230 J. OBEID
exempted but businesses report uncertainty over a recent 3% tax, though
there are discussions that it will be waived.
Fueling the Competition
While alternative energy deployment should be hailed as a game changer
for highly indebted, net energy-importing economies, changing the
outlook of an otherwise extremely costly and monopolized energy
market, it would be fueling a direct competition with the traditional
electricity utilities, the fossil fuel imports industry, and the informal
private generators industry in Lebanon only, and the vested interests in
the political economy, and may trigger a regional rivalry or potential
collaboration.
Battling with Traditional Utilities
The core of the electricity utility business is impacted by powerful
emerging trends and developments including the volatility of fossil fuels,
the growing investments in energy efficiency, the pressure to decrease
greenhouse gas emissions, accelerating number of prosumers 36 (the traditional consumers, whose role was changed into generating their own
electricity needs), and decentralized energy generation.
On the political level, the decentralization concept in general faces
opposition across the Middle East, as monopoly and centralized decisionmaking are key aspects of the prevailing political and governance models.
The electricity utilities in the region, adopting the single-buyer model
and subsidies, are accumulating fiscal losses whenever they generate or
purchase power. Whereas decentralized power generation decreases the
demand from the utility’s side, therefore cutting down on these fiscal
losses, it also threatens to make the electricity utilities lose their highest
paying consumers, and as such, the bulk of their revenues, especially when
subsidy reforms are partially or fully implemented and electricity tariffs are
hiked.
The most straightforward approach to subsidy elimination for governments has been to increase the tariff for the highest consumers, while
safeguarding the vulnerable population and small productive activities.
As a result, those high-paying consumers are seeking alternatives, implementing rooftop solar and other distributed generation mechanism. 37
exempted but businesses report uncertainty over a recent 3% tax, though
there are discussions that it will be waived.
Fueling the Competition
While alternative energy deployment should be hailed as a game changer
for highly indebted, net energy-importing economies, changing the
outlook of an otherwise extremely costly and monopolized energy
market, it would be fueling a direct competition with the traditional
electricity utilities, the fossil fuel imports industry, and the informal
private generators industry in Lebanon only, and the vested interests in
the political economy, and may trigger a regional rivalry or potential
collaboration.
Battling with Traditional Utilities
The core of the electricity utility business is impacted by powerful
emerging trends and developments including the volatility of fossil fuels,
the growing investments in energy efficiency, the pressure to decrease
greenhouse gas emissions, accelerating number of prosumers 36 (the traditional consumers, whose role was changed into generating their own
electricity needs), and decentralized energy generation.
On the political level, the decentralization concept in general faces
opposition across the Middle East, as monopoly and centralized decisionmaking are key aspects of the prevailing political and governance models.
The electricity utilities in the region, adopting the single-buyer model
and subsidies, are accumulating fiscal losses whenever they generate or
purchase power. Whereas decentralized power generation decreases the
demand from the utility’s side, therefore cutting down on these fiscal
losses, it also threatens to make the electricity utilities lose their highest
paying consumers, and as such, the bulk of their revenues, especially when
subsidy reforms are partially or fully implemented and electricity tariffs are
hiked.
The most straightforward approach to subsidy elimination for governments has been to increase the tariff for the highest consumers, while
safeguarding the vulnerable population and small productive activities.
As a result, those high-paying consumers are seeking alternatives, implementing rooftop solar and other distributed generation mechanism. 37