* Government launches solar plans with Ouarzazate contract
* Wind farm programme already underway, to expand
* Morocco hopes to export energy to Europe
* But may not be able to compete on cost in Spain
* Environmental impact, finance are also issues
By Aziz El Yaakoubi
RABAT, March 6 In a couple of years, rows of
gleaming solar panels are expected to stretch across the desert
outside Morocco's southern city of Ouarzazate, part of the
country's plans to meet its energy deficit with power from the
sun and wind.
Morocco is one of the world's most energy-poor countries,
importing around 95 percent of its needs, according to the World
Bank. Energy imports accounted for more than a quarter of the
country's total imports last year, contributing to a 7.9 percent
rise in the trade deficit to a record $23.6 billion.
So if they are successful, the renewable energy plans could
be a big boost to the economy. Together, solar and wind energy
development schemes should eventually cut Morocco's annual
imports of fossil fuels by the equivalent of 2.5 million tonnes
of oil, according to state power utility ONEE. Imports jumped 10
percent in 2012 to 19.7 million tonnes equivalent, energy
ministry data shows.
Morocco aims eventually to export some of its renewable
energy to Europe via undersea cables; success could pave the way
for Algeria and Tunisia to do the same.
But there are major obstacles. Operating solar plants in the
arid south of Morocco could damage the environment, straining
local water resources. Financing some of the renewable energy
projects could be a problem, especially as it is unclear whether
they will generate power cheaply enough to be exported.
"The idea seems great, but I don't know whether Morocco can
attract the billions needed to reach these ambitions. It's too
expensive and massive," said Mehdi Lahlou, economist at the
National Institute of Statistics and Applied Economics in Rabat.
Morocco hopes that by 2020, 40 percent or more of its
electricity generating capacity will be in the form of renewable
sources such as solar and wind.
In 2009, the government announced a $9 billion plan to
promote solar energy, envisaging five sites across the country
that would produce a total of 2,000 megawatts.
The global credit crisis, which slowed Morocco's economy and
hurt the state budget, delayed the plan for several years. But
the government is now moving ahead with it; last September, the
Moroccan Agency for Solar Energy (MASEN) awarded a $1 billion
contract to a consortium led by Saudi International Company for
Water and Power (ACWA) for an initial project at Ouarzazate.
Under the contract, ACWA will build and operate a 160 MW
solar plant, supplying electricity at 1.62 dirhams ($0.19) per
kilowatt hour, against 2.05 dirhams offered by the other
consortiums which bid.
Now MASEN is soliciting bids for another solar facility at
Ouarzazate with a capacity of 300 MW. The deadline to submit
expressions of interest is March 25.
Solar power generation requires water for mirror washing,
raising concern about the environmental impact. A World Bank
assessment in February said the water needs of the first
Ouarzazate facility would be small; "this impact is considered
to be of minor to moderate negative significance." However, the
drain of water due to solar projects is expected to increase as
their number grows.
By contrast, wind farms do not appear to face significant
environmental concerns in Morocco. ONEE has already installed
250 MW across the country and plans many more facilities. Nareva
Holding, the energy arm of investment company SNI, which is
controlled by Morocco's royal family, is a major player.
"Costs for wind are competitive now so we don't need an
agency like MASEN in the solar sector," ONEE chairman Ali Fassi
Fihri told a news conference this month.
Last month, French utility GDF Suez said that in a
consortium with Nareva, it would start to build Africa's largest
wind farm, with output of 300 MW, in Morocco's southern desert.
Investment will total around 540 million euros ($710 million),
partly financed by 360 million euros of loans from three
Moroccan banks. Fihri told Reuters that ONEE would buy
electricity from the farm at 0.64 dirham per kWh over 20 years.
Next month, ONEE plans to invite bids to build five wind
farm projects with total capacity of 850 MW. That huge project
would require about $1.7 billion of investment, however, and so
far only $201.7 million has been secured in the form of a loan
signed with the African Development Bank.
Obtaining finance for the renewable energy projects will
depend partly on how competitive they appear against other
sources of energy - and here the outlook is not entirely sunny.
Although Morocco imports the vast majority of its coal, ONEE
plans to build a big coal-fired power plant on the Atlantic
coast near the city of Safi, under a contract awarded in 2010 to
GDF Suez and Nareva. Mines and energy minister Fouad Douiri told
Reuters that the plant was expected to start operating by the
start of 2017.
Earlier this month, Abu Dhabi National Energy Co obtained
$1.4 billion in financing to expand its coal-fired power plant
in Jorf Lasfar, which would bring the plant's capacity to a
massive 2,000 MW. ONEE has also launched a tender for a 350 MW
coal-fired power plant in the eastern city of Jerada.
Given expected growth in Morocco's population and energy
demand over the next decade, there is likely to be room for
expansion of both traditional and renewable sources. But while
ONEE's Fihri said some Moroccan wind farms now generated power
more cheaply than coal-fired plants, it is not clear that all
its renewable energy projects will be able to compete on price.
Exporting large amounts of energy to Europe may be
impossible for the foreseeable future because of cost factors.
The ACWA solar project, for example, plans to supply electricity
at the equivalent of about 0.15 euros per kWh - significantly
more expensive than some renewable energy projects in Spain,
which also has major solar and wind resources.
"Morocco cannot compete with Spanish prices, which are at
between 0.05 and 0.06 euros per kWh," Ingrid Christina Barth, a
German embassy official handling cooperation with Morocco, told
"Any imports of green Moroccan energy into the EU would
therefore have to be subsidised - in one way or another."