to plan, by 2013 we should start the construction of the first nuclear
power plant to have it operational by the year 2019.”
What is the estimated cost of the nuclear plants and how is the government planning to
finance such a huge project, taking into consideration its current financial state?
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“The nuclear plant is estimated to last for 60 years and the approximate cost of 1 GW
nuclear plant will be between 4 and 4.5 billion US dollars. As for financing, it will be a
major factor, however, we are working on a model of public-private partnership and we
are looking now at different companies for finance, working on possibly 30 per cent equity
in terms of the initiation of the project and the rest will be based on 70 percent dept
financing.”
What about the nuclear waste, how it is going to be managed?
“For the time being, we will purchase the enriched uranium from the open market;
therefore this waste will be managed outside the country. As for the spent fuel discharged
from the reactor, this still contains appreciable quantities of plutonium and other chemicals
including reaction poisons. However, we are planning to resend the spent fuel abroad to be
recycled and recovered as it is a complicated procedure and can only be done in highly-
sophisticated facilities.”
According to the article in Wall Street Journal (Solomon, 2010), the United States are
supporting the Nuclear program in Jordan but under what conditions?
“That is right, United States would agree on establishing a deal with Jordan, only if Jordan
surrendered its right to enrich its own uranium. However, we have the right to enrich
uranium under the Nuclear Non-proliferation Treaty, and we will not give up that right,
since that would also restrict the country from becoming a nuclear energy supplier.
Nevertheless, Jordan will try to work with other countries to establish its uranium
enrichment plants, but this will be in the later stages since there are both economic and
political strings attached at the current time.”
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Chapter 5- Discussion
This chapter will examine the data from previous sections and present a holistic view of
low-carbon investments in Jordan, then interpret these findings to answer the research
questions posed in chapter 1.
It is clear from the laws and strategies recently released by the Jordanian government that
it is striving to diversify its energy mix and reduce its dependency on exported fuel. The
aim of these laws and strategies is to facilitate and support low-carbon energy investments
and create an investment friendly atmosphere: given that private investment in Jordan is
usually hindered by the unfavourable taxation structure combined with high infrastructure
costs, which limit profit, productivity and, hence, investors’ interest (National Agenda,
2006-2015).
The interviews with MEMR and Kawar Group presented parallel perceptions regarding
the future of renewable energy in Jordan; nevertheless, there were a few critical points that
were misapprehended and miscalculated by both parties. It was obvious from both
interviews that the renewable energy law released early this year is still immature, taking
into account the absence of some key ingredients that should have been included, such as
reference list, details of incentives, terms of funds...etc. Until these gaps are filled out,
presumably by the end of this year, it will be very difficult for any investor to judge the
profitability of his/her own investment.
The renewable energy law has provided many enticements, such as obliging NEPCO to
purchase all and any electricity produced by renewable energy projects and covering the
expenses for connecting these projects to the main electrical grid (Ministry of Energy and
Mineral Resources, 2010). This will raise a sigh of relief from investors as they will not
need to worry about how to market the high cost energy from their projects. Nevertheless,
the law also states that a fixed electricity tariff within an acceptable range needs to be
clearly stated in the proposal submitted to the government before being approved.
From another perspective, the new released law stipulates certain conditions that will deter
the interest of potential investors, particularly inexperienced investors: as the law only
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permits investment by those who possess previous experience in the development of
similar renewable energy facilities. Although this condition might help the government in
reducing the potential for failure, on the other hand, this could prevent prospective
investors with no previous experience from engaging in this new form of venture.
The interviews also uncovered a few contradictions regarding the estimated tariff for the
energy supplied from Shams Ma’an. According to Zaghloul (2010) Kawar group is
planning to sell one unit of energy at 25 cents/KWh, while expecting 10 per cent IRR in
return. On the other hand, it was indicated by Jibril (2010) that it would be next to
impossible for the Jordanian government to purchase the electricity at that rate, since the
government is already facing financial constraints and such a high electricity tariff is an
impractical option in view of the fact that almost 14 per cent of Jordanians are living
below the poverty line (National Agenda, 2006-2015).
This illustrate that although Jordan has a high potential of solar energy, however, the PV
technology is still uncompetitive. Therefore, investors might need to reconsider whether
renewable energy investments should yield a return on capital or not? Whether improving
the quality of life has a higher priority than just making profit? However, it is still early for
all these enquiries to be furnished as renewable energy investments and policies are still in
their early stages.
The second part of this research concentrated on nuclear energy development in Jordan,
and whether producing nuclear energy will act against the interests of renewable energy
investment. The results threw up a variety of challenges that need to be addressed by the
Jordanian government in order to move forward with the nuclear program; these
challenges are as the following:
• Political Environment
• Exploitation of Uranium
• Human Resource Development
• Choice of Reactor Technologies
• Funding
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In addition to all of these, Jordan has a disadvantage in starting up in that the country has
no previous experience of using nuclear technology and no nuclear infrastructure in place;
thus, the entire project presents new and immense challenges to the Jordanian government.
It would be a waste of opportunity if Jordan continues to depend on its traditional sources
of fuel and electricity, especially when electricity demand is projected to double in few
years (see figure 5), and considering the rise in energy costs and scarcity of water
resources.
Figure 5 Jordan’s Electric Loads Forecast (Toukan K. , 2010)
The question to be raised now is whether moving ahead with the Jordanian nuclear
program could have detrimental effects on investment in renewable energy in the
kingdom.
Developing a nuclear power plant, with all its facilities and processes, requires time, and it
will take Jordan at least another 9 years to arrive at the production phase and 20 years to
achieve the 30 per cent of the energy mix that the government is aiming for. Moreover,
renewable energy plants need to be backed up with a base load power plant supplied by
either nuclear or fossil sources due to the intermittent nature of renewable resources.
Therefore, for the near future there will be no adverse effects on renewable investments
from nuclear power plants. In addition, there is always the option of exporting excess
energy to neighbouring countries.
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On the environmental front, there was a previous discussion earlier, in the literature
review, about the advantages and disadvantages of renewable and nuclear energy and how
they can play a major part in reducing global warming and greenhouse effects. However,
the interviews have shown that Jordanians are more anxious about energy security and the
ability to meet future energy demands, rather than establishing a green source of energy.
This does not mean that the government is not concerned with global warming and its
consequences on the environment, but that, with the current financial position, global
warming is not its major priority.
On the political front, as mentioned previously, cooperation with the US for passing on
nuclear technology and knowhow to Jordan would be attached to the condition that Jordan
surrendered its right for enriching its own nuclear fuel: to limit the risk of proliferation of
arms in the Middle East. However, the fact that Jordan has not yet agreed to this condition
might jeopardise the entire agreement (Solomon, 2010). Nevertheless, Jordan has already
signed nuclear co-operation deals with eight countries – including France, the UK, China
and Russia, these agreement involve employee training, technical exchange, nuclear-fuel
disposal, nuclear safety and advice on regulatory frameworks (Ma’ayeh, 2010).
According to Solomon (2010), it would appear that Israel is at the root of all the
difficulties that Jordan is encountering: as King Abdullah II has accused Israel of
attempting to thwart Jordanian nuclear ambitions by applying pressure on countries like
France and South Korea to deter them from selling nuclear reactors to Jordan. As King
Abdullah is quoted, "There are countries, Israel in particular, that are more worried about
us being economically independent than the issue of nuclear energy, and have been
voicing their concerns". Although, Israel denies these accusations, Israeli officials have
publicly voiced concerns about a reactor being situated so close to the border, since the
port city of Aqaba, where the nuclear reactor will be situated, is just miles away from the
resort city of Eilat on the Israeli side.
On balance, if all these economic and political challenges to nuclear energy were able to
be surmounted, then it could provide a contribution towards sustainable energy, and would
definitely assist Jordan in achieving its national energy strategy objectives.
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Chapter 6 –Conclusion and Recommendations
That the Jordanian government is trying to escape from the deep hole of depending on
exported fuel and is striving to enhance its energy security can be clearly observed through
the new national energy strategy. However, Jordan is considered to be one of the smallest
and poorest economies in the Middle East, with a large budget deficit, and this
consequently hampers the government’s ability to invest directly in low-carbon energy
projects. Therefore, in order to overcome these obstructions, the Jordanian government
needs to follow a holistic developmental approach through a private-public partnership.
Renewable energy sources can address challenges posed to global communities by effects
of global warming and greenhouse gas emissions, while enhancing energy security and
meeting future energy demands. However, it is apparent that renewable energy generation
is burdened with high investment costs and risks compared to fossil fuel energy generation
and these are the main reasons why investors tend to steer clear of renewable energy
investment.
To address these concerns and to promote renewable energy investments, the Jordanian
government released a new renewable energy law early in 2010. The current analysis of
the effectiveness of the law has shown that the law provides investors with a broad list of
incentives, including free taxes, free government land, customs exemptions and
connectivity expenses. However, these incentives are not expanded on in any detail and
there are still some missing ingredients, such as the reference list, which are essential to
the investor in making a reasoned decision as to whether to proceed or not. As a
researcher, I am not daunted by the idea of renewable energy investment in Jordan and I
know the first movers will benefit the most from the new law; however, considering these
facts from an investor’s perspective, it would be wise to halt any decision on the
investment in any renewable energy project until the reference list is available and all the
incentives are made explicit.
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In addition, despite dramatic technical and economic advances in renewable energy
systems, the previous results illustrated that there is still a wide gap between the energy
cost generated from fossil fuel sources and that of renewable energy sources even with
Jordanian government intervention. However, it is still early to conclude the prospect of
renewable energy in Jordan as the estimated cost of one unit of energy was only based on
a single investor, and that cannot be generalised.
As in the case of renewable energy, potentially, the benefits of nuclear energy in Jordan
could be immense, especially with the availability of its own nuclear fuel resources.
Nuclear plants are secure long term investments that can offer electricity at low and stable
costs for up to 60 years, depending on the nuclear reactor’s life span. However, provision
of nuclear energy is burdened with significant initial capital costs: which the Jordanian
government would find difficult to fund in the light of its current liabilities. To overcome
this, the Jordanian government has initiated a private-public partnership, which from my
point of view is a remarkable step forward for the nuclear program.
Because renewable energy involves issues of intermittency, nuclear energy would have to
be used as a base load; thus, nuclear must be a part of the equation at the current time. But
unlike renewable energy, nuclear is tied by political constraints and the Jordanian
government needs to use its diplomatic avenues to arrive to a solution that will not
compromise its interests.
In the end we can say that Jordan’s challenges are not unique and other countries face a
similar situation, but by adopting a transformational strategies and effective policies
Jordan should be able to achieve its objectives. And it remains to be seen whether policies
and governmental intervention combined with technological improvements will permit
low-carbon investments to achieve the national energy mix.
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Limitations and Future Recommendation:
Although this research has provided a clear insight into the future of low-carbon energy
investments in Jordan, due to the lack of existing investment and the gaps in renewable
energy law, it would be difficult to conduct an economic feasibility for these investments
at the current time. In addition, there was only limited access to research studies
undertaken by the National Energy Research Centre: as such reports provided to investors
on a monetary basis and are not available free of charge.
The following are few recommendations that can improve and facilitate the low-carbon
energy sector in Jordan and are totally based on the researcher’s point of view:
• It was noted that there are weak communication channels between the private and
public sectors; therefore, the government needs to establish better communication
channels and open up discourse between the two parties.
• The Ministry of Energy and Mineral Resources needs to make sure that policies are
presented in full detail before releasing them, as this can have a negative impact on
the trust between them and potential investors.
• A proper published time plan needs to be set for the different projects, in line with
identification of technical, financial and legislative requirements for the projects.
• The government needs to open the door to inexperienced investors, and at least let
them conduct pilot projects, as the current restrictions could lead to a loss of
potential foreign and local investors who have the will to invest in low-carbon
energy. In addition, diversification of investors will create competition that will
provide a stronger impetus for cost reduction and innovation.
• The MEMR need to organize a marketing campaign to promote renewable energy
investments in the kingdom and to attract foreign and local investors, as, currently,
the potential of renewable energy investment in the kingdom remains in the
shadows.
• It would be advantageous for the Jordanian government to identify the different
locations where renewable resources could be utilized and to assist the potential
private investor by providing relevant research.
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• The government should empower the National Energy Centre to develop the
exploitation of new renewable energy resources and to offer investors such
research studies free of charge to encourage their participation.
Further Research:
It would be better to take the current research a further step down the road when all the
policies are fully mature, and then an economic feasibility study on low-carbon investment
becomes a possibility.
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41. Sheffield MBA
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47. Sheffield MBA
Appendix
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48. Sheffield MBA
Appendix A- Mind Map
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49. Sheffield MBA
Appendix B- Interviewee Consent Forms
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50. Sheffield MBA
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51. Sheffield MBA
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52. Sheffield MBA
Appendix C- Research Ethics Form
Full Research Project Title: Feasibility Study of Low-Carbon Energy Investments in Jordan
In signing this Student Declaration I am confirming that:
• The research ethics application form for the above-named project is accurate to the best of
my knowledge and belief.
• The above-named project will abide by the University’s ‘Good Research Practice
Standards’ : www.shef.ac.uk/researchoffice/gov_ethics_grp/grpstandards.html
• The above-named project will abide by the University’s ‘Ethics Policy for Research
Involving Human Participants, Data and Tissue’:
www.shef.ac.uk/researchoffice/gov_ethics_grp/ethics/system.html
• Subject to the above-named project being ethically approved I undertake to adhere to any
ethics conditions that may be set.
• I will inform my Supervisor of significant changes to the above-named project that have
ethical consequences.
• I will inform my Supervisor if prospective participants make a complaint about the above-
named project.
• I understand that personal data about me as a researcher on the research ethics application
form will be held by those involved in the ethics review process (e.g. my Supervisor and
the Ethics Administrator) and that this will be managed according to Data Protection Act
principles.
• I understand that this project cannot be submitted for ethics approval in more than one
department, and that if I wish to appeal against the decision made, this must be done
through the original department.
Name of Supervisor: Prof. Andrew Tylecote
Name of student: Bashar Al-Zagha
Signature of student:
Date: 8th July 2010
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