The Palestinian Territories facesignificant energy security challenges, already severe inGaza, but also emerging in the West Bank. In Gaza, theavailable power supply only meets half the demand leading torolling blackouts, alternating between 8 hours on and 8hours off. Although the West Bank generally enjoys 24-hourpower supply, there have been emerging power shortagesduring peak winter and summer months. With Palestinianelectricity demand projected to grow at an average annualrate of around 3.5 percent for the coming years, a littlefaster in Gaza and slower in the West Bank, energy shortagescan be expected to deteriorate unless new supply options arefound. Both Jordan and Egypt have recently overcomeinterlinked power supply crises caused by a shortage ofEgyptian gas, and are now heading for significant powersurpluses. In principle, existing interconnection capacityof 20 MW with Jordan and 20-30 MW with Egypt could beupgraded to support higher volumes of imports. However,Jordanian electricity is currently more expensive thanIsraeli power due to heavy reliance on LNG, but is expectedto become cheaper as Israeli gas enters the Jordanian marketand renewables increase their share in the Jordaniangeneration portfolio. On the other hand, the size ofJordan’s power system is on par with the size of Palestinianelectricity demand, meaning that the amount of poweravailable for export may not be so large relative toPalestinian needs. Egyptian power is currently cheaper thanIsraeli power due to the historic low cost of natural gas;however, the size of the Egyptian power system is 30 timeslarger than the Palestinian demand making it relatively easyfor Egypt to supply the scale of power that West Bank andGaza might need. Nevertheless, historical imports from Egyptinto Gaza (which have been managed through a local Egyptiandistribution company rather than the national Egyptiantransmission operator) have proved unreliable due tosecurity issues in Sinai. In addition, Gaza has not yetestablished any payment record with Egypt since the cost ofthese imports has been covered by third party benefactors todate. Finally, neither Jordan, nor Egypt have access to thecontroversial ‘net lending’ mechanism that has so farprovided Israel with an informal payment security mechanismto at least partially offset any payment risk fromPalestinian consumers.
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