Due to declining revenues, electricity distribution companies have
stopped accepting applications for licenses for the “net metering”
system, which enables consumers, such as factories, to produce
electricity from renewable energy sources for their own use and sell
the surplus to the distribution company. The Electricity Regulatory
Council (a non-ministerial governmental organization affiliated with
the Council of Ministers) received several complaints from
distribution companies regarding the impact of the net metering
system on their revenues, prompting the council of ministers to hold
hearings to discuss new mechanisms to maintain the balance of
interests between distribution companies, which rely on electricity
purchased from Israel, and factories that are semi-self-sufficient
using solar energy.
The director of the licensing department at the Electricity
Regulatory Council, Qais Samara, said that the council is working to
amend the instructions of the net metering system to ensure a fair
revenue ratio for all parties, noting that the cost of installing
solar energy units has decreased from about $2,000 to $700 per
kilowatt, which has increased the demand for this system.
The license restrictions are not limited to the domestic sector, but
also extend to energy investment projects. The director of Qudra
Renewable Energy Solutions, Abdulrahman Al-Hijawi, said that his
company's 22 MW of solar power generation projects would have
achieved greater results had it not been for the restrictions it
faced, which hindered attracting investment and financing to the
sector. Al-Hijawi explained that the legislative environment is not
favorable for renewable energy projects, as it imposes great burdens
on developers without requiring distribution companies to apply the
laws, describing this as unfair.
Al-Hijawi explained that solar companies offer preferential prices
that are 15 percent lower than those of other suppliers, but
distribution companies ignore the laws, which increases the risk of
investing in this field without clear government support.
In addition, the Palestinian government has strengthened
restrictions on the solar sector. The National Transmission Company
was obligated to purchase solar energy from Palestinian developers
under a 2015 law, but legal amendments passed in 2022, gave
distribution companies the right to purchase electricity directly
from developers, making the licensing and production capacity of
investment projects dependent on the decisions of distribution
companies.
Doubts about capacity
There is conflicting information about the accuracy of calculations
of solar capacity storage in the electricity grids, which is the
argument used by distribution companies to deny licenses for solar
projects. According to a 2022 MAS Institute study, there is a lack
of information and research on electricity grids intake capacity and
inaccurate estimates of the volume needed to accommodate renewable
energy within existing grids. This has made it difficult for
investors to accurately determine costs and returns. Through
interviews with the Energy Authority, the study confirms that
available data on the electricity grid lacks reliability, especially
in municipalities and local authorities that distribute electricity
themselves.
Researcher and renewable energy consultant Yasser al-Khalidi adds
that the lack of information about capacity is a hindrance, as
applicants for solar project licenses face rejection without
explaining the reasons.
In its 2020 report, the Financial and Administrative Control Bureau
noted that there are no clear criteria for the reasons used for
accepting or rejecting energy projects. Distribution companies may
reject some applications under the pretext of a lack of technical
capabilities, prompting the citizen to file a complaint with the
Electricity Regulatory Council. The report concluded that the lack
of transparency in accepting projects, and the absence of specific
and clear criteria for accepting or rejecting them, may increase the
likelihood of rejection by local authorities without real reasons,
given that accepting new energy projects means a decrease in the
authorities' revenues from selling electricity.
The Ministry of Local Government confirms that only 10 percent of
local authorities have studies that determine the capacity of their
networks, while the rest rely on preliminary estimates of their
capacity, ranging between 70 and 80 percent.
