MENA Energized: Regional Challenges to Green                    the Power Sector       Session 1: the emergence of a regul...
Content    Energy context and RE status in North Africa    region    Institutional and regulatory framework for    Renewab...
Energy context and RE status in the regionVaried energy contexts   Algeria        Gas and petroleum net exporter        Pr...
Energy context and RE status in the regionRE contribution                                      6%                         ...
Energy context and RE status in the regionInstalled capacities                                                            ...
RE institutional and regulatory frameworksGeneral overview              Centre for the Development of RE  Algeria     Agen...
RE institutional and regulatory frameworksAlgeria   Regulation framework   Private bodies can install and operate RE power...
Institutional and regulatory framework for REConception du mécanisme PROMO-ISOLMorocco du mécanismesObjectifs   Regulation...
Institutional and regulatory framework for RETunisia   Regulation framework   A company (or a group of companies) is allow...
RE country policies and their objectivesStrategic goals   Reduce the weight of the energy expenses in the   economy (in 20...
RE country policies and their objectivesQuantitative objectives                            % RE in       % RE in primary  ...
Strengths of the RE policies in the region   Raised awareness of policy makers in the region for energy   efficiency and R...
Main weaknesses of the RE policies in the region   Legal frameworks still not enough attractive for private   investment  ...
Main weaknesses of the RE policies in the regionImpact of the subsidies to conventional energy tariffs                    ...
Main weaknesses mécanisme PROMO-ISOLConception du of the RE policies in the regionImpact of the subsidies to conventional ...
Main weaknesses mécanisme PROMO-ISOLConception du of the RE policies in the regionImpact of the subsidies to conventional ...
Main weaknesses of the RE policies in the regionImpact of the subsidies to conventional energy tariffs             Example...
Success stories of integrated RE approachesSolar water heater program in Tunisia: PROSOL   Principles        Integrated ap...
Success stories of integrated RE approachesSolar water heater program in Tunisia: PROSOL4 000                  Evolution o...
Success stories of integrated RE approachesPV rural electrification program in Morocco   Strong Public-private partnership...
Success stories of integrated RE approachesCSP project in Algeria: Hassi Rmel project   Project description        Project...
Conclusion  The region knows recent dynamism for RE development through:       Regulatory frameworks reform       RE devel...
Conclusion  Technology transfer and local industry support in order to  maximize indirect benefits of RE programs  Capacit...
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Session1 a perspective from the maghreb countries authored and_or presented by rafik mosau

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MENA Energized: Regional Challenges to "Green the Power" Sector July 28, 2009

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Session1 a perspective from the maghreb countries authored and_or presented by rafik mosau

  1. 1. MENA Energized: Regional Challenges to Green the Power Sector Session 1: the emergence of a regulatory framework in the MENA Region Perspective from the Maghreb Countries 28th June 09Rafik MISSAOUI,Energy & Enivrement expert
  2. 2. Content Energy context and RE status in North Africa region Institutional and regulatory framework for Renewable Energy RE countries policy and their objectives Strengths of the RE policies in the region Success stories
  3. 3. Energy context and RE status in the regionVaried energy contexts Algeria Gas and petroleum net exporter Primary energy consumption : 35 Mtoe Libya Gas and petroleum net exporter Primary energy consumption : 11 Mtoe Morocco Importation for more than 96% of its energy needs Primary energy consumption : 15 Mtoe Tunisia Net importer since 2000 Primary energy consumption : 8 Mtoe
  4. 4. Energy context and RE status in the regionRE contribution 6% Share of RE in primary energy consumption in North Africa Countries - 2008 5% 4,4% 4% 3% RE contribution in the region is still very low: around 1.6% of 2% 1,6% the primary energy consumption 1% 1,2% (including Hydro) 0,3% 0,1% 0% Less than 2.1% of total Algeria Libya Morocco Tunisia All the region electricity generation (including 12% Share of RE in electricity generation Hydro and excluding traditional in North Africa Countries - 2008 10% biomass) Hydroelectricity Excluding hydro 8% Morocco and Tunisia show the 6,0% highest rates 6% 4% 2% 4,0% 1,6% 1,1% 0,9% 0,3% 0,4% 0,5% 0,5% 0% Algeria Libya Morocco Tunisia All the region
  5. 5. Energy context and RE status in the regionInstalled capacities Installated capacities Biomass (% Primary energy Solar PV Solar thermal (1000 Countries consumption) Wind (MW) (MWp) x m² collectors) Algeria 0,6 6 Libya 0,5 6 Morocco 16% 124 10 240 Tunisia 11% 54 1,3 320 35 Penetration rate of Solar Water Heater 31 30 in North Africa Region - 2008 Collectors m² / 1000 hab. 25 Turkey 132 20 Cyprus 788 Greece 334 15 10 7 5 1 0,2 - Algeria Libya Morocco Tunisia
  6. 6. RE institutional and regulatory frameworksGeneral overview Centre for the Development of RE Algeria Agency for the Promotion of the Rational Use of Energy Centre of Research and Studies on Solar Energy Libya Renewable Energy Authority of Libya Morocco Centre of Renewable Energy Tunisia National Agency for Energy Conservation Public incentives & Specific Feed in Countries Specific regulation for RE subsidies fund Tariffs Elec. & Gas Law 02-01 Algeria Law on RE 04-09 Yes Yes Yes Libya No No No No Morocco On going Yes On going On going Law n°2009-7 Tunisia Decree n°2009-362 Yes Yes On going
  7. 7. RE institutional and regulatory frameworksAlgeria Regulation framework Private bodies can install and operate RE power plants, but under concession regime. Transmission system operator or the holders of the distribution concessions must purchase RE-based power generation. Annual quotas for power generation from RE can be set by Regulatory Commission who ensure compliance to such obligations. A premium of 100% to 300% over the electricity price as established by the market operator is given to every kWh from RE supplied to the network. The premium depends on the RE sources (ex: PV and wind 300%, CSP maximum 200%, waste 200%, etc.). The excess costs associated to these measures can be financed by the State or can be imputed on tariffs. Incentives Investment subsides provided by the national energy conservation fund which can go until 50%, depending on the RE technology.
  8. 8. Institutional and regulatory framework for REConception du mécanisme PROMO-ISOLMorocco du mécanismesObjectifs Regulation framework Private operators can produce electricity from RE for its own consumption for less than 50 MW Private operators can produce electricity from RE for the national network The operators needs simple declaration for small capacities (less than 2 MW) and authorization for upper capacities. The purchase tariff is defined by a Power Purchase Agreement to be signed between the operators and the national utility. Incentives Customs duties : 2,5% for all RE Other subsidies in the framework of the foreseen energy conservation fund
  9. 9. Institutional and regulatory framework for RETunisia Regulation framework A company (or a group of companies) is allowed to produce electricity from RE for its own consumption, with no capacity limitation. The company is allowed to use the transmission network for electricity transportation to other consumption facilities belonging to the same company or group. The national utility has the obligation to buy electricity in a proportion below 30% of the generated RE electricity by the company, with a price defined by decree. Incentives Investment subsides provided by the national energy conservation fund with a level that depends on the RE technology: 70% of cost for immaterial investment (feasibility study, etc.) 70 $/m² for the SWH, 30% for PV systems connected to the network, 40% for solar and wind water pumping and small biogas systems, etc. VAT and Customs duties exemption for all RE and EE equipments
  10. 10. RE country policies and their objectivesStrategic goals Reduce the weight of the energy expenses in the economy (in 2007 the share of energy expenses in the GDP was around 12% in Tunisia and 20% in Morocco) Reduce the amount of public subsidies to conventional energy by displacing energy fossil consumption Reduce the energy dependence of the country by diversify the energy mix in the mid and long term
  11. 11. RE country policies and their objectivesQuantitative objectives % RE in % RE in primary Target Countries electricity energy Additional forecasted capacities horizon generation (1) consumption (1)Algeria 2010 5% 400 MW solar PV and CSP * Wind: 1000 MW * PV: 16 MWLibya 2020 10% * CSP: 100 MW * SWH: 10.000 m² * Wind: 1420 MW * PV: 20 MWMorocco 2012 20% 10% * CSP: 20 MW * SWH: 200.000 m² * Wind: 190MW * Biogas: 10 MWTunisia 2011 8% 4% * Pomace olive valorisation: 40 MW * PV: 4 MW * SWH: 480.000 m²(1) Including hydro
  12. 12. Strengths of the RE policies in the region Raised awareness of policy makers in the region for energy efficiency and RE Existence of RE official policies development in the countries Reinforcement of energy efficiency and RE policies since the last oil international price increase, particularly in energy importer countries (Tunisia and Morocco) Establishment of new regulatory frameworks more open to private-public partnership Increase of financial support from the international donors to RE in the region, mainly for Tunisia and Morocco More and more mobilization of CDM to support RE projects in the region (Tunisia and Morocco).
  13. 13. Main weaknesses of the RE policies in the region Legal frameworks still not enough attractive for private investment Subsidies to conventional energy tariffs make RE not profitable for the end user and not attractive for private investors Strategy targets are based some time on political issues and not taking in account the real bottlenecks that will make them not feasible Development approach focusing on demand stimulation only: But, market transformation needs to work also on the development of local industries and suppliers of RE energy technologies Countries don’t focus enough on financing mechanisms to mobilize required resources. Lack/absence of concrete integrated mechanisms to operationalize the adopted strategies Capacities building
  14. 14. Main weaknesses of the RE policies in the regionImpact of the subsidies to conventional energy tariffs 0,250 Energy tariffs Electricity tariffs for residential use in MEDA Country November 2008 - all taxes included $/kWh in MENA countries 0,200 Min 0,162 Max 0,154 0,150 0,142 0,125 0,100 0,087 0,087 0,067 0,050 - Algeria Egypt Jordan Lebanon Morocco Syria Tunisia Turkey 0,300 LPG and natural gas tariffs for residential use in MEDA Country November 2008 - all taxes included 0,250 €/kWh 0,207 0,200 LPG Price (USD) NG Price (USD) 0,150 0,100 0,067 0,056 0,050 0,031 0,029 0,018 0,003 0,007 0,002 - Algeria Egypt Jordan Lebanon Morocco Syria Tunisia Turkey
  15. 15. Main weaknesses mécanisme PROMO-ISOLConception du of the RE policies in the regionImpact of the subsidies to conventional energy tariffsMécanisme financier Example of the wind projects50% Profitability of self production wind projects45% according to the site quality in NA countries Equity IRR40% 35% Tunisia35% 32% Morocco 30%30% Algéria 27% 24% 30%25% 22% 28% 19% 25%20% 23% 16% 20%15% 18% 15%10% 13% 5% 3% 1% 0% 2600 2800 3000 3200 3400 3600 3800 4000 4200Source: Author estimation Site quality: Number of hours of full generation per year
  16. 16. Main weaknesses mécanisme PROMO-ISOLConception du of the RE policies in the regionImpact of the subsidies to conventional energy tariffsMécanisme financier Example of the SWH market 1 000 Pay back Period (years) LPG Tariff and SWH Egypt profitability for the end users 100 Algeria Syria Jordan Moroc Tunisia 10 Lebanon Palestine Turkey 1 0 200 400 600 800 1000 1200 1400 1600 1800 2000 LPG Tariff in €/T
  17. 17. Main weaknesses of the RE policies in the regionImpact of the subsidies to conventional energy tariffs Example of the SWH market1 000 0,3 m² of collectors / SWH penetration market rate versus 900 1000 inh. LPG tarifs in MEDA region 0,25 LPG price €/kWh 800 700 0,2 600 500 0,15 m²/1000 inh 400 LPG kWh price 0,1 300 200 0,05 0,025 0,023 100 0,014 - 0 Cyprus Greece Turkey Jordan Tunisia Morocco Algeria
  18. 18. Success stories of integrated RE approachesSolar water heater program in Tunisia: PROSOL Principles Integrated approach including technical, financial and organizational issues Win-Win negotiated multi-stakeholders approach, Pubic-private partnership approach, Strong involvement of stakeholders: suppliers, bank sector, Utility Mechanism description NECF subsidies the SWH cost (around 20%) to improve the pay back period for the end-user 5 years loan reimbursable through the electricity bill to face the constraints of limited household capacity of investment Public quality control mechanism by NAEC (suppliers and models accreditation) Monitoring and information management system
  19. 19. Success stories of integrated RE approachesSolar water heater program in Tunisia: PROSOL4 000 Evolution of installed thermal solar collectors index Index (%) Base 1985 85000 m²3 500 No clear policy PROSOL3 000 GEF project No specifique credit system2 500 No quality control system No investment subsidies Fiscal incentives (VAT =0 and CD = 63000 m² 10%) Fiscal incentives2 000 No specific credit system Private suppliers Fiscal incentives Specific credit system (via STEG) Investment subsidies No investment subsidies (35%)1 500 One public supplier and no private Private suppliers 35000 m² Quality control system Quality control system Specific credit system Investment subsidies 5 Private suppliers1 000 Fiscal incentives 17000 m² 4 500 2350 5494 3 1 2 328 m² 7500 m² - 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20
  20. 20. Success stories of integrated RE approachesPV rural electrification program in Morocco Strong Public-private partnership : concession approach Cost sharing between Utility, local collectivities and customers
  21. 21. Success stories of integrated RE approachesCSP project in Algeria: Hassi Rmel project Project description Project developer: New Energy Algeria (NEAL) Project under implementation Installed capacity 150 MW Energy mix : solar and natural gas Developing approach Project finance implying private sector 66% Spanish private developer and 33% public and private Algerian investors BOT approach
  22. 22. Conclusion The region knows recent dynamism for RE development through: Regulatory frameworks reform RE development strategies setting up There is a need to operationalize these strategies through innovative mechanisms Need for win-win financial mechanism that conjugate Public investment subsidies to overcome the constraint of low energy conventional tariffs Appropriate financial facilities (credit, guarantee, etc.) Downstream financial resources mobilization mechanisms (dedicated credit lines, investment funds, etc.) CDM mobilization as a financial supporting mechanism
  23. 23. Conclusion Technology transfer and local industry support in order to maximize indirect benefits of RE programs Capacity building Monitoring system for strategies and programs Enhancement of regional cooperation

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