In a country where energy resources are largely depending of oil imports, the recent increases in oil prices is heavily affecting the Moroccan government’s budget as well as the economic growth. Thanks to its strategic location, Morocco’s geographical situation offers a variety of renewable energy sources that the government is committed to optimize in order to increase its contribution to the energy mix from 4% to 10% in 2012.

Morocco aims to become a regional hub for electricity transfers, thanks to its program of interconnection with Spain and Algeria. As the required investments in these projects are usually higher than the conventional hydrocarbon resources, the government opted for the BOT concession mode. Morocco represents considerable opportunities for companies in equipment, technology and services related to RE development.

Market Overview

Morocco’s energy supply depends heavily on imports (95%). Only hydroelectric and renewable energies (RE - solar and wind) are produced from local resources. Morocco’s total installed capacity of electric power was 5,252 MW in 2005. Electricity production reached 19,518 GWh, representing 96% of the total demand (590 KWh/ habitant). Electricity imports are possible thanks to the interconnection that the country established with Spain and Algeria which allow access to installed capacities of 1,400 MW and 1,200 MW respectively.

Electricity demand in Morocco is expected to grow by 8.5 % to 9% annually until 2020. This is mainly supported by equivalent GDP growth forecast and generalized access to electricity thanks to an ambitious rural electrification plan, which aims at supplying electricity to 100% of the Moroccan rural population by 2007. The plan reached a coverage rate of 81% by 2005 as opposed to 72% in 2004.

In 2005, Morocco had an installed capacity from RE of 64 MW which produced 288 GW/h: 87% was generated by wind parks, 9% by thermo-solar plants, 3% by photovoltaic solar installations and the rest was produced by micro-hydraulic plants and biomass treatment plants.

L’Office National de l’Electricité (ONE) is the principal actor in Morocco’s electricity sector, with a monopoly on transmission and the largest in-country distribution grid.

Market Trends and Opportunities

After a 10-year period (1980-1990) of testing and evaluations of renewable energies alternatives, they were fully integrated in the government socio-economic programs. The objectives include the improvement of life conditions of the rural populations and the preservation of natural resources especially forests.

As a result of the national Action Plan of RE, RE’s supply share in Morocco for 2005 reached 4% (with 3.5% for hydraulic power generation). The plan aims to increase the RE supply share to 10% by 2012.

With its strategic geographical location, Morocco’s renewable energy resources offer a growth potential capable of exceeding the Government’s objectives: Morocco’s large dependence on petroleum resources, whose price reached historical peaks during the last 5 years, is a considerable obstacle to its economic growth. Therefore, the main challenge currently is to secure a sustainable and regular supply for the market to support the local economy. In addition, reducing the cost of energy ($4.2 bn in 2005) supports the government’s choice for renewable energies solutions in its energy development strategy.

Wind energy

In the north of Morocco (region of Tanger/ Tetouan), wind speed reaches an average of 8 to 11m/s (meter per second). In the regions of Essaouira, Tarfaya and Taza, the spead ranges from 7 to 8.5 m/s.

Because of the considerable estimated potential of wind power (6,000MW) in Morocco CDER published in 2006 the ” Atlas Eolien du Maroc” (The Wind Atlas of Morocco) including information on 50 sites.

Two wind parks, with a final total installed capacity of 200 MW, are currently under construction (60 MW for the Essaouira project and 140MW for the Tangier project). Both projects will be operational by the end of 2007.

Two additional wind parks with a total installed capacity of 120MW (60MW in Taza and 60MW in Tarfaya) will be implemented by the year 2012, augmenting the total wind capacity to 500 MW.

A recent study by the Centre de Developpement des Energies Renouvelables (CDER, Center for the Development of Renewable Energies) identified 6 wind farm sites with a potential installed capacity of 220 MW and a total production capacity of 660 GWh/year. Other initiatives to promote wind energy include ONE’s “1000 MW wind power” to develop new wind farm concessions.

While ONE already started the implementation of the projects of Essaouira, Tanger and Taza, in compliance with its new disinvolvement policy from the production phase, the Tarfaya project was announced recently in an International tender.

Morocco is striving to reduce its electricity costs to the industrial users. As a result these is increased interest of manufacturing companies in building their own power plants: In addition to the existing 10MW wind farm that Lafarge cements build in 2005, Ciment du Maroc will soon have its 10 MW wind farm, which can be extendable in the limits allowed by the regulator. The government is in the process of approving an increase of this limit to 50MW.

Other wind energy related projects scheduled for 2007 include water desalination projects in Tan-Tan and Akhenfir where the cost of potable water transfer reaches a prohibitive level of $13/ m3.

Solar Energy

Solar captivity in Morocco per meter square allows energy generation of 4.7 to 5.7 KW/day, while the average annual solar exposition ranges between 2800 hours to 3000 hours in the south of Morocco.

• Thermo-Solar energy: While the existing thermo-solar capacity is limited to 6 MW, a new 230MW thermo-solar plant will be implemented in 2007 (30MW from solar energy). Other projects for 200MW thermo-solar plants are currently in the feasibility study phase to identify the ones to be included in the 2008-2012 development plan.

  
  

• Solar-photovoltaic: In addition to the currently installed 45,000m2 of solar captors, the rural electrification plan, to be achieved by the end of 2007, will provide electricity to an additional 30,000 rural households. The increased promotion for the use of solar water heaters in rural as well as urban areas will require the installation of 20,000m2 each year.

Biomass

Abundant resources including wide areas for livestock breading (2.6 mil cattle, 16.3 mil sheep and 5.3 mil goats), important food processing activity (34% of the total manufacturing industry), as well as household solid waste from the urban activity, contribute to the current 3000 m3 of biomass production.

Hydraulic energy

Hydropower resources for electricity power generation remain generally under-utilized. The existing micro-hydraulic plants provide only 150 Kw of electricity. More than 200 sites were identified across the country for the installation of micro-hydraulic power plants.

Key Suppliers

Except for few solar photovoltaic panels that are produced locally in limited quantities, most of the renewable energy solutions are imported from the U.S., France, Spain, Italy and Germany among others. Technology suppliers are usually part of a consortium bidding on the international public tenders issued by ONE.

Prospective Buyers

Unlike the transmission activity, power generation in Morocco has been extended to private companies since 1990 when the first independent power plant (IPP) was awarded to CMS Energy/ ABB consortium under a 30 years BOT (Build, Operate, Transfer) contract as a result of an international public tender process.

Today, IPPs are responsible for 35% of power production in Morocco. Therefore IPP developers are the key buyers of RE equipment. However, under the current regulations, ONE remains the sole buyer of electricity production as well as the entity to which IPP assets are transferred after the end of the concession period.

As for RE consulting services, ONE and CDER are the only entities that are responsible for conducting the different feasibility studies prior to the issuance of International tenders. Other potential buyers of renewable energy solutions and services are the large industrial users that plan to produce their own supply of electricity for up to 10MW.

Market Issues & Obstacles

There are no non-tariff barriers inhibiting the importation of renewable energy equipment. The Moroccan government is completely supportive of increased involvement of the private sector in the development of cheaper and cleaner electricity; it is continuously improving the regulatory as well as the fiscal environments to make the investment more attractive.

Excerpts from “Morocco: Renewable Energy Opportunities”, US Commercial Service, 2006.