Special Report Contents

• Comment: Drive towards efficiency

• New direction for Saudi power sector

• Tehran’s dwindling water supplies

• New generation of gas turbines drive down costs

The first half of 2015 has been memorable for the Moroccan Agency for Solar Energy (Masen). In January, the solar body awarded contracts for the Noor 2 and 3 projects, which have a combined capacity of 350MW and are two of the largest concentrated solar power (CSP) projects in the world.

This was followed in March by the state-funded firm’s five-year anniversary, where it celebrated a remarkably successful period in which it established itself as the largest solar client in the Middle East and North Africa (Mena) region.

Daye Oudghiri, a member of Masen’s executive management, outlines the scale of what has been achieved in such a short period.

Building trust

“After starting with five people [in 2010], today we have 100 people,” says Oudghiri. “The first challenge was to make people believe in us. We were a new company; we started from scratch and [had] no recognised experience in solar energy – as it didn’t exist.”

Five years later, and with more than $2.5bn-worth of solar schemes under way, Masen has accumulated arguably the most experience in the Mena solar market, and is set to continue pushing ahead with some of the world’s largest solar projects.

Masen was established to focus solely on Morocco’s ambitious solar programme, under which it is targeting 2,000MW of solar energy by 2020, a third of the country’s 6,000MW renewable energy target in this period.

Following the signing of project agreements for the Noor 2 and 3 projects, Masen now has more than 500MW of CSP projects under development.

The contracts for all three of the current projects have been awarded to Saudi Arabia’s Acwa Power International. The firm won the deal to develop the 160MW Noor 1 project in late 2012 for a 25-year contract tariff of $0.189 a kilowatt hour (kWh), which at the time was the lowest ever tariff selected for CSP technology. In January this year, Acwa Power was selected to develop the Noor 2 and 3 schemes. The developer managed to deliver even lower tariffs for these two phases, with a $0.157 a kWh price for Noor 2 and $0.163 a kWh for Noor 3 submitted as part of the combined offer.

Access to financing

As part of its efforts to attract developers to its renewables programme, Masen has been able to use its government status to access financing from international financial institutions (IFIs). For the $2bn Noor 2 and 3 projects, Acwa Power will develop the schemes on an 80:20 debt-to-equity basis, with the debt to be financed entirely by Masen.

“We are the sole lender for [Noor 1, 2 and 3],” says Oudghiri. “We were able to bring down the costs significantly through concessional funding. Private companies cannot get it, so we lend the money with the government guarantee package.”

For the Noor schemes, Masen secured funds from the African Development Bank, the Agence Francaise de Developpement, the European Commission, European Investment Bank, Germany’s KfW and the Washington-based World Bank, as well as the Clean Technology Fund.

While Masen is lending with government guarantees, the construction risk lies solely with the developer.

“Acwa is putting in the equity and all the guarantees and construction risk are with Acwa,” says Oudghiri. “So even [though we are taking a] 25 per cent equity risk – we have put an option in – if something goes wrong with construction, the developer takes care of it.”

With the financing agreed and contracts signed for Noor 2 and 3, Masen has already started the procurement process for the next phase of projects.

While Morocco has so far moved forward with CSP projects, the next schemes will be photovoltaic (PV) solar. Oudghiri explains that CSP has been pursued to date due to its ability to provide electricity at off-peak times.

“We had discussions about peak hours for electricity, and peak hours are at night, so we were obliged to go with technology that allowed storage,” she says. “Now, we are working together to see how we can combine technologies to meet the different needs.”

Combining technologies

“For the next projects, we have looked at how we can combine the technologies to provide the right answer for different needs, and there is opportunity for PV. In some cases, consumption of CSP plants can be fed in by PV, and also in some locations in Morocco, PV is beneficial, such as Boujdour and Laayoune.”

For the next phase, Noor PV 1 will consist of three projects that will have an overall capacity of 170MW. The plants will be located at Ouarzazate (where the CSP projects are being developed), Laayoune and Boujdour.

Companies were invited to submit expressions of interest for the scheme in March. Masen is planning to issue requests for qualification imminently and hopes to issue requests for proposal by the end of the year. Masen has identified additional sites in Tata, Midelt and Ouarzazate/Taznakhet for future projects, although the scope and configuration of projects has yet to be decided.

While the initial challenge for Oudghiri and the Masen team was making progress on an ambitious programme with little experience, the challenge now is coordinating all the different bodies involved and ensuring the timeline is kept to and the 2020 target achieved.

“A challenge is to keep up the timing,” says Oudghiri. “We have so many stakeholders involved – stakeholders from our side, the government, IFIs and ONEE [Office National de l’Electricite et de l’Eau Potable]. They all have their own procedures, and we need to work with each other and be able to get the best value from each other.”