Energy Sector in Jordan: Perspectives

The Hashemite Kingdom of Jordan is an emerging and stable economy in the Middle East. Jordan has almost no indigenous energy resources as domestic natural gas covers merely 3% of the Kingdom’s energy needs. The country is dependent on oil imports from neighbouring countries to meet its energy requirements. Energy import costs create a financial burden on the national economy and Jordan had to spend almost 10% of its GDP on the purchase of energy in 2019.

In Jordan, electricity is mainly generated by burning imported natural gas and oil. The price of electricity for Jordanians is dependent on price of oil in the world market, and this has been responsible for the continuous increase in electricity cost due to volatile oil prices in recent years. Due to fast economic growth, rapid industrial development and increasing population, energy demand is Jordan is increasing at a steady rate of 3 percent per annum.

Therefore, the provision of reliable and cheap energy supply will play a vital role in Jordan’s economic growth. Electricity demand is growing rapidly, and the Jordanian government has been seeking ways to attract foreign investment to fund additional capacity. In 2025, the expected demand for electricity in Jordan is 5800 MW.

In 2007, the Government unveiled an Energy Master Plan for the development of the energy sector requiring an investment of more than $3 billion during 2007 – 2020. Some ambitious objectives were fixed: heating half of the required hot water on solar energy by the year 2020; increasing energy efficiency and savings by 20% by the year 2020, while 7% of the energy mix should originate from renewable sources by 2015. The Government has been successful in increasing the share of renewables in the national energy mix to 2526 MW in 2022, representing 29% of the total electricity mix.

Concerted efforts are underway to remove barriers to harnessing of renewable energy, particularly wind, solar and biomass. There has been significant progress in the implementation of sustainable energy systems in the last couple of decades to the active support from the government and increasing environmental awareness among the local population.

With high population growth rate, increase in industrial and commercial activities, high cost of imported fuels and higher GHGs emissions, supply of cheap and clean energy resources has become a challenge for the Government. Consequently, the need for implementing energy efficiency measures and exploring renewable energy technologies has emerged as a national priority.  In the recent past, Jordan has witnessed a surge in initiatives to generate power from renewable resources with financial and technical backing from the government, international agencies and foreign donors.

The best prospects for electricity generation in Jordan are as Independent Power Producers (IPPs).  This creates tremendous opportunities for foreign investors interested in investing in electricity generation ventures. Keeping in view the renewed interest in renewable energy, there is a huge potential for international technology companies to enter the Jordan market.  There is very good demand for wind energy equipment, solar power units and biomass energy systems which can be capitalized by technology providers and investment groups.