Sparking interest: Expanding access to electricity and increasing capacity through foreign partnerships

Due to recent power cuts during the summer of 2012, Algeria is accelerating plans to expand its capacity. According to statements made by the minister of energy and mines, Youcef Yousfi, the government is planning to increase output from the current 11,000 MW to 19,000 MW within the next five years, almost doubling capacity. Previously, the ministry had projected that the planned increase of 4000 MW for the period between 2011 and 2016 would be sufficient to meet rising demand. The estimates were based on projections in 2006 of 6-7% annual growth. However, the ministry has since realised that this will be insufficient.

In 2001 the Ministry of Energy and Mines launched an energy efficiency and renewable energy programme worth €92.4bn. Between 2012 and 2030 the government hopes to install an additional 22,000 MW of capacity from renewables across the country. Of this, 12,000 MW is earmarked to meet domestic electricity demand. The remaining 10,000 MW is for export, possibly under an initiative by the Germany-based DESERTEC Foundation. Yousfi told OBG, “The main objective of our energy strategy is to meet our national demand. We are also working on developing a renewable energy programme to make our energy generation more sustainable. In doing so, we would like to be able to export surplus electricity.”

Solar thermal energy is expected to form the core of Algeria’s renewable energy programme, with a power potential of 169,440 TWh a year. The government estimates that with the solar energy available in the wider Sahara Desert the energy requirements of Western Europe could be covered 60 times over. There are currently plans in the pipeline for the installation of photovoltaic and concentrated solar power plants (CSP), wind farms and hybrid power plants by 2020. Of the 12,000 MW intended for domestic consumption between 2012 and 2030, 2000 MW is planned to be generated by wind farms. Solar energy, including CSP, will contribute 7200 MW, with the remaining 2800 MW coming from photovoltaic sources. Currently, Algeria is able to meet its energy requirements solely through hydrocarbons, particularly natural gas, which accounts for almost all of the electricity generated in the country and is very cost-effective.

As temperatures throughout the country during the summer of 2012 were unusually high, power consumption rose by 13% compared to the same period the year before. Facing peak power consumption of 9463 MW in July 2012, the state-owned utility responsible for electricity production and supply, Sonelgaz, had to take certain provinces off the grid for a few hours to stabilise the system. Nationally, business carried the greatest burden of the cuts. According to the General Union of Traders and Artisans, power cuts that lasted most of July cost businesses an estimated AD2bn (€13.8m). In August of 2012 the national power system was once again stable, with power cuts confined to the south-east of the country.

PROGRESS: Algeria has already made substantive progress in alleviating the energy shortfall. While at independence in 1962 only about 33% of the country was connected to the electricity grid, this number reached 96% by 2001. Currently, the electrification rate of the country is 98%. The government-owned SGP-CABELEQ installed an additional 100,000 km of low- and medium-voltage electricity lines, and high demand in newly established industrial zones as well as rural areas will guarantee additional business for the company in the next 15-20 years.

Consumption and efficiency are also a priority. US-based global technology company Itron will install a smart metering programme and data collection system.

Within one-and-a-half years, the system will be deployed to over 58 distribution centres. Once fully operational, it will enable industrial and commercial clients to manage their electricity consumption more efficiently.

PROJECTS: The Société Algérienne de Production de l’Électricité (SPE), which is part of Sonelgaz, issued tenders for the construction of four new gas turbine facility in August 2012. The capacity and location of the plant are: 51 MW in Tamanrasset, 30 MW in Illizi, 34 MW in Béni Abbès and 60 MW in El Goléa. Bids were open to national and foreign companies alike. Also in August, SPE confirmed that it had awarded a construction contract for a 1200-MW, combined-cycle power plant in Ras Djinet in Boumerdes Province, 50 km east of Algiers, to Daewoo EC of South Korea. The project is worth AD73.4bn (€506.46m) and is expected to be completed in little over three years. The tender for the project was open to assembly companies, as well as turbine manufacturers. Daewoo will add a new combined-cycle facility to the existing 650-MW steam turbine power plant. The firm is overseeing the design, construction and preparation of the project.

RENEWABLE ENERGY: The Algerian Sahara has among the highest number of days of sunshine per year in the world. For wind energy, the potential is smaller, yet some small-scale wind projects with a targeted capacity of between 10 MW and 20 MW are planned to be built over the next few years, mainly along Algeria’s northern coast line. Sonelgaz has been at the forefront of efforts to boost the use of renewables in Algeria. Through various programmes covering manufacturing and maintenance of industrial plants, in addition to research and engineering, Sonelgaz promotes innovation in renewable energy. Towards the end of 2011 Algeria announced planned investments of €15.41bn in renewables over the next 20 years.

In December 2011 the gas and electricity supplier had signed a memorandum of understanding with the DESERTEC industrial initiative (Dii), a consortium with 56 partners from 15 countries, with the main focus being to provide renewable energy for Europe from solar plants in North Africa. The memorandum focused on exchanging technical expertise and the promotion of renewable energy in Algeria and abroad. In October 2012 the Sonelgaz-Dii cooperation was boosted with the announcement that the initial part of the EU-Algeria agreement would soon be launched, a power plant fuelled by renewable energy with a capacity of 1000 MW. The plant will be used as a testing facility for different renewable energy technologies such as solar, thermal, photovoltaic and wind. The location of the plant has not yet been decided. However, in later October 2012 the government announced that it had postponed its decision to participate in the initiative until 2013 as it was waiting for DESERTEC to approve its preconditions. Media reports cited officials as saying the government is reconsidering the possible economic gains from participation and is testing the willingness of foreign partners to compromise and accept its terms, which call for manufacturing project appliances in Algeria as well as involving Algerian experts.

Further agreements between German companies and Algeria were signed in late October, such as one for the construction of energy-efficient homes. The German Aerospace Centre (DLR) in Cologne announced that the first solar power tower utilising CSP systems in North Africa will be built in Boughezoul as part of a collaboration between Algeria and Germany. The hybrid plant will incorporate both CSP and natural gas generation, including 7 MW of solar power, and will be able to function on solar power alone. The DLR will supply technology for the project, which will serve primarily as a pilot and research facility. “We are delighted to be able to further develop relations between Algeria and Germany in respect to environmental technologies and renewable energies through this project,” said Algeria’s German ambassador, Götz Lingenthal.

The German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) was reported to have contributed towards the project, and Ambassador Lingenthal signed a declaration of intent to promote and support the project at Oran’s EnviroAlgérie trade fair. The BMU and Algerian Ministry of Higher Education and Scientific Research will collaborate on the project. BMU will contribute up to €7m towards the construction of the plant and a renewable energy test centre. The plant will use DLR receiver technology, and will utilise a receiver which can operate at temperatures of up to 700° C, also designed and tested by the DLR. The receiver is currently in use at the Jülich Solar Tower in Jülich, Germany, which is owned by DLR.

NATIONAL TARGETS: In August 2012 Sonelgaz confirmed it would set up a unit aimed at developing the national renewable energy programme. In 2011 Algeria launched a renewable energy strategy with a targeted energy output of 22,000 MW by 2030, and the government announced plans to fund the programme with about €500m. Following a new set-up, energy company New Energy Algeria (NEAL), a joint venture between Sonelgaz and the industrial group Semoulerie Industrielle de la Mitidja, will be absorbed by the government. Unlike NEAL, which was created in 2002, the new unit will be the owner of its own assets.

Of all countries in the Middle East and North Africa region, aside from Morocco, Algeria has the most progressive legislative framework for the implementation of renewable energy technologies. The necessary institutions are being built up and strategic partnerships are being formed, despite various delays in recent years.

However, missing transmission lines may prove to be an obstacle. These lines need to be built to transport the electricity from the distant Sahara. DESERTEC has expressed intentions to use high-voltage direct current lines to reduce power loss. The Algerian transmission network stretches for around 18,000 km at present, according to Sonelgaz. This includes lines with a capacity of down to 60 KV, with 400-KV lines amounting to less than 1300 km. The 400-KV lines are currently being upgraded, including an east-west line, lines reaching into the south of the country and ones used for trans-border connections to Tunisia, Libya and Morocco.

With 40% of the nation’s power requirements planned to be supplied by renewables by the year 2030, the country is open to collaboration with foreign companies.

According to Sonelgaz CEO Noureddine Bouterfa, Algeria would prefer to export gas and invest revenue in clean energy, rather than subsidise fuel for its population, thus creating more jobs for Algerians. Firms with technological expertise are welcome to bid for future projects and share their knowledge and experience.