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Jordan announces tax exemptions for green tech equipment, new billing mechanisms: Jordan’s cabinet approved new rules exempting renewable energy and energy efficiency equipment from customs duties and general sales tax, Al Mamlaka reports, citing an announcement made by Jordan’s Energy and Mineral Resources Minister, Saleh Kharabsheh. The policy also introduces new ways for green energy producers to exchange electricity on the national grid.
Background and next steps: Jordan is looking to boost the use of renewable energy and make higher-efficiency electrical appliances and lighting more attractive in a bid to curb the rate at which consumption is going. The rules will come into effect once they’re in the Kingdom’s Official Gazette.
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We knew this was coming: Jordan’s House of Representatives approved in April an amendment to the renewable energy and energy conservation law that outlined the systems, devices, and equipment for renewable energy generation that would be exempt from customs duties and subject to a zero-rated general sales tax. It also adopted the net billing principle, allowing power producers to sell excess energy into the national grid. Under the amended regulation, power producers will receive a credit of JOD 0.40 for every 40 kW sold to the grid.
The list of tax-exempt green tech equipment is growing: The new policy will give tax exemptions to solar and wind energy equipment and materials including metal bases, cables, and transformers. Energy storage systems, concentrated solar power equipment, energy auditing services, solar water heating systems and their equipment, and insulation materials, were also added to the list of eligible products. Solar panels, inverters, solar collectors, and direct water heating pipes already benefited from exemptions.
New methods for green energy storage and trading: The policy outlines four scenarios for integrating renewable energy systems into the electrical grid: net metering when the energy station is located in a different area than the consumer; net metering when the station is in the same location as the consumption site; zero export; and total netting / withdrawal. These mechanisms — the benefits of which depend on the client’s consumption patterns — allow consumers to effectively “store” on the national gride energy generated by their renewable sources. Only owners of renewable energy stations that received approvals before 1 June 2024 will be eligible.
First up: Net metering in different geographies: The net metering scheme is a billing tool that allows an energy producer to add excess generation to the local grid in exchange for credits. It covers projects where the energy station is located in a different area than the point of consumption. Only small and medium industries, hotels, and agriculture businesses that are eligible for this category. These sectors can connect renewable energy stations that have the capacity to cover up to half of their previous year’s energy consumption. While the renewables stations powering industries and agriculture will not have to pay network service fees for trading on the grid, hotels will still have to pay.
Second: Net metering in the same geographies: SMEs, hotels, agriculture businesses, and households can all use the net metering system, which requires that the renewable energy generation site be the same as the site of consumption. In this scenario, households can generate up to 100% of their annual consumption, capped at around 500-1500 kWh per month depending on whether the alternating current power supply system is single-phase or three-phase. The new rules will reduce the network usage fee for households to JOD 1 per kWh per month, down from the current JOD 2.
Third: Zero export: This type of billing method — which also applies to the same sectors excluding the banking sector and extractive industries like cement — allows the subscriber to build a station that produces 100% of their consumption for the last year. However the network service fees may balance out to zero as the fee is calculated by taking into account the electricity tariff applied to the relevant sectors.
Finally: total netting / withdrawal: The fourth mechanism, which applies to all sectors, eliminates network service fees and allows for renewable energy systems to fully cover annual electricity consumption. It also allows consumers to purchase all their electricity at the sector-specific tariff.
