Algeria‘s energy ministry has revealed that it plans to launch a tender for the deployment of 1 GW of solar capacity by the end of October.
Mouloud Bakli, the president of Algerian think tank Club Energia, said the tender might conclude with prices ranging from DZD 5/kWh ($0.036) to DZD 7/kWh.
“Given the latest capex balance-of-system figures in the market and harvesting yield in the North African region, we expect the tender will provide a double-digit internal rate of return,” he told pv magazine. “Several international Tier 1 independent power producers have already expressed their intention to participate in the tender.”
Bakli said he expects the power purchase agreements to adhere to international standards.
“Investors will be able to repatriate dividends in international currency,” he stated, noting that the PPAs will likely be similar to those that international players already use for desalination projects. “The awarded PPAs should have a duration between 20 and 25 years and the tender will be divided into 10 lots ranging from 80 MW to 180 MW each.”
The Algerian Renewable Energy Company (SHAEMS), which is jointly owned by state-owned gas giant Sonatrach and power utility Sonelgaz, will be allowed to take a share of up to 25% in the special purpose vehicles that will own the winning projects.
“This is meant to reassure foreign investors, like for the water desalination scheme,” Bakli explained. “We expect the selected parcels to be mostly developed in the sunny Hautes Plaines, in the northern part of the country.”
Local content requirements will be included in the procurement exercise, but they will not be mandatory for the first tender of the series, as the capacity of the local industry will only just exceed 1 GW by the end of 2022. Solar developers that use locally manufactured PV components may receive additional bonuses on top of the granted fixed tariff.
Another three tenders of the same size will likely be held each year between 2022 and 2024.
In 2019, the Algerian government held tenders for off-grid, hybrid solar-diesel and PV projects. The procurement rounds were part of the country’s plans to deploy 22 GW of clean energy generation capacity by 2030, including 13.6 GW of solar.
Algeria had around 423 MW of total installed solar capacity by the end of last year, according to the International Renewable Energy Agency (IRENA).
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