Electrical Power in Palestine

Background: • Palestine is located in the middle east• 20 years of autonomy, in result

Palestinian National authority was established

• Large land still occupied by Israel• Segregated pieces of lands (West Bank &

Gaza)• Lower Middle Income W.B. classified,

GDP per capita (2014) $2992• OECD political risk indicator (2015) “7”• 4.8 million of population, 3% growth

rate:

Gaza

West bank

o 2.9m in the west Banko 1.9m in Gazao Expected to become 6.45m in 2025

Palestine Electrical Power Profile: • 87% of the power supply is imported from Israel• 1% from Jordan and 4% fromEgypt• Remaining (8%) is locally produced by the only generation

plant in Gaza• West Bank rely 99% on Israel elec. Com. (IEC)• West Bank consumption is 6121 gWy (Ava. 700 mWh)• 6.08% annual growth rate in demand on power• 0.704 mWh per capita (it is 10 times in Israel 7.2mWh)• Three main distribution companies in the West Bank, most

of local authorities purchase directly from Israel• Considered as the highest prices in the region (tariff =

$0.17/kWh which is 20% higher than Israel and 3.4 times of Jordan)*All data sources are PEA, PCBS, World Bank, and unpublished research by PWC and the EU

Power Issues: Three main issues* with addition to others:A. Firstly, as a small energy market

with no developed domestic resources of commercial energy, it is almost entirely dependent on imported energy supplies, specifically electricity and oil products. Because of political and logistical factors, nearly all of these supplies at present come from Israel.

*Report No. 39695-GZ. (2007) By the W.B. “most of the available data on this sector is back to 2007, No researches were published after that year”

87%

4%

1% 8% IEC

Eygpt

Jordan

Gaza Gen. Com.

Data Source: 2013 PCBS statistics

Power Issues (cont'd): B. fragmentation into two distinct geographical zones

with divergent economic characteristics. The West Bank and Gaza

C. constraints imposed by Israeli policies and actions on the ability of the Palestinian Authority (PA) to operate and develop its energy systems

D. The Electricity network is a combination of medium voltage and low voltage distribution systems. These networks are currently flooded and can’t provide more power

E. 227 connection points with IsraelF. Lack of high voltage transmission grid (161Kv and

above)G. High technical losses (35% “22.5% is the world’s aver.”)

Opportunities: • Discovery of Gaza gas marine, which can be used for

domestic power generation• Domestic Resource Mobilization (Private Sector)

considered for power generation investments.• Government will issue tenders for 11 solar farms

(each has the capacity of 10mWh)• Potential for 9 Municipal Solid Waste-to Energy

production plants• Power and Energy Acts were issued, with a special

section for renewable energy.

The Problem: Issues cannot be solved, nor opportunities can be captured because simply there is no transmission

grid available in the country.

All power generation initiatives (conventional and renewables) will not

be able to evacuate generated power without

the national grid.

Missing inthe Power System

The Solution: Simply!Construct the National Grid

Impact of the Solution: • Reduce the tariff to affordable level • Satisfy growing demand• Reduce technical and non technical losses

“Effect on national economy and world’s Climate”

• Unlock domestic power production projects• Unlock Power Green technologies porjects• Enabler for economical growth• Promote Peace between Palestine & Israel

Obstacles facing the Solution: • Israel Refusal• Lack of legal frameworks (Regulation, PPPs)• No institutional capacity within the Government “PA”• Lack of knowledge among the government• Lack of Governance on the ground• Despite the good returns, but the environment is

very risky for the investors

Overcoming the Obstacles: • Israel Refusal This project is technically a need for Israel.

it will provide backup for IEC network, also it will increase the imports as the Palestinian national grid will be connected with Jordan and Egypt, the grid will provide a close circuit for Israel single route network, and it will reduce the technical losses for IEC, and finally this grid can provide the needed power for the Israeli territories located rear from the IEC grid.

Overcoming the Obstacles: • Government should be innovative and abandon the

classical roles of Gov., by not doing everything rather than regulating and monitoring everything Palestine profile on aidflows.org shows that around 42% of ODAs and OOFs money is directed into the security sector, another great chunk is allocated for Budgetary Support and for humanitarian response, small amount for infrastructure projects for the communities, and almost nothing for institutional and knowledge building within the government. In addition, according to the Prime Minister (Dec. 2015) ODAs to Palestine had been reduced by 53%

Overcoming the Obstacles: • The solution for the Gov. should not be particular to

this project only. Gov. should build a strategic transformation that will create enabling environment for all development sectors including private investments in these sectors

Utilities Housing

Education & Health

Transport Waste & Recycling

Scientific research

IndustryAgriculture Private Sector Businesses

Climate

Overcoming the Obstacles: • De-Risk the investment environment

The project needs Five activities to be financed: • last one is the construction itself, which will cost around $550m-$600m.Off course Gov. can’t afford this cost, and sustainability reasons; nor the ODAs should.International and local investors had shown interest in this project, but the country’s risk remains high.To de-risk the environment, the other Four activities are needed:1. Invest in the Rule of Law and Gov. legislation arms to issue laws, regulations

and acts that would attract investments, and protect the customers2. Build the Gov. institutions, enhance their monitoring capabilities

Overcoming the Obstacles: • De-Risk the investment environment (Cont’d)

3. Invest in detailed researches on the energy sector to contribute to the national development plan

4. Build Sovereign Guarantee systems to reduce the risks for the investors

Money needed for these four activities can be allocated only from ODAs, and this is the ultimate objective of these ODAs, which is sustainability

“give a man a fish and you feed him for a day; teach a

man to fish and you feed him for a lifetime”

How to allocate funds:

Gov. Institutions

Knowledge Systems

Capabilitybuilding

Strong Delivery Systems

Rule of Law

Regulation & Monitoring

Legislations

Know how / Best Practices

Hard and soft Infrastructure

% of Private Investments which goes into systems

% ODAs & OOFsInvestments which goes to enabling the environment and reducing the risk

For this Enabling Environment to be achieved

This is needed“Robust Financial Pipeline“

Inve

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ents

allo

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the

pipe

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We have to change how we do things, because we all owe these kids

Gazan Students studying on candle as result of Gaza electricity crises