Electricity consumption in Algeria has been rising by 10 per cent a year. Peak demand during the hottest months is projected to rise from an estimated 12.5GW this year to 20GW in 2017 – a reflection both of increased prosperity and of the growth in a population set to reach 38 million in two years’ time, compared with just 36 million in 2012.

In the past, Sonelgaz, the national power generation and distribution utility, has been forced to ration supply; summer power cuts in 2012 provoked public protests.

However, Sonelgaz has been investing steadily in new plants, in an attempt to keep pace with demand. Generating capacity has climbed steadily from 11.4GW in late 2011 to 12.9GW a year later and 15.2GW by the end of 2013, and there are plans to bring a further 12GW onstream over the next four years.

Spending programme

Sonelgaz plans to invest $7.6bn in expanding thermal generation capacity. In February, it signed $4bn of contracts for the construction of six combined-cycle power projects for completion by 2017.

However, if the drive to continue expanding thermal generating capacity is to be sustained over the long term, Algeria’s government faces some serious strategic questions.

Natural gas fuels 95 per cent of all power generation and most new plants are also set to be gas-fired, even though Algeria’s gas output has been held back by delays to some upstream projects.

Meanwhile, the government policy of supplying power to consumers at subsidised prices imposes an estimated $1bn a year cost on Sonelgaz.

IPP legislation

The scope for attracting foreign investors to develop independent power projects (IPPs) was hit by the 2009 legislation that imposed a requirement for 51 per cent Algerian ownership of major investments.

The country had been a regional leader in developing independent utility developments, with the Arzew water and power plant – which came onstream in 2005 – followed by an independent power scheme at Hadjet Ennous. But the law forced Singapore’s Hyflux to trim its stake in the Mactaa water project.

Renewable energy

The government may feel relaxed about the issue because it has a long-term policy of seeking to bolster the contribution made by renewable energy and reduce its reliance on gas, so that more gas can be reserved for export.

Under a 400MW solar power programme, contracts have already been signed for the construction of 23 photovoltaic projects. And there are plans to add 639MW in wind generation capacity by 2023, for which the pilot is a new 10MW project at Adrar in the Sahara, with 12 turbines.

The transmission and distribution network extends to 99 per cent of the population, but Sonelgaz has committed itself to upgrade it further, at a projected cost of $13.9bn.

Water supply

Algeria has also made substantial efforts to improve water provision, investing more than AD6bn ($72m) since 2005 in the construction of dams, distribution and desalination. Since 2000, average per capita water supply has risen from 123 litres a day to 178 litres.

Between 2010 and 2014, some 35 dams and 34 water purification plants were built. To improve the security of supply, major new water transmission links include a connection from the Chelif and Kerada dams to the Oran region and a 750-kilometre pipeline from In Salah artesian basin – under the Sahara – to Tamanrasset, in the far south of the country. Major dam and distribution investments are planned for the Setif region in the east.

Although the drinking water network now covers 98 per cent of the population, only some 75 per cent is guaranteed daily supply.

So in mid-2014, Algeria’s water resources minister, Hocine Necib, announced further investments equal to €14bn ($18bn) in water infrastructure for 2015-19. The priority will be to improve supply to areas that suffer from shortages and also to the Hauts Plateaux regions, and to reduce leaks.