BY Osama M. Al Azzam

The Cities and Villages Development Bank takes royal initiatives and the economic modernization vision within its plans for municipal work and development. Whereas renewable energy was one of the promising sectors and its stimulation and support will positively affect the overall performance of the Jordanian economy, which His Majesty, King Abdullah II, identified in his message to the citizens of Jordan on his 60th birthday, in which he addressed the features of Jordan’s future within the framework of a comprehensive national vision across governments where everyone participates. The recently launched economic modernization vision also included eight initiatives in the field of energy that included setting a road map for the transition to renewable and alternative energy. The vision identified the sector's priorities with the need to strive to achieve a reliable, sustainable, cost effective and continuous source of energy for the electricity sector. It is also to tighten interdependence to enable development through diversity, localization, innovation, and rapid development.

A major portion of expenditures in municipalities is directed toward spending on electricity and fuel. Rationalizing energy consumption and encouraging the application renewable energy will contribute to achieving savings that can be reapplied to establish development projects, which contribute to improving the general quality of life for local communities. In the context of Jordan, renewable energy should be seen as an important tool for increasing energy diversity and security, alleviating clean energy poverty, and for meeting environmental and climate change goals.

However, there are other important factors, national and international, that push us to reduce our consumption of carbon-intensive fuels. Climate change, due to greenhouse gas emissions resulting from burning fossil fuels, poses a serious threat to cities by trapping the sun's heat and overall raising temperatures. Additionally, public entities in Jordan should factor the public benefits of meeting those goals into the cost of renewable energy.

The competitiveness of the renewable energy technology available today prompts us to expedite the establishment of these projects to serve the municipalities of the Kingdom. The issue is no longer a luxury but rather a necessity to meet the goal of achieving a sustainable energy sector that is environmentally and economically balanced.

Without diving into technicalities, the main challenges we face today are the capacity of the electric networks, and the additional costs that may result from the introduction of renewable energy, especially solar and wind energy, and the development of policies that lead to reducing the total electrical costs. In order to meet the changing demand of the population, it is also important to take into account the environmental costs of burning fossil fuels, as well as determining the optimal mix of technologies and the different applied energy sources.

At the same time, opportunities to reduce the capital costs of projects to overcome the recent price hikes may be available through standardized procedures and project assembly, which will also reduce operating and maintenance costs.

The cost of financing has been reduced through the finance agreement signed between the Cities and Villages Development Bank with the European Investment Bank. The finance agreement secures equally a 45 million euros from each bank to finance energy projects in municipalities at a low and reduced interest rates.

It is now, the opportune time to invite our municipalities to take advantage of this opportunity, which enables them to: (i) access affordable financing, (ii) achieve expenses’ saving (by reducing the electricity bills) and (iii) mitigating environmental impacts resulting from the use of traditional energy sources.

Financial resources from the signed finance agreement will finance municipalities’ projects with the objectives to improve on the energy efficiency by installing solar PV system to generate electricity for municipal service buildings, and establishing fast charging stations for electric cars inside cities and external roads. In addition, as urgent action, it is important to replace municipalities traditional street lighting units by new energy-saving lighting units.

The author is the Director General of Cities and Villages Development Bank