In November 2018 the government released a new series of tenders for electricity production from renewable sources. A total of 200 MW of solar capacity is available for development, of which 150 MW can be bid on by international independent power producers (IPPs) in partnership with local firms, while 50 MW are reserved for state-owned utilities operator Sonelgaz. This is a key step in opening up the solar segment to IPPs, as Sonelgaz subsidiary SKTM currently dominates the country’s production of electricity from solar power.
Mouloud Bakli, managing director of local consultancy firm Tell Group, believes these tenders will constitute a catalyst for expanded participation of IPPs in the solar segment. “After this phase of 200 MW, we will continue to move forward,” he told OBG. “It is always difficult in the beginning, but Algeria is at the dawn of a revolution,” he added.
According to SKTM data from mid-2018 by SKTM, there are 21 photovoltaic (PV) power stations in the country, with a total capacity of 344.1 MW. In 2017 five PV stations were opened, with a combined capacity of 125 MW. Hybrid projects also exist, such as the combined solar thermal power plant at Hassi R’Mel in the wilaya (province) of Laghouat.
Solar energy is central to the National Development Plan for Renewable Energies, launched in 2011. Of the 22 GW of renewable generation capacity it targets, 13.6 GW will come from PV. One of PV’s advantages is the relatively short construction time of solar parks, averaging three to six months in sub-Saharan Africa. The Sahara represents 75% of Algeria’s territory and has 3000 hours of sunshine per year, or an average isolation of 5 KWh per sq metre per day; this rises as high as 6.9 in the southern region. Algeria thus has the highest solar potential in MENA and one of the highest in the world.
Sonatrach is working to leverage this underexploited potential, signing a contract with Total to identify opportunities in renewable energies at the Algeria Future Energy Summit in October 2018.
Crucially, the development of solar energy should help ease pressure on gas. “Algeria hopes to increase its gas exports by meeting domestic demand with solar energy,” Bakli told OBG. Another important advantage of solar is that it can be used to bring electricity to isolated and off-grid areas, as demonstrated by a solar programme installed in 20 villages in the south of the country.
The government has set a targeted integration rate for PV and solar thermal of 80% and 50%, respectively by 2020, and the local PV panels industry is growing, led by manufacturers Aures Solaire and Condor Electronics. However, the requirements of the tenders regarding locally manufactured PV components has been raised as a possible challenge.
Although more modest in potential, wind is the second axis of the government’s renewable energies strategy. The country’s first and only wind farm was constructed in 2014 at Kabertene in the wilaya of Adrar, with a generation capacity of 10 MW. Two 20-MW wind farms were slated to be constructed between 2014 and 2015, but these have yet to be built. The government aims to boost wind generation capacity to 1.7 GW by 2030, and is also planning the development of a wind industry with a targeted integration rate of 50% by 2020.
Wind development may be slower to take off due to lower levels of competition than solar. This partly stems from the fact that wind power is less profitable, varying as it does according to wind speed, which in Algeria is relatively moderate, at an annual average of 9.7 km per second.
In addition, the country has less experience in wind generation, and farms located in the Sahara imply higher-than-normal maintenance costs. Another challenge is accurate localisation. “The mapping of wind resources is not very precise,” Bakli told OBG.