Master Thesis - Universität Kassel: Aktuelles · This study is a master thesis of Eng. Fadi...

Master Thesis: Large scale RE projects in Syria –

An analysis of the institutional and legal framework In view of the Egyptian experience

Prepared by: Fadi Aljawabra

Supervisors: Prof. Mohamad ElSobki Cairo University Prof. Jürgen schmid Kassel University

February 2011

Master Thesis- REMENA-Fadi Aljawabra

Table of Contents Synopses ....................................................................................................................................... 6 Executive summery ...................................................................................................................... 8 Introduction .................................................................................................................................. 14 Objective ...................................................................................................................................... 14 The Scope and Methodology .................................................................................................... 14 1. Introduction to the energy sector ......................................................................................... 17

1.1 Energy trends in Syria .................................................................................................... 17 1.1.1 Electricity Sector ........................................................................................................... 17 1.1.2 Oil Sector ....................................................................................................................... 19 1.1.3 Gas Sector ..................................................................................................................... 20 1.1.4 Renewable Energy Sources ........................................................................................ 20 1.2 Supply and demand in Syria .......................................................................................... 22 1.2.1 Electricity Demand: ....................................................................................................... 22 1.2.2 Electricity Supply:.......................................................................................................... 24 1.3 Findings: ............................................................................................................................ 26

2. Potentials and Obligations .................................................................................................... 29 2.1 Potential of RE sources ................................................................................................... 29 2.1.1 Solar Energy .................................................................................................................. 29 2.1.2 Wind Energy .................................................................................................................. 32 2.1.3 Hydro Power .................................................................................................................. 34 2.1.4 Biomass .......................................................................................................................... 37 2.1.5 Urban Waste .................................................................................................................. 37 2.1.6. Geothermal Energy ..................................................................................................... 38 2.2 International Conventions and Agreements ................................................................. 38 2.2.1 Environmental agreements: ........................................................................................ 38 2.2.2 The Association Agreement between Syria and the EU ......................................... 39 2.3 National Programmes ...................................................................................................... 40 2.3.1 The 10th five year plan 2006‐2011 .................................................................................... 40 2.3.2 The 11th five year plan 2011-2016 ............................................................................. 40 2.3.3 Master Plan 2010.............................................................................................................. 41 2. 4 Findings ............................................................................................................................... 45

3. Institutional framework ........................................................................................................... 47 3.1 Current institutional framework in Syria ........................................................................ 47 3.1.1 The electricity law No. 32 ............................................................................................ 49 3.2 The role of the RE organisation stakeholders in Syria ............................................... 52 3.4 Comparison with Egypt current institutional set-up ..................................................... 54 3.5 Findings ............................................................................................................................. 58

4. Legal framework ..................................................................................................................... 61 4.1. Public Private Partnership (PPP) in Syria ................................................................... 61 4.1.1 History of PPP ............................................................................................................... 61 4.2 Independent Power Producers (IPP) Laws in Syria ................................................... 62 4.2.1 Tender law ..................................................................................................................... 62 4.2.2 Corporate law ................................................................................................................ 63 4.2.3 The law No. 32 date 14 Nov. 2010 ............................................................................ 63 4.2.4 Investment promotion laws and institutions .............................................................. 64 4.2.5 Tax and customs ........................................................................................................... 66

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4.3 Purchase Agreement (PPA) ........................................................................................... 66 4.4 Feed-in Tariff Power ........................................................................................................ 67 4.5 Comparison with Egypt ................................................................................................... 67

5. Conclusion ............................................................................................................................... 71 5.1 RE Institutional Framework: ........................................................................................... 71 5.1.1 Achievements of the Syrian RE- institutional framework ........................................ 71 5.1.2 Obstacles of the Syrian RE-institutional framework ................................................ 72 5.1.3 Suggestions how to overcome the challenges ......................................................... 72 5.2 RE-Legal Framework:...................................................................................................... 74 5.2.1 Achievements of the Syrian RE- legal framework ................................................... 74 5.2.2 Obstacles of the Syrian RE- Legal Framework ........................................................ 75 5.2.3 Suggestions how to overcome the legal challenges ............................................... 75 List of References: .................................................................................................................. 77

Annex 1: Case study- Expected results (wind energy sector): ............................................ 79 Annex 2: The Electric Tariff Applied In Syria .......................................................................... 82 Annex 3: Organisational chart of the National Energy Research Centre in Syria: ........... 84 Annex 4: Organisational chart of the New & Renewable Energy Authority: ...................... 85 Annex 5: Organisational chart of the Public Establishment of Electricity for Generation and Transmission in Syria: ........................................................................................................ 86 Annex 6: Top 10 wind turbine manufacturers by annual market share in 2009: ............... 88

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List of Tables

Table1: Total electrical energy production GWH with fuel consumed 2005 - 2009 ........ 23

Table2: Planned for 2010 - 2025 energy demand ........................................................... 23

Table 3: Electricity Production & Consumption [TWh] in 2009 ........................................ 25

Table4: Capacity of power plants in 2006. ...................................................................... 26

Table5: Annual Daily Global Horizontal Radiation and at 30° tilt .................................... 30

Table6: Operating Hydropower Plants in Syria ............................................................... 35

Table7: Geothermal Energy Potential ............................................................................. 38

Table 8: RE stakeholders’ roles in Syria (Before the law 32) .......................................... 52

Table 9: RE stakeholders’ roles in Syria (After the law 32) ............................................. 53

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List of figures

Figure 1: RE share in the 11th 5-year plan ...................................................................... 10

Figure 2: Block Structure of Electricity Tariff for Residential Consumers (per KW per two months) ........................................................................................................................... 19

Figure 3: the energy gap between the future demand and the current energy capacity . 27

Figure 4: the capacity gap between the future demand and the current capacities ........ 27

Figure 5: Mean Annual Daily Radiation on Horizontal Surface Wh/m2 ........................... 30

Figure 6: Mean Daily Total Radiation on 30° Incline Wh/m2 ........................................... 30

Figure 7: Wind Map of Syria (Source: Meteorological Department, Syria) ..................... 33

Figure 8: Wind Energy Potential in Syria¹ ....................................................................... 34

Figure 9: Hydro Resources in Syria (Source: Ministry of Environmental) ....................... 36

Figure 10: Biomass Resources in Syria ......................................................................... 37

Figure 11: RE share in the 11th 5-year plan .................................................................... 41

Figure 12: Distribution of electricity generation by type of energy source (ES) in 2030. . 43

Figure 13: Development of generated electricity by type of fuel (ES)1 ............................ 43

Figure 14: Distribution of total installed capacity in 2030 for ARES ................................ 45

Figure 15: The structure of Ministry of Electricity in Syria ............................................... 47

Figure 16: The supporting roles of the players in Syria before the law 32 ...................... 54

Figure 17: The structure of Ministry of Electricity and Energy in Egypt ........................... 55

Figure 18: Social Market Economy and the New Government Role ............................... 61

Figure 19: Direct Employment by Type of Company, According to EWEA Survey ......... 80

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Abbreviations: CDM: Clean Development Mechanism CSP: Concentrated Solar Plant DNA: Designated National Authority DWH: Domestic Water Heaters EE: Energy Efficiency EEHC: Egyptian Electricity Holding Company EETC: Egyptian electricity transmission company EU: European Union GCEA: Commission for Environmental Affairs GDP: Gross Domestic Product GEF: Global Environment Facility GTZ: German Technical Cooperation IPP: Independent Power Producer LUA: Land Use Agreement MEERE: Masterplan for Energy Efficiency and Renewable Energies MENA: Middle East and North Africa MoE: Ministry of Electricity Mtoe: Million Ton of Oil Equivalent MW: Mega Watt NA: Not Available NERC: National Energy Research Centre NGO: Non-Governmental Organisation NREA: New & Renewable Energy Authority PEDEEE: Public Establishment for the Distribution and Exploitation of Electrical Energy PEEGT: Public Establishment for Electricity Generation and Transmission PEET: Public Establishment for Electricity Transmission PEEG: Public Establishment for Electricity Generation PPA: Purchase Agreement PPP: Public Private Partnership PV: Photovoltaic RE: Renewable Energy REMENA: Renewable Energy and Energy Efficiency in MENA Region Master

Programme SIA Syrian Investment Agency SYP Syrian Pound UNDP United Nation Development Programme UNFCCC United Nations Framework Convention on Climate Change

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Synopses

This study is a master thesis of Eng. Fadi Aljawabra for Renewable Energy and Energy Efficiency in MENA Region Master Programme. REMENA is a joint Master Programme between Cairo University and Kassel University and subsidised by DAAD (German Academic Exchange Agency).

The main objective of this study is to assess the current situation of the large scale renewable energy projects with review of the institutional roles of relevant entities and the opportunities of private sector participation in Syria. In addition to comparing the anticipated results with the Egyptian experience.

Additionally this study could be considered as a hand out for the outside observer in order to recognise the current situation in Syria, this thesis clarifies the role of the establishments and the current laws which promote the large scale RE projects and pave the road for efficient and successful participation of private sector.

The reasons for choosing the Egyptian experience to compare with are: - The similarity in the institutional, legal, economic, national resources and social

situations in Syria and Egypt - The long experience in Egypt in terms of promoting RE - The achievements were reached in Egypt in order to develop large scale

projects (540MW Wind plants, 20 MW Concentrated Solar Plant (CSP) plant up till year 2011)

- The existence of the ambitious policy for RE in Egypt (20% of the generated electricity from renewable energy by 2020, including a 12% contribution from wind energy).

In purpose of the development of electricity sector, the Syrian government made a major step by issuing the electricity law no. 32 dated 2010. The law regulates and restructures the electricity sector and allows the private sector to invest in the electricity generation and distribution activities.

The big gap between the future demand and the current supply needs to be fulfilled by building new power plants; the RE could be feasible choice to participate in bridging the gap between the supply and demand. Ministry of Electricity aims to increase its capacity from 7500 MW to 12000 MW by the end of the 11th 5 year plan (2011-2016).

The absence of clear strategy for RE and absence of successful RE projects was partly was solved by the electricity law. Moreover the absence of institutional structure for RE sector development in MoE leads to a poor policy making and implementation.

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Currently the PEEGT is the governmental power producer and power purchaser; in this case a conflict of interest will be existed while theoretically PEEGT should be the governmental competitor of the IPP from commercial point of view.

One of the main obstacles in the RE-legal framework is the absence of financial mechanisms and guarantee system which ensure the financial sustainability of the projects; it would be required to establish a sustainable fund in order to reduce the cost of the financial risks.

The main suggestions to develop the institutional framework in Syria:

- Carrying out a national Syrian policy for RE sector development.

- Establishing institutional development programmes and projects.

- Establishing RE departments in Ministry of Electricity (MoE), the Public Establishment for Electricity for Generation (PEEG) and the Public Establishment for Electricity Transmission (PEET).

- Establish PPP department in MoE.

- Restructure the Public Establishment for Electricity Generation and Transmission (PEEGT) to two establishments PEEG and PEET.

The main suggestions to develop the legal framework in Syria: - Applying commercial management tools in the contractual process and bidding

system, and applying the marketing tools and developing the financial system.

- Establishing incentives system based on performance contracts linked to performance indicators.

- Establishing tariff systems based on cost figures.

- Issuing technical studies and standards.

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Executive summery

This study is a master thesis of Eng. Fadi Aljawabra for Renewable Energy and Energy Efficiency in MENA Region Master Programme (REMENA). REMENA is a joint course between Cairo University-Egypt and Kassel University- Germany and subsidised by DAAD (German Academic Exchange Agency).

The overall objective of REMENA MSc programme is to educate specialists in the field of renewable energy and energy efficiency who are able to manage complex projects for international institutions and companies operating in the MENA region.

The main objective of this study is to assess the current situation of the large scale renewable energy projects with review of the institutional roles of relevant entities and the opportunities of private sector participation. In addition to compare the results with the Egyptian experience.

Additionally this study could be considered as a hand out for the outside observer to recognise the current situation in Syria, this study gives an overview for the role of the establishments and the current laws which promote the large scale RE projects and pave the road for efficient and successful participation of private sector.

The government of Syrian Arab Republic stats its desire to establish a developed RE sector, however there are no tangible results for any RE project yet. This study is trying to cover the institutional and legal barriers for RE development in Syria. The RE technical researches are required for sector growth, nevertheless, the existence of advanced institutional framework which leads the sector through the development process (policy making, strategy making, implementation and monitoring & evaluation) is essential, this clear framework with clear role for each player in the sector should be harmonised with laws and legal system in purpose of translating the sector strategy.

This thesis scans the challenges in the current institutional framework and laws which don’t support RE sector development. Syria was aware of the importance of these components of development and took crucial steps building a sustainable RE sector, in the last two months of the year 2010 Syria issued the electricity law no. 32 which regulates the electricity sector and allows the private sector to invest in electricity projects. Another step was taken by Syria by setting a nominal target for RE projects which was missed before.

The growth of RE sector in Egypt was obvious through the ambitious target which was set and the installed capacity, this capacity is the highest installed capacity from RE resources in MENA region. There are many reasons for this development, one of these reasons was the existence of the New & Renewable Energy Authority (NREA) which lead the RE sector and is responsible for the sector development, the Egyptian experience approves that the institutional and legal development should be in parallel

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with the technical one, moreover establishing sustainable advanced sector encourages for more technical research and development.

This study don’t not try to assess the Egyptian experience neither detailed comparison with the Syrian situation, however the study develops suggestions for possible Syrian RE programme based on the lesson learned from the Egyptian experience.

- The reasons for choosing the Egyptian experience are: - The big similarity in the institutional, legal, economic, national resources and

social situations in Syria and Egypt - The long experience in Egypt in terms of promoting RE, and establishing

institutional structure for RE development, for instance (NREA) which was established since 1986.

- The achievements were reached in Egypt in order to develop a large scale projects (for instance: Zafarana wind farms 540MW current capacity, Kuraymat CSP plant 20 MW).

- The existence of the ambitious policy, this policy was approved by the Supreme Council of Energy in February 2008 in order to satisfy 20% of the generated electricity from renewable energy by 20201, including a 12% contribution from wind energy. This figure translates into about 7200 MW of grid-connected wind farms and 8% contribution from other sources, mainly hydro and solar energy.

The research started with the description of energy trends in Syria in the first chapter, this description includes electricity, oil, gas and renewable energy sectors, and additionally the chapter contains the demand and supply in Syria. The approximate annual increase of the electricity demand in Syria is 6%. The total installed power generating capacity in Syria was about 8,359 MW in 2009, of which 7,518 MW was actually available with 67% average system load factor. The need to increase the supply capacity is urgent as Syria faced a lack of electricity power supply in 2010. The big gap between the future demand and the current supply needs to be fulfilled by building new power plants; the RE could be feasible choice to participate in bridging the gap between the supply and demand. Ministry of Electricity aims to increase its capacity to 12000 MW (currently 7500 MW) by the end of the 11th 5 year plan (2011-2016).

The second chapter was important to verify the potentials for the large scale RE projects. These potentials were technical as national sources (Wind, Solar, Biomass, Hydro and wastewater), and legislative potential such as obligations and agreements (international and regional agreements) and existence national policies.

1 NREA Annual Report 2009

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Syria has tremendous solar energy resources which are available in a largely uniform manner across the geographical spread of the country, based on the Syrian atlas the global radiation at 30° tilt is approximately 115 KWh/m². Syria has good wind energy resources, which is estimated to be 40,000-85,0001 MW. Several of the potential locations are close to the major population centres.

The national Syrian 11th 5-year plan 2011-2016 of the Ministry of Electricity stats a specific target of RE plants that should be built in the plan duration. The strategic plan mainly focus on wind and photovoltaic energy plants in the supply side, the numeral target of this policy is to reach 2% of the total electricity supply generated from wind and PV by 2016. The planed RE power plants as governmental projects in the 11th 5-year plan are:

- 150 MW wind plants - 5 MW photovoltaic plants - 10 MW CSP

Figure 1: RE share in the 11th 5-year plan

The 3rd chapter of the study discussed the institutional framework of RE sector in Syria by analysing the role of each sector player based on the establishing decrees. The institutions in Egypt were described by the strengths and weaknesses of the current situation. The electricity sector in Syria comes under the responsibility of the Ministry of Electricity (MoE) who controls Public Establishment for Electricity Generation and Transmission (PEEGT) and the Public Establishment for the Distribution and Exploitation of Electrical Energy (PEDEEE). In Syria, the law no. 32 clearly determined MoE as a regulator for the

1 Reference: National Renewable Energy Master Plan, 2004, UNDP

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sector; additionally PEEGT was mandated as a developer. The separation between the regulating role and the developing role is a subjective point which prevents the conflict of interests. However the organisation who has the capacity to work daily with REs is the National Energy Research Centre (NERC), NERC is mandated to cover the researches and supporting the decision makers by studies, NERC should support MoE in the RE technical staff while MoE have good experience in contracts and tenders

The Egyptian RE sector framework were special in the region, at a very early stage a specific body for RE development which is the National Renewable Energy Authorities (NREA, the authority is responsible for the implementation of the RE projects, it owns and operates all existing wind farms in Egypt and is planning several more. Currently NREA act as a research centre, developer, regulator and national planner. It establishes rules and procedures with the electricity regulatory agency for allocating land for wind farms to developers. The role of NREA needs to be revisited to avoid the conflict of interest.

The absence of clear strategy for RE and absence of successful RE projects was partly was solved by the electricity law. Moreover the absence of institutional structure for RE sector development in MoE leads to a poor policy making and implementation. As a regulator, MoE has no previous experience in attracting the private sector in the generation sector; this could lead to a poor private sector participation in electricity sector

Currently the PEEGT is the governmental power producer and power purchaser; in this case a conflict of interest will be existed while theoretically PEEGT should be the governmental competitor of the IPP from commercial point of view.

Chapter 4 discussed the legal situation including the laws of developing RE projects and investment incentives in Syria (Contracts Law, Tax taw, Investment law and private sector participation law). Based on the law no 32 year 2010 private investors could be involved in the electricity sector in deferent ways:

Investor: Pay the investment cost and be paid back by the plant operator from the revenues.

The operator: Operate the plant and be paid back according to the pre-agreed electricity tariff

The distributor: Buy the electricity from the operator and sell it to consumers.

The Syrian Investment Agency (SIA) enjoys legal personality, financial and administrative autonomy; however it is linked directly to the prime Minister. SIA has a vision to create an investment environment which is suitable for sustainable development in Syria. SIA duty is to encourage and facilitate the inflow of foreign direct investment by contributing to the development of the socio-economic performance.

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The Legislative Decree (law no.8) includes the sectors that benefit from the advantage and incentives granted according to this Decree. Electricity sector was mentioned in the decree as the sector which shall benefit from the exemptions stipulated in the effective Income Tax Law and all the advantages and guarantees stipulated in this legislative decree. One of the main obstacles in the RE-legal framework is the absence of financial mechanisms and guarantee system which ensure the financial sustainability of the projects; it would be required to establish a sustainable fund in order to reduce the cost of the financial risks.

Chapter 5 summarised the findings in each chapter in accordance with the institutional and legal frameworks achievements, obstacles and the recommendations of development to overcome the challenges.

The main suggestions to develop the institutional framework in Syria: - Carrying out a national Syrian policy for RE sector development - Establishing institutional development programmes and projects. These

programmes and projects should lead to efficient institutional and legal mechanisms, since these mechanisms pave the road for sustainable RE projects through sustainable and transparent financial mechanisms.

- Establishing RE department in MoE responsible for: Planning and policy making Issuing projects proposals Preparation of feasibility studies for a pipeline of generating projects that

could be offered to private investors Assessment (in cooperation with Ministry of Finance) the need for

guarantee packages or other credit enhancement instruments Preparation for IPP bidding packages for the selected generating plants

and carry out a transparent bidding process. Giving the sophistication and experience of private investors.

- Establishing a department for Renewable Energy at PEEGT responsible for: RE resources planning for utilisation Implementation of RE matured technologies Rendering of consultancy services in the field of RE exploitation, Training, information dissemination and capacity building Transfer of technology and the development of local industry.

- Establish a governmental PPP unit in the ministry of electricity to be in charge of: Management of private sector participation development Implementation of necessary regulations and Communication with

private sector

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- Establishing transmission establishment in order to avoid the conflict of interest which will be exist in the PEEGT, while theoretically it should be a competitor of the IPP from a commercial point of view.

The main suggestions to develop the legal framework in Syria: - Applying commercial management tools in the contractual process and bidding

system, and applying the marketing tools and developing the financial system. - Establishing incentives system based on performance contracts linked to

performance indicators. - Establishing tariff systems based on cost figures (renewable energy production

costs or avoided costs of conventional supply) or premium systems based on market prices for electricity (e.g. electricity wholesale prices) and a specific additional premium.

- Issuing technical documents conclude: Electricity Generation Code Electricity Transmission Code Performance Indicators System Technical conditions for licensing Third part access regulations

- Studying the proposed initiative to establish a Fund in order to subsidise the RE

sector. This Fund would target to compensate the losses of PEET. The law determined the financial sources of the fund as follow:

The saving from the kW electricity produced from RE sources instead of the fuel

The governmental grants from the public budget The non-governmental grants The revenues of the fund investment

A rough case study for the possible results of applying the recommendations was prepared (Annex 1). It is estimated to reach 500 MW wind plants.

Benefit of installing 500 MW wind plant 1. Diversify the fuel sources

and enhance its security of energy supply

2 TWh per annum (0.03 % of needed electricity)

2. Extend the life of the fossil fuel reserves

- 1.5 Million tone of CO2 per annum - Annual price of CO2 credit is 13.5 Million

3. Generate local employment and local market

400 full time job opportunities

4. Diversify the Syrian fuel sources and enhance its security of energy supply

450,000 Toe (0.03 % of needed Fuel)

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Introduction

This study is a master thesis of Eng. Fadi Aljawabra for Renewable Energy and Energy Efficiency in MENA Region Master Programme (REMENA). REMENA is a joint Master Programme between Cairo University-Egypt and Kassel University- Germany and subsidised by DAAD (German Academic Exchange Agency).

The overall objective of REMENA MSc programme is to educate specialists in the field of renewable energy and energy efficiency who are able to manage complex projects for international institutions and companies operating in the MENA region.

Objective

To assess the current situation in syria of the large scale renewable energy projects with review of the institutional roles of relevant ministries and the opportunities of private sector participation. In addition to compare the anticipated results with the Egyptian experience.

Additionally this study could be considered as a hand out for the outside observer to recognise the current situation in Syria, this study gives an overview for the role of the establishments and the current laws which promote the large scale RE projects and pave the road for efficient and successful participation of private sector.

The Scope and Methodology

The government of Syrian Arab Republic stats its desire to establish a developed RE sector, however there are no tangible results for any RE project yet. This study is trying to cover the institutional and legal barriers for RE development in Syria. The RE technical researches are required for sector growth, nevertheless, the existence of advanced institutional framework which leads the sector through the development process (Policy making, strategy making, implementation and monitoring & evaluation) is essential, this clear framework with clear role for each player in the sector should be harmonised with laws and legal system in purpose of translating the sector strategies.

This thesis scans the challenges in the current institutional framework and laws which don’t support RE sector development. Syria was aware for the importance of this components of development and took a crucial steps in purpose of building a sustainable RE sector, in the last two months of the year 2010 Syria issued the law 32 which regulates the electricity sector and allows the private sector to invest in electricity projects, the other step was taken by Syria was setting a nominal target for RE projects which was missed before.

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Renewable energy sector development would support the governmental efforts in:

- Diversify the Syrian’s fuel sources and enhance its security of energy supply - Reduce its greenhouse gas emissions and enable it to profit from Clean

Development Mechanism (CDM) credits and potential project financing from the Clean Technology Fund

- Generate local employment; - Extend the life of its fossil fuel reserves. - RE cannot displace large conventional power plants, but it can substantially

reduce the need for more fossil fuel fired generating capacity.

The growth of RE sector in Egypt was obvious through the ambitious target which was set and the installed capacity which is the highest installed capacity from RE resources in MENA region. There are many reasons for this development, one of these reasons was the existence of NREA which lead the RE sector and is responsible for the sector development, the Egyptian experience proves that the institutional and legal development should be in parallel with the technical one, moreover establishing sustainable advanced sector encourage for more technical research and development.

This study is not trying to assess the Egyptian experience neither carry out detailed comparison with the Syrian situation, however the study develops the suggestions based on the lesson learned from the Egyptian experience.

There are many reasons for choosing the Egyptian experience:

- The big similarity in the institutional, legal, economic, national resources and social situations in Syria and Egypt

- The long experience in Egypt in terms of promoting RE, and establishing institutional structure for RE development

- The achievements were reached in Egypt in order to develop a large scale projects (for instance: Zafarana wind farms 540MW current capacity, Kuraymat CSP plant 20 MW).

- The existence of the ambitious policy, this policy was approved by Supreme Council of Energy in February 2008 in order to satisfy 20% of the generated electricity from renewable energy by 2020, including a 12% contribution from wind energy. This figure translates into about 7200 MW of grid-connected wind farms and 8% contribution from other sources, mainly hydro and solar energy.

The research started with the description of energy trends in Syria in the 1st chapter, the second chapter was important to verify the potentials for the large scale RE projects. These potentials were technical as national sources (Wind, Solar, Biomass, Hydro and wastewater), and legislative potential such as obligations and agreements (international and regional agreements) and existence national policies. The 3rd chapter of the study discussed the institutional framework of RE sector in Syria by analysing the role of each

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sector players based on the establishing decrees. The institutions in Egypt were described by the strengths and weaknesses of the current situation. Chapter 4 discussed the legal situation including the laws of developing RE projects and investment incentives in Syria (Contracts Law, Tax taw, Investment law and private sector participation law). Chapter 5 summarised the findings in each chapter in accordance with the institutional and legal frameworks achievements, obstacles and the recommendations of development to overcome the challenges. A rough case study for the possible results of applying the recommendations was prepared

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1. Introduction to the energy sector

1.1 Energy trends in Syria

Syria is an Eastern Mediterranean country with 23 million inhabitants of which almost 20% live in the capital Damascus. The annual per capita income on a purchasing power parity basis was 3,300 € in 2009 and 1,700 € in nominal terms. The Gross Domestic Product growth (GDP) has slowed to 2.2% in 2009 from 5.1% in 2008 and yet higher values before. The population is growing at an annual rate of 2.3%1.

Syria is the only Eastern Mediterranean country with significant hydrocarbon deposits and in 2007 some 94% of the total final electricity energy usage was based on oil (71.4%) and gas (22.4%), the rest being supplied by hydropower (3.7%) and biomass (2.5%). The exports of crude oil and petroleum products (in 2007 amounting in total to 7.6 million tons) contribute significantly to the state budget, but they are offset by the import of 7.4 million tons of petroleum products. The oil sector is still an important part in the Syrian economy, but its share is decreasing, because crude oil production is hampered by dwindling oil resources.

In the past, Syria has always been a net exporter of energy, ,at present time Syria can be considered self-sufficient in energy. At the rate of growth in final energy usage Syria experienced in the past five years (about 6% per annum), Syria is becoming a net energy importing country. The Syrian government pursues the policy to increase the share of natural gas in domestic consumption in particular in power generation so that the net export of crude oil and petroleum products can be maximised.

In this context the Syrian government has also realised that energy efficiency (EE) and the use of renewable energy resources (RE) can play an important role, because both depend on domestic resources.

1.1.1 Electricity Sector

The electricity sector comes under the responsibility of the Ministry of Electricity (MoE) who controls the Public Establishment of Electricity for Generation and Transmission (PEEGT) and the Public Establishment for the Distribution and Exploitation of Electrical Energy (PEDEEE). These two agencies are the main operators in the Syrian electricity sector. However a new electricity law number 32 date 14.11.2010 reorganised the policies of the electricity sector, the law no. 32 restructures the electricity sector, based on this law the transmission duty will be transferred to a new created establishment

1 Reference: Masterplan for Energy Efficiency and Renewable Energies (MEERE)-2010 – prepared by

GTZ and NERC

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called (Public Establishment for transmission), furthermore the new law allows the private sector to invest in the electricity generation and distribution.

In 2008, electricity usage in Syria grew by 4% and amounted to 42 TWh. At the same time domestic generation grew by 6% and amounted to 41 TWh, which means that Syria still depended on electricity imports to the extent of some 2% of usage. Peaks demand are in winter when electricity is widely used for space heating and still to a somewhat lesser degree in summer, when it is needed for air conditioning. The load shedding is still common and stand by generators are visible in many locations.

Syria has interconnections at the 400 kV level with Turkey, Jordan and Lebanon and is a part of the regional grid which includes also Egypt and Libya. Interconnections at the 400 kV level with Iraq is under construction. PEDEEE's distribution lines reach nearly 100% of the population.

In 2007 the fuel needs for the Syrian thermal power stations were covered to 65% by oil and to 35% by natural gas. As mentioned above, a further movement towards the use of natural gas is to be expected.

Hydropower contributed 6% to electricity generation in 2009. There is no additional potential for hydropower in Syria.

Low electricity prices during the past years have contributed to the rapid growth in electricity demand and to some extent to inefficient electricity use. The government has realised this and in 2007 started to increase the electricity tariffs. Presently there is a block tariff system, where the price depends on the quantity consumed. It consists of eight blocks with the price ranging from as low as 0.25 SYP per kWh(less than 0.5 cents€) for low consumers (with less than 100 KWh usage in two months) to 7 cents€ per kWh for high consumers (above 2,000 kWh usage in two months). The average price paid for electricity by household clients in 2009 was 1.26 SYP/kWh, which is about 0.02 €/kWh. For industrial customers the average price was 2.8 SYP/kWh, equivalent to about 0,045 €/kWh. Added to this price there is a tax of about 10%.

By international standards these prices are still quite low, but in the Syrian economic context they are meaningful and set signals about the scarcity of electricity.

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Figure 2: Block Structure of Electricity Tariff for Residential Consumers (per KW per two months)1

1.1.2 Oil Sector

The Syrian oil sector is governed by the Ministry of Petroleum and Mineral Resources and the upstream production is operated by the State Petroleum Company (SPC) which comes under the Ministry.

Syrian oil production peaked in 1996 and ever since it has been steadily declining. Efforts have been made to increase oil exploration and production by organising licensing rounds at the international level for onshore and offshore exploration. Some onshore blocks have been awarded to international oil companies. While the level of oil production in 2009 was at about 370,000 barrels a day, the Ministry of Petroleum announced in October 2009 that it targets a level of 300,000 barrels per day during the next 40 years.

Syria's two state owned refineries have a joint throughput capacity of about 240 thousand barrels per day. This is not sufficient for the current levels of consumption in Syria, so considerable amounts of petroleum products (in particular diesel oil) are imported and crude oil is exported. There are various initiatives towards the construction of a third refinery involving foreign investors (China, Iran, France, Malaysia, Russia, and Venezuela).

1 PEDEEE website:

http://www.pedeee.org/site/index.php?option=com_content&view=article&id=46&Itemid=57&lang=en

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Syria's fuel prices were subsidised for many years and the IMF estimated the total sum of all energy subsidies (petroleum products and natural gas) in 2007 to amount to some 13% of GDP. The rather high price subsidies gave rise to significant black marketeering, which meant that a substantial part of the subsidies did not reach the originally intended beneficiaries. The government reacted to this problem and took steps to overcome it. Fuel prices were increased several times during the past three years and now have reached international price levels for petroleum products. Diesel (heating oil) is sold at 20 SYP/l (0.31 €/l) and gasoline at 40 SYP/l (0.62 €/l). Rather than subsidising the fuel prices, the government has shifted to handing out direct subsidies to households, helping them pay for the increased heating oil bill.

1.1.3 Gas Sector

The Syrian gas sector comes also under the Ministry of Petroleum and Mineral Resources and is operated by the Syrian Gas Company belonging to the Ministry. There are significant gas reserves which at present rates of production would last for more than 35 years. Roughly one quarter of the natural gas production is re-injected for enhanced oil recovery or flared; of the remaining three quarters some 80% are used in power production and the rest in industry. Only little gas is used in the domestic or service sector; there is only a very limited gas distribution system.

Syria is connected to the Arab gas pipeline and participates actively in the Europe-Arab Mashreq Gas Market Project, which aims to support the reforms and modernisation of the gas industry with emphasis on gas market and network development, strengthening of the legal and regulatory framework, and transfer of knowhow and expertise to the administrations, institutions and companies of the Mashreq region. The Europe-Arab Mashreq Gas Cooperation Centre has been established in the context of this project. It is located in Damascus and underlines Syrian aspirations to become a regional gas hub.

Presently Syria neither imports nor exports significant amounts of natural gas, but it is expected that on the basis of the policy to replace the use of petroleum products as much as possible by the use of natural gas, Syria will become an important importer of natural gas. The gas imports could come from Egypt through the Arab Gas Pipeline, or in reverser flow from Turkey, once the Arab pipeline is extended into Turkey. Syria also is conducting negotiations in other directions. There are plans for Syria to assist in the development of gas fields in western Iraq and connecting these fields with the Arab Gas Pipeline.

1.1.4 Renewable Energy Sources

Syria has tremendous national resources of renewable energy. The direct use of solar energy for domestic hot water (DHW) is the wider use of renewable energy in Syria. Institutionally there is many parties which play different roles in the renewable energy sector, the renewable energy project is dealt as the conventional energy project,

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however the national centre for renewable energy (NREC) is responsible for carrying out the comprehensive studies and research, which help to put in place the proper strategies, polices and long term plans in order to optimise the use of the available energy recourse, and proposing alternatives energies, in coordination with other energy- related organisations in Syria.

During the years 2001- 2004, UNDP sponsored the elaboration of a Renewable Energy Masterplan. It developed a roll out plan for RE investments over the time period up to 2011 amounting to some 1.4 billion USD.

The roll out plan has been implemented only to a very limited extent. Major emphasis was given to the development of wind energy and a serious measurement campaign was conducted at fifteen sites during 2004 and 2005. It confirmed the good potential for wind energy in Syria. Unfortunately this master plan wasn’t applied; however in 2010 The Ministry of Electricity is pursuing various projects for the installation of wind parks.

Syria offers a very good potential for solar energy, in particular for solar thermal applications. It is surprising that only very limited use has been made of this source. There are no effective policies or programmes in place promoting solar thermal applications, but as a consequence of rising prices for traditional heating fuels, a market for solar thermal collectors has been spontaneously developing during the past two years.

Syria represented by NREC with cooperation with GTZ (German Technical Cooperation) prepared a Masterplan for Energy Efficiency and Renewable Energies (MEERE), the MEERE project is the first to analyse the previous studies in a comprehensive framework and develop scenarios till 2030 for the energy demand development under full consideration of EE options and supply scenarios for the same time frame considering the relevant RE options (the scenarios is detailed in MEERE is presented in chapter 2). In addition to the identification of the EE and RE potentials and their integration into a consistent energy planning framework, concrete policy measure were identified and discussed with relevant stakeholders.

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1.2 Supply and demand in Syria

1.2.1 Electricity Demand: During the last 5 year plan 2006-2010, the demand for electricity in Syria increased on an average by a very high rate of 6.5% per year, caused by:

1. Strong economic growth 2. Electricity tariffs that are below cost recovery level and that do not

encourage energy efficiency; 3. High technical and non-technical network losses.

During the same period, the power system experienced increasing difficulties in meeting demand. The peak load in 2008 was 6.7 GW; the available generation capacity was 7.1 GW. The shortfall in domestic supply can partly be balanced through electricity imports. Moreover, in 2010 (February & August) the peak load reached an unprecedented amount to reach 7500 MW.

In 2007 the Public Establishment for the Distribution and Exploitation of Electrical Energy (PEDEEE) had about 4.6 million customers and 99% of the population had access to electricity. About 75 % of delivered energy was billed; the remaining 25% consisted of technical (15%) and non-technical (10%)1 losses. About 5% of billed energy was not collected, mainly due to low payment levels by government entities. Assuming more commercially acceptable loss levels, the equivalent financial loss to PEDEEE on account of these three factors was about US$278 million in 2007 alone.

Residential and industrial consumers are the largest categories, constituting 47% and 37%, respectively, of 2007 total electricity consumption. In contrast, the commercial sector constituted only 9% of the electricity consumption¹. Compared to other intermediate income countries, the demand from industry is high and the demand from commercial activities is relatively low. In terms of capacity demand and during system peak, residential users had by far the largest peak demand with 4,760 MW, followed by industry with 1,016 MW. Residential consumers typically use a great deal of capacity but only during relatively short periods, while industry uses a given capacity on a more continuous basis throughout the day. Hence it i s very important to manage the demand of the residential sector by reducing its demand for peak capacity

1 Reference: annual report 2007, PEEGT.MoE

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Table1: Total electrical energy production GWH with fuel consumed 2005 - 2009

Years Total production (GWh)

Growth percentage per year

Import (GWH)

Export (GWH)

local consumption (GWH)

fuel needed (million TOE)

2005 34653.40 101 926 33828.4 8.75

2006 37503.60 8% 310 1099 36714.6 9.47

2007 38644.50 3% 1480 1006 39118.5 9.76

2008 41023.40 6% 607 1064 40566.4 10.36

2009 43317.20 5.6% 557 617 43257.2 10.94 2009

Without Hydropower

41257.2 43257.2 9.293

Reference: annual report 2009, PEEGT.MoE

Table2: Planned for 2010 - 2025 energy demand

Years Total production (GWh)

Growth percentage per year

Fuel needed (Mtoe)

Fuel available (Crude +Gas)

Deficit in fuel (Mtoe)

Total cost of deficit

M US$

2010 45916 6% 10.3 13.725 - -

2011 48671 6% 11.0 13.725 - -

2012 51591 6% 11.6 13.725 - -

2013 54687 6% 12.3 13.725 - -

2015 61446 6% 13.8 13.725 0.1 49.7

2020 82227 6% 18.5 13.725 4.8 2062.4

2025 107200 6% 24.1 13.725 10.4 4481.1

2030 136817 6% 30.8 13.725 17.1 7349.7

Reference: annual report 2009, PEEGT.MOE

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1.2.2 Electricity Supply: The total installed power generating capacity in Syria was about 8,359 MW in 2009, of which 7,518 MW was actually available with 67% average system load factor1; Although available capacity increased by 5.6% from 2008 to 2009, it is projected that in the period 2011 to 2020 there will be a shortfall in available capacity due to growing demand. The shortfall is expected to continue to rise during 2011 to 2020 due to retirement of an estimated 2,476 MW of older generating units.

Base case demand forecast projects a 67% increase in electricity demand during 2009-20202.

This would require the addition of about 7000 MW of new generation capacity during the same period. The investments in new generating capacity and in expansion of the transmission and distribution networks would cost an estimated US$ 10.5 billion¹, of which US$ 7.0 billion for generation and US$ 3.5 billion for rehabilitation and expansion of the transmission and distribution networks.

The following table indicates nominal & actual capacity of power plants in Syrian power system by turbine type & subsidiary at the end of 2006.

The transmission system in Syria is planned, operated, and maintained by PEEGT. The main transmission network consists of 5,912 km of 230 kV lines and 1,409 km of 400 kV lines, plus associated substations and transformers

Ministry of Electricity aims to increase its capacity from 7500 MW to 12000 MW by the end of the 11th 5-year plan 2011-2016. However MoE is planning to allow to the private sector to invest in the electricity generation sector, MoE announced three projects according to BOT contract.

The new electricity law number 32 dated 14.11.2010 allows the private sector to invest in generation and distribution, IPPs could have a license from MoE based on financial and technical conditions, this law allows the IPP to establish a power plant which serve their on activities or selling the electricity to the PEET.

1Reference: Nasserieh IPP project, preliminary information memorandum, 2010 2 Reference: Annual report 2009, PEEGT.MOE

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Total electricity production 43.3

Net production at power plant fence 40.5

Transmission losses 1.3

Sales at 230 kV 06

Electricity available for distribution 38.7

Distribution losses (Technical & Non-Technical) 9.9

Electricity consumption at distribution level (66 kV or below) 28.8 Table 3: Electricity Production & Consumption [TWh] in 20091 1 Reference: annual report 2009, PEEGT.MoE

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Table4: Capacity of power plants in 2006.

Reference: Mediterranean and National Strategies for Sustainable Development Priority Field of Action-UNEP (2007)

1.3 Findings: - The approximate increase for the demand in Syria is 6%, the use of demand side

management could decrease this required energy and the peak demand, however this demand will keep increasing and the need to build new power plants will stay required.

- The need to increase the supply capacity is urgent where Syria is facing a lack of power supply in 2010.

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- The regional electricity grid connection gives Syria an opportunity to sell the electricity in commercial price which support the financial feasibility of RE plants

- The big gap between the future demand and the current supply needs to be fulfilled by building new power plants; the RE could be feasible choice to participate in bridging the gap between the supply and demand.

Figure 3: the energy gap between the future demand and the current energy capacity

Figure 4: the capacity gap between the future demand and the current capacities

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- By international standards the electricity prices are still quite low, but in the Syrian economic context they are meaningful and set signals about the scarcity of electricity, electricity tariff restructuring is essential in order to subsidise RE initiatives especially in the lunching period till it become more economically feasible.

- Syria's fuel prices were subsidised for many years and the International Monetary Fund (IMF) estimated the total sum of all energy subsidies in 2007 to amount to some 13% of GDP. Moreover the transaction of Syria from fuel exporting country to importing one can be inspiration for the Syrian government to include RE in its plans to pave the road for RE investments by modernised entities and laws.

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2. Potentials and Obligations

2.1 Potential of RE sources

Syrian Arab Republic is well endowed with renewable energy resources such as sun and wind and to a lesser extent with biomass and hydro resources. Syria also has significant fossil fuel resources such as oil and gas which currently dominate its energy supply.

2.1.1 Solar Energy

Syria has good solar energy resources like other countries in the Middle East and on the Mediterranean coast. The average global horizontal solar radiant flux in Syria is approximately 5 KWh/m2/day or 1.8 MWh/m2/Year. The average daily radiant flux varies from 4.4 KWh/m2/day in the mountainous areas in the west to 5.2 KWh/m2/day in the desert regions in the Badia. The annual sunshine hours also vary between 2,820 hours to 3,270 h. A report on the institutional framework for renewable energy in 19981 estimated that the total possible contributions from all solar renewable energy resources in 2010 could be 0.5 Mtoe or 2 TWh/Year.

Solar meteorological data has been collected from four meteorological stations at Kharabo, Raqqa, Messelmiyeh and Jabla over a period (1966-1975) and in 1994 the Meteorological Department and Scientific Studies and Research Centre (SSRC) issued the Solar Atlas of Syria. The atlas is based on tabulated data and maps of theoretical values of different components of solar irradiation for twenty two sites in the various regions of Syria.

The European Solar Radiation Atlas also includes global horizontal solar irradiance values from three of the four stations in the solar atlas of Syria, which are Kharabo, Raqqa and Messelmiyeh. The data in the atlas is taken from monitored data from between 1966-1975 and the radiation figures are generally higher than those in the Syrian Solar Atlas.

Data on mean daily irradiance from 15 solar meteorological stations was published in 1997, in the Country Level Study on Renewable Energy Resources.

The figures 5 & 6 shows the locations of the meteorological stations in Syria and the mean annual daily radiation on horizontal surface and 30° incline respectively. 1 Syria-Institutional Framework for Renewable Energy, Hagler Bailly Consulting Ltd, EC DGXV11, Dec

1998

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Figure 5: Mean Annual Daily Radiation on Horizontal Surface Wh/m2

Figure 6: Mean Daily Total Radiation on 30° Incline Wh/m21

1 National Renewable Energy Master Plan, 2004, UNDP

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The Table 5 presents the deference in the results of the measured radiation on horizontal surface in the available studies (Syrian solar atlas, European Solar atlas, the country level study).

Table 5: Annual Daily Global Horizontal Radiation and at 30° tilt

Station Latitude Longitude

Radiation on Horizontal Surface (Wh/m2)

Syrian Solar Atlas

Radiation on 30° incline

(Wh/m2)

Syrian Solar Atlas

European Solar Atlas

Country Level Study

Idleb 35°56 36°37 4850 NA NA 5249

Palmyra 34°33 38°18 4985 NA 5100 5439

Jableh 35°22 35°57 4750 NA NA 5180

Jarablus 36°49 38°00 4610 NA 4800 5042

Aleppo 36°11 37°13 4792 NA 4900 5160

Hama 35°08 36°43 4926 NA 5100 5303

Homs 34°46 36°42 4886 NA NA 5249

Kharabo 33°30 36°28 5134 5725 5300 5564

Daraa 32°36 36°07 5070 NA NA 5510

Damascus airport

33°26 36°32 5108 NA 5200 5540

Damascus Mezzeh

33°29 36°14 5179 NA 5300 5635

Deir Ezzor 35°17 40°11 4817 NA 5000 5283

Sarghaya 33°49 36°09 4863 NA NA 5187

Hassakah 36°31 40°43 4695 NA 4800 5132

Raqqa 35°55 38°59 4870 5152 4900 5338

Kamishli 37°02 41°13 4572 NA NA 5042

Lattakia 35°33 35°47 4511 NA 4600 4884

Messelmiyeh 36°19 37°14 4696 5026 4800 5114

Ein Elkroum 35°21 36°16 4617 NA NA 4873

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Station Latitude Longitude

Radiation on Horizontal Surface Syrian Solar (Wh/m2) Atlas

Radiation on 30° incline

(Wh/m2)

Syrian European Country Solar Atlas Solar Atlas Level Study

El Jayyed 35°33 36°19 4690 NA 4800 5072

Khafseh 36°13 38°02 4802 NA NA ` 5244

Kraem 35°23 36°20 4742 NA NA 5333

The analysing of the Syrian solar resources shows:

- Syria has tremendous solar energy resources which are available in a largely uniform manner across the geographical spread of the country, based on the Syrian atlas the global radiation at 30° tilt is approximately 115 KWh/m²

- The significant availability of solar energy resources for a long period during the year

- Available data resources through the solar atlas of Syria, the European Solar Atlas and the Country level study which provide a good and acceptable summary of solar resources in the country

2.1.2 Wind Energy

Wind monitoring stations have been established around the country, mainly towards the major population centres in the western and southern regions. These monitoring stations have collected between 5 and 12 years’ data at each site, during the period 1965-1993. The data so collected has resulted in developing a Wind Energy Atlas for the country which was published in 1998 through co-operation with Risø National Labs of Denmark. Syrian engineers were also trained on wind resource assessments and wind atlas methodology in the early 1990s.

The Syrian Wind energy atlas is a comprehensive document and presents for each of the sites the measured wind speed data, Weibull parameters for each 30° sector, and a table summarising the calculated mean wind speed (m/s) and power density (W/m2). The wind speeds and wind power density are given at heights of 10 m, 25 m, 50 m, 100 m, and 200 m for four roughness classes. Wind roses and wind speed duration curves are also available for most of the sites.

A wind map of Syria is presented in Figure 7. It illustrates strong wind resources in the central, southern and hilly coastal areas of the country. Some of the attractive areas

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include Qattina, Mesiaf, Qunaitera and Palmyra. The Wind Atlas is thoroughly prepared and represents an excellent data source from which a wind energy programme can be planned.

Figure 7: Wind Map of Syria (Source: Meteorological Department, Syria)1 The theoretical technical potential for wind power developments in Syria was calculated based on the data available from the wind energy atlas and based on some assumptions¹:

- Only locations with a minimum wind power density of 250 W/m2 at 50m height was considered suitable for the wind energy generation;

- Air density is taken as 1.184 kg/m2, considering an altitude of sea level and an ambient temperature of 25ºC;

- The orographic features and their effect on wind speeds was ignored;

- The technical specifications of two commercially available wind turbines of 100 kW and 1 MW were used for calculations ;

- A wind farm array spacing of 10 d x 5 d was used for the calculations;

- It will be feasible to develop wind farms in at least 5% of the suitable land area.

Based on the calculations, the technical potential for wind energy developments in Syria is estimated to be 85,000 MW¹.


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Figure 8: Wind Energy Potential in Syria¹

The assessment of the wind energy resources shows:

- Syria has good wind energy resources, which is estimated at 40,000 MW- 85,000 MW1. Several of the potential locations are close to the major population centres.

- However, the data currently available requires detailed professional analysis with corrections for topography, infrastructure for access to the sites and grid infrastructure for evacuation of generated power. This should result in prioritises list of sites for wind farm development.

- It is not considered necessary to undertake any major wind resource assessments except for normal monitoring of energy meteorological data.

2.1.3 Hydro Power

Hydropower is the only significant renewable energy contribution to Syria’s energy supply at the current time, providing between 2000 GWh and 4000 GWh per year, depending on precipitation levels.


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The table 6 presents the installed hydropower plants in Syria which are the Al-Thawra Dam (880 MW) and newly commissioned Teshreen Dam (630 MW), both on the Euphrates, provide around 90 % of the hydro-electric supply. The Al-Baath Dam on the Euphrates (75 MW) and 5 other small hydro plants make up the total of 1620 MW .

Table 6: Operating Hydropower Plants in Syria1

Basin / River Name / Location Installed Capacity (MW)

Typical Output (GWh/year)

Euphrates Al-Thawra 880 2,000 Al-Baath 75 300 Teshreen 630 1,300

Barada Wadi-Barada 8 24 Orontes Al Rastan 8 12

Shaizer 7 4 Afrin 17th of April 10 40 Al-Khabour Hassakeh-West 1.2 3.3 Total 1,619.2 3,683.3

Because priority is given to drinking water supply and irrigation over electricity supply, these growing demands are likely to reduce the potential for existing and future developments. Development on the Tigris and Yarmuk rivers depends on agreement with the respective bordering countries (Turkey and Jordan).

1 Small Hydro Power in the Syrian Arab Republic, Sufian Al-Alao, UNDP Sustainable Energy in the Arab

States RAB/96/005, July 1998

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Figure 9: Hydro Resources in Syria (Source: Ministry of Environmental)1

The assessment of the hydro-energy resources shows:

- Syrian hydropower resources are limited by the low precipitation and flow from international rivers. Most of the available hydropower potential has been harnessed and there is not much scope for harnessing small, medium or large-scale hydropower.

- Further studies have to be carried out to analyse the scope for micro-hydro power. These can be stand-alone power stations or linked together to form a mini grid in the region assuming the period of availability of water justifies the investments.


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2.1.4 Biomass

Agriculture is important to the Syrian economy and therefore animal and agricultural wastes are important products of the rural areas. Cow dung, poultry droppings and human waste in addition to wood and vegetable debris form the main source of biomass in Syria. The theoretical biomass potential in Syria has been estimated as 25.8 million tonnes per year, which is split between all sources as shown in the Figure 10 below. Over 60 % of the total biomass potential is derived from the agricultural sector.

Animal10%

Forests13%

Human12%

Industrial5%

Agriculture60%

Figure 10: Biomass Resources in Syria1

2.1.5 Urban Waste

Over 50 % of the Syrian population live in urban areas and approximately 47 % of the population live in Aleppo and Damascus. Since there is a concentration of a large percentage of population in the major cities, there appears to be opportunity to use the municipal waste for energy purposes.


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2.1.6. Geothermal Energy

The geothermal energy potential1 in Syria has been evaluated based on mathematical models and a number of locations have been identified as offering scope for power generation.

Table7: Geothermal Energy Potential

Name of Well Location Surface Temperature°C

Water Discharge m3/hour

Aldabiat – Sukneh

Aboureah – Gareten

Almauh Swamp

Alyadude

Raas Alain

Alsfera

Palmyra central region



Daraa – South region

North east region

Aleppo – North region

61

50

45

44

40

38

42

dry air

320

7.72

31.3

980

The assessment of the geothermal energy resources shows:

- There is a high theoretical potential of the geothermal energy in some locations in Syria like in Palmayra, however a feasibility study should be prepared.

- The geothermal potential itself need to be investigated thoroughly to identify regions with prospects and to verify the initial findings. A geothermal resource assessment study is needed.

2.2 International Conventions and Agreements

2.2.1 Environmental agreements:

The Syrian Government considers the environment to be an integral component of all sectoral activities, and will work to achieve an integrated rural development that includes the protection and improvement of use of natural resources. Environmental issues being integrated into major development plans are the responsibility of the Ministry of state for Environmental Affairs, and other relevant ministries that form the Environment Protection Council. In 2002 the Environmental Law (decree 50/2002) has been issued, and forms

1 (Aug-2000), Renewable Energy Country Profile for the Syrian Arab Republic, ESCWA.

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the basis for environmental management in Syria. The Government of Syria has ratified the UNFCCC in April 1996 and ratified the Kyoto protocol (Presidential decree 73 dated 4/9/2005).

Syria has nominated the General Commission for Environmental Affairs (GCEA) as the national authority for the Clean Development Mechanism (CDM)-Designated National Authority (DNA).

The main tasks of DNA are to provide approval to the project participants and in case of a host party, confirm, through written approval, that the CDM project activity assists it in achieving sustainable development. Furthermore, GCEA through the National Climate Change Committee is the official focal point for climate change activities in Syria, including CDM projects.

2.2.2 The Association Agreement between Syria and the EU

The Association Agreement between Syria and the EU has been negotiated, but it is not yet in force. It will require Syria to adapt to EU energy market standards (level play field) which means that the Syrian energy market will need further liberalisation and institutional change in accordance with the respective EU directives.

Under the heading "Policy and Legal Reforms" inter alia the following key points are listed1:

- Amend legislations allowing the private sector to produce electricity - Restructuring the electricity sector according to the studies prepared by Euro-

Med Association Area. - Set out pricing and incentive policies for rationing consumption, particularly in

residential application by using energy saving bulbs and to introduce rationed uses in commercial and services sectors such as using automated lighting and appliances that have high efficiency and to monitor manufacturers of electric appliances.

- Adopt regulations that allow Syrian private sector to participate in oil and gas production service operations, transport and final marketing.

- Adopt flexible and transparent financial conditions regarding contracting, domestic sales and foreign marketing.

- Establish an independent governing authority for the energy sector that will supervise contracts, transparent competition, domestic and international marketing and economic pricing of energy carriers.

- Establish higher energy commission that prepares the national energy strategy and branch policies for various sectors, by expanding the functions of the

1 The Association Agreement between Syria and the EU

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National Centre for Energy Research currently under Ministry of Electricity, to include the oil and gas sectors.

2.3 National Programmes

2.3.1 The 10th five year plan 2006-2011

There is no official document that states the national policy of renewable energy of the Syrian Government. The 10th five year plan 2006-2011 stated long term objectives to be achieved by 2015:

1. Improve electricity generation efficiency and reduce all types of loses as high priority.

2. Provide electricity to cover expected growth in loads, by doubling combined capacity from presently 7079 MW to 12,000 MW in 2015.

3. Best use of renewable energies, by fully utilising hydro-electricity and benefiting from Syria's climate to use new and renewable energies (solar, wind and biomass).

4. Maximum benefit from available quantities of gas to generate electricity. 5. Reach higher dependability in generating and distributing electricity. 6. Restructure electricity sector according to Syrian European Association

Agreement, intended to be signed soon. Issue electricity law which will allow competition and attract investments in accordance with regional market for energy and electricity by 2015.

2.3.2 The 11th five year plan 2011-2016

In contrast to previous 5-year plan the 11th 5-year plan 2011-2016 of the Ministry of Electricity put a specific target of RE plants should be built in the plan duration. Ministry of Electricity is aiming to increase its capacity from 7500 MW to 12000 MW by the end of the 11th 5 year plan 2011-2016.

The plan included strategies to reach the national objectives, the strategy manly focus on wind and photovoltaic energy plant in the supply side, however the plan focus also on the energy efficiency technologies in the demand side in purpose to reduce the consumption.

This national policy obligate the Syrian government (MoE) to achieve the objectives were mentioned in the plan, according to this policy and by 2016 the generated electricity from wind and solar plants should be 2% of the total electricity supply (Figure11).

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The planed RE power plants as governmental projects in the 11th 5-year plan are: - 150 MW wind energy plant - 5 MW photovoltaic energy plant - 10 MW CSP

Figure 11: RE share in the 11th 5-year plan

2.3.3 Master Plan 2010

The core task for the MEERE (Masterplan for Energy Efficiency and Renewable Energies) project has been to evaluate and asses quantitatively the impact of energy efficiency and renewable energy on the future development of the national energy sector at both the demand and the supply side. The demand side deals with the assessment of future energy needs of various consumption sectors, whereas the supply side is devoted to the technical, economic and environmental evaluations of all energy supply options taking into account national specific needs and constraints. While in the past ten years a number of studies have addressed EE and RE issues in Syria, the MEERE project is the first to analyse these studies in a comprehensive framework and develop scenarios till 2030 for the energy demand development under full consideration of EE options and supply scenarios for the same time frame considering the relevant RE options. In addition to the identification of the EE and RE potentials and their integration into a consistent energy planning framework, concrete policy measure were identified and discussed with relevant stakeholders.

The MEERE project, in several ways, linked into the present Syrian debate on sustainable energy development, by cooperating with on-going energy modelling efforts and adding on to them the notions of energy efficiency and renewable energy use, and

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in addition by bringing together several times the national stakeholders of EE and RE issues to discuss options for Syria.

The MEERE project made use of and contributed to on-going national energy modelling efforts using MAED (Model for Analysis of Energy and Electricity Demand) and the optimisation model MESSAGE (Model for Energy Supply Strategy Alternatives and their General Environmental Impacts). They have been applied for the projection of future Syrian final energy demand and the formulation of optimal supply strategies for different scenarios.

2.3.3.1 Reference supply (RS) and energy saving (ES) scenarios:

The MEERE formulated reference scenario RS for energy supply, the scenarios took in consideration the alternative energy supply strategies consonant with user-defined constraints (such as limits on new investment, fuel availability and trade, environmental regulations and market penetration rates for new technologies). Another scenario called energy saving supply scenario has been developed with an enhanced role of saving measures and of renewables to realise an optimal national supply strategy characterised by minimal total costs of the energy system over the study period.

The national resources and available energy conversion technologies are exploited wisely, and import & export options are considered in the optimisation.

However RE was included in the scenarios through numerical targets for power generation.

- Wind turbines: installation of a total capacity of 2,000 MW during the period 2010-2030.

- PV: total installed capacity of 1,000 MW - CSP: total installed capacity of 1,000 MW

The renewable share in the primary energy will grow up to about 7.5% in 2030 compared to 1.3% in the RS. This substitution effect of renewables will enable to save about 3.8 Mtoe of fossil fuel in 2030.

Over the next two decades 2010-2030 the cumulative substitution effect of renewables will save more than 30 Mtoe of fossil fuel.

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Figure 12: Distribution of electricity generation by type of energy source (ES) in 2030.1

Figure 13: Development of generated electricity by type of fuel (ES)1

1 Reference: Masterplan for Energy Efficiency and Renewable Energies (MEERE)-2010

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2.3.3.2 Accelerated Renewable Energy Scenario (ARES)1

The reflected realistic policy of the ES scenario to encourage the future role of renewable mainly in the generation sector- takes into account the expected technical, financial and infrastructure barriers that would hinder the penetration of renewable options and their successfully implementations in due time. Thus in the ES scenario the total installed capacity of renewables over the period 2010-2030 has been constrained to 4,000 MW, consisting of 2,000 MW for wind and 1,000 MW for PV and CSP each.

This adopted policy measure leads to a renewable share of 14% in the total installed capacity and about 9% of total electricity generation in 2030. However, in view of the high potential of renewables in Syria it would be useful to analyse also a development trend in which a higher contribution of renewable options is proposed. Thus, an additional so called Accelerated Renewable Energy Scenario (ARES) has been considered. Under the policy assumptions of this scenario the Syrian power sector would be able to overcome the expected barriers and realise higher implementation of renewable generation options to arrive an imposed renewable share of 22% of total installed capacity in 2030.

The proposed renewable capacities to be installed are 3,000 MW Wind turbines, 2,000 MW PV and 2,000 MW CSP making together 7,000 MW.

Figure 14 presents the resulting distribution of total capacity in 2030. It can be seen that the realised policy measure of implementing 22% renewables in the total installed capacity in 2030 will require to expand the total installed capacity of the system to about 31,400 MW compared to 28,700 MW in ES.

This arises from the low capacity factor due to the limited annual operation time, which in the many cases is below 30% compared to more than 80% for fossil and nuclear power plants.

1Reference: Masterplan for Energy Efficiency and Renewable Energies (MEERE)-2010

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Figure 14: Distribution of total installed capacity in 2030 for ARES1

2. 4 Findings

This chapter shows the need for deep assessment and analyses for the RE institutional and legal current situation in Syria through:

- Confirming the significant potential for RE resources in Syria. Since the RE potential is not used hence a big gap can be fulfilled.

- Presenting that Syria has tremendous solar energy resources which are available

in a largely uniform manner across the geographical spread of the country, the significant availability of solar energy resources for a long period during the year. The significant unused potential should lead to an internal assessment for weaknesses and barriers for the use of solar energy.

- Confirming the available data resources through the solar atlas of Syria, the

European Solar Atlas and the Country level study which provide a good and acceptable summary of solar resources in the country. These data should be developed and taken in consideration the national plans.

1 Masterplan for Energy Efficiency and Renewable Energies (MEERE)-2010

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- Reviewing the Syrian wind energy potential resources, this is estimated at 40,000 MW- 85,000MW. However, the data currently available requires detailed professional analysis with corrections for topography, infrastructure for access to the sites and grid infrastructure for evacuation of generated power. This should result in a prioritised list of sites for wind farm development. Based on the mandate of the Syrian entities, NREC is the responsible and the capable body in terms of developing such studies. The lack of clarification of the mandate led NREC to use its efforts on other activities such as building a big wind farm.

- Surveying the obligations of Syrian government in the international agreements

give the government the motivation to accelerate its efforts in order to meet its duties and targets. Syrian authorities can be supported financially and technically through these agreements, for instance the association agreement between Syria and EU. Based on these agreements Syrian government can request the financial and technical assistant.

- Surveying the prepared studies which could be useful to support MoE efforts in

terms of policy making, strategic plans and supporting RE sector on macro level. These studies recommended a deep assessment for the electricity sector bodies in purpose of supporting RE sector; the assessments should focus on developing the institutional framework of electricity sector, restructuring clarifying the sector players’ duties.

- Analysing the absence of clear police for RE in the 10th five-year plan which

weakened the opportunities of RE sector to be developed. The 11th five-year plan 2011-2016 is a precious chance for establishing modernised RE sector, indeed a modernisation electricity sector is required for creating efficient RE projects and attracting private investment. The 11th 5-year plan can considered as national policy which contains quantitative targets, the supportive policies as pricing policy, financial policy and contractual policy are missed.

- Presenting the advanced study MEERE which gives a vision for the possible

scenarios of electricity supply on a long term; these scenarios help MoE in setting its prioritised strategies based on its financial and technical resources. MEERE are discussed in NREC which needs to be approved and followed up with roadmap.

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3. Institutional framework tional framework

3.1 Current institutional framework in Syria 3.1 Current institutional framework in Syria

The electricity sector is under the responsibility of Ministry of Electricity. Ministry of Electricity and its affiliated establishments are leading the electricity sector from the generation phase to the distribution. The electricity sector is a public sector whereas the MoE and its affiliated establishments are governmental; till the moment the private sector involved as a contractor (implementer) in the ministry’s project.

The electricity sector is under the responsibility of Ministry of Electricity. Ministry of Electricity and its affiliated establishments are leading the electricity sector from the generation phase to the distribution. The electricity sector is a public sector whereas the MoE and its affiliated establishments are governmental; till the moment the private sector involved as a contractor (implementer) in the ministry’s project.

The Public Establishment for Electricity Generation and Transmission (PEEGT) and, the Public Establishment for the Distribution and Exploitation of Electrical Energy (PEDEEE) are the main implementers in the Syrian electricity sector. However the new electricity law number 32 date 14.11.2010 is regulating the policies of the electricity sector, the law 32 restructuring the electricity sector, based on this law the transmission duty will be transferred to a new created establishment called (Public Establishment for transmission), furthermore the new law allows the private sector to invest in the electricity generation and distribution.

The Public Establishment for Electricity Generation and Transmission (PEEGT) and, the Public Establishment for the Distribution and Exploitation of Electrical Energy (PEDEEE) are the main implementers in the Syrian electricity sector. However the new electricity law number 32 date 14.11.2010 is regulating the policies of the electricity sector, the law 32 restructuring the electricity sector, based on this law the transmission duty will be transferred to a new created establishment called (Public Establishment for transmission), furthermore the new law allows the private sector to invest in the electricity generation and distribution.

Minister of Electricity

Public Establishment for Electricity Generation and

Transmission (PEEGT)

National Energy Research Centre (NERC)

Public Establishment for Distribution & Exploitation of Electricity Energy (PEDEEE)

Figure 15: The structure of Ministry of Electricity in Syria Figure 15: The structure of Ministry of Electricity in Syria

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The duties of the Ministry of Electricity:

Ministry of Electricity is mandated to accomplish the following main duties:

- Caring out the plans to cover the need of electricity energy and implementing the projects in purpose of reaching its plans

- Ensuring Producing, transmission, distribution and operation the electricity energy

- Supervising the individual electricity production in the public establishments.

The duties of the Public Establishment for Electricity Generation and Transmission (PEEGT):

PEEGT is mandated to accomplish the following main duties:

- Determining the requirements for covering the demand in terms of generation resources, transmission grids and carrying out the plans

- Implementing generation power plants and transmission grids

- Following up the power exchange with the neighbour countries

The duties of the Public Establishment for Distribution & Exploitation of Electricity Energy (PEDEEE)

PEDEEE is mandated to accomplish the following main duties:

- Carrying out the plans in purpose of ensuring the distribution

- Establishing the substation plants and transmission grids on voltage (0.4-20-60)kV

- Operating and maintaining the transmission grids and substation plants on voltage (0.4- 20- 60)kV

The duties of National Energy Research Centre (NERC):

(NERC) is mandated to accomplish the following main duties:

- Carrying out comprehensive studies and researches, which help to put in place the proper strategies, polices and long term plans in order to optimise the use of the available energy recourse, and proposing alternatives energies, in coordination with other energy- related organisations in Syria.

- Surveying and assessing renewable energy sources in Syria, recommending plans in order to develop the use of REs.

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- Implement renewable energies pilot projects independently or in coordination with other local or international parties.

- Providing technical assistant and conducting training courses, seminars, and conferences in order to build up national capacities regarding energy efficiency and renewable energy sectors

- Formulating Syrian standard specifications for energy performance in the facilities in addition to monitoring performance indicators of electrical appliances –both local and imported – based on energy efficiency standards

- Conducting researches and studies required to improve energy efficiency at demand and supply sides.

- Developing tools and mechanisms in order to improve energy efficiency and increase the public awareness.

- Constructing and operating laboratories for developing of renewable energy systems and high efficiency equipment.

- Building a database to support conducting researches and studies.

- Conducting agreements regarding energy research with the international organisations.

3.1.1 The electricity law No. 32

In November 2010, Syria issued a new electricity law, the new electricity law number 32 date 14.11.2010 regulates the electricity sector, it restructures the electricity sector and clarifies the mandate of each entity in the sector as well as it allows the private sector to invest in the electricity sector as electricity generator and distributor, additional duties was added to the mandate of the entities to be harmonised with the participation of the private sector like the licensing` of the private sector, The objective of the law:

1- Ensuring the supply of the electricity needs for the society and the national economy.

2- Permit for the public sector, the joint sector and the national, local and international private sector to invest in the electricity generation and distribution sectors.

3- Supporting and promoting for renewable energies use and nationalise the manufacturing.

3.1.1.1 Electricity players’ duties

The law added some duties for the MoE, these duties were managed by the ministry before the law but it became more clarified in the law. Main of these duties were:

- Preparing the policy of the electricity sector to be approved from the government.

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- Encouraging the usage of the renewable energy.

- Giving the licenses for the investors in the electricity generation and distribution, giving the allowance for the individual and backup generation. Based on suggestions of PEEG the MoE announces for investment proposals.

- Carrying out the electricity operation systems based on the suggestions of PEEG and PEET.

- Carrying out the electricity tariff based on the suggestions of PEEG, PEET and PEEDEEE.

- Based on the agreement between the investors and the MoE the PEET will be obliged to buy the electricity from the individual electricity producer, in the case of the agreement didn’t include the condition to buy the electricity by PEET, the producer can use the transmission grid depending on an individual agreement with PEET for agreed price.

- Representing Syria in the international organisations which deal with the electricity and renewable energy.

All the agreements between the MoE and the individual investors should be certified from the prime minister’s council.

A new electricity transmission establishment will be established based on this law, the new establishment will be called “the Public Establishment for Electricity Transmission” (PEET), the main duties of PEET:

- Connecting the licentiate producers for a prices announced be the MoE.

- Scheduling the generation plants

- Scheduling the grid lines

- Load management

- Scheduling the electricity exchange with the neighbouring countries’ grids

- Buying the electricity from the power producers and sell it to distributers (PEEDEE or private distributers).

- Issuing the technical conditions for grid connection, metering and grid operation.

- The economic and transparent demand side management.

- Monitoring and following up the demand and supply balance, additionally the load and power expectations on the long and mid term

PEET can buy the electricity from the individual producers based on the rules, conditions and prices which will be published by MoE.

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3.1.1.2 Renewable energy

- It is allowed to buy the electricity which produced is from renewable energy sources if there is a technical availability for connection, the price will be proposed by MoE and issued through the prime minister’s decision.

- PEEG in cooperation with NERC will do the technical, economic and environmental studies for the renewable generation projects.

- The implementation, operation and investment in RE generation projects are under the responsibility of PEEG.

- MoE is the responsible entity for the announcement for calling investment offers for RE generation projects.

3.1.1.3 Licensing in the electricity sector

- All the activities in the electricity energy sector are exclusively managed by MoE and its affiliated establishments; it is prohibited to practice any activity in electricity sector without the permission and the licensing from the MoE.

- Exclusively the transmission is under the responsibility of PEET (a new establishment will be established based on this law).

- It is allowed for the public sector, the joint sector and the national, local and international sector to invest in the electricity generation and distribution sectors, the allowance should be based on a license issued by MoE.

- The regulations of licensing and the conditions will be issued by the prime minister’s council, this regulations concluded:

o The rules and principles and procedures for licensing. o The principles and the rules for stopping the licenses. o The accepted produced power. o The performance indicators for the accepted generation project. o The minimum number of the consumers in the accepted distribution project. o The minimum power for individual generation. o The technical, legal and financial conditions o Monitoring and evaluation system for the licentiate performance o The system of the electricity pricing (generated, transmitted, distributed).

3.1.1.3 Law assessment

- The law clearly determined MoE as a regulator for the sector, additionally PEEG was mandated as a developer, the separation between the regulating role and the developing role is subjective point prevents the conflict of interests in PEEG role.

- Establishing a new establishment for electricity transmission whereas the transmission was mandated to PEEGT, this separation allows for more decentralisation for the companies, the decentralisation help the companies to commercially and transparently.

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- The PEEG will be in the same position of the IPP, this position puts the PEEG in a competition with IPP which lead to increase in its performance efficiency.

- Before the law the implementation of the RE project wasn’t clear in order to clarify the responsible authority, the law mandated the implementation to PEEG.

- The uncertainty to the role of NERC, which was mentioned in many studies1, became clear in order to support the MoE, PEEG and other player with studies. Based on the law, NERC is not RE projects implementer while this mission was delegated clearly to the PEEG and the IPPs .

3.2 The role of the RE organisation stakeholders in Syria

Before the electricity law No. 32date 14 Nov. 2010

Activities

Entities

Stra

tegy

set

up

Proj

ect i

dent

ifica

tion

R&

D

Educ

atio

n &

App

rova

l for

pow

er

Gen

erat

ion

Pow

er G

ener

atio

n

Pow

er T

rans

mis

sion

Man

ufac

turin

g

CD

M a

ppro

val

Ministry of Electricity X X X X PEEGT X X X X NERC X X X Universities X GCEA X IPP Industry X NGOs X X

Table 8: RE stakeholders’ roles in Syria (Before the law 32)

1 Was mentioned in: MEERE study and RCREEE study (Provision of Technical Support, country report)

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Figure 14: The supporting roles of the players in Syria before the law 32

After the electricity law No. 32date 14 Nov. 2010

Activities

Entities

Stra

tegy

set

up

Proj

ect i

dent

ifica

tion

R&

D

Educ

atio

n &

App

rova

l for

pow

er

Gen

erat

ion

Pow

er G

ener

atio

n

Pow

er T

rans

mis

sion

Man

ufac

turin

g

CD

M a

ppro

val

Ministry of Electricity X X X X PEEG (New establishment) X X X PEET (New establishment) X NERC X X X Universities X GCEA X IPP X Industry X NGOs X X

Table 9: RE stakeholders’ roles in Syria (After the law 32)

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Figure 16: The supporting roles of the players in Syria before the law 32

3.4 Comparison with Egypt current institutional set-up

The electricity sector in Egypt is working under the umbrella of Ministry of Electricity and Energy (MoEE). In Order To full fill its objective which is to supply the electricity to all the consumers in Egypt, The Ministry may duties:

1. Settle the General plans and energy Generation, transmission and distribution using the high-tech and the latest scientific development and supervise the execution of such plan and follow-up the different activities concerning the electrical network.

2. Suggest the electricity energy prices for all different voltage levels and different usages.

3. Supervise the study and execution of essential electrical projects. 4. Publish the statistics and data relating to electric energy production &

consumption 5. Supply the technical consultancies and services in the electric fields to arab

countries and all others

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Figure 17: The structure of Ministry of Electricity and Energy in Egypt1

Presidential Decree No. 339 of the year 2000 established the electric utility and consumer protection regulatory agency, The Agency objective is regulating, monitoring, and control over all matters relating to electric generation, transmission, distribution and consumption to ensure availability and continuity of supply so as to satisfy the demand.

The implementation entity of electricity projects is the Egyptian Electricity Holding Company (EEHC), EEHC implements generation, transmission and distribution electricity projects throw its affiliated companies The Production Companies, Transmission Companies and Distribution Companies

The Supreme Council of Energy in February 2008 approved a plan to satisfy 20% of the generated electricity from renewable energy by 2020, including a 12% contribution from wind energy. This figure translates into about 7200 MW of grid-connected wind farms and 8% contribution from other sources, mainly hydro and solar energy.

The Law No. 102 year 1986 established NREA, the duties of NREA were determined as follows:

1 NREA Annual report 2009

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- The assessment and evaluation of the new and renewable energy resources potential to plan for its development and utilisation within the framework of the general policy of the state in the field of energy.

- To undertake and conduct the technical, economic and environmental studies and research necessary to develop new and renewable energy resources utilisation whether by itself or in cooperation with the scientific entities both locally and abroad.

- To determine the fields wherein it shall be a must to use the new and renewable energy resources instead of the conventional sources, in coordination and in liaison with the state entities concerned. The Authority shall be solely and exclusively entitled to ratify the alternatives of the engineering systems for the said usage's, in such a way as to secure the achievement of their technical guarantees.

- To undertake the implementation and execution of the projects related to the production and utilisation of the new and renewable energy as indicated under the previous item, whether by itself or in participation with third parties, or to entrust the implementation and execution thereof, wholly or partly, to third parties, whether for its own account, or for the account of third parties.

- To propose the Egyptian standard specifications for the new and renewable energy equipment and systems, and to conduct the scientific tests to evaluate the performance of the equipment and systems, both local and foreign, under the Egyptian prevailing conditions and to issue respective licensing certificates to that effect.

- To undertake and conduct the applied and practical experiments related to the new and renewable energy technologies.

- The laying down and implement the training and promotional programmes that are necessary for spreading and expanding the new and renewable energy utilisation and application.

- The rendering of consultative services in the field of the new and renewable energy, and to provide the technical know-how and expertise for the development of the national industries related to the equipment thereof, and the respective programs.

- The implementation all the agreements and protocols concluded by the State and the Public Authorities with the foreign governments and international authorities in relation to the competence of the authority, as well as to conclude agreements in the field of its own activity with similar and analogous entities both locally and abroad.

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Activities

Entities

Stra

tegy

set

up

Proj

ect I

dent

ifica

tion

R&

D

Educ

atio

n &

Cap

acity

B

uild

ing

App

rova

l for

pow

er

Gen

erat

ion

Pow

er G

ener

atio

n

Pow

er T

rans

mis

sion

Man

ufac

turin

g

CD

M a

ppro

val

Ministry of Electricity &energy X X NREA X X X X Regulator X X X X EEHC X Universities X X Research centre X X Scientific research academy X Industry X IPP X NGOs X EEAA X

Table 9: RE stakeholders’ roles in Syria (After the law 32)

Establishing NREA was an essential step in the process of conducting REs in Egypt. The benefit was recognised in the ambitious strategy to produce 20% of electricity demand from RE by 2020. A significant progress was approached by conducting many projects (Zafarana, Jabel Elzait, Koraymat….), however the challenge started with the participation of the private sector in electricity generation from RE resources. The challenge was because of the conflicts of interest in the discharge of the various functions of NREA. The law No. 102 year 1986 established NREA (New & Renewable Energy Authority) , the authority is responsible on the implementation of the RE project, it owns and operates all existing wind farms in Egypt and is planning several more., this role equal to the role of private sector. NREA acts as a research centre, developer, regulator and national planner. It establishes rules and procedures for allocating land for wind farms to developers.

There many suggestions to improve the performance efficiency of NREA by restructuration the duties. The duties could be separated to:

- Regulatory role - Commercial developer

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- Research and promotion.

3.5 Findings - In Syria, the law no. 32 clearly determined MoE as a regulator for the sector;

additionally PEEGT was mandated as a developer. The separation between the

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regulating role and the developing role is a subjective point which prevents the conflict of interests. However the organisation who has the capacity to work daily with REs is NERC, NERC is mandated to cover the researches and supporting the decision makers by studies, NERC should support MoE in the RE technical staff while MoE have good experience in contracts and tenders.

- Mainly NERC in Syria has the continuous contact with the international RE events

and researches, the absence of the other players (MoE the planer and PEEGT the implementer) led to the absence of the national RE police.

- The PEEG will be in the same position of the IPP’s (Independent Power Producer);

this position puts the PEEG in a competition with IPP which lead to increase in its performance efficiency.

- Before the law no. 32, the implementation of the RE project wasn’t clear in order to

clarify the responsible authority, the law mandated the implementation to PEEG. - It was mentioned in many studies, that the uncertainty of the role of NERC, became

clear in order to support the MoE, PEEG and other player with studies. RE projects implementation which was sometimes misled to be under responsibility of NERC.

- A national Syrian policy for REs should be carried out in purpose to correct the

market short comings. The policy should put a target for the participation of REs projects in covering the demand for long and mid-term period.

- This national police should be followed by a strategy in order to implement the policy

through development programmes and projects. These programmes should be targeted to institutional, legal and financial development.

- These programmes and projects should lead to efficient institutional and legal

mechanisms, although these mechanisms pave the road for sustainable RE projects through sustainable and transparent financial mechanisms.

- Many countries have found it useful to establish a RE specialised institution to

prepare initiatives, draft regulations, monitor progress, ensure compliance, administer funds and perform other administrative activities. It will not be necessarily the only institution with powers in the area. If fiscal incentives are adopted then these will be managed through the office responsible for taxation, but there will still be a need to confirm the technical acceptability of the investment.

- NERC should prepare a monitoring system for the development of RE use and

propose policy adjustments as needed.

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- However, PEEG is responsible for generation of electrical energy and in order to support the exploitation of renewable energy projects which produce grid connected electricity, it is recommended to install a main department for Renewable Energy at PEEG with equal rights and obligations as the other Main departments at PEEG.

- The mandate of the Department for Renewable Energy at PEEG should be

RE resources planning for utilisation Implementation of RE matured technologies Rendering of consultancy services in the field of RE exploitation, Training, information dissemination and capacity building Transfer of technology and the development of local industry.

- The cornerstone of IPP involvement is the long term Power Purchase Agreement

(PPA). The agreement is generally between the IPP developer and the national electricity transmission entity. Until establishing the PEET the PPA will be developed between PEEGT and the IPP however PEEGT is the governmental implementation entity, in this case a conflict of interest will be exist while theoretically PEEGT should be a competitor of the IPP from commercial point of view.

- There is a need to establish a governmental PPP unit in charge of management the

private sector participation development and the implementation of necessary regulations.

- There is a need to establish a RE department in MoE responsible for:

Planning and policy making Issuing projects proposals Preparation feasibility studies for pipeline generating projects that

could be offered to private investors Assessment (in cooperation with Ministry of Finance) the need for, and

level of, guarantee packages or other credit enhancement instruments that may need to be provided by the government to attract private investment

Preparation for IPP bidding packages for the selected generating plants and carry out a transparent bidding process.

Giving the sophistication and experience of private investors, it is strongly recommended that the government engage highly qualified transaction and legal advisors with broad international experience to develop an IPP strategy and conduct a pilot IPP.

The legislation must be realisable, clear, strong, unambiguous and reliable.

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4. Legal framework

4.1. Public Private Partnership (PPP) in Syria

4.1.1 History of PPP

In June 2005, Syria has officially adopted the “Social Market Economy” model, a term used to imply a market economy but with social concern.

The shift towards the social market economy means using market tools and re-defining the government intervention as the regulator of the market’s performance, the Syrian model opted to keep the government as provider of public services. The government in this model aims at maintaining a balance between high rate of economic growth, low inflation and low levels of unemployment, good working conditions, social welfare, and public services¹

Figure 18: Social Market Economy and the New Government Role1

1 Reference; Ministry of Housing and Construction (Syria) The Organisational evaluation, new role, and recommendations for change in (MHC,GTZ 2007)

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The changes accelerated and widely expected in the coming years, as the government has stepped up an ambitious reform programme, to provide cohesion and underpin the ambitious goals stated in its tenth 5-year plan and will be included in the eleventh 5-year plan 2011-2016. This reform programme is expected to provide a clear path to the market economy that became inevitable for Syria.

Naturally, this long-term reform programme has requirements that need to be met by government institutions. Some of these requirements are:

- Shift the role of the government to become a regulator of the market - Encourage markets and market-based initiatives - Strengthen relationship with customers and introduce customer-oriented

measures - Fundamentally reorganise institutions in a way that smooth the introduction of

new policies and procedures allowing for a greater managerial flexibility - Emphasise on human resources development at all levels and across all sectors - Promote transparency and fight bureaucracy.

Private sector participation in the power sector has several major advantages. :

- The availability of the private cash finance which reduce the pressure on the governmental budget

- Private sector sponsored projects are in general implemented faster than public sector projects; this will ensure reducing the construction cost and period.

- The efficiency of the project performance in the operation phase. - The private sector introduces better management and technical techniques which

can be spread out to the governmental bodies - The competitively environment which the private sector creates leads to a better

technical, managerial and commercial performance of the sectoral governmental entities.

4.2 Independent Power Producers (IPP) Laws in Syria

4.2.1 Tender law

Law No. 51 of 2004 constitutes the legal framework to all procurement process. It was issued to regulate the procurement process as a general system applicable to all public bodies in Syria, for both, administrative and economic sector. In addition, article / 7 / in Law No. 51 stipulated that the tender procedures to be conducted based on the book of the general conditions of the decree No. 450 dated 9/2/2004.

It is noted that the Law No. 51 and the Decree No. 450 are restricted to some degree to contracting regulations of supply and works. They do not provide enough explanations to contracts of services (study, consultation, supervision, etc).

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The second section of the Law No.51 organises the procurement as the following: 1. Direct purchase 2. Tender 3. Call for offers 4. Contest 5. Contracting by mutual consent 6. Entrusted execution of works

Before the law 51, three Laws existed which regulated the public sector procurement. Law no. 51 unified the methods of procurement into one piece of legislation and is applicable to all public sector entities except the Ministry of Defence and the non-structural companies linked to that Ministry.

The legislation does not establish a principle of non-discrimination against foreign bidders nor contains any provisions preferring public and private bidders.

4.2.2 Corporate law The law 3 for year 3008 regulates the companies in Syria; the law sets the rules for establishing the companies in the Syrian Arab Republic. Based on the corporate law the companies in Syria may take one of the following types:

- Joint Ventures - Commercial companies - Holding Companies - Free Zone Companies - External Companies

4.2.3 The law No. 32 date 14 Nov. 2010 As a response to the need of attracting private investors to participate in the sustainable development of electricity generation sector especially by renewable energy sources, Syria issued a new electricity law no. 32 which regulates the electricity sector and allows the private sector to invest in electricity production, in follow the points in the electricity law which regulate the participation of private sector in RE sector:

- It is allowed to buy the electricity produced from renewable energy sources if there is a technical availability for connection, the price will be promoting and proposed from MoE and issued through the prime minister’s decision.

- PEEG in cooperation with NERC will do the technical, economic and environmental studies for the renewable generation projects.

- The implementation, operation and investment in RE generation projects are under the responsibility of PEEG. PEEG will be the governmental implementation arm of RE project (electricity generation).

- MoE is the responsible entity on the announcement for calling investment offers for RE generation projects

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- Whole the activities in the energy sector are exclusively regulated and managed by MoE and its affiliated establishments; it is prohibited to practice any activity in electricity sector without the permission and the licensing from the MoE.

- It is allowed for the public sector, the joint sector and the national, local and international sector to invest in the electricity generation and distribution sectors, the allowance should be based on a license issued by MoE.

- The regulations of licensing and the conditions will be issued by the prime minister’s council, this regulations concluded:

The rules and principles and procedures for licensing. The principles and the rules for stopping the licenses. The accepted produced power. The performance indicators for the accepted generation project. The minimum number of the consumers in the accepted distribution

project. The minimum power for individual generation. The technical, legal and financial conditions Monitoring and evaluation system for the licentiate performance The system of the electricity pricing (generated, transmitted, distributed).

Based on the law no 32 private investors could be involved in the electricity sector in a deferent ways:

Investor: pay the investment cost and be paid back by the plant operator from the revenues.

The operator: Operate the plant and be paid back according to the pre-agreed electricity tariff

The distributor: buy the electricity from the operator and sell it to consumers.

4.2.4 Investment promotion laws and institutions Syria tries to ease and promote the business (investment) start-up by setting many steps:

- Reducing the minimum capital requirement for limited liability companies. - Decentralisation of the approval of the company establishment. - Enhancing the access to credit - Establishing the Syrian Investment Agency (SIA)

In 2007 the Syrian Investment Agency (SIA) was established, It enjoys legal personality (corporate), financial and administrative autonomy; however it is linked directly to the prime Minister. SIA has a vision to create an investment environment suitable for sustainable development in Syria. SIA duty is to encourage and facilitate the inflow of foreign direct investment by contributing to the development of the socio-economic performance.

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SIA offers a one stop shop for electricity project services; the one stop shop provides studies and information about investors' applications and offers (qualification) of companies to set up new electric power plants, and the offers to expand the already existing ones.

The Legislative Decree (Law No.8) includes the sectors that benefit from its provision, and the advantage and incentives granted according to this Decree. Electricity sector was mentioned in the decree as the sector which shall benefit from the exemptions stipulated in the effective Income Tax Law and its modifications and all the advantages and guarantees stipulated in this legislative decree.

Law (8) date 2007 (investment promotion law) includes many incentives which mainly are:

- It shall be allowed for investors to possess and lease lands and real estates required for establishing or expanding investment enterprises.

- An investor shall have the right to get work and residence licenses for the enterprise non-Syrian workers in accordance with effective laws and regulations.

- A non-Syrian investor and his family shall have work and residence licenses during the enterprise execution and operation life.

- An investor shall have the right to retransfer the outcome of dealing with his/her share of the enterprise in a convertible currency and after settling the taxes due on that dealing.

- An investor shall have the right to annually transfer abroad the profits and interests resulting from the invested foreign capital in a convertible currency after settling the taxes due on those profits and interests.

- Six months after the foreign capital transference and if difficulties and conditions beyond the investor’s ability prevented him from investing that capital, the investor shall have the right to retransfer his foreign capital abroad,

- The experts, workers and technicians working for any approved enterprise shall have the right to transfer abroad 50% of their net wages, salaries and bonuses, and 100% of their end-service allowances in a convertible currency.

- Any enterprise of the many sectors shall benefit from all the exemptions stipulated in the effective Income Tax Law and its amendments as well as all advantages and guarantees stipulated in this legislative decree

- Licensed enterprises pursuant to the provisions of this law (electricity sector is included) shall have the right to import all their needs from the country of origin system and exchange system provisions. The imported assets shall be exempted from customs duties and that include the machines, tools and equipment used in production process.

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4.2.5 Tax and customs

Legislative Decree (8) of 2007 for investment promotion includes taxes incentives for the investors in many sectors, the tax shall be imposed on the net profits according to the wild rates to reach 28% for the profits higher than 3 Million SYP (approx.46000€). Furthermore the income tax is imposed on the net profits achieved by a joint stock company whose shares are on the market for underwriting at a percentage not less than 50 % with a rate of 14 % including all the additions.

In addition to the reduction in taxes which the investor can get by investing in the remote area, employing a local staff or by exporting products (in this case the electricity is the product), the investor in RE sector has additional exemptions from taxes.

4.3 Purchase Agreement (PPA)

The power purchase agreement is a contract between the producer/seller of electricity and the power purchaser. The seller could be a public utility or (fully or partly) private independent power producer. The PPA defines the relationship between these two parties and provides the obligations and rights. An essential part of the agreement is the arrangement of the commercial relationship between buyer and seller. The PPA therefore may also be used to implement renewable energy policies such as feed-in tariff systems. The conditions laid out in the agreement fundamentally influence and determine the revenues of a power plant project, and are thus usually a key prerequisite for obtaining external project finance.

Completing the creation of the legal basis for the use of RE in Syria (e.g. regulation for tariffs for feeding-in electricity from RE resources into the electrical grid) is promoting the development of electricity generation from RE resources.

One of the main objective of the new electricity law no. 32 is to encourage the private sector to invest in the RE project. This contribution of private sector will maintain supply side and help the government in order to reduce the pressure on the state budget.

As Power Purchase Agreement (PPA) is the cornerstone of the private sector involvement on long term. The agreement is usually engaged between the IPP developer and the national electricity transmission entity. Currently the electricity transmission is mandated to the PEEGT (Public Establishment for Electricity Generation and Transmission), it is supposed that PEEGT will be separated to two establishments PEEG (generation establishment) and PEET (transmission establishment). Until establishing the PEET the PPA will be developed between PEEGT and the IPP however PEEGT is the governmental implementation entity, in this case a conflict of interest will be existed while theoretically PEEGT should be the governmental competitor of the IPP from commercial point of view.

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The law no. 32 clearly identifies the duties for each entity in the permit process; the determination of the governmental entity which is responsible for electricity generation from RE resources was strong and clear be determination PEEG.

4.4 Feed-in Tariff Power

A feed-in tariff system provides a per-unit tariff or premium for grid-connected electricity production. Thereby, the system shall promote renewable energy utilisation by providing a favourable environment for investors. The two main features of a feed-in tariff system are:

- The system ensures the economic and financial viability of the renewable energy project. This is probably the most important justification of financial support schemes for renewable energy projects. The feed-in tariff shall guarantee that investments in RE facilities are economically viable and provide a competitive rate of return.

- The system shall reduce the investment risk to a manageable level. The tariff level determines to a large extent the revenues of the whole investment project.

Under feed-in tariff regime fluctuations in revenues of power projects only depend on fluctuations in generation and not on potentially unstable electricity prices.

Feed-in tariff systems can generally be divided into two groups: - Tariff systems based on cost figures (renewable energy production costs or

avoided costs of conventional supply) - Premium systems based on market prices for electricity (e.g. electricity wholesale

prices) and a specific additional premium.

As there is no on-going RE projects in Syria the feed-in tariff system does not exist, it would be recommended to study the feasibility of applying this financial system in purpose of insuring the sustainability of RE sector in Syria.

4.5 Comparison with Egypt

Issuance of the proposed electricity law; (currently discussed in the parliament) which addresses a number of electricity related issues among which are efficient use of energy and renewable energies.

There is no active renewable energy law in Egypt yet, but there are some important provisions of the draft electricity law that will determine how the next phase of renewable development shill proceed.

The electricity law sets out the procedures for the construction of grid-connected renewable generators and the compensation of EETC (Egyptian Electricity Transmission Company) for purchase of power at higher prices than alternatives. In addition, the Law sets out the process for the procurement of electricity generation plants using renewable

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energies. It provides for several options combining a competitive bidding system and a feed-in tariff.

The proposed electricity law gives NREA the authority to make the following type of contracts:

- Competitive bidding system: NREA may call for DBO tenders (Design, Build, and Operate) to sell electricity to the Egyptian Electricity Transmission at a rate proposed by the regulatory Agency and approved by the cabinet.

- Alternatively EETC, in coordinate with NREA can call for public tenders to build, own and operate plant under which arrangement the successful tenderer will agree a power purchase agreement with EETC.

It is also foreseen that investors may own their build plant and sell the electricity to EETC on the basis of a standard PPA of a take-or-pay character valid for 15 years, approved and announced by the Prime Minister Cabinet. Based on the law, It is required the holders of licences for generation and distribution licenses to connect renewable generators to its own network and to cover the corresponding investment needed for strengthening their networks.

Articles 47 – 50 of the law provide a fund for RE projects, to be named the "Fund for Development of Power Generation from Renewable Energies", established by and affiliated to the cabinet of ministers. The purpose of the Fund is to compensate the losses of EETC because of purchasing the electric energy from the renewable generators. The Fund will be financed mainly from allocations of the public budget of the State. The Fund's statutes and governance are to be set by Decree. The law determined the financial sources of the fund as follow:

- The saving from the kW electricity produced from RE sources instead of the fuel - The governmental grants from the public budget - The non-governmental grants - The revenues of the fund investment

Findings

- In purpose of the development of electricity sector, the Syrian government made a major step by issuing the law no. 32 date 14 Nov 2010. The law allows the public sector, the joint sector and the national, local and international private sector to invest in the electricity generation and distribution sectors

- From technical point of view and in purpose of attracting the serious developed private sector and insuring the highest rate of performance and efficiency, issuing many technical documents is essential, these studies should conclude:

Electricity Generation Code Electricity Transmission Code Performance Indicators System Technical conditions for licensing Third part access regulations

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- The government should study the feasible contractual framework of the use of

renewable energy sources, which has a key role to attract private sector to participate in RE projects however this participation was in operation, building or owning a RE power plant.

- Government of Syria will need to continue in the development and implementation of its strategies in purpose of ensuring an environment encouraging of private sector involvement, competitiveness and transparency

- The Syrian government works on building an advanced investment environment by the investment promotion law and the tax exemptions

- It was mentioned in the law no. 32 that a special dispute resolution system will be

published; the availability of this system gives more transparency required by the international investors.

- The cornerstone of IPP involvement is the long term Power Purchase Agreement

(PPA). The agreement is generally between the IPP developer and the national electricity transmission entity. Until establishing the PEET, PEEGT as the governmental implementation entity, conflict in interest will be existed while theoretically PEEGT should be a competitor of the IPP from commercial point of view.

- However PEET is a public establishment the guarantee of the payment will be a governmental guarantee for payments obligations. The governmental guarantees backing its payment obligations will be required. The Syrian Centre bank and ministry of finance can give these guarantees.

- MoE could choose the kind of private sector involvement based on the financial

and technical capacities, the choices of this involvement would be between the competitive bidding system and feed-in tariff.

The advantages of the competitive bidding system:

Low bid preparation effort: The basis for the tender is the delimitations of the

concession area and the available data regarding the potentials

Site development: The burden and responsibility of the site development

remains with the investor.

Market response: The Government receives and immediate response from

potential investors.

Integration into the national electricity system: The feed-in point is defined.

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All utilities and suppliers are required to meet the same renewable energy

purchase requirement and the additional costs of can be spread fairly.

The advantages of feed-in tariff system:

Administration affairs: Once the general conditions and the feed-in tariff are

defined the programme management and transaction costs are low.

Commercial freedom: The investors know the conditions and have the maximum

freedom to invite partners and to develop projects.

Market response: The attractive feed-in tariff and the legal and contractual

framework facilitate the development of the project.

Participation of national investors: The feed-in tariff offers also for national

investors good business opportunities because all sizes of the projects can be

developed.

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5. Conclusion

5.1 RE Institutional Framework:

5.1.1 Achievements of the Syrian RE- institutional framework

The following briefly indicates the achievement of RE institutional framework and how to benefit from it:

i. Available data resources through the solar atlas of Syria, the European Solar Atlas and the Country level study which provide a good and acceptable summary of solar resources in the country

ii. The obligations of Syrian government in the international agreements give the government the motivation to accelerate its efforts in order to meet its duties. Syrian authorities can be supported financially and technically through these agreements, for instance the association agreement between Syria and EU. Based on these agreements Syrian government can request the financial and technical assistant.

iii. The prepared studies can be useful to support MoE efforts in terms of policy making, strategic planning and supporting RE sector on macro level. These studies recommended a deep assessment for the electricity sector bodies in purpose of supporting RE sector; the assessments should focus on developing the institutional framework of electricity sector, restructuring and clarifying the duties sector players.

iv. The 11th 5-year plan (2011- 2016) can be considered as a national policy which contains quantitative targets. The supportive policies as pricing policy, financial policy and contractual policy are still missing.

v. The advanced study MEERE (Masterplan for Energy Efficiency and Renewable Energies-2010) gives a vision for the possible scenarios of electricity supply on the long term; these scenarios help MoE in setting its prioritised strategies based on its financial and technical resources. MEERE are discussed in NREC which needs to be approved and followed up with a roadmap.

vi. In Syria, the law no. 32 clearly determined MoE as a regulator for the electricity sector, additionally PEEG was mandated as a developer, the separation between the regulating role and the developing role is subjective point which prevents the conflict of interests in PEEG role.

vii. However the organisation who has the capacity to work daily with REs is NERC, NERC is mandated to cover the researches and supporting the decision makers by studies, NERC should support MoE in the RE technical staff while MoE have good experience in contracts and tenders.

viii. Before the law the implementation of the RE project wasn’t clear in order to clarify the responsible authority, the electricity law mandated the implementation to PEEG.

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ix. The proposed separation of PEEGT to two establishments PEEG and PEET will lead to better management, the MoE will be more capable to play its role in monitoring and evaluation of sector performance, additionally it will facilitate attracting the private investment into the sector. Private sector involvement would be probably only focused on building new generation plant.

x. The PEEG will be in the same position of the IPP; this position puts the PEEG in a competition with IPP which lead to increase in its performance efficiency.

5.1.2 Obstacles of the Syrian RE-institutional framework

i. The absence of clear strategy for RE and absence of successful RE projects. Partly this obstacle was solved by the electricity law.

ii. Mainly NERC in Syria has the continuous contact with the international RE events and researches, the absence of the other players (MoE the planer and PEEGT the implementer) led to the absence of the national RE police.

iii. The uncertainty of the role of NERC, which was mentioned in many studies, became clear in order to support the MoE, PEEG and other player with studies. RE projects implementation which was sometimes misled to be under the responsibility of NERC.

iv. The absence of institutional structure for RE sector development in MoE leads to a poor policy making and implementation

v. The absence of institutional structure for the RE project in PEEGT, however, PEEG is the governmental body how is responsible for RE projects implementation and on supporting the exploitation of renewable energy projects

vi. Currently the PEEGT is the governmental power producer and the power purchaser; in this case a conflict of interest will be existed while theoretically PEEGT should be the governmental competitor of the IPP from commercial point of view.

vii. As a regulator, MoE has no previous experience in attracting the private sector in the generation sector, this could lead to a poor private sector participation in electricity sector

5.1.3 Suggestions how to overcome the challenges

i. The big gap between the future demand and the current supply needs to be fulfilled by building new power plants; the RE could be feasible choice to participate in bridging the gap between the supply and demand.

ii. A national Syrian policy for REs should be carried out in purpose of correcting the market failures. The policy should put a target for the participation of REs projects in covering the demand for long and mid-term period

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iii. This national police should be followed by a strategy in order to implement the policy through development programmes and projects. These programmes should be targeted to institutional, legal and financial development.

iv. These programmes and projects should lead to efficient institutional and legal mechanisms, although these mechanisms pave the road for sustainable RE projects through sustainable and transparent financial mechanisms.

v. Many countries have found it useful to establish a specialised institution to: Prepare initiatives, carry out policies and identify projects Daft regulations and standards Monitor & evaluate progress, Ensure compliance, administer funds Perform the administrative activities. It will not necessarily be the only

institution with powers in the area, for instance if fiscal incentives are adopted then these will be managed through the office responsible for taxation, but there will still be a need to confirm the technical acceptability of the investment.

vi. NERC should propose a monitor and evaluation system of RE sector performance and propose policy adjustments as needed.

vii. Establish RE department in MoE responsible for: Planning and policy making Issuing projects proposals Preparation of feasibility studies for a pipeline of generating projects

that could be offered to private investors Assessment (in cooperation with Ministry of Finance) the need for, and

level of, guarantee packages or other credit enhancement instruments that may need to be provided by the government to attract private investment

Preparation for IPP bidding packages for the selected generating plants and carry out a transparent bidding process.

Giving the sophistication and experience of private investors, it is strongly recommended that the government engage highly qualified transaction and legal advisors with broad international experience to develop an IPP strategy and conduct a pilot IPP.

The legislation must be realisable, clear, strong, unambiguous and reliable.

viii. Establishing a department for Renewable Energy at PEEGT responsible for: RE resources planning for utilisation Implementation of RE matured technologies Rendering of consultancy services in the field of RE exploitation, Training, information dissemination and capacity building Transfer of technology and the development of local industry.

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ix. Establishing a government PPP unit in the ministry of electricity responsible for: Management of private sector participation development Implementation of necessary regulations and Communication with

private sector to in purpose of investigation required regulation for better efficiency of private sector participation Coordination with ministry of finance in order to develop financial guarantee packages and credit enhancement instruments

x. Establishing transmission establishment in order to avoid the conflict of interest which will be exist in the PEEGT while theoretically it should be a competitor of the IPP from commercial point of view.

xi. Capacity building programmes in order to train the employees in MoE, PEEGT and NERC on the new roles of each entity.

xii. The regional and international initiatives can be further used efficiently, RCREEE and The Mediterranean Solar Plan are examples for the regional and international initiatives which can support the Syrian efforts in purpose of RE sector development through:

Capacity building of the sector staff especially on the levels of policy making, regulations, monitoring and evaluation, and implementation

Issuing a national RE plan and performance indicators system Legal frameworks for tendering large scale RE projects such as LUA (Land Use Agreement), PPA model

5.2 RE-Legal Framework:

5.2.1 Achievements of the Syrian RE- legal framework

The following briefly indicates the achievement of RE legal framework and how to benefit from it:

i. Legislative Decree (8) of 2007 for investment promotion includes taxes incentives for the investors in many sectors including RE projects

ii. In purpose of the development of electricity sector, the Syrian government made a major step by issuing the law no. 32 date 14 Nov 2010. The law allows the public sector, the joint sector and the national, local and international private sectors to invest in the electricity generation and distribution sectors

iii. Syrian Investment Authority has a vision to create an investment environment suitable for sustainable development in Syria. SIA duty is to encourage and facilitate the inflow of foreign direct investment contributing to the development of the socio-economic performance.

iv. The regional electricity grid connection gives Syria an opportunity to sell the electricity in commercial price which support the financial feasibility of RE plants

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5.2.2 Obstacles of the Syrian RE- Legal Framework

i. By international norms for the electricity prices are still quite low, but in the Syrian economic context they are meaningful and set signals about the scarcity of electricity. Electricity tariff restructuring is essential in order to subsidise RE initiatives especially in the lunching period till become more economically feasible

ii. The absence of the experience in modelling the contractual frameworks, for instance PPA, LUA, Feed-in tariff and competitive bedding contracts, these contracts express the relation between the private investors and the buyer body.

iii. Syria's fuel prices were subsidised for many years and the International Monetary Fund (IMF) estimated the total sum of all energy subsidies in 2007 to amount to some 13% of GDP. Moreover the transaction of Syria from fuel exporting country to importing one can be inspiration for the Syrian government to include RE in its plans to pave the road for RE investments by modernised entities and laws

iv. The absence of financial mechanisms and guarantee system which ensure the financial sustainability of the projects, it would be required to establish a sustainable fund in order to reduce the cost of the financial risks.

v. There is a need for a continuous updating for the technical standard, for instance the generation, connections and fluctuation limits standards.

5.2.3 Suggestions how to overcome the legal challenges

i. Applying commercial management tools in the contractual process and bidding system, and applying the marketing tools and developing the financial system.

ii. The attraction of the private sector which started by the electricity law 32 should be followed with incentives system based on performance contracts linked to performance indicators.

iii. It would be worthy to study the proposed initiative in the Egyptian electricity law to establish a Fund in order to subsidise the RE sector, this Fund could be feasible and useful for the Syrian example. This Fund would target to compensate the losses of PEET because of purchasing the electricity energy from the renewable generators. Similarly to the Egyptian law, the Fund could be financed mainly from allocations of the public budget of the State. The Fund's statutes and governance are to be set by Decree. The law determined the financial sources of the fund as follow:

The saving from the kW electricity produced from RE sources instead of the fuel

The governmental grants from the public budget The non-governmental grants The revenues of the fund investment

iv. From technical point of view and in purpose of attracting serious developed private sector and insuring the highest rate of performance and efficiency, issuing technical documents is essential, these documents should conclude:

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Electricity Generation Code Electricity Transmission Code Performance Indicators System Technical conditions for licensing Third part access regulations

v. In order to attract investors and facilitate the investment process it is required to issue the following legal frameworks:

The executive order of the law No32. Land use agreement and Power purchase agreement models Dispute resolution system

vi. Special attention should be paid to IPP contracts in general and power purchase agreements (PPAs) in particular as they are not easy to reconcile with the introduction of competitive wholesale markets.

vii. Establishing tariff systems based on cost figures (renewable energy production costs or avoided costs of conventional supply) or premium systems based on market prices for electricity (e.g. electricity wholesale prices) and a specific additional premium.

viii. The governmental guarantees backing its payment obligations will be required. The Syrian Centre bank and ministry of finance can set a guarantee system.

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List of References:

1. Annual report 2009, PEEGT. MoE 2. National Renewable Energy Master Plan, 2004, UNDP 3. Small Hydro Power in the Syrian Arab Republic, Sufian Al-Alao, UNDP

Sustainable Energy in the Arab States RAB/96/005, July 1998 4. RCREEE study (Provision of Technical Support, country report)(2010)- Syria 5. Doing business report in Syria 2011 6. Masterplan for Energy Efficiency and Renewable Energies (MEERE)- Prepared

by GTZ and NERC 7. Mediterranean and National Strategies for Sustainable Development Priority

Field of Action-UNEP 8. Small Hydro Power in the Syrian Arab Republic, Sufian Al-Alao, UNDP

Sustainable Energy in the Arab States RAB/96/005, July 1998 9. Financial Support of Renewable Energy System: Investment VS Operating Cost

Subsidies, Norbert Wohlgemuth University of Klagenfurt, 9020 Klagenfurt, Austria- Reinhard Madlener Institute for Advanced Studies and Scientific Research Carinthia, 9010 Klagenfurt, Austria

10. Syrian investment Authority: www.investinsyria.org/ 11. National Syrian 10th 5-year plan 12. National Syrian 11th 5-year plan 13. Syrian Electricity Law no. 32 date 14 Nov 2010 14. Syrian Decree number /8/ year 2007- Investment Law 15. Pre-feasibility study, ALhayjaneh wind farm Project 16. Law no. 51- Contracts Law 17. Strengthening of Procurement System Study-GTZ water Programme Syria(2008) 18. Ministry of Housing and Construction (Syria) The Organisational evaluation, new

role, and recommendations for change in (MHC,GTZ 2007) 19. EU-Project Cycle Management- manual (2004) 20. Masterplan for Energy Efficiency and Renewable Energies (MEERE)-2010-

(NERC-GTZ project) 21. NREA Annual Report 2009 22. http://www.nationalwind.org/ 23. The Effect of Wind Energy Development on State and Local Economies-1997 24. Private Sector Investment In Infrastructure: Project Finance, PPP Projects and

Risk, World bank publications, 2009 25. REN 21: Renewable Energy Policy Networks for the 21st century- report 2010 26. Presidential Decree No. 339 of the year 2000: Reorganising The Electric Utility

and Consumer Protection Regulatory Agency 27. Prospects of the Renewable Energy Sector in Egypt Focus on Photovoltaic and

Wind Energy, Egyptian-German Private Sector Development Programme-2010 28. Law 67 the year 2010: Regulating the private sector participation in the

infrastructure, services and public facilities projects 29. RCREEE study (Provision of Technical Support, country report(2010) Egypt

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http://www.investinsyria.org/

http://www.nationalwind.org/


30. Electricity Law- Egypt /draft/ 31. (Aug-2000), Renewable Energy Country Profile for the Syrian Arab Republic,

ESCWA. 32. Design of a Feed-In Tariff Structure and a Contractual Relationship Template for

Wind Power in Egypt-Lahmewer- July 2009 33. Arab strategy, Arab League publishes 2010 34. MoE website: www.moe.gov.sy 35. PEEGT website: www.peegt.gov.sy 36. PEDEEE website: www.pedeee.org 37. NERC website: www.nerc.org.sy 38. Enabling Activities for the preparation of Syria’s initial national communication to

the UNFCCC, UNDP Syria, 2006.

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http://www.moe.gov.sy/

http://www.peegt.gov.sy/

http://www.pedeee.org/

http://www.nerc.org.sy/


Annex 1: Case study- Expected results (wind energy sector): Based on the Egyptian experience, Egypt was able to build 540 MW wind farms in the period 2001-2010, it is assumed that Syria will continue the electricity sector reform which it started with the electricity law. In parallel MoE initiated to build wind plants (currently a tender process is on-going to build 2 wind farms 50 MW public investment and 50 MW IPP), It will be reasonable to estimate that Syria can reach a near amount to the Egyptian current capacity in a shorter time.

Here-down a rough case study for the expected benefit of building 500MW wind plants which can be reached by the end of the 11th 5year plan in 2016.

The capacity of 500 MW from wind source would support the governmental efforts in:

1. Diversify the Syrian fuel sources and enhance its security of energy supply:

Ministry of Electricity is aiming to increase its capacity to 12000 MW (currently 7500MW) by the end of the 11th 5 year plan 2011-2016. The targeted 500 MW wind plants would be 11% of the needed add capacity in the 11th 5-year plan. The rough estimation of annual electricity generation from 500 wind plants is 2 TWh per annum (0.03 % of needed electricity).

2. Reduce its greenhouse gas emissions and enable it to profit from Clean Development Mechanism credits and potential project financing from the Clean Technology Fund:

It was reported that the average CO2 emission of the Syrian power plants is 0.78 t/MWh generated1. The saved CO2 emission by generating 2TWh electricity from wind plants is 1.5 Million tone of CO2 per annum. The price of CO2 credit based on GEF organisation (approximately 9$/tCO2) is 13.5 Million $ (It should be taken in consideration that the period of construction and the application for CO2 credit will not be productive)

3. Generate local employment and local market:

Wind energy projects create job and local goods and services during construction and operation.

In comparison with conventional generation operations, wind energy projects create more jobs per dollar invested and per kilowatt hour (KWh) generated2. A New York State

1 Pre-feasibility study, ALhayjaneh wind farm 2 The Effect of Wind Energy Development on State and Local Economies-1997

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Energy Office study recently found that for identical amounts of electricity produced, wind energy generates 27 per cent more jobs than a coal plant and 66 per cent more jobs than a natural gas plant (in USA).

A wind power plant can be built in less than a year. For a 50 megawatt wind project 40 full time jobs may be created. In addition, construction and operation of a wind project creates demand for local goods and services such as construction materials and equipment, maintenance tools, supplies and equipment, and accounting, banking and legal assistance.

The case of 500 MW wind plants, 400 full time job opportunities would be created in operation and maintenance terms. The supply services for the wind farm will create more job opportunities.

Figure 19: Direct Employment by Type of Company, According to EWEA Survey

4. Extend the life of the fossil fuel reserves.

Syrian oil production peaked in 1996 and ever since it has been steadily declining. Efforts have been made to increase oil exploration and production by organising licensing rounds at the international level for onshore and offshore exploration. Some onshore blocks have been awarded to international oil companies, who cooperate with SPC. While the level of oil production in 2009 was at about 370,000 barrels a day, the Ministry of Petroleum announced in October 2009 that it targets a level of 300,000 barrels per day during the next 40 years.

Syria's fuel prices were subsidised for many years and the IMF estimated the total sum of all energy subsidies (petroleum products and natural gas) in 2007 to amount to some 13% of GDP.

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500 MW plants could produce 2 TWh per year; the needed fossil fuel to produce 2 TWh from convectional power plant in Syria is equal to 450,000 Toe (0.03 % of needed Fuel).

5. RE cannot displace large conventional power plants, but it can substantially reduce the need for more fossil fuel fired generating capacity.

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Annex 2: The Electric Tariff Applied In Syria

The Electric Tariff Applied In Syria

Voltage level Items

Accounting to decree No.(974) Date 30/4/2009

S.P / KWh

230 [ kv ]

Average 200 Evening peak load 300

Day period 200 Night period 150

66 [ kv ]



20 [ kv ]



20 / 0.4 [ kv ]

Irrigation and Agricultural



Commercial



Industry and other



0.4 [kv]

Domestic

0-100k.w.h 25 101-200k.w.h 35 201-400k.w.h 50 401-600k.w.h 75 601-800k.w.h 200 801-1000k.w.h 300

1001-2000k.w.h 350

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2001and more(kwh) 700

Commercial

0-800k.w.h 250 801-2000k.w.h 350

2001and more(kwh) 400

Small Crafts

and others

0-800k.w.h 250 801-2000k.w.h 350 2001and more

(kwh) 400

Public Offices 250 PEDEEE Offices 250 General lighting 200

The consumer gets use of all slices whatever his consumption is

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Annex 3: Organisational chart of the National Energy Research Centre in Syria:

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Annex 4: Organisational chart of the New & Renewable Energy Authority:

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Annex 5: Organisational chart of the Public Establishment of Electricity for Generation and Transmission in Syria:

of BoardDirectors

Director General

the for Director General Deputy and administrative financial,

Affairs legal the of Office

Secretariat for Director General Deputy

Affairs Technical

of Directorate ialFinanc

Affairs

of Directorate Administrative

Affairs

of Directorate owerP

enerationG

of Directorate Power

ransferT

of Office nternalI onitoringM

of Directorate

Accounts of Directorate

Affairs Legal General Office Relations

of DirectorateCoordination

of DirectorateTI

of DirectorateContracts

of DirectorateSupply

of DirectorateImplementation

of Directorate and Planning

Statistics

of DirectoratesoanL

of Directorate

TechnicalStudies

of DirectorateFacilities

of Directorate and Training

IndustrialSecurity

of Directorate stablishingE

Plants

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Annex 6: Top 10 wind turbine manufacturers by annual market share in 20091: 1. Vestas/ Denmark: 12.5%

2. GE Wind Energy/ USA: 12.4%

3. Sinovel/China: 9.2%

4. Enercon: Germany: 8.5%

5. Goldwind/ China: 7.2%

6. Gamesa/ Spain: 6.7%

7. Dongfang Electric/China: 6.5%

8. Suzlon/ India: 6.4%

9. Siemens Wind Power/ Ger-Den 5.9%

10. Repower/ Germany: 3.4%

1 http://en.wikipedia.org/wiki/List_of_wind_turbine_manufacturers

Master Thesis - Universität Kassel: Aktuelles · This study is a master thesis of Eng. Fadi...

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