Sparks

Renewables: lessons from Morocco

 By Nicholas Newman

The only country in North Africa without commercial scale reserves of oil or gas is Morocco, which depends on imports of variable priced (but usually expensive) fossil fuels to satisfy domestic demand. Currently, annual electricity and fuel imports costing $3 billion supply 96 percent of Morocco’s energy needs. The bulk of oil and petroleum products arrive from Saudi Arabia. Coal comes from South Africa and gas arrives from Algeria through the Maghreb-Europe pipeline, which transits Morocco to Spain. Electricity is imported from Algeria and from Spain via HVDC electric lines. Today, renewable power meets 28 percent of the country’s annual electricity consumption. National utility company, Office National de l’Electricité et de L’Eau Potable (ONEE) estimates that demand from its 5.6 million industrial and household customers is rising at between 5-6 percent a year. As a result, ONEE plans to double renewable energy capacity by 2030…

The renewable power program

The scale of the renewable program, currently valued at $30 billion is attracting the attention of international investors including Morocco’s Nareva Holdings, Abu Dhabi-based renewables firm Masdar Power and France’s Energie.

Solar

Morocco aims to build 2,000 MW out of its potential 2,600 kWh/m²/ of solar generating capacity at five major sites and save 3.7 million metric tons of CO2 emissions a year. Some solar plants will employ Concentrated Solar Power (CSP) while others will stay with Photovoltaic (PV) technology. The Ouarzazate site will host three CSP plants with total capacity of 580 MW. With Noor CSP technology in terms of price per MW dearer than traditional PV technology, it has the advantage of being able to generate electricity from stored heat for up to three hours after the sun goes down or when it is cloudy.

Some solar plants will employ Concentrated Solar Power (CSP) while others will stay with Photovoltaic (PV) technology.

Wind

Morocco is also home to Africa’s largest wind farm, the 301 MW Tarfaya-Wind-Energy-Project with 131 wind turbines, which came on line in 2014. In 2015, Morocco had an installed wind power capacity of 787 MW, which is set to reach 5,000 MW by 2030. Invest in Morocco, calculates that the country has a commercial wind potential of some 25,000 MW with the best potential sites located in the Atlas and Rift mountain chains as well as along 3,500 Miles/ 5632.704 kilometers of coastline bordering the Atlantic and Mediterranean. Currently 720 MW of wind power is under development at five sites across the including Tarfaya (300 MW), Akhfenir (200 MW), Bab El Oued-Laayoune (50 MW), Haouma (50 MW) and Jbel Khalladi (120 MW). The most promising sites are Tangier and Tetouan, which record annual average speeds of 8.11 meters per second (m/s) at 10 meters.

To capitalize on its rich wind potential, Morocco has an additional 1,000 MW of capacity planned at five new sites (as can be seen in Figure 2). They are Tanger 2 (150 MW), El Baida Koudia in Tetouan (300 MW), Taza (150 MW), Tiskrad Laayoune (300 MW) and Boujdour (100 MW) (as illustrated in Figure 2). Once complete, they should provide annual savings of 1.5 million tons of fuel imports costing $750 million and prevent the emission of 5.6 million metric tons of CO2 per year.

Invest in Morocco, calculates that the country has a commercial wind potential of some 25,000 MW with the best potential sites located in the Atlas and Rift mountain chains

Energy projects throughout the continent face financial, legal, political and regulatory hurdles. In common with elsewhere on the continent, Mark Barges, Banking and Projects, Linklater’s Paris points out that “although some projects have been financed by local banks, the depth of the Moroccan debt market is not sufficient to finance all the projects.” Money is not everything since security considerations count for just as much. A case in point is the disputed Western Sahara of southern Morocco, where its absence means that Export Credit Agencies and Development Finance Institutions are reluctant to provide finance for projects.

Likewise, as Barges points out, “nor does it help when the state is not the sole owner of the land and expropriation can be slow and expensive.” Also common to most of Africa, there is a generalized lack of industrial capacity and skills to construct and maintain renewables technologies. To foster domestic technological skills, the Moroccan government has been assisted by Germany’s foreign aid agency, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

To help guide grid capacity expansion to cope with the additional renewable energy supply from private sector sponsored projects under the 13/09 projects (e.g. 200 MW Noor Atlas and 200 Noor-Argana), Morocco’s new law on the medium voltage network requires operators to publish their 10-year development plans. However, Burgess fears that “the new law may influence the bankability of those projects,” and may thus slow down progress.

Lessons

On the finance front, Morocco has a transparent well-organized system in place. Wind projects are promoted by ONEE through a well-established and acceptable “bankable “power purchase agreement (PPA) model or under law 13/09 (which enables the sale of electricity by independent power producers to private off- takers using ONEE’s network). Likewise, solar projects are generally supported by Moroccan Agency for Solar Energy (MASEN). Funding for the Ouarzazate CSP Noor-1 marked a departure from normal practice and is viewed by some analysts as a “game-changer.” For Noor-1, MASEN was able to use funds borrowed by the government from multilateral agencies and banks and then lend the money to the project company. The winning independent power producer is fully financed and the government becomes a minority shareholder. This could show the way forward for other African countries wishing to expand their renewable power provision.

For other African countries with similar ambitions, Mark Burgess stresses the need for a bankable power purchase agreement (PPA) backed by government and covering key risks. An equally vital component of the bankable PPA is the cost reflective tariff, whereby independent power producers can recover their costs and are able to receive reasonable profits. Overseas Private Investment Corporation, a key partner of the American Power Africa Initiative, has devised a comprehensive template of the essential elements of “bankable” PPAs.

For countries that wish to emulate Morocco’s example, Said Mouline, Director General of the Moroccan Agency for Energy Efficiency (AMEE) provides the following advice. “It’s not just about money. It’s much more a matter of capacity building, technology transfer and the right policies.” African countries will do well to heed Moroccan advice if they wish to attract foreign investment for closing their energy gap.

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about the author
Nicholas Newman
Freelance energy journalist and copywriter who regularly writes for AFRELEC, Economist, Energy World, EER, Petroleum Review, PGJ, E&P, Oil Review Africa, Oil Review Middle East. Shale Gas Guide. https://nicholasnewman.contently.com/