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Economic analysis - Electricity and Climate Change
Published in AL HAYAT on 30 - 08 - 2010

It is natural for some areas of the planet to be affected by regional climate trends, and become distinguished as a result from other regions, in terms of natural characteristics, resources and biodiversity, and subsequently, in terms of the adaptation of their inhabitants with their respective environments, and their specialization (in terms of lifestyle, agricultural, etc.)
Despite the expanding scope of globalization, the regions that are characterized by a distinguished climate boast certain economic properties that manifest themselves in types of food, and in the crafts and industrial goods that vary according to needs. In a wide range of everyday life needs, societies need foods and goods that are not well suited to climate differences, especially between cold and hot regions.
However, both actual and potential changes in global climate, and the resulting natural disequilibrium, affect lifestyles and alter their nature, at the least in periods of calamitous emergencies. This is what the changing climate translated into this year, from the drought ensuing from temperature rises (in Russia), to the catastrophic floods (in China, India and Pakistan), and the resulting economic losses valued in the billions of dollars, in addition to the irreplaceable losses in lives and property. In fact, the impact of these events may last for several years, while they may worsen over time as a result of successive climactic fluctuations.
In this current episode of the cycle of climate change, the Arab region, from the Gulf States to Egypt, Jordan, Lebanon, Syria and currently the Arab Maghreb, witnessed exceptional temperature rises that climate scientists attribute to a prevailing desert climate, in particular in Lebanon and Syria, and to the effects of global warming.
Also as a result of global warming, the countries of this region are witnessing dramatic increases in the demand for electric power, as the use of air-conditioning increases in households, shops, places of worship, offices, hotels and factories. And as a result of the exceptional hot weather, the sale of all types of air-conditioning devices flourished, and their stocks were effectively depleted in Lebanon, Jordan, Syria, Egypt and other countries, while their retailers achieved exceptional profits, after taking advantage of the circumstances.
However, the unusual heat revealed many fault lines in electricity production, which are otherwise usually concealed during times of normal demand for electricity. In Egypt, for example, the grid would have almost completely collapsed if the total demand load was transferred over the grid. This means that the problem not only lies in the lack of power plants, but also in the grid and electric substations. This is in addition to the shortages in production during periods of intense heat. Meanwhile, Syria was forced to buy electricity from Turkey, while Jordan suffered a shortage in power supply, and demand increased steeply during peak hours in Kuwait, the UAE, Saudi Arabia and Egypt. However, the most dramatic problem remains to be in Lebanon.
In this ‘small country', a tragedy has been taking place ever since the start of its ‘internal wars', which devastated the power grid, plants, distribution, collection and everything else related to the power sector over two decades. Meanwhile, neither the Lebanon Electric Company (EDL) nor the government succeeded in creating an ambitious plan to develop the power sector, which takes into account an annual growth of production, in parallel with the growth in demand, i.e. 7 to 8 percent annually.
In light of the stumbling delivery of fuel oil, EDL succeeded in creating new production units to the plants in Zouk and Zahrani, and repaired the production units of the Jiyyeh plant. However, the grids were habitually exposed to missiles and bombs, and so remained they disrupted for the most part of the year, and so did the major electric substations.
With the end of the civil war, EDL failed to keep up with the growth and development seen with the start of the reconstruction phase launched by the government in the first half of the nineties. This is because EDL was forced to completely replace the grid and its equipment, increase the number of substations, reorganize its relations with the customers, and maintain the sets that produced energy over periods of time that far exceeded the periods for conducting routine maintenance. Despite this, production stations were built in the north, south, and the Bekaa that operate on gas and combined-cycles. However, the plant in the north, for example, waited until this year to begin operating on imported gas from Egypt, as it was not possible to secure gas from Syria for many reasons, most notably that it was no longer available when the Deir Ammar plant in the north was completed. The use of gas oil in the operation of these plants led to reduced productivity, and to production losses through the grid which consumed 12 percent of the energy it carries. It is also no secret that these plants experienced technical problems after they were commissioned, as they did not comply with technical specifications.
As if the internal wars, the delays in building production plants and the lack of funds to upgrade the grid were not enough, power plants and major distribution substations became strategic targets during the Israeli attacks against Lebanon. For instance, the power plants in the north, Jiyyeh and Baalbek were damaged, most dramatically in Jiyyeh in 2006, while the station in Bsalim came under frequent attacks, affecting distribution to the capital, Mount Lebanon and to the important productive sectors. In many cases, Israeli aggression cut power supply from the entire Lebanese territory.
In such conditions, and given the fact that the sale of electricity by EDL is at less than a third of the cost of production – this is without factoring in the cost of repairs resulting from wars -, EDL failed to take advantage of the availability of a variety of energy sources, most importantly nuclear energy, solar power and wind power…
Despite the fact that the government's economic policy endorsed the principle of privatizing public sector institutions, a future plan for the electricity sector funded by the treasury was adopted. This is while noting that two fifths of the power supply is provided by private generators, which receive five times the revenues of EDL for each equivalent unit of electric power. In truth, the government could have resorted to calling for B.O.T (Build, Operate, Transfer) projects for electricity and water, just like Syria did recently.
There is no doubt that increasing temperatures increase the demand for electricity, which means that the countries of the region must plan for an increase in power projects in order to meet not only daily peak loads, but also seasonal peak loads during periods of high temperatures.


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