Power Sector in Palestine Prepared By: Eng. Mohannad Aqel Palestinian Energy Authority

Past The power sector in Palestine has been severely neglected. Systems are old and inefficient; electricity supplies are unreliable; generation is highly dependent on Israeli sources; the institutional framework is weak and highly fragmented; and consumption is considerably below regional standards.

Present & Future To develop the electricity sector in Palestine, the PNA and the PEA set out policy for the development of the sector, as outlined in the Letter of Sector Policy (LSP), and the various reports and reviews – recently the World Bank issued its review "West Bank and Energy Sector Review, May 2007"-.

Objectives The PEA is committed to providing the citizens of the Palestinian with reliable electricity supplies, and is committed to doing so at a price that is affordable and that permits the efficient long term development of the sector and the economy as a whole.

Medium-term Strategy To focus on rehabilitating existing networks and services and extend services to currently un-served communities; To separate the ‘policy’ and ‘regulatory’ functions from the ‘commercial functions’ of power sector enterprises; To refocus and reorganize the PEA to be the main policy making body for the sector;

Medium-term Strategy To encourage maximum private sector participation in sector operations and development, particularly in generation and distribution, thus minimizing the need for government financial support; To consolidate transmission networks, systems and functions in the a new transmission company;

Medium-term Strategy To increase the operating/technical efficiency of the distribution utility companies through energy end-use efficiency, energy conservation and better load management; and To develop pragmatic tariff setting guidelines that will permit full cost recovery and promote the commercial viability of sector enterprises while at the same time providing for ‘lifeline’ rates for needy consumers.

Developing of Power Supply System Rehabilitation Since its establishment, PEA has undertaken a number steps and programs to remedy critical network deficiencies to improving service reliability and efficiency, the main programs are: Rehabilitation of Gaza network 1995-1997 with the assistance the government of Norway; Rehabilitation of the networks in the major cities and town in the Northern area of West Bank with the assistance the government of Norway;

Developing of Power Supply System Rehabilitation Rehabilitation of the networks in the central area and the southern area of West Bank with the assistance of Italy, EIB and the World Bank. Rehabilitation of Bethlehem and surrounding area network with the assistance of Norway Rehabilitation of many villages in the northern area of West Bank with the assistance of Norway; Replacement of damages occurred due to Israeli incursions in Gaza and West Bank with the assistance of Norway and Sweden;

Developing of Power Supply Rural Electrification Electrifying the Palestinian rural areas is a crucial function to develop the agricultural sector, water supply and other sector in the villages. PEA will electrify all the un-electrified villages by the mid of year 2009. The major electrification projects are done with the assistance of: Czech Republic (22 villages Tubas area in the Northern area of West Bank, completed in 2002) Belgium (25 villages in the Northern area of West Bank in phase 1, completed in 2007 and 27 villages in Phase 2 to be finalized June 2009)

Developing of Power Supply Rural Electrification France (29 villages in the Northern area of West Bank, completed in 2007) Norway (7 villages in the central and southern area of West Bank) MOF ( for the remaining small localities scattered in the Northern and southern area of West Bank to be finalized mid 2009)

Developing of Power Supply Interconnection with neighboring countries PEA has completed a small scale interconnection project (supply projects), one between Egypt and Rafah with 17 MW capacity, and the other between Jordan and Jericho with 20 MW capacity. In October 2008, PEA became a full member of the 7 countries interconnection project and become the country number eight; the countries are Jordan, Egypt, Syria, Lebanon, Iraq, Libya, Turkey and Palestine. This membership will allow Palestine to be connected to the grid of these countries at a large scale, specially connecting Gaza to Egypt and West Bank to Jordan.

Developing of Power Supply Generation The GPP Gaza Power Plant is the only significant generation capacity in the West Bank and Gaza with an installed capacity of 140 MW, and is the only major privately financed, developed and operated power facility from which power is provided to Gaza under a long term power purchase agreement. This plant has the capacity to supply only 20% of the combined needs of the West Bank and Gaza, but it can supply about two-thirds of the current maximum load on the Gaza electricity system (it is constrained to using 50% of capacity at present because of the limitations of the transmission network to take power from the plant). The plant generates electricity at high cost because it currently uses costly gasoil.

Developing of Power Supply Generation In order to increase system capacity and reduce supply dependency on Israel, PEA will encourage the creation of new generating capacity within Palestine. Two Power plants will be created in West Bank (One in the South and the other in the North). In doing so, the PEA will encourage maximum participation by the private sector through independent power providers (IPPs). The PEA will also diversify the sources of supply by encouraging the purchases from neighboring countries while at the same time promoting regional interconnection, system stabilization and scale economies.

Developing of Power Supply Transmission The transmission network is not yet fully in Palestinian hands. Also it is a component of the system that can not be reasonably privatized. PEA started to develop the transmission system in Gaza with the assistance of Sweden. PEA constructed two High voltage substations that both where partially or completely destroyed by IDF. PEA with the assistance of Sweden could repair the main substation which is the central substation. In addition PEA, will start soon the development of four substations in West Bank to be the core of the transmission system.

Developing of Power Supply Transmission Also, PEA will establish a new, professionally managed and commercially - oriented company, Palestine Energy Transmission Company Ltd. (PETL) which would eventually own, operate and develop the network. PETL would enter into power-purchase agreements with independent and semi-independent generating companies and from neighboring countries, and would sell power to regional distribution utilities

Developing of Power Supply Distribution As indicated in the PA’s “Letter of Sector Policy”, the PA is consolidating power supply and distribution arrangements in the present situation of the energy sector in the West Bank into four power utilities by adding three utilities to the utility serving the central area around Jerusalem - the Jerusalem District Electricity Company (JDECO)

Developing of Power Supply Distribution The companies are: Gaza Distribution Company (GEDCO), established in 1999 – with the assistance of Norway-; Southern Electricity Company, established in 2002- with the assistance of the World Bank-, and Northern Electricity Distribution Company (NEDCO), established in 2008-with the assistance of Norway and Sweden.

Developing of Power Supply Distribution Parallel with the institutional development of the distribution, PEA plans to develop the distribution network to be connected to the new substations and have an integrated networks in the southern area and the northern area.

Developing of Power Supply Regulation The Palestine Energy Regulation Commission (PERC) reporting to the PNA will be established pending the governmental approval. The PEA would establish the overall policy for sector development, tariffs would be set by PERC on the basis of commercial considerations with due regard to the needs of especially vulnerable segments of the population. The members of the Board of PERC would be appointed by the PNA on the recommendation of the Board of PEA. PERC would include significant representation from the private sector.

Organigram of the Electricity Sector As explained earlier, the power sector will be run by companies and monitored and regulated by PERC and PEA will set out policy for the development of the sector. The next figure represents the organization of the power sector.

Organigram of the Electricity Sector Figure 1: PALESTINIAN ELECTRIC POWER INSTITUTIONAL FRAMEWORK Regulation Authority PEA IPP’s TRANSMISSION COMPANY PPA IEC Jordan Egypt NEU JEDCo SELCo GEDCo Palestine Consumers

Current Electricity Supply and Demand The pattern of electricity supply and characteristics of electricity consumption in the Gaza region are different from those in the West Bank. The difference stems mainly from the higher standard of living in the West Bank compared to the Gaza area.

Current Electricity Supply and Demand West Bank The West Bank depends almost entirely on IEC for electricity supply. It is mainly supplied by three 161/ 33 KV substations: one in the south in area C close to Hebron, a second in the north in the Ariel settlement (area C) close to Nablus, and a third in Atarot industrial area (area C) near Jerusalem.

Current Electricity Supply and Demand West Bank West Bank consumption of electricity – as measured by purchases of bulk power from IEC - increased at an average annual rate of 6.4% between 1999 and 2005 as shown in the following figure:

Current Electricity Supply and Demand Gaza Gaza receives electricity from IEC and from a gasoil (diesel) based power plant with electricity generating capacity of some 140MW located inside Gaza (GPP), which is the only major power generating facility in West Bank and Gaza. Gaza also receives a small power supply from Egypt (17MW). GEDCO distributes electricity within Gaza.

Current Electricity Supply and Demand Gaza Gaza’s total supply of power (purchased from IEC and GPP) increased by 80% between 1999 and 2005 at about 10% average annual rate. Most of this growth took place from 2003 onwards, and it coincided with the advent of power from GPP

Load Forecast The following figure displays the growth pattern in the West Bank, Gaza Strip and total Palestine forecasts:

Forecast Growth

Forecast Summary - Peak Demand (MW) 2025 2020 2015 2010 2009 2008 Year 1,714 1,347 1,059 885 845 806 Total 1,012 809 646 548 525 502 W.B. 701 538 413 336 320 303 Gaza

Future Plans for Generation & Transmission supply strategy for West Bank & Gaza The domestic power generation in Palestine should be minimum 50% of the total generation requirement. In addition to increasing the capacity of the existing power plant in Gaza, two new power plants in the West Bank will be constructed which are: Jayyus Power Plant in the north, near Qalqiliya, and Turqumia Power Plant in the south, west of Hebron

Future Plans for Generation & Transmission The other 50% of the supply requirements will be imported from the neighboring countries through the interconnection project (West Bank – Jordan) and (Gaza – Egypt). The following Single Line Diagram shows the future interconnection & transmission system for West Bank & Gaza

West Bank SLD

Gaza SLD