Powering up: With the local climate providing an edge over competitors, the country is set to expand renewables

Since the announcement of the 2020 Energy Strategy five years ago, followed by the introduction of the 2010 Renewable Energy Law, Morocco has seen a significant increase in interest in clean energy, with the biggest developments in solar and wind, both of which are planned to contribute 14% each (or 2000 MW) to the country’s installed capacity by the end of 2020.

Anas Kabbaj, development manager for Morocco and Mauritania at GE Global Growth and Operations, told OBG, “Renewable energy is an excellent driver for growth as it reduces the burden on the environment and energy imports related to hydrocarbon products.”

THE RIGHT CONDITIONS: One reason for investor interest is the country’s favourable climatic conditions for wind and solar power. In terms of wind, for example, strong and consistent air flows allow for capacity usage rates of up to 45%, compared to only 20% in France. The country’s most promising sites are in remote locations, and therefore do not face the local resistance that projects in densely populated Europe regularly see. In fact, these conditions have encouraged small-scale production for some time, with some manufacturers, such as France’s Lafarge, incorporating on-site wind facilities. In terms of solar, Morocco’s has many large flat plains with favourable irradiation upwards of 2300 KWh per sq metre per year, which is very competitive compared to Europe, have been found to be some of the world’s most productive.

Pricing mechanisms are also favourable. In the case of wind energy, contracts are awarded through a public tender where, besides technical criteria, the most competitive bid is awarded a long-term purchase power agreement. This differs from the system in many European countries where feed-in tariffs or subsidised regimes dominate. “Through Morocco’s system of fixed long-term pricing, Office National de l’Électricité et de l’Eau Potable assumes the financial risk, while operators take the operating risks related to wind fluctuations and maintenance costs,” said Mohamed Sebti, the senior corporate director for Nareva Energy.

PICKING UP MOMENTUM: Nowadays, a range of large generation projects are close to delivery; among these are the 300-MW Tarfaya project, which will be the biggest Africa has seen thus far. In addition, a 150-MW wind farm in Taza is the first of a series of projects under the umbrella of the state-backed Integrated Wind Programme (Programme Eolien Intégré, PEI).

Slim Kchouk, the CEO of Siemens, told OBG, “Considering the quick progress made by the authorities to implement an enticing framework for wind energy development, Morocco should attain its objective of a 2-GW wind output by 2020.”

Developments are also unfolding in the solar arena, albeit at a slower pace. A lack of competition and high input costs at the start put the average price per KWh at levels beyond fossil fuels. In addition, the Moroccan Agency for Solar Energy (Agence Marocaine de l’É nergie Solaire, MASEN) spent its initial period conducting feasibility studies and optimising the regulatory framework. In all, the agency came up with a variety of projects valued at some $9bn.

One such example is the 500-MW project in Ouarzazate – the first of five major solar projects in the country – which broke ground in 2013. MASEN has said that tenders for the remaining four projects will go out by early 2015 at the latest.

In recent years, the price per KWh for solar has gradually become more competitive as a result of a growing domestic industrial base serving the industry and a withdrawal of fossil fuel subsidies. In fact, according to 2013 figures from the US Department of Energy, the cost of generating electricity from concentrated solar power in Morocco is nearly 25% less than in Spain.

LOCAL CONCERNS: However, while the developments described above provide evidence of the country’s realistic ambitions with regards to renewable energy, its wider benefits for the local economy remain a point of contention. Since the early days of Morocco’s green energy strategy, criticism has surfaced about the marginal involvement of local industries and employment.

Moroccan suppliers have faced difficulties in gaining a foothold due to the projects’ large demands. “With the exception of a few players operating basic tasks in the wind segment, the impact of these projects on the local industrial base has been minimal,” said Ahmed Squalli, president of the l’Association Marocaine des Industries Solaires et Éoliennes (Amisole). The reasons for that are varied, Squalli added, and include the absence of effective training, development in human resources and an enabling regulatory framework.

INCLUSIVE GROWTH: In a bid to encourage local content, Amisole has been advocating contractual clauses for minimum local involvement, a condition that up until recently was undermined by concerns about noncompliance with international trade standards.

Nevertheless, Abdelkader Amara, the head of the Ministry of Energy, Mines Water and Environment ( Ministére de l’Energie, des Mines, de l’Eau et de l’ Environnement, MEM), recently said a number of initiatives are being prioritised to widen the impact on local renewable equipment manufacturers. “We are grasping the opportunity to put Morocco at the forefront of worldwide trends in renewables,” said Amara.

Among the various segments of the value chain where local operators can plan an active role is the production of solar cells. If the MEM remains committed to liberalising low-voltage power generation, demand for photovoltaic systems is expected to increase substantially. In fact, according MEM estimates, close to 1500 MW of today’s installed capacity of just under 7000 MW could be served by solar panels. Similar developments are shaping up in upcoming wind projects. The tenders for the 850-MW PEI project were announced in February 2014, including criteria for integration of local industries. Following the public bids, Abderrahim El Hafidi, the director of electricity and renewable energy at MEM, told local media that contract sizes would be large enough to justify the construction of dedicated factories to support the production or assembly of key components such as wind turbines and blades.

GENERATING EMPLOYMENT: In the same vein, job creation in traditionally poor areas is set to rise proportionally. According to figures from the National Agency for Promotion of Employment and Skills, an estimated 20,000 direct jobs are expected in the solar segment by 2025, while wind energy is set to create 7500 new positions. Adding the hydropower segment and indirect jobs, the agency foresees the creation of around 50,000 jobs overall.

That number may grow if Morocco manages to carve out a spot in the international renewables market. Over the past few years, Morocco has launched efforts to liberalise the exchange of energy equipment with Europe. While progress has been minimal to date, hopes are high that, along with rising power exchanges, equipment supplies will occupy their own niche. While such goals may be long term, Morocco’s efforts to focus on renewables provide optimism for local industries.

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The Report: Morocco 2014

Energy & Environment chapter from The Report: Morocco 2014

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