With electricity consumption rising inexorably, power production almost entirely gas-based and Algeria’s leadership increasingly conscious of the need to husband exportable gas resources, the country is placing ever-greater hopes on renewable sources of energy. This is particularly the case as a means of feeding domestic demand for electricity, but possibly also as a way of diversifying energy exports, by sending power generated in the south to consumers in Europe.
BRIGHT PROSPECTS: Space and sunshine are two things Algeria is not short of. Average hours of sunshine run to 2650 in the north, 3000 in the Hauts Plateaux and 3500 in the Sahara regions of the south. In terms of direct normal irradiance (DNI) – a measure for the amount of raw energy sunshine represents – those figures translate into annual averages of 1700, 1900 and 2650 KWh per sq metre (KWh/m2), respectively. That puts Algeria high on the list of sites for potentially cheap solar electricity, especially for concentrated solar power (CSP). Also known as solar thermal power, it is a range of technologies which involve using mirrors to concentrate sunlight and superheat water or liquefy salt, driving turbines, storing heat or both. In Europe, it has been most used in Spain: Algerian DNI – inferior to Chile’s but roughly on a par with California or South Africa – means a cost per KWh 25% below that of Spain, according to a 2010 study by AT Kearney and the European Solar Thermal Electricity Association.
Algeria is also big, especially the Sahara, which accounts for 86% of its surface. Even allowing for its Ergs – shifting sand dunes where solar production is not possible – the area available is huge. Defining “economic” by an annual DNI of 2000 KWh/m2, Algeria’s economic potential for CSP production has been estimated at 168,971 TWh per year, roughly eight times higher than current world electricity output. That is the highest potential in the world, more than double that of Egypt and over 100 times higher than that of Spain.
The potential of other renewable sources is less spectacular but still significant. Photovoltaic (PV) involves processing sunlight through silicon-based panels: national PV potential is put at 13.9 TWh a year, or one-quarter of current national electricity production. While Algeria’s wind resources are classified as poor, there is still annual potential of 1 TWh in coastal regions, 4.5 TWh in the Hauts Plateaux and 31.5 TWh in the Sahara, according to a 2013 presentation by the Centre for the Development of Renewable Energies (Centre de Développement des Energies Renouvelables, CDER).
Renewables are flexible as well as abundant. Big generation projects are possible, but so is use at the village or even household level, where PV can solve the problems of communities remote from the grid – a particular concern in the south of the country. Hybrid plants combining solar with diesel or gas-fired production can cope with fluctuating demand.
GREAT EXPECTATIONS: The potential has long been recognised: electricity and hydrocarbons giants Sonelgaz and Sonatrach, along with local firm SIM, founded joint venture New Energy Algeria (NEAL) to promote renewables development in 2002, while a law in 2004 set a target for solar and wind production in 2020 of 10% of the national electricity balance. The start-up of Algeria’s first sizeable solar plant came in 2011 near the gas centre of Hassi R’Mel, a hybrid integrating 25 MW of CSP and 130 MW of gas-fired combined-cycle capacity, built and operated by NEAL and Spain’s Abengoa, with technology from ABB and Siemens – and involving 180,000 sq metres of parabolic mirrors.
TARGETS: February 2011 saw the publication of a government programme envisaging the creation of 22,000 MW of renewables capacity between 2011 and 2030 – almost double the conventional installed capacity in place at the time. Of this, 10,000 MW (including perhaps 2000 MW by 2020) was export-oriented, though it was flagged as “possible” and contingent on “long-term purchase guarantees, reliable partners and external financing”. The programme focused on the 12,000 MW earmarked for Algerian needs, raising the proportion of domestic consumption so accounted for from practically nothing in 2011 to around 30% of a projection of 130-150 TWh in 2030. Of that 30%, most was to be solar – wind capacity of 1750 MW was not expected to yield more than 3% – while CSP capacity (7200 MW) was expected to predominate over PV (2800 MW).
Nor was this just for the distant future. A first phase (2012-13) of projects to test the different technologies was to be succeeded by the beginnings of deployment (2014-15), and large-scale roll-out from 2016. Capacity was to hit 650 MW in 2015 (including 300 MW of CSP and 240 MW of PV) and 2600 MW in 2020, the latter comprising 60 plants with roughly 1500 MW of CSP, 800 MW of PV and 300 MW of wind capacity.
PROGRESSIVE INTEGRATION: The principle of progressive integration – local production of equipment – was to be followed. For instance, a PV panel factory to be launched in 2013 was to put the integration rate at 60%, while further capacity and the production of silicon from sand was to raise that to 80% between 2014 and 2020. Renewables are reckoned to be capable of generating 100,000 jobs in the long term, with production, construction and operation combined.
ADJUSTING UPWARDS: With the “30% in 2030” target still regularly repeated, medium-term targets seem, if anything, to have escalated – and their structure shifted. A 10-year plan published by Sonelgaz in June 2013 envisaged 3071 MW on-stream by the end of 2020, with almost 2470 MW to be added in the following three years. In the medium term, at least, there is more emphasis on PV, which accounts for 1476 MW of the 2020 total, with 420 MW of it due to enter service in 2014, mostly on the Hauts Plateaux. Sonelgaz statements in September 2013 referred to “emergency plan” provisions up to the end of 2017, further emphasising PV and not mentioning CSP at all.
With all eyes currently fixed on increasing production, the potential quick-fix character of PV is doubtless an attraction, as is its lower (and falling) unit cost: Sonelgaz figures from 2012 assumed PV is approximately 25% cheaper than CSP per MW.
With a price tag of €75bn regularly mentioned for the full 22,000-MW programme, investments earmarked for the shorter term are huge, rising and apparently entirely down to the public sector. That 2013 10-year plan envisaged over €24.5bn for renewables – more than the €18bn destined for conventional electricity generation – with the state providing €21.9bn of it and the rest to be financed by SKTM, the recently established Sonelgaz subsidiary responsible for renewables.
PROGRESS: The role of SKTM represents a change in the organisational structure of the renewables segment. SKTM currently oversees the isolated grids in the south of the country, an area that will likely see a sizeable increase in solar production due to the remoteness of its consumers, and has been assigned the bulk of the mandate for renewables development, in collaboration with NEAL. Regulatory changes also bode well. The Electricity and Gas Regulatory Commission set cost-based preferential renewable feed-in tariffs (FITs) in June 2013 and a subsidy mechanism has been put in place. The difference between FITs and standard electricity costs will be reimbursed from a fund financed by a 0.5% levy on hydrocarbons royalties.
However, projects are still largely in experimental mode. While significant PV roll-out on the Hauts Plateaux may be imminent, the Sahara is a different matter: an experimental PV park of 1.1 MW is to come on-stream in 2014 at Ghardaïa, to test the application in Saharan conditions of the four types of PV technology. The first Algerian CSP tower plant – a storage-friendly form distinct from the parabolic trough system in operation at Hassi R’Mel – is to be a 7-MW hybrid plant, announced in 2012 and to be developed at Boughezoul on the edge of the Sahara by the CDER and its partner the German Aerospace Centre, adapting technology applied by the latter in Jülich, Germany. Bigger, 150-MW plants at El Oued and Béni Abbès, using a different form of tower technology, were originally planned to come on-line in the 2011-13 phase, but are still at prequalification stage. The country’s first wind farm, a 10-MW installation at Adrar, is still being built, by France’s Cegelec.
PV EQUIPMENT: Integration plans are ongoing, though an integrated PV equipment production facility – planned by Sonelgaz’s subsidiary Compagnie d’ Engineering de l’Electricité et du Gaz (CEEG) – at Rouïba near Algiers has been delayed. The subject of a €290m turnkey deal with Germany’s Centrotherm in 2011 – and expected to be able to produce 114-120 MW in PV modules per year starting in 2014 – this was held up by Centrotherm’s financial difficulties, with CEEG cancelling the contract in June 2013.
It has been announced that a re-tender is now on the cards, with planned capacity at 140 MW. Local industrial conglomerate Cevital has plans for a still bigger (500-MW) PV module factory at Laarba, designed to serve foreign as well as Algerian markets.
Meanwhile, the benefits are being felt first on a much smaller scale. Distribution of PV kits to remote areas with no grid connection has been under way for some time, with 18 villages in Adrar, Illizi, Tindouf and Tamanrasset provinces already so supplied. Supported by a state-administered rural electrification programme, this method is being extended in the south and applied to 48 population centres in the Hauts Plateaux in 2013. Capacity of 5 MW is slated for 2013.
EXPORTS: The Algerian authorities were guarded about the idea of large-scale renewables exports in 2011, unsurprisingly given the level of demand in Europe, the natural market. While the connection is not a necessary one, the idea of exporting large amounts of cheap electricity to Europe has been closely associated with the German Desertec scheme. Taking in not just Algeria but North Africa and the Middle East generally, this is based on the concept that energy-hungry Europe can be supplied with cheap, desert-generated electricity via high-voltage direct-current cables stretching thousands of kilometres – with as much as 15% of Europe’s energy needs being so supplied by 2050. Championed by the Desertec Foundation, this was bolstered in 2009 by the establishment of the Desertec Industrial Initiative (DII), including a consortium of industrial and financial heavyweights, such as E.On, RWE, Siemens, Deutsche Bank, Munich Re, Schott Solar, MAN Solar Millennium and Bosch Rexroth from Germany, Switzerland’s ABB, Spain’s Abengoa and Algeria’s Cevital.
However, the DII has faced a spate of recent complications. With MAN Solar going bankrupt in 2011, Siemens and Bosch exited the consortium in 2012, as did the Desertec Foundation in July 2013. More broadly, the potential for exports to Europe is facing a retrenchment after a renewables boom in Europe. Proposed large-scale Moroccan capacity described as Desertec’s pilot project has fallen foul of Spain’s unwillingness to transmit its power, for example.
FEASIBILITY STUDY: Sonelgaz signed a memorandum of understanding with the DII in December 2011, and a feasibility study followed for creation of 1000 MW of capacity, with 90% of it export-oriented. Yet Sonelgaz’s CEO, Noureddine Boutarfa, made statements to the press after its conclusion in June 2013 that raised questions over the long-term potential and lack of enabling EU legislation. Indeed, given the mandates Algeria has given itself in terms of local production, perhaps it has enough on its plate with its domestic programme.