In 2009, Morocco adopted a national action plan for renewable energies. The aim is to achieve an installed capacity of 6,000 MW by 2020 with a combination of solar, wind and hydro energy. Where does its implementation stand? An interview with Saïd Mouline, CEO of the National Agency for the Development of Renewable Energies and Energy Efficiency (ADEREE).
What is Morocco’s policy for renewable energies?
Since 2009, the Kingdom’s priority has been renewable energies and the effectiveness of energy policies. We have a program identified with quantified targets. It aims to achieve an installed capacity of 2,000 MW of solar energy (“Noor” program), 2,000 MW of wind energy and 2,000 MW of hydro energy by 2020.
We have already reached 3,000 MW for solar and wind energy and by the end of 2015, we are going to commission the largest solar power plant in Africa in Ouarzazate. This site, which will be built in several phases, will have a total capacity of 500 MW. In the hydro sector, the 2,000 MW have already practically been installed.
It should also be emphasized that to reduce the intermittent component, the Ouarzazate solar power plant provides for heat storage to operate at night. In the hydro sector, dams with pumping and turbine stations act as batteries which store electricity.
Our entire renewable energy project will allow our country to reduce its energy dependence, by reducing it to 75% by 2020, compared to over 95% today, i.e. 20 points less. Another advantage is that we are going to make the best possible use of our domestic resources and develop industries in this sector, while bringing about regional development in isolated areas.
How has the Ouarzazate solar power plant been financed?
Three-quarters of the financial structuring of the first 160 MW tranche, which has a total cost of EUR 1bn, came from development banks. Agence Française de Développement (AFD), European Investment Bank (EIB), the German Development Bank (Kreditanstalt für Wiederaufbau – KFW), World Bank and African Development Bank (AfDB) are stakeholders. The Clean Technology Fund has been mobilized via the World Bank and AfDB.
The remaining 25% came from the Moroccan Agency for Solar Energy (MASEN) and a private partner selected following a bid invitation, as this project has been conducted in the context of a public-private partnership (PPP).
The second and third phases of the Ouarzazate power plant, which should be commissioned in 2017 with a capacity of 350 MW, will be financed with USD 2bn, with 20% by equity from Acwa Power (Saudi Arabia) and 80% from a debt contracted by MASEN through funds guaranteed by the development banks mentioned above, as well as through the Clean Technology Fund, which is part of the Climate Investment Funds (CIF).
What is different about this green financing compared to other more traditional credit lines?
Its main interest lies in the proposed rate and the additional support, for example, what the Clean Technology Fund offers (40-year maturity with a 10-year grace period and a rate at 0.75%).
Does Morocco’s banking sector finance the renewable energies sector?
Yes, of course. It is active in large-scale wind and solar projects, but also in purely private projects. Our strategy has been to establish dedicated institutions (MASEN for the implementation of the Solar Plan, ADEREE, which is more or less the equivalent of ADEME, the French Environment and Energy Management Agency), but also regulations, such as Law 13.09 of 2010 on renewable energies. This text allows private actors, individuals and companies to invest to produce their own energy using renewable energies.
This whole system has mobilized green financing in a public-private framework for “clean” projects that do not emit CO2, but has also allowed purely private projects to be developed. Today, some 500 MW of wind energy serve large consumers in the cement, steel and mining sectors in which Morocco’s banking sector operates.
Furthermore, large-scale national wind projects are supported by ONEE, the national water and electricity company. It launches bid invitations with a share of private prefinancing, in which promoters bid.
Moroccan and foreign banks are also called upon to provide financing alongside major development banks for projects conducted under public-private partnerships (PPPs). A special EUR 80m fund, MORSEFF, was set up in June 2015 by the European Bank for Reconstruction and Development (EBRD), AFD, KfW and EIB. It aims to support Morocco’s private sector for renewable energy and energy efficiency projects. It relies on local Moroccan local banks (BMCE Bank) which offer this specific credit line to their clients. Certain banks (ATW Bank, Crédit Agricole) have also set up specific lines which are earmarked for energy efficiency or solar pumping.
Can it be said, as someone pointed out in the room during the last Convergences Forum in Paris, which you took part in, that all the risks of green financing are borne by public authorities and all the benefits go towards the private sector?
No, in Morocco, a number of initiatives prove that the risk is shared because the State does not have the means to finance everything. The Cherifian Phosphates Office (OCP) has reduced its carbon emissions and energy consumption thanks to a pipeline to transport phosphates. In Tangiers, the French group Renault has the world’s first “carbon neutral” car factory because it operates with biomass boilers and electricity from wind energy. In Tetouan, Lafarge Group has built a wind farm partly financed by private Moroccan banks. In Laayoune, the cement manufacturer Italcimenti has done the same thing. The private sector takes its share of risk and the Government establishes structures and regulations to support this.
Should your country be considered as a model in Africa?
Yes, as our approach is quite exceptional. In Africa, Morocco is conducting a proactive policy on the continent, which is led at the highest level of the State. Africa is a priority for the Kingdom and we go to a number of countries in the context of forums and partnerships, both for renewable energy and electrification projects. The rural electrification rate has increased from 25% to 99% in Morocco in record time (15 years).
We are aware of Africa’s needs, especially for electrification. Exporting our model is not only a question of financing. It also depends on adopting the right approach with the African institutions in question.
Finally, we should not forget the small applications related to renewable energies, such as solar pumping or solar roofs, for which the economic model is becoming increasingly attractive thanks to the constantly decreasing cost of photovoltaics. The price has become very competitive with the sunlight we have in our region. At ADEREE, we set the example with a solar roof, which could be widely used for public buildings and private individuals when the architecture allows it.
The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.