GUEST BLOG: North Africa: Electricity systems in transition?
By: Dr. Bernhard Brand
Renewable energies are rapidly expanding into the electricity systems of the Middle East and North Africa (MENA) region. This observation has already been made in a previous entry of this blog, which highlighted recent advancements, particularly in the Middle East and Persian Gulf region. In the last months, media attention has turned to the North African countries: this February Morocco commissioned Africa’s largest CSP power plant, a few months earlier on Egypt launched an extensive renewable energy investment program, including a multi-billion wind energy deal with Siemens – to date the largest single order in the firm’s history. Likewise Algeria and Tunisia have recently announced ambitious national renewable expansion roadmaps. It can be stated that – apart from the conflict-shaken Libya – today all North African countries are clearly committed to integrating more renewable power into their electricity systems.
However, can we really speak of a deeper-rooted energy transition happening in these countries? This is difficult to say. First, it must be mentioned that the entire region features a hard-to-satisfy electricity demand, with tremendous growth rates in the ballpark of 6-8% per year. Facing imminent supply bottlenecks, decision makers are still taking a very conservative stance towards capacity planning. As per now, renewables are mostly perceived as a diversification option, an “add-on”, but not a key constituent of the future power system. Most players in the region seem to believe that their electricity systems can only be operated on the basis of a strong conventional generation backbone. Therefore, irrespective of the support for renewables, it can be observed that all North African countries are still pursuing equally vigorous expansion strategies for conventional technologies. Algeria, for instance, in addition to its 22 GW renewable goal by 2030, has announced a conventional capacity target, with almost 28 GW of new gas-fired power plants to be installed between now and 2025. Morocco is about to significantly expand its coal power share in the electricity mix, with three new coal-fired power plants under planning and construction. Likewise, Tunisia is considering coal power as a diversification option, while Egypt, motivated by recent huge offshore gas discoveries, has embarked on a broad expansion of its natural gas power plants – and is even considering nuclear energy as a future option for the electricity system.
It must be also noted that the implementation of renewable projects in the MENA region is often plagued by delays, as a comparison of the national renewable targets with the actual achievements (in terms of realized renewable capacity) shows (See Figure 1). The underlying reason is that renewable power projects in the region are mostly carried out on a project-by-project basis by state-owned electricity utilities, government agencies or other public entities. This approach usually involves an extensive phase for funding acquisition, negotiations with international finance institutions and a lengthy public procurement process. North African energy planners are beginning to realize that only a stronger involvement of the private sector can accelerate renewable energy expansion. An increasing number of countries are now focusing on attracting private renewable investments by implementing power purchase agreements (Egypt, Morocco), or even setting up feed-in-tariff (FiT) schemes for renewable electricity (Algeria, Egypt). However, it must be said that despite these promising attempts, the access for private players to the electricity market remains limited. North African power regulations are known for being very cumbersome and being highly exclusive to the state. The access to FiT, for example in Egypt, is linked to a protracted permission process, where public authorities – such as the state-owned transmission system operator – have the final say whether a private wind or solar power project will go ahead or not. Regulatory uncertainty (or the absence of regulation) is an additional reason why many novel concepts, which are currently being explored in Europe, have difficulties propagating in North Africa: grid-connected battery storage, net metering, pooling of (renewable) generators and consumers, demand-side-management, and so on – in other words, everything revolving around the topic of “smart grids.” Applying smart grid concepts and technologies is however essential to the integration of higher shares of renewable energies into the power systems. Regarding North Africa, which is endowed with exceptionally high solar and wind resources, a true transition towards renewable-based power systems can only be managed if – complementary to renewable capacity expansion – more emphasis is also placed on intelligent, “smart” concepts for their integration.
Fig. 1. Installed capacity (2015) and targeted capacity (2020) of wind and solar power plants in North Africa (in MW). Source: Brand, B. The Renewable Energy Targets of the MENA Countries: Objectives, Achievability, and Relevance for the Mediterranean Energy Collaboration. In: Rubino, Alessandro et al. (ed.): Regulation and Investments in Energy Markets. Solutions for the Mediterranean. Academic Press, 2015. ISBN 978-0128044360
Dr. Bernhard Brand works as consultant for renewable energy projects, mostly in the Middle East and North Africa. He holds a PhD from the University of Utrecht, for which he received the 2016 DNV GL Global PhD Award in Renewable Energy and Grid Integration.
Link 2: http://www.power-technology.com/news/newsmorocco-commissions-first-phase-noor-ouarzazate-solar-power-project-4803152
Link 3: http://www.wsj.com/articles/siemens-signs-9-billion-power-plant-deal-with-egypt-1433343667
Link 5: http://www.ecomena.org/solar-tunisia/
Link 6. http://www.nytimes.com/2015/10/29/business/energy-environment/a-gas-discovery-in-egypt-threatens-to-upend-mideast-energy-diplomacy.html