Algerian 150 MW solar tender secures final price of $0.069/kWh – and only a third of the capacity

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The Algerian Electricity and Gas Regulation Commission (CREG) has selected only one, 50 MW solar project in a tender intended to secure 150 MW of generation capacity across several power plants in the southwest of the country. The procurement exercise began in June.

Malek Drif, co-founder of Africa-focused renewables firm Al-Michkat Renewable Energy, told pv magazine CREG had pre-qualified 93 bidders for the tender but shortlisted only eight in June. Of the shortlisted bidders, only five made it to the tender’s final phase and only one was awarded a power purchase agreement, said Drif.

The sole successful project was submitted by the Power Generation consortium, of which Algerian module manufacturer Condor is the largest shareholder, for the 50 MW portion of the available generation capacity allocated in the Biskra region. The project will sell power for DZD8.28/kWh ($0.069/kWh).

CREG had set a ceiling price of DZD10.24/kWh for the Biskra allocation. The Ghardaïa region, which was set to have 50 MW of new solar, should have paid no more than DZD10.8/kWh and Ouargla’s planned 30 MW should have supplied solar electricity for no more than DZD11.16. The region of El Oued was set to see 10 MW facilities established at each of Tendala and Nakhla. No ceiling price was disclosed for those allocations.

Algerian solar analyst Moloud Bakli told pv magazine one of the reasons for the tender’s disappointing outcome was the fact ceiling prices were revealed on the same day the exercise was finalized. He estimated the winning project may have a payback period of up to 15 years and said the expense of civil engineering and logistics in Algeria contributed to a final solar electricity price higher than that seen in other North African tenders.

High failure rate

With 92 project bids having fallen by the wayside, Al-Muchkat’s Drif said many were unable to provide sufficient documentation for bank guarantees and added, the tender information provided by CREG and state-owned power and gas company Sonelgaz was not clear enough.

The project developer blamed a requirement for bidders to work with Algerian engineering, procurement and construction services firms with international experience for deterring investors and said the nation’s modest solar manufacturing industry does not have the economies of scale required to keep component prices down.

British investment firm Renewable Energy Partner, which has been active in Algeria since 2013, criticized the tender. “Although disappointing, this outcome was highly anticipated,” a company representative told pv magazine. “A lot of developers, like us, decided not to participate in the tender in the end for various reasons, which meant that a lot of bids were submitted in the first place [but not followed through]. Our advice to the authorities would be to analyze what went wrong and correct them for future [procurement] rounds.”

The Algerian government approved the exercise, as well as a 50 MW tender for the development of off-grid hybrid gas-diesel and solar projects, in early June. Both tenders are part of the country’s plan to deploy 22 GW of renewables generation capacity by 2030, including 13.6 GW of solar.

This article was amended on 30/10/19 to include Moloud Bakli’s comments.