North African nations such as Algeria and Morocco are ideally located for CSP. But they will need to offer a lot more than sunshine in order to satisfy investors.
By Jason Deign, Spain correspondent
Juan Alario is a man you should talk to. As the European Investment Bank’s head of Renewable Energies, he holds the key to €5 billion in finance at a time when investment cash is scarce. His funding advice could make or break your CSP project.
So it is interesting that when referring to North Africa his counsel is not directed at CSP operators, but authorities.
In the region, “it is well known that there are three conditions needed for developing solar power,” he said at June’s Mediterranean Economic Leaders Summit Invest in Med conference.
“You need a clear regulatory framework, clear permits and permitting processes, and access to networks and sufficient capacity in those networks. North African countries have problems in all these areas.”
Which is a shame. As a 2007 research paper in the Revue des Energies Renouvelables notes: “In North Africa, millions of km2 fulfil the criteria of suitability for the construction of solar thermal power plants with respect to land slope and land cover.
Under the radiation conditions of North Africa … CSP plants can annually generate 0.25 TWh/km2.”
The problem is the region has to offer more than just flat land and sunshine: “In terms of regulation, I need a regime which allows me to buy [renewable energy] at the best possible rate,” Alario points out. “It has to be very clear that there is no political or regulatory risk.”
Alario says North African countries should go as far as possible in ensuring investors only have to shoulder the technical risks of a CSP project.
One simple measure governments can take, for example, is buying energy in dollars so investors do not face exchange rate worries. “If you do this, the investor can create a local market which leads to economies of scale, so costs go down,” he says.
States could go even further and carry out their own environmental studies on proposed CSP sites, so projects do not get nixed in advanced stages of development.
“In the energy market, a great deal of the answer [to funding issues] lies with the administrations,” Alario says. “Everything is regulated by the state.”
In North Africa, these states theoretically have a big incentive to make CSP work.
Omar Elbadawy, regional land resources programme manager at the Centre for Environment and Development for the Arab Region and Europe, in Egypt, says: “We have high energy and electricity demand growth and high demand in rural areas. Renewable energy sources are abundant, but not developed.”
However, CSP has its rivals.
Abdelhakim Bensaoula, director general of an Algerian consultancy called CCC Engineering, suggests that administrations in oil-rich nations may be swayed to fund hybrid projects instead of pure CSP as a way of appeasing the petrochemical industry.
“It’s difficult in an oil-producing country,” he says. “There is strong opposition to solar from local governments so we usually have to opt for hybrid systems.”
Nevertheless, he points out that if solar can provide cheap and efficient energy then that would allow oil to be diverted to other, potentially more profitable uses. And support for renewable energy is emerging from unusual quarters in the administration.
Bensaoula says the Ministry of Higher Education and Scientific Research is putting USD$10 million towards Algeria’s biggest renewable energy project so far, an integrated solar combined cycle plant near Tipaza on the Mediterranean coast, as a way of building up industry know-how.
Paving the way
If these early projects help pave the way for stronger support of solar energy, and the political will to introduce a favourable, durable regulatory framework, then investment is likely to follow.
Alario insists the European Investment Bank is keen to mobilise cash to back North African projects that can feed into the Mediterranean Solar Plan, and is eyeing proposals in territories such as Morocco, but “we want real action.”
And once each nation has got its house in order, there could still be challenges in putting in place the interconnections that will allow CSP energy to be exported to the region’s biggest potential power buyer: Europe.
That is perhaps why Alejo Vidal-Quadras Roca, one of the 14 Vice-Presidents of the European Parliament, feels the prospects for importing electricity from North African are still “almost science fiction”.
He says: “All these big projects are linked to having the right transport infrastructure and the Mediterranean Ring.”
While “we are giving priority to trans-European networks to do away with energy islands”, he says, it is not clear whether this investment will spill over into North Africa while governments there are viewed as less than completely stable.
“We import more than 50% of the energy we consume and most of these imports come from unstable or hostile countries,” says Vidal-Quadras. “This opens up a source of geopolitical instability which is worrying.”
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