Moroccan green energy receives key AfDB backing

Morocco has huge potential to generate solar and wind power and is strategically placed to supply Europe with electricity. The AfDB is supporting a rapid roll-out of projects, including wind farms and one of the world’s biggest concentrated solar power projects.

The African Development Bank (AfDB), the World Bank, various international financial institutions and the government of Morocco have committed substantial concessional finance to developing solar power projects. As long ago as 2009, Morocco announced a hugely ambitious $9bn plan to produce no less than 2,000MW of electricity by 2020.

The country currently imports nearly 2.5m tons of fossil fuels such as oil and coal, much of which is utilised to generate its electricity needs in thermal power stations, and those fuels account for around one-quarter of Morocco’s total imports bill.

Morocco inaugurated the Ain Beni Mathar Integrated Solar Thermal Combined Cycle Power Station in 2010 and this represented the AfDB’s first investment in concentrated solar power. This plant combines solar power and thermal gas power. The use of this system helped reduce the national fuel bill, and avoids emissions of 1,000 tons of CO2 per year compared to a fully gas-powered plant.

Ain Beni Mathar in Morocco, near the border with Algeria, was considered the perfect site to build a thermal and solar hybrid plant. The first of its kind in Africa, Ain Beni Mathar underpins the decision to build five concentrated solar power (CSP) plants.

The first CSP site being planned is now under construction and is scheduled to become operational next year. It leverages the huge amount of solar energy that falls on the North African region in general. Morocco receives more than 3,000 hours of dependable sunshine every year, and studies have shown that 15% of Europe’s energy could be provided by North African solar power plants by 2050.

It is estimated that this plant, to be built at Ouarzazate, south-west of Marrakesh, will be three times as efficient as a similar plant built in northern Europe latitudes, in Manchester or Warsaw for example.

The first phase of the Ouarzazate concentrated solar power plant will generate 160MW of power, but eventually this site will be expanded in a second phase to generate a further 300MW.

Concessional clean technology funds (CTF) were provided by the AfDB and the World Bank. Other Multilateral Development Banks – European Investment Bank, Agence Française de Développement, German Development Bank (KfW), and the EU’s Neighbourhood Investment Facility – as well as Moroccan financial institutions and the government, have all committed finance for the first phase of the project that is expected to have an operational life of 25 years.

The AfDB has advanced $70m from the CTF in the form of an investment, and granted a 25-year loan of €168m, ($216.5m) from its own resources. Already, tenders for Ouarzazate’s second phase, invited earlier this year, were received by the Moroccan Agency for Solar Energy (Masen), a Moroccan public entity established in 2010 in order to implement the Moroccan 2000MW solar plan.

“The Ouarzazate first phase is a key milestone for the success of the Moroccan solar programme,” says Mustapha Bakkoury, the president of Masen. “While answering both energy and environmental concerns, it provides a strong opportunity for green growth, green job creation, and increased regional market integration. It will pave the way for the positive implementation of the regional initiatives sharing the same vision. The support of international financial institutions, through development financing but also climate change dedicated financing, is essential to help bring the overall scheme to economic viability,” Bakkoury elaborates.

Types of Concentrated Solar Plants

There are four basic solar thermal power plant designs, but they all work on the principle of concentrating solar power with parabolic collectors (mirrors) that direct that solar energy onto a receiver. Ouarzazate uses parabolic trough collectors – the other designs being Fresnel collectors, solar tower plants and the dish Sterling system. Energy is then converted into heat at temperatures that can be as high as 1,000° centigrade (in solar tower plants). Then with the use of steam-powered turbines, this heat generates electricity.

The mirrors in the parabolic trough system concentrate the sunlight power onto an absorber tube that runs along the focal line, containing special oil as a heat transfer medium that is heated to around 400° centigrade and used in a heat transfer to create steam that drives a generator.

The energy payback time – that is, the time this installation will require to produce the same amount of energy that is used in the construction, operation and decommissioning – has been estimated at between three to seven months.

As for costs, research in South Africa suggests that the capital expenditure required to construct a concentrated solar plant is roughly equal to that of a conventional coal-fired generating station of the same turn-key capacity (however, this view is not universally accepted). Yet clearly, the environmental impact of the operation of a concentrated solar power plant is almost insignificant in terms of emissions.

Issues of land and water

In a further comparison between coal-powered plants and concentrated solar power, the large areas of land needed to construct a utilityscale solar power plant – usually thought to amount to one square kilometre for every 20-60MW – is often thought to present another problem. But the Ouarzazate solar project is built in the desert, which is uninhabited. Besides which, if the life cycle of the land is examined, including raw material exploitation, operation, infrastructure and disposal, solar technologies appear to be the most efficient electricity generating technology.

Generating electricity from coal actually requires as much or more land per unit of energy delivered if the land used in strip mining is taken into account. Furthermore, it is believed that the trough mirrors could be used as a shading asset that would allow for some forms of agricultural activities, so gaining waste desert land for human activities rather than just using land for energy use. However, there is one other issue that may prove problematic, which is the need for water in a CSP plant to maintain the mirrors. (The water used for the steam-driven generators is retained in a closed system.)

One study, by the World Bank, suggested that the water for maintenance would not be such a difficult challenge during the first phase of the Ouarzazate scheme, but the question would need to be revisited prior to the second phase becoming operational.

Essentially, Ouarzazate is in many ways an experimental and pioneering concept. It is experimental because nothing of this size has ever been attempted before. And pioneering because, although the cost of the electricity generated in strictly financial terms is not viable, the scaling up of concentrated solar power will see a rapid fall in costs so that the prospects for future projects will be far more compelling.

This objective is to install a concentrated solar plant of such a size to sufficiently test and demonstrate the storage technology component, which will most probably rely on a molten salt system, according to Youssef Arfaoui, a renewable energy specialist with the AfDB, and will possibly provide more than four hours of heat storage, allowing for electricity generation for at least some of the night after the sun has set.

“Morocco has emerged as an early leader in developing low carbon, sustainable energy on a large scale, and we are proud to support their drive,” states Hela Cheikhrouhou, the director of the AfDB’s Energy, Environment and Climate Change Department. “Lessons learned from these projects will inform efforts going forward in the country, region and around the world. One way to make these projects more viable, in the context where technology is still expensive, is to make the financing less expensive.”

Climate Investment Funds

The Clean Technology Fund’s (CTF) backing has been pivotal to Morocco’s Concentrated Solar Power programme. In fact, the CTF (which is the Climate Investment Fund that provides developing countries with positive incentives to scale up the demonstration, deployment, and transfer of technologies with a high potential for long-term greenhouse gas emissions savings) is backing the region’s concentrated solar power scale-up initiative with a total of $750m, to be implemented by the AfDB in partnership with the World Bank. The programme expects to leverage $4.8bn in public and private investments to avoid an estimated 1.7m tons of CO2 emissions each year from the energy sectors of the countries involved.

“Renewable energy holds much promise for Africa,” stated Mafalda Duarte, AfDB Chief Climate Change Specialist and CIF Coordinator.

“We must bring attention to these projects and encourage the widespread use of renewables like CSP, which holds substantial promise in Africa given its proven solar radiation potential, to increase energy access, green African economies, and deliver on sustainable development,” Duarte adds.

Others agree. The International Energy Agency emphasises: “It is only through technology learning as a result of market place deployment that these costs are reduced and the product can be adapted to the market.” So the government of Morocco is to subsidise the electricity generated at Ouarzazate to the tune of an estimated $60m each year. The purpose of this ongoing subsidy is to fund the viability gap between the price Masen pays to purchase power, and the price that it sells power to the national utility l’Office national de l’électricité et de l’eau potable (ONEE). Put simply, Morocco – which has little in the way of fossil fuel energy resources to exploit – has an obvious motive in exploiting renewable energy systems.

The government is convinced in the longterm economic benefits and higher-level objectives that would be triggered with a move towards a concentrated solar power market in the region, and these will justify its early investment confidence.

The government of Morocco will also receive some revenue streams through its equity holding in Masen, as well as tax revenues associated with the new industries and employment. One of the government’s key objectives is to capitalise on its early-mover advantage by becoming a manufacturing hub for the concentrated solar power and generation industry that, it is envisaged, could become a driver for long-term economic development. Evidence of Morocco’s effort to embed longer-term goals in the project design includes Masen’s request for private developers to include local content valued at 30 per cent of the plant capital costs in their bids.

The Winds of Change

Last year the African Development Bank (AfDB) demonstrated its commitment to supporting the scaling up of renewable energy in Morocco with the granting of $800m in loans to the country’s wind and solar markets. The Bank’s technical and financial support of Morocco’s plan for a concentrated solar power (CSP) plant at Ouarzazate was complemented with assistance for Morocco’s integrated wind/hydro and rural electrification programmes.

One month after the AfDB approved a loan for €168m from its own resources and a concessionary loan of $100m from the Clean Technology Fund for the first phase of the Ouarzazate project in June 2012, the AfDB made its largest project approval to date with a loan for €359m from its own resources and $125m from the CTF for Morocco’s Integrated Wind/Hydro and Rural Electrification Programme. This $2.16bn programme will increase national wind power capacity by 1,070MW and expand rural electrification to nearly 80,000 households in 24 of Morocco’s most isolated and vulnerable districts. It is being implemented by l’Office national de l’électricité et de l’eau potable (ONEE).

The wind/hydro component of the project is designed to maximise production from wind, use excess wind energy to store water for the later production of hydroelectricity, and supply water to generate hydro-electricity during the dry season. The project will also support new transmission infrastructure and water storage facilities. Completion is envisioned for 2017. Without the AfDB and CTF funding, it is doubtful that ONEE’s financial capacity could meet the huge capital expenditure costs associated with this programme. Morocco’s wind and solar initiatives are concrete examples of green growth opportunities in Africa.

As Hela Cheikhrouhou, the director of the AfDB’s Energy, Environment and Climate Change Department explains, “Green growth is about finding the pathway where you achieve your ambitions in terms of social and economic development, but doing it in a way that is environmentally friendly; not only to be a global agent, but also to leave for future generations economies that are more robust and more able to produce jobs and resist climatic risks and disasters.”

Demonstrating its commitment to wind energy, the decision was made public last month to build Africa’s second-largest wind farm in the southern town of Tarfaya, adding 300MW to the national grid once fully operational, and meeting 40% of Morocco’s wind-generated electricity. The farm will consist of 131, 80-metre-long turbines, each with a capacity of 2.3MW. The location’s favourable weather conditions should allow the farm to generate wind energy around 45 per cent of the time.

As Morocco’s Minister of Energy, Mines, Water and Environment, Fouad Douiri, commented earlier this year: “With tremendous wind and solar resources, Morocco already has strong and concrete achievements in solar and wind capacity, thanks to its experienced local skills and within an attractive legal and regulatory framework. As a country focused on the development of its renewable energy, we see major benefits in building a valuable cooperation with renewable energy players.”

According to the OECD: “Governments that put green growth at the heart of development can achieve sustainable economic growth and social stability, safeguard the environment, and conserve resources for future generations.” Clearly, Morocco has accepted this principle, and the AfDB, true to its development agenda, is placing the full weight of its resources to achieve that objective.