It is hardly an exaggeration to say that Lebanon's electricity system today is bankrupt and broken. With people receiving no more than a few hours of uninterrupted power on any given day, supply is nowhere near what they need. It is unreliable, far from resilient and insecure – just the opposite of what a well-functioning system should be. Lebanon’s electricity system is a textbook example of how not to run things. Moreover, it is the lion's share of Lebanon's debt.
Indeed, unreliable electricity has for long held the country back.
Businesses need electricity. Food refrigeration relies on an uninterrupted supply; imagine how much less food wastage there would be if there were no power cuts. Public health would be better, for many medicines need cooling. Clinics and hospitals need electricity for sterilisation, lighting, cooling and heating. Electricity is important for all kinds of critical infrastructure to work, such as water treatment, communications, transportation, petrol stations, banking, finance and government. Try working in an office with no air conditioning or living in a small apartment in the heat of August.
There is no doubt that Lebanon could be a healthier, richer and more hopeful society with a better electricity system. And yet, despite being an obstacle to the country ever reaching its potential, its nefarious neglect and debilitating dysfunction continue.
There are many technical "fixes" to Lebanon's power crisis. There is plenty of potential for solar, wind and geothermal energy. Geothermal is mostly found in the north, but geothermal heat pumps could be set up anywhere in the country. Lebanon has many windy and sunny areas, too. But as the sun does not shine for 24 hours in a day and the wind does not blow all the time, battery systems to back up their energy need to be obtained.
Lebanon can do with hybrid energy systems and microgrids, which are decentralised electricity sources. Geothermal has a base load that can run 24 hours a day, 365 days a year. Solar and wind energy can be used as intermittent sources that would, nonetheless, need to be backed up by battery systems and microgrids spread across the country. With all these sound renewable ideas, it is possible that local politics and vested interests will get in the way.
Geopolitics, unfortunately, is already getting in the way.
Oil-rich Iran, for instance, seeks to export more of its petroleum products to Lebanon, arranged for by Hezbollah, the Tehran-backed proxy in the country. The US and its Arab allies obviously do not approve. This method has been designed to circumvent the Lebanese government, thereby threatening to further weaken it, while at the same time potentially supplying legitimacy to Hezbollah in the eyes of Lebanon's fuel-starved public.
The US and its allies, instead, want Lebanon to import natural gas via the Arab Gas Pipeline that originates in Egypt's Sinai Peninsula. They are also planning for an improved electricity grid connecting Lebanon with Egypt, Jordan and Syria. Technically, it makes sense for Lebanon to avail of the pipeline and the grid. Nevertheless, these projects don’t come without risks as they become potential targets for nefarious groups, including terror networks. Damaging energy infrastructure – including long-distance, high-voltage transmission lines, lower-voltage distribution lines, control stations and transformers – could be a feature in the future, just as it has been from time to time in the region's past.
Another critical issue is how will a bankrupt Lebanon pay for the construction, maintenance and repairs for its present and future energy systems. At one point, the accumulated cost of subsidising its state power firm amounted to more than 40 per cent of the country's entire debt. Many countries and multinational organisations could chip in. But given its fractious politics and the instability bred from outside – notably by Iran and its proxies – external aid is not a sustainable solution. It will not solve Lebanon's chronic corruption, instability and infighting.
Asking for and getting aid and subsidised fuel sent in from Iraq and Egypt, with the help of the World Bank and others, will, at best, be a short-term fix. At worst, these will further incentivise the corrupt and dysfunctional way business is done in the country.
There is a lot of what economists call a "moral hazard" in constantly bailing the country out to stave off collapse. Unfortunately, the collapse has happened – even as the elites have continued to stay in power. Some of the biggest sources of dysfunction in Lebanon can be found in the corrupt and sectarian behaviour of vested interests in business, government and other institutions. If outside parties were to walk in to manage the risks and losses, what incentive would the political class have to work towards reducing risks and hazards in the future?
Over the long term, therefore, Lebanon needs practical and sustainable energy policies that are rational, with rational prices that allow investments to make sense. Better demand management is important. These policies could be developed eventually to make the systems more sustainable. In the meantime, external subsidies and help would be needed to get the system working – even if it stands to be manipulated by the corrupt.
And while gas, oil and electricity from abroad will meet Lebanon’s immediate requirements, long-term sustainability, reliability and resilience will come from using the energy indigenous to the country: solar, wind and geothermal for a start.
Above all other ideas and quick fixes, however, looms the biggest source of Lebanon's decline: the way things are done. Every problem there seems to begin with corruption and dysfunction within leadership at all levels. Few real solutions can be developed until these are dealt with.
