By Neeraj Sanjay Mense
North Africa continues to be one of the most well-endowed regions in the world in terms of natural resources. Nations like Morocco, Egypt, Algeria, Tunisia and Libya not only own one of the largest hydrocarbon reserves – mainly concentrated in Algeria and Libya – but also boast an abundance of solar and wind potential, owing to the high temperature of the Sahara desert and an extensive coastline in the North. The sustainable supply of energy is a key determinant of socio-economic development and electricity demand in these North African nations. It has witnessed a sharp rise due to improved standards of living, increasing per capita income and a spurt in economic activity. On average, electricity demand in these countries has and is expected to increase from 4 per cent to 10 per cent per annum.
As of 2013/14, the total installed generation capacity of these countries was roughly 66.8 GW and this capacity will likely double over the next 5 to 7 years. With the exception of Morocco, which relies heavily on coal to meet its electricity demand requirements, the other countries have traditionally relied on gas and liquid fuels to meet their cumulative annual demand of 275 TWh. Although these countries are likely to continue their dependence on conventional fuel driven thermal systems up to 2019/20, volatility in the hydrocarbon market, a slump in oil and gas prices, reduced exploration and production activity, along with issues pertaining to security of supply, climate change, and sustenance of the resource has resulted in these countries developing ambitious renewable energy strategies to offset power shortages and ensure sustained economic development over the medium to long term.
Country by Country summary of current and future renewable energy landscape
With an installed capacity of 7,994MW, electricity demand in Morocco has been rising sharply by 7 per cent annually with a recorded consumption of 33.5TWh in 2014. Morocco’s generation portfolio has been dominated by coal (46.6 per cent), natural gas (16.5 per cent), liquid fuels (7.3 per cent) and renewables (16.5 per cent), while it imported an estimated 18.5 per cent of the total energy supply to meet its demand requirements.
As of 2016, the Morocco has 947MW of renewable capacity (excluding hydropower) including the recently commissioned 160MW Phase 1 of the Noor CSP Project and 787MW of wind power. With over 3,000 annual sunshine hours and an average solar radiation of 5.3kWh/m2/day, solar energy – along with wind – are the major source of alternative energy in the country.
The total wind energy potential in Morocco is estimated around 7,936TWh per year with average wind speeds ranging from 6 to 11m/s. Morocco has set itself the most ambitious plan in the North Africa region of achieving 42 per cent (approx. 6,000MW) of its total electricity demand through renewable energy technologies by 2020, which would witness commissioning of 2GW each of solar and wind power generation technologies and is anticipated to invest USD 13 billion in renewable energy technologies which would not only reduce its dependence on imported energy sources, but also reduce carbon emissions significantly.
Egypt currently leads the North African region in terms of installed renewable energy generation capacity, with 2.8GW of hydro power and 687MW of wind and solar power. As of 2014, Egypt’s power generation portfolio was dominated by steam, combined cycle and gas based thermal systems, which account for over 90 per cent of the total installed generation capacity, while hydro (8.20 per cent) and wind plus solar (1.30 per cent) make up the remainder of the generation capacity.
With a high electricity demand growth of 6 per cent per annum, Egypt would be required to add an additional 54GW through 2022 to meet its growing electricity requirement. While it envisages doubling its installed capacity by 2020, future power generation would continue to be dominated by natural gas and coal based systems.
Unlike 2014, Egypt’s new generation mix in 2022 would comprise of gas based thermal systems (57 per cent), coal (15 per cent), hydro (3 per cent) and wind and solar contributing 25 per cent of the total generation capacity. Additional capacity to the country’s national grid is expected to entail an investment of over USD 70 billion; USD 45.7 billion of which will be public finance while USD 25 billion is anticipated to be achieved through private investment.
With an additional capacity of 11.32GW by 2020, the renewable sector in Egypt presents a potential investment opportunity worth USD 13 billion, an estimated 46 per cent (USD 6 billion) of which would be used for commissioning wind and solar PV systems by 2018. Wind energy, with an estimated 30GW development potential, is set to dominate the renewable profile of Egypt with an installed capacity of over 5.5GW as compared to solar which would account for 2.5GW in 2020.
Algeria has an important role in global energy markets as a leading producer and exporter of natural gas and liquefied natural gas. As such, its installed generation capacity of 15.2GW is dominated by gas (>92 per cent) based systems and a peak demand of 12.5GW in 2014.
Renewable energy contribution has been limited to hydropower and solar installations (268MW of solar PV). Algeria has an enormous solar potential, which it is trying to harness through the Renewable Energy and Energy Efficiency Programme. Electricity demand in the country has been growing at a staggering 8-10% annually, necessitating diversification of its power generation capacity to ensure sustainability of economy and the country’s electricity supply industry.
The Renewable Energy Programme seeks to add 22,000MW worth of renewable power into the national grid by 2030, of which 4,500MW is expected to be commissioned by 2020. Estimates project Algeria’s solar potential at 13.9TWh/year; however, it’s expected to add a further 13,575MW of solar PV by 2030.
Apart from solar PV systems, wind (5,010MW), concentrated solar power (2,000MW), biomass (1,000MW), CHP (400MW) and geothermal (15MW) would make up the remainder of the renewable capacity addition in 2030. The country’s solar sector will; however, struggle to meet the government’s goals as many foreign investors would prefer investments in low risk environments in Egypt and Morocco.
The installed generation capacity for Tunisia was recorded at 4,799MW in 2014. This capacity is set to increase to an estimated 7,500MW as the country tries to meet its growing electricity demand, increasing at a rate of between 4-5 per cent per annum.
Renewable energy technologies currently account for 6 per cent of the country’s total installed generation capacity with 245MW of wind power, 62MW of hydro power and 15MW of solar PV.
The Tunisian Solar Plan aims to boost the proportion of renewable energy in the total generation mix with renewables accounting for 30 per cent of the total electricity generated in 2030. The objective of the Tunisian government is to add 4.7GW worth of renewable energy projects by 2030, with 2,700MW of wind and 1,700MW of solar energy based projects.
Libya’s power generation capacity has been hugely dominated by natural gas and liquid fuel fired systems. Supply shortages and maintenance of thermal systems have been a cause of concern during the civil war that the country witnessed as it now focusses on moving from a largely hydrocarbon dominated economy to one which is diversified with significant renewable energy contributions in its generation portfolio.
Similar to Egypt, Libya also seeks to develop its wind potential where average wind speeds recorded have been above 2.9m/s, sufficient for developing grid based wind generators. While the average solar radiation recorded has been 6kWh/m2/day, it seeks to not only increase its Solar PV capacity but also diversify with a significant proportion of concentrated solar power (CSP), as well as solar water heating (SWH) systems.
In tune with the Planning & Studies Department of the Renewable Energy Authority of Libya (REAOL), the country envisages renewable energy contributing 10 per cent of the total electricity generation capacity by 2020, comprising of wind power (1,500MW), CSP (800MW), solar PV (150MW) and SWH (300MW). By 2025, REAOL expects renewables to contribute an estimated 25 per cent of the total electricity generation capacity in the country, largely driven by wind (2,000MW), CSP (1,200MW), solar PV (500MW) and SWH (600MW).
While each of these nations have huge ambitions for expanding their portfolio of renewable energy, sound economic and regulatory practices, and private investment – along with political stability and risk mitigation – will prove crucial in realising the renewable potential that the region has on offer.
To date, solar and wind energy in North Africa have not matched up to their actual potential. Apart from utilisation of power for domestic purposes, regional power trade through COMELEC, and the proposed North African Transmission Corridor as well as interconnections with European nations across the Mediterranean, could boost viability of large renewable projects in North Africa. While the main aim of the North African Transmission Corridor is to ensure transmission of energy between Morocco, Algeria, Tunisia, Libya and Egypt; power export across the Mediterranean remains a key goal. Power export to mainland Europe would require the establishment of regional interconnectors, which are currently non-existent, except for the submarine cable link between Morocco and Spain.
Neeraj Sanjay Mense, is a Senior Research Analyst at Frost & Sullivan Africa