Algeria sets ambitious target for solar programme
Beirut - Algeria’s state-owned utility company, Sonelgaz, is pursuing an ambitious programme to double the country’s electricity generation capacity by the end of the decade, largely through a massive solar energy project.
Faced with high energy subsidies and declining gas output, Sonelgaz has plans to install 13.5 gigawatts (GW) of solar photovoltaic (PV) capacity by 2030. It is projected that Algeria could generate more than one-quarter of its energy needs from renewable sources by 2030.
Algeria is highly dependent on energy revenues. Oil and gas account for 62% of government revenue and 97% of export earnings. However, with oil and gas production in decline, renewable energy is considered an essential substitute for high domestic energy demand. Algeria’s electricity generation capacity reached 15.2GW in 2013, up from 11.4GW at the end of 2011, mainly from gas-fired and combined-cycle plants. The role of renewable energy is limited.
Peak power demand in Algeria is during the summer, reaching 12.5GW in the summer of 2014. Sonelgaz projects peak demand to grow to 20GW by 2017. As a result, Sonelgaz plans to add more than 12GW of generating capacity by 2017-18, with solar energy contributing a large part of the growth. One of the main challenges for the programme is financing projects at fixed electricity prices.
Algeria is the largest natural gas producer in Africa and is the second-largest gas supplier to Europe. It is also a member of the Organisation of the Petroleum Exporting Countries (OPEC). Algeria’s oil production is approximately 1.6 million barrels per day (bpd); gross gas production in 2011 was around 190 million cubic metres.
Despite its considerable hydrocarbon reserves, Algeria is building large solar energy capacity, about 170 terawatt-hours (TWh) per year. A new scheme for large-scale PV power plants is in the pipeline.
The programme, which will offer two feed-in-tariffs (FIT) rates — one for 1-5MW projects and one for projects larger than 5MW, is intended to help the country reach its goal of 800MW of solar capacity by 2020 and 22GW of renewable energy capacity by 2030.
The Algerian Energy Ministry launched the FIT programme to adopt more clean energy technologies. The programme offers solar power generators about $0.17 per kilowatt-hour (kWh) and has contributed to what is currently about 350MW worth of solar PV projects that are on the drawing board.
The ministry programme for the development of renewable energy plans to integrate renewable energies into the national energy mix to conserve hydrocarbon resources for export. In the Programme for Development of Renewable Energies 2011-30, adopted by the government in 2011, renewables are given a high priority. The first phase of the programme is dedicated to pilot and test projects of available technologies.
The first Algerian renewable energy project was launched in 2011, based on hybrid sources: photovoltaic, concentrated solar power (CSP) and wind power. The programme has a generating capacity of 12GW. It was built at the Hassi R’Mel power station in the northern part of the Sahara next to Algeria’s major natural gas industry hub. Gas from Hassi R’Mel feeds the natural gas export pipeline to Tunisia and Italy, as well as a gas pipeline to Morocco and Spain.
Algeria considered earlier an ambitious large scale European proposal to build Desertec. The initial focus of the project (proposed by a consortium of European firms, led by Germany’s Siemens) was to export solar power generated from the Sahara to Europe.
Desertec plans were to produce 100GW of power by 2050 at a cost of $440 billion.
The one-dimensional project’s main objective was to use renewable energy in North Africa to export power to Europe but failed to attract sufficient interest because the European renewable energy market could supply 90% of its own power demand. European critics of Desertec also argued that the project is utopian and too expensive.
In late December 2015, the Algerian Electricity and Gas Regulation Commission (CREG) confirmed its commitment to the development of renewable energy by concluding the final templates of the Algerian Power Purchase Agreement (PPA) for PV solar and wind projects.
Algeria’s power demand is experiencing steep consumption rates, with growth of 8-10% annually. Consumption growth is due to increasing population, rising demand and below-cost domestic energy tariffs. Several Arab countries have changed domestic energy prices recently in light of the rising demand and the deterioration of global crude oil prices. Algeria is expected to follow suit to attract financing for its energy projects.
Energy exploration has declined in Algeria. International oil companies have been reluctant to invest in exploration because of differences over the production-sharing contract law and security threats by terrorist organisations.
The major discovery has been shale gas in the southern Sahara. Algeria is among the top ten countries with shale gas reserves but shale gas is a long-term perspective. Exploration has been delayed. Local residents demonstrated against the development of shale gas reserves, fearing depletion and contamination of water tables in the region. National protests spread in support of the move and very little work on the new gas finds has taken place since discovery in 2014.