North Africa: Maghreb countries are preparing for the solar sector

Can you provide a brief overview of the current photovoltaic market development in North Africa?

There is little installed photovoltaic capacity today in North Africa. Nonetheless, we have noticed a strong craze for this technology. Morocco has deployed a large number of photovoltaic panels, particularly under the Global Rural Electrification Program (PERG) Framework, launched by ONE and in which non-grid connected photovoltaic kits totaling a capacity of 15 MW and covering 51,509 homes were installed by the end of 2008. In terms of grid-connected photovoltaics, Morocco possesses a capacity that is a little less than 500 kW. Under the same context, a photovoltaic plant of 800 kW is under construction and will be commissioned in November this year. Morocco will launch very soon many small-size power plants.

Meanwhile, in Tunisia, a program named PROSOL-ELEC, offering a loan to be paid via the electric bill, along with a subsidy for the initial investment cost, has allowed the attainment of the country’s 15 MW target in one year, rather than in the three years (2010-2012) initially expected. Several pilot projects in Algeria are also well under way.

Furthermore, the vast majority of the Maghreb countries have prepared, or are preparing the legal and institutional frameworks, and the financial supporting programs to set off and develop this sector.

What are the biggest challenges to North Africa’s solar market development, especially in Morocco?

Though the level of solar irradiation in Morocco is auspicious for solar technology development, the cost of these systems remains relatively high and presents the main constraint against large deployment of such technology. However, the significant drop in the price of photovoltaic modules in the recent years brings us closer to grid parity in several specific electricity consumption scenarios. With the continuing improvement in solar technology efficiency and optimization of costs, it is most likely that photovoltaic installations will be economically viable in Morocco between 2013 and 2014. It is therefore necessary that both legislative and regulatory constraints are raised. Among others, the feed into the grid of electricity generated must be possible at all different voltage levels supported by a legal framework with well-defined, transparent and clear technical and financial specifications.

The main challenge for the electricity dispatching organism is to manage the intermittency in power generation of photovoltaic installations given that the country’s current installed energy capacity is only 6,346 MW. To mitigate this undesired intermittency with other renewable energy solutions, Morocco could utilize hydraulic or thermal solar power to alleviate electricity production.

How does the solar subsidy policy landscape in North Africa look like?

As stipulated earlier, Tunisia embarked on the support for renewable power with a residential photovoltaic program offering a support mechanism, which comprises both a subsidy to the initial investment and a loan which reimbursement is included in the monthly electricity bill.

Morocco, on the other hand, has started with international request for proposals for large-scale centralized solar and wind power parks in which electricity purchase is guaranteed via a PPA (power purchase agreement). Regarding the first large-scale thermal solar power plant launched by MASEN, the evaluation is carried out in two stages: the first stage covers the evaluation of the project’s technical aspects; and the second stage is set to evaluate the economical conditions. The gap between the bid price and the ONE purchase price will be covered by MASEN.

With respect to the low voltage/residential photovoltaic installations, thoughts and discussions are being initiated to reduce or eliminate VAT for modules and set up special loans or subsidies for equipment acquisition.

How will the solar market grow in North Africa? What market segments will lead the development?

Existing market forces have attracted international photovoltaic players only to those markets with the highest feed-in tariff. This approach was suitable for the development of the photovoltaic market and valid for developed countries. Regarding the Power Purchasing Parity of North African countries, a different approach has to be considered, thus forcing investors to adapt a different business model. North African countries, as well as countries from the GCC, have favourable climate conditions allowing for a strong and economically sustainable development of photovoltaics.

The North African photovoltaic market is still tiny, yet I am confident that we shall see important market growth in the coming two years, due to favourable solar irradiation, reaching grid parity as well as several regional initiatives, such as the Desertec Industrial Initiative (DII), Med Grid, etc. with their objectives to install large scale CSP and photovoltaic power plants in the region.

In the short- and medium-term, mainly the development of those two segments: small size photovoltaic power plants and facilities on a commercial-scale, are expected to grow favourably.

Will Morocco be able to maintain its leading solar role in the future and if so, how?

Morocco has been a pioneer in the field of renewable energies, already starting with the water dam policy of HM King Hassan II in 1960 aiming at water control and its valorisation. Today, HM King Mohammed VI strengthens this strategy and fixes new objectives for the development of renewable energies, especially solar energy. The result of this strong commitment is a growing public awareness of this potential, as well as a mobilization on each level.

We are going to maintain this impulse, joining forces by developing and integrating the private sector, thus creating high value-added jobs. We aspire to strengthen the local expertise and to support innovation to become technology developers. Therefore, Morocco fortifies the cooperation on different levels and sectors with neighbouring countries. These would also include, for example, Germany to benefit from its experience, but also to develop new models of partnership in research and manufacturing.

How big is the interest of international investors in projects in Morocco? What does the country do to attract them?

Due to the favourable geographical setting of Morocco with its vicinity to Europe, its stable economic and political situation, and the fact Morocco is working hard to become a hub towards Africa and a bridge towards the Middle East, the government has been successful in attracting several major global players from the automotive and aeronautics industry to base their production lines here in Morocco.

Several incentives by the Ministry for Industry and Innovation have been launched by the government to attract foreign direct investment, e.g. several special economic zones that are tax exempted, subsidies to encourage the setting up of industrial production units, and programs that support for the development of qualified human resources, and more.

In Morocco, there is no general feed-in tariff, meaning the purchase prices for major projects has to be negotiated separately. With the initiative "EnergiPro" the government encouraged industrial companies to produce "green" electricity of up to 50 MW. Is the initiative adopted by industrial companies?

Yes, the program has been successful with a strong the focus on wind power plants. I imagine, the more we approach grid parity for photovoltaics, the more the number of photovoltaic projects will increase.

How do you think local content will develop in the near future?

There are two manufacturers of crystalline photovoltaic modules in Casablanca with an annual production of five and 15 MW, respectively (Droben and Cleanenergy).

Speaking about local content, it is necessary to examine the whole value chain of a photovoltaic installation or power plant, and to differentiate. For example, there is no problem concerning certain components, such as civil works, metallic frames and cables, due to a competitive industry on international level which can – if necessary with minor adaptations – be positioned in these parts of the value chain. With regards to inverters, there is also potential due to a well-developed electronics industry. All those components represent more than 50 percent of the value chain.

Several programs and instruments have been created to accompany existing and new companies, encourage joint ventures and attracting production lines of international companies to Morocco. In this context, several training programs for photovoltaic technicians and fitters have already been implemented.

For cells and modules, the development of photovoltaic technologies such as thin film or CPV adapted to the Moroccan climate circumstances, might represent a market in which a considerable higher local content rate could be obtained.

PV Technology Conference – North Africa 2012

Badr Ikken will speak at the PV Technology Conference – North Africa 2012. The event is scheduled to take place on September 10, 2012 in Casablanca, Morocco. It will provide substantial know-how about market potential, relevant contact persons, economic aspects, and infrastructure and technology in North Africa. At the event, regional and international project developers, suppliers and manufacturers will have the opportunity to meet government decision makers, and potential investors who want to enter the market and invest in the solar industry. Further information can be found here.

Edited by Becky Beetz.