Demand for electricity in Morocco has grown rapidly in recent years as a result of steady economic development. Estimates suggest that the country’s installed generation capacity will have to be tripled in order to meet rising demand, which has expanded by an estimated 6-7% annually in recent years. The primary challenge lies in determining how to simultaneously increase electricity supply and reduce dependence on energy imports.
In 2008 the kingdom adopted an energy strategy that emphasised reduction of energy imports through the development of renewable energy. The government aims to create an additional 10 GW of installed renewable capacity to meet the target to generate 52% of energy from renewable sources by 2030. As a result, several opportunities for investment are emerging, although a number of obstacles remain for the segment to reach its full potential.
GOVERNMENT GOAL: According to the Moroccan-German Energy Partnership (Partenariat Energé- tique Maroco-Allemand, PAREMA), a platform for institutional energy policy dialogue between the two countries, the kingdom’s installed generation capacity reached 8154 MW in 2015, of which coal accounted for 31%, followed by gas with 25.8%, hydroelectricity with 22%, fuel and diesel with 10%, and wind with 9.4%. The government aims to increase total capacity to 15,946 MW by 2020, 20,070 MW by 2025 and 24,800 MW by 2030.
Renewable energy represented 34% of installed generation capacity in 2015. The government plans to boost this to 42% in 2020, 47% in 2025 and 52% in 2030. To achieve these targets, the kingdom is planning to add just over 10 GW of capacity by 2030 – 4560 MW from solar power, 4200 MW from wind and 1330 MW from hydroelectricity – and has unveiled an investment plan for the energy sector. The plan, which spans the 2016-30 period, will require approximately $40bn of funding, of which electricity generation derived from renewable sources will account for $30bn, or 75% of the total. The kingdom also aims to reduce consumption by 20% by 2030.
SOLAR POWER: The Moroccan Agency for Sustainable Energy (MASEN) – known as the Moroccan Agency for Solar Energy before its renaming in September 2016 – is in charge of implementing the Moroccan Solar Energy Programme, which was launched in November 2009 and was rebranded as the Noor Solar Plan to reflect the adoption of the 2030 target. The solar energy programme sought to add 2000 MW of capacity by 2020, and generate around 4500 GWh per year; however, as a result of the upward revision of renewable energy contributions to the energy mix, projections have been adjusted. “The decision to focus on renewables came in 2009, when demand for electricity was rising by 5-6% per year and oil prices skyrocketed and natural gas was virtually unavailable,” Anas Raisuni Perez, country director at engineering and technology company SENER Group, told OBG. “With solar energy production being cheaper than fuel production, renewables consequently constituted the apt solution.”
CONCENTRATED SOLAR POWER: MASEN is in charge of various concentrated solar power projects, including Noor I, II and III. Although it is more expensive than photovoltaic technology, concentrated solar power holds other advantages, particularly the ability to store energy, which allows authorities to manage peak demand and ensure stable supply.
The 160-MW Noor I, officially inaugurated in February 2016, is the first stage of Morocco’s main solar power project. Located in Ouarzazate, the facility comprises 500,000 crescent-shaped solar mirrors positioned in 800 rows. It can generate an estimated 500 GWh per year, and has the capacity to store up to three hours of energy each night.
The following stage of the project includes both Noor II and III, which are scheduled to come on-line in 2018. The 200-MW Noor II project will use the same technology as Noor I, albeit with a storage capacity of five to six hours of energy per night, whereas the 150-MW Noor III will employ a different technology that will enable it to store between five and eight and a half hours of energy per night.
The cost of the Noor complex is estimated at $9bn, and the total capacity will reach 580 MW, which will be able to supply around 1m households. Saudi Arabian developer ACWA Power led the consortium in charge of bringing Noor I into operation. The company has also won bids to develop Noor II, III and IV. Upon its completion, Noor will be one of the largest-capacity solar power plants in the world, second only to Kamuthi in India, with a 648-MW capacity.
VENTURING INTO PHOTOVOLTAIC: After initiating a number of concentrated solar power projects, MASEN has ventured into photovoltaic technology, applying it to several projects, as well as other initiatives, which combined concentrated solar power with photovoltaic technologies.
In November 2016 MASEN awarded a 20-year build-own-operate-transfer contract to ACWA Power for the construction of a 170-MW solar power complex. The contract encompasses Noor IV (70 MW), Noor Laâyoune (80 MW) and Noor Boujdour (20 MW), and the programme is set to cost $220m. In late 2016 the agency also opened a bid for two 400-MW combined concentrated solar power-photovoltaic plants in 2017. In July 2016 MASEN had already launched a call for expressions of interest in the first 400 MW, to be developed at the Noor Midelt solar power complex. In June 2017 it announced five out of seven pre-selected consortia, and the results of their requests for proposals will be announced by the end of 2018. The first phase of construction on the project began in mid-2017.
ONEE PROJECTS: The National Office for Electricity and Potable Water (Office National de l’Electricité et de l’Eau Potable, ONEE) is in charge of three more solar power projects, including Noor Tafilalet (120 MW), Noor Atlas (200 MW) and Noor Argana ( 200-225 MW), which have a combined installed capacity in excess of 500 MW. Noor Tafilalet consists of three photovoltaic power plants to be located in Erfoud, Missour and Zagora, each with a 40-MW capacity.
In November 2016 ONEE said that 11 bidders, composed of five companies and six consortia, had been pre-qualified. The project is expected to cost $158m and become operational in 2018. Pre-qualification tenders for Noor Atlas and Noor Argana projects are anticipated to launch in 2017. According to local media, Noor Atlas is estimated to cost €300m, while Noor Argana will require €250m.
WIND POWER: Initiated in June 2010, the integrated wind project is expected to add 2000 MW of capacity by 2020, the equivalent of 6600 GWh per year, for a total investment of Dh31.5bn (€2.9bn). In 2011 Morocco had a total installed wind power capacity of 289 MW, while an additional 720 MW was under development and a further 1000 MW was being planned. By mid-2017 the kingdom’s total installed wind power capacity had reached 892 MW.
As illustrated by past successes – such as the 300-MW Tarfaya wind farm project, the largest such initiative to be developed in Africa– there is much potential for the development of the segment. Operational since 2015, the facility cost $478m and was built by a 50:50 joint venture between Moroccan company Nareva Holding and France’s Engie under a 20-year build-own-operate-transfer contract. The facility supplies power to around 1.5m households.
Recently awarded or ongoing projects include the construction of five wind farms with a combined capacity of 850 MW by a consortium composed of Nareva, Enel Green Power and Siemens Wind Power. The wind farms, which together are estimated to cost Dh12bn (€1.1bn), will be located in Tangiers (100 MW), Tiskrad (300 MW), Jbel Lahdid (200 MW), Boujdour (100 MW) and Midelt (150 MW). These initiatives will be developed as public-private partnerships under build-own-operate-transfer models. The facilities are set to become operational by 2020.
HYDROPOWER: As of 2017 Morocco had 1770 MW of installed hydroelectric generation capacity, according to PAREMA. Various projects are also under construction or in the planning stage. ONEE has identified 125 sites appropriate to develop small or micro-sized power stations (with 100-1500 KW), for a total capacity of around 300 MW. PAREMA estimates suggest capacity derived from micro-sized hydropower stations will rise to 3 GW by 2030.
ONEE is investing in the development of pumped storage power station projects; in Morocco the potential for such plants is estimated at approximately 6 GW. Similar to concentrated solar power, pumped storage power stations allow for the storage of energy. At present, the kingdom has just one pumped storage power station, which is located in Afourer, situated north-east of Marrakech, and has a capacity of 460 MW. However, there are plans to develop an additional 1330 MW of hydropower by 2030, boosting the number of dams from 139 to 170.
Three major hydroelectric projects are set to be developed by ONEE by 2030: pumped storage power stations Abdelmoumem (350 MW), El Menzel II (300 MW) and Ifahsa (300 MW). Vinci Construction won a €284m contract to construct Abdelmoumem, which is anticipated to be completed by the end of 2020. ONEE planned to launch calls for tenders on technical studies, as well as geological and geo-technical studies, for both El Menzel II and Ifahsa during 2017, but no further news was available as of early 2018.
While the state remains the main player in large-scale hydroelectricity projects, private investment is also growing. US-based Platinum Power received authorisation to build three hydroelectric power stations in Beni Mellal in December 2016. The company is seeking to raise Dh2.8bn (€259.3m) to develop projects in Boutferda (18 MW), Tillouguit Amont (8 MW) and Tillouguit Aval (30 MW), bringing collective annual production to 250 GWh. This is Morocco’s first private hydroelectricity power project.
LEGISLATIVE CHANGE: The development of renewable energy has brought significant opportunities to the private sector, but obstacles to investment persist. Two pieces of legislation – Laws No. 16-08 and 13-09 – have helped increase investment, allowing private production and generation of energy via renewable sources for either private use or the sale of surplus output to the national grid. “There has been an excellent response to Law No. 13-09, which allows private producers to meet the needs of industrial customers. However, the law requires some modifications to streamline the implementation process of such investments,” Badis Derradji, country manager of ACWA Power, told OBG.
Although high- and very-high-voltage grids are already accessible to producers of renewable energy, low- and medium-voltage grids remain effectively closed to them. According to local reports, the connection to medium-voltage grids for private renewable energy producers, while adopted on paper, still requires the approval of a joint decree by the ministries of energy and the interior.
The opening of low-voltage grids is defined under Law No. 58-15, but by-laws must be approved before this segment’s potential can be met, benefitting small and medium-sized enterprises (SMEs) and residential consumers, as opposed to industrial players, which can already access high- and very-high-voltage grids.
SME OPPORTUNITIES: Most projects developed so far have been large in size, and few SMEs have been involved. Subcontracting provides opportunities for growth in the role of smaller firms, and is set to accelerate as market liberalisation advances. “SMEs have yet to benefit from the development of renewable energies in Morocco; however, some segments are already well placed to take advantage of the boom in renewables, such as companies developing metallic structures to be embedded in solar panels,” Touria Barradi, vice-president of the Association des Centraliens et Supélec du Maroc, a local alumni association, told OBG. “Going forward, Morocco has sufficient capacity and competencies to extend the value chain, especially in electronics, as well as control and monitoring devices.”
There is great potential for export development. Morocco’s geographic location – combined with demand for local content in awarded contracts – has resulted in foreign investment in this segment, leading to the creation of jobs and the development of the country as an export platform. For example, Siemens announced in March 2016 that it was investing in a wind blade factory in Tangiers, describing the nation as a perfect platform to supply not only the local market, but also the growing onshore wind power markets of Africa, the Middle East and Europe.
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