Today Palestine has the best tax incentive in the region

Energy security is one of the major challenges that Palestine faces today and considered as a critical obstacle towards realizing sustainable political and economic independence, the sector is almost fully dependent on electricity imports; majority imports come from the neighboring countries. Electricity prices in Palestine are the highest in the MENA region, forming a large portion of household disposal income. Today Palestine has the highest price incentive in the region, as the country fully relies on imports of its energy needs.

The Government had set the energy sector strategy with strong emphasis of efficient and green power generation, where the vision is to build an integrated Palestinian National Energy System, which will be capable of securing energy from various sources, and will be sufficient to meet local consumption needs as well as comprehensive and sustainable development, targeting local generating of 50% of electricity needs by the year 2020, out of which 10% would be from renewable energy sources (approx. 130 MW).

The 2015 Renewable Energy and Natural Resources Law came into effect to promote the exploitation and development of renewable sources, and to increase the proportion of its contribution to total energy mix, and regulates the power purchase agreements with carriers; recently the Palestinian Council of Ministers approved a unique renewable energy incentive package that leap Palestine towards Green Energy within the Palestinian Investment Encouragement law over regional legislations, and gives a competitive advantage form investors to invest in Palestine, as this contract can be granted to support strategic projects, geographic location or named sector to generate jobs, technology transfer or implement international standards to protect the environment or generate energy from alternative resources.

Incentives:

Utility scale projects, more than (1) Mega watt/h power generation:

Stage 1: 0% income tax for seven years starting from operation

Stage 2: 5% income tax following stage one for five years

Stage 3: 10% income tax following stage 2 for three years

Feed in projects with less than (1) Mega Watt/h power generation:

1. Current projects that enjoys incentives receive additional extinction if they generates power as follow
   1. 20 Kilo Watt/h power generation receives extension for one year
   2. 40 Kilo Watt/h power generation receives extension for two years
   3. 60 Kilo watt/h power generation receives extension for three years
2. Projects never received incentives or their incentives period expired and generates 40 Kilo Watt/h subject to 5% income tax for two years.

For more information, please click here to view the value proposition of the solar energy sector