Algeria should look to open its energy market to international players to achieve its solar energy goals, according to a webinar on the country’s solar energy market held by Solarabic and the Middle East Solar Industry Association (MESIA).
The webinar focused on Algeria’s evolving solar market and the work and regulations the country needs to achieve its target of deploying 15 GW of solar power by 2035, as announced by the government earlier this year. A 3.2 GW solar development plan is already underway, which aims to roll out 20 large-scale solar projects in 12 provinces of the country.
Ghazi Koubaa, project and solutions manager at Longi MENA, explained that Algeria’s solar rollout has been slower than some of its North African neighbors because the country does not face the same pressure on fuel imports. He explained that although the country is heavily dependent on gas, production is domestic and strongly linked to the export economy.
“As a result, the driving force behind renewable energy is different,” Koubaa told attendees. “It’s not primarily about escaping an import law. It’s more about retaining gas for higher value exports, meeting rising domestic demand, diversifying the energy mix and preparing for future carbon taxes, perhaps from Europe for export opportunities.”
He added that when fuel is domestic and subsidized, the economic pressure to switch to renewables is obviously weaker: “It is not necessarily a lack of economic ambition, but renewables are developing rapidly when the economic pressure is greatest and the investment framework is affordable,” Koubaa said.
Yacine Boulfrad, Technical Development Manager at Scatec, believes that the main challenge facing solar deployment and the wider renewable energy market in Algeria is the ecosystem, not the technology.
Boulfrad mentioned five pillars – policy, power purchase agreements, procurement, permits and partnerships – that are needed to enable large-scale deployment. He explained that developers want to see stable policies, access to PPAs, competitive and transparent government procurement, fast permitting procedures and opportunities to work with local partners to enter the Algerian market.
Boulfrad also told attendees that he believes Algeria should seek to transform its solar market from a state-funded engineering, procurement and construction model to an independent power producer (IPP) model, in which private developers finance, build and operate projects. He said this would help reduce public expenditure, reduce electricity costs and attract the investments needed to achieve Algeria’s renewable energy targets.
“[Scatec] for example, have managed to charge very low rates in Tunisia. We are at less than $0.03/kWh there, and we can do the same in Algeria, or even better. We are now seeing some signs that the market is likely to shift towards IPPs, but there is no clear view on that yet, so we are waiting for some announcements from the government. “
Boukhalfa Yaici, director of Algeria Green Energy Cluster, said Algeria is “on its way to receiving international funds” following changes to last year’s finance law. He added that the cooperation of domestic and international players in Algeria will be crucial as the country works towards its renewable energy goals.
“We are thinking about 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 aim to create long-term value for Algeria, rather than just increasing local content, by developing local talent and strengthening the local supply chain. “When localization is treated as an investment rather than a liability, it becomes a win-win situation for both the project and the nation,” he explains.
Yaici also briefed attendees on Algeria’s work in network expansion. He said the Algerian utility, Sonelgaz, is making plans where all future plants will be connected. He also said the utility wants to build an electric highway about 800 kilometers long that would transmit energy between the north and south of the country, with longer-term plans including selling electricity through interconnection with neighboring countries.
The Africa Solar Industry Association (AFSIA) has so far tracked 2.87 GW of solar power in Algeria, according to figures available in its projects database. The database adds that a further 2.6 GW of solar is currently under construction.
