Meeting rising power demand in North Africa

31 July 2008
Electricity producers across North Africa are investing heavily in building new capacity, with coal-fired plants and wind power accounting for an increasingly large share of the market.

Demand for power in Algeria is growing at a rate of 6.7 per cent a year, according to state energy company Sonelgaz. Peak demand, which stood at 6,576MW in 2007, will almost double to 12,000MW by 2017. Over the same period, the utility predicts its customer base will grow from 6 million to 9 million.

To accommodate these changes, Sonelgaz will invest a total of $19.8bn in new power infrastructure. Of this, $7.5bn will go towards the construction of new gas-fired power plants, and the remaining $12.3bn will be spent on transmission and distribution infrastructure for electricity and gas.

From 31 December 2007, Algeria’s installed capacity stood at 8,392MW, with steam turbines accounting for 2,740MW, gas turbines for 4,410MW, diesel turbines for 187MW, hydraulics for 230MW and combined-cycle plants for 825MW.

Between 2009 and 2012, an additional 5,676MW of capacity will be built in the country. “After 2013, and in order to meet future demand, it is necessary to have 800MW a year [of new capacity] under a medium-demand scenario, and 1,200MW a year in the case of a strong-demand scenario,” says Karima Med-edjel, communications manager at the Commission for Electricity & Gas Regulation.

By 2010, 1,658MW of old capacity will be taken out of service.

Meeting demand

In 2007, Sonelgaz awarded two 1,200MW power projects to help it meet demand in 2012. The first plant, which will be located at Terga, 400 kilometres west of Algiers, went to France’s Alstom with Egypt’s Orascom Construction Industries, and will cost $1.98bn to build. The second plant, worth $2.15bn and to be located at Koudiet Draouch, 600km east of Algiers, will be built by a consortium of the US’ GE and Spain’s Iberdrola.

Growth in demand for power in neighbouring Morocco was 7.1 per cent in 2007, down from 8.1 per cent the previous year. From 2007 to 2012, state utility Office National de l’Electricite (ONE) will invest MD47.5bn ($6.5bn) in expanding the country’s power infra-structure. The level of state investment in the sector will decline between 2010 and 2012 as a result of the introduction of private participation in power generation.

Morocco has a current installed capacity of 5,292MW. An additional 900MW will come on line in 2009 with the completion of the 300MW open-cycle gas-fired power plant project at Mohammedia, the 472MW solar/thermal power plant at Ain Beni Mathar, and a diesel-fired plant at Tan Tan with a capacity of 116MW.

The Mohammedia plant is being built by the US’ GE and Spain’s Socoin Ingenieria y Construccion Industrial. A consortium of France’s Alstom and Spain’s Abengoa is building the Ain Beni Mathar facility, while the Tan Tan plant will be built by Wartsila of Finland.

ONE also aims to bring another 2,454MW into operation between 2010 and 2013 and a total of 6,600MW between now and 2015. But unlike Algeria, which will continue to rely on gas-fired generation, hydrocarbons-poor Morocco is looking to alternative energy to meet demand.

Issuing tenders

Rabat has recently issued tenders for two coal-fired power plants. The first covers the construction of a 300MW coal-fired extension to an existing power plant at Jerada. The second is the Safi plant, which will have capacity of 1,320MW and is due to be operational by June 2013.

The use of coal-fired generation and wind power is growing in the region. By 2015, coal will account for 74.5 per cent of generation, compared with 48.9 per cent in 2008. Wind generation will grow from 1.7 per cent to 10.6 per cent over the same period.

Neither Tunisia nor Libya, which both have substantial gas reserves, are likely to experience a similar trend. From 2007, Societe Tunisienne de l’Electricite et du Gaz (Steg) had 3,314MW of installed power generation capacity. Privately owned power facilities account for another 500MW of installed capacity in the country. About 45.1 per cent of electricity is produced from thermal power plants, 13.7 per cent from gas-fired power generation and 40.1 per cent from combined-cycle power plants. National demand peaked at 2,416MW in 2007, up from 2,240MW the previous year, marking a 7.9 per cent increase in demand.

Despite easily meeting peak demand of 2416MW, Tunisia is expanding its power generation infrastructure. In April, Steg awarded a e335m ($529m) power plant project to France’s Alstom. Under the engineering, procurement and construction contract, Alstom will build a 400MW combined-cycle facility at Ghannouch, near Gabes on the southeastern coast. The company has also won a 12-year renewable operation and maintenance contract for the plant.

Steg’s next major project will be identical to the planned plant at Ghannouch. Situated at Bizerte on the northern coast, it too will be a combined-cycle plant with capacity of 400MW.

There are also plans to develop the country’s second independent power project at Haouaria. The plant will produce 1,200MW of power, with 800MW earmarked for export to Sicily via a submarine link. The estimated E1.8bn ($2.8bn) scheme was approved by Tunis and Rome in the summer of 2007.

Over the border, Libya is one of the most interesting markets in the region and contractors often speak of its tremendous potential. Having stagnated under international and US sanctions for years, the power sector is only now starting to recover.

The latest power statistics available from state utility General Electricity Company of Libya (Gecol) are from 2006, when installed capacity was 4,710MW. That year, peak demand reached 4,005MW. This was 3.8 per cent higher than in 2005, when demand for power stood at 3,857MW.

A total of 67 per cent of Libya’s power generation in 2006 was fuelled by natural gas, with 33 per cent of the country’s electricity produced by steam turbines.

Overseas funding

Several major projects are currently planned or under way. Gecol has issued contractors with letters of credit for the 1,400MW Al-Khaleej thermal power plant, but has struggled to get the equally sized combined-cycle Tripoli West scheme off the ground.

The utility is now understood to be looking overseas, specifically to Abu Dhabi, for the estimated $1.3bn it needs to build the plant. Gecol is also planning to transfer the plant to a private owner post-construction, making it the country’s first ever independent power project.

With a smaller population than its neighbours, Libya’s demand for power has been growing at a slower rate. Contractors predict the Al-Khaleej and Tripoli West schemes will meet demand up to 2015 and the stream of major projects will dry up. “Based on the official development plan, the next tender will be in 2015,” says the head of one leading foreign contracting firm based in Tripoli. “We cannot find any projects. The population is 5 million and there is almost no industry. There is no strong power demand. There will only be demand for desalination up to 2015.”

Annual demand growth

Algeria: 6.7 per cent

Libya: 3.8 per cent

Morocco: 7.1 per cent

Tunisia: 7.9 per cent

Source: MEED

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications