Context
Historically, Jordan’s energy sector depended on fossil fuel imports for power generation, as Jordan’s electricity generation fleet was predominantly fuelled by natural gas. In 2015, an interruption to the supply of gas from Egypt forced Jordan to import expensive and polluting heavy fuel oil (HFO) to generate electricity. At that time, the energy sector accounted for about 70% of the country’s greenhouse gas (GHG) emissions. Over the subsequent years, the Jordanian renewable energy (RE) sector experienced remarkable growth, increasing the RE installed capacity from about 20 MW to over 1.000 MW (with an estimated 800 MW under construction). This growth, however, came with significant challenges, as Jordan needed to take measures to improve the demand-supply balance and the capacity of the grid to absorb further intermittent RE generation while ensuring grid stability. The Jordanian grid operator NEPCO would have been required to curtail RE generation unless further adaptive measures were introduced.
Goals and approach to transformational change
The project had intended to blend public and private financing to support the construction of 450 MW pumped hydroelectric energy storage (PHES). This would have contribute to balancing supply and demand in the power grid, supported by the integration of variable renewable energy (RE) sources such as wind and solar and reduce the curtailment of renewables by 80%.
Components and support mechanisms
The project’s Technical Cooperation (TC) component was intended to primarily deliver:
(1) a roadmap for the decarbonisation of the energy sectors, alongside other policy and technical support to promote renewable expansion and integration,
(2) technical assistance for the pumped hydro project, and
(3) enhanced local expertise through capacity building.
The Financial Cooperation (FC) component was focused on providing a CAPEX grant for the pumped hydro as well as introducing a blended finance component, merging a CAPEX grant and EBRD debt financing, amounting to EUR 16.6 million and EUR 130.7 million respectively. The grant component was intended to leverage EBRD financing, equity investment from project sponsors, and additional third-party funding from other international and development finance institutions and/or commercial banks.
Long-term impact
The direct mitigation potential was significant and relevant in the country context as it was intended to help reduce the curtailment of REs, support expansion of REs, and increase storage capacity to manage variable renewable energy sources. The GHG emissions mitigation potential was estimated to be up to 4.7 MtCO2e over the lifetime of technology, which represents about 4.5% of Jordan’s cumulative GHG emissions reduction target laid out in the country’s first updated Nationally Determined Contribution (NDC) until 2030.
