Algeria should look to open its energy market to international players in order to reach its solar targets, according to a webinar on the country’s solar market held by Solarabic and the Middle East Solar Industry Association (MESIA).
The webinar covered Algeria’s evolving solar market and the work and regulations required for the country to achieve its target of deploying 15 GW of solar by 2035, as announced by the government earlier in the year. Work is already underway via a 3.2 GW solar development plan, which is aiming to roll out up to 20 utility-scale solar projects across twelve of the country’s provinces.
Ghazi Koubaa, Project and Solutions Manager at Longi MENA, explained that Algeria’s solar rollout has been slower than some of its North African neighbours as it does not face the same fuel import pressure. He explained that while the country is heavily reliant on gas, its production is domestic and strongly linked to its export economy.
“As a result, the renewable energy driver is different,” Koubaa told attendees. “It’s not mainly about escaping an import bill. It’s more about preserving gas for higher value export, meeting rising domestic demand, diversifying the energy mix and preparing for future carbon taxes maybe from Europe for export opportunities.”
He added that when fuel is domestic and subsidized, the economic pressure to switch to renewables is naturally weaker: “It’s not necessarily a lack of economic ambition, but renewables move fast when economic pressure is strongest and where the investment framework is bankable,” Koubaa said.
Yacine Boulfrad, Technical Development Manager at Scatec, believes the main challenge facing the rollout of solar and the wider renewables market in Algeria is the ecosystem, rather than technology.
Boulfrad listed five pillars – policy, power purchase agreements, procurements, permitting and partnerships – that are required to allow for large-scale deployment. He explained that developers want to see stable policies, access to PPAs, competitive and transparent government tenders, fast permitting procedures and opportunities to work with local partners in order to enter the Algerian market.
Boulfrad also told attendees he believes Algeria should look to transition its solar market from a state-funded engineering, procurement and construction-led model towards an independent power producer (IPP) model where private developers finance, build and operate projects. He said this would help reduce government spending, lower electricity costs and attract the investment required to achieve Algeria’s renewables targets.
“[Scatec] managed to have really very low tariffs in Tunisia, for example. We are at lower than $0.03/kWh there, and we can manage the same in Algeria, or even better,” he said. “We see some signals now that the market will probably shift to IPPs, but there is no clear vision yet on it, so we are waiting for some announcements from the government. “
Boukhalfa Yaici, Director of Algeria Green Energy Cluster, said Algeria is “moving in the direction to receive international funds” following amendments to its financial law last year. He added that the collaboration of domestic and international players in Algeria will be vital as the country works towards is renewables targets.
“We think the next step, after the 3.2 GW [solar development plan], will be supported by international players,” Yaici told attendees.
Muhammed Uzair Adeem, Business Manager at PowerChina, said localization should look to create long-term value for Algeria, rather than just increasing local content, via developing local talent and strengtening the local supply chain. “When localization is treated as an investment rather than an obligation, it becomes a win-win for both the project and the nation,” he explained.
Yaici also informed attendees of Algeria’s work on grid expansion. He said Algeria’s utility, Sonelgaz, is planning where all future plants will be connected. He also said the utility is looking to build an electric highway, of around 800 kilometers in length, that would transfer energy between the north and south of the country, with longer-term plans including the sale of electricity via interconnection to neighbouring countries.
The Africa Solar Industry Association (AFSIA) has tracked 2.87 GW of solar in Algeria to date, according to figures available in its project database. The database adds that a further 2.6 GW of solar is currently under construction.
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