Key fact

Electricity consumption in Morocco is rising at about 4.2 per cent a year

Source: MEED

Morocco has for many years struggled to keep pace with electricity demand. It currently has less than 7,000MW of grid-connected power capacity in operation. For a country with a population of 33.7 million, this is vastly insufficient. While electricity demand in 2010 totalled 26,530 gigawatt hours (GWh), Rabat was only able to produce 22,851GWh itself, with the shortfall made up through power imports from Spain.

Morocco plans to generate 4,000MW of electricity from wind and solar plants by 2020

With demand forecast to rise to 15GW by 2020, the state utility Office National de l’Electricite (ONE) has embarked on an ambitious programme of capacity building. Some of the plants are to be developed as independent power projects (IPPs) and some on an engineering, procurement and construction (EPC) basis.

Renewable energy in Morocco

Unlike most countries in the Middle East and North Africa (Mena) region, Morocco generates most of its electricity from coal-fired thermal power plants. As the kingdom has little in terms of oil, gas and coal reserves, much of the fuel needed for power generation is imported.

In a bid to move away from imports and towards greater energy independence, Rabat has also decided to prioritise the development of a renewable energy sector. It has already proven itself capable of executing renewable energy projects on a moderate scale, which it intends to build upon extensively.

Electricity consumption in Morocco is currently rising at about 4.2 per cent a year. While ONE has been relatively successful in bringing its plans to fruition, almost all projects face significant delays during the tendering phase. With demand already outstripping supply, Morocco cannot afford further delays with its upcoming projects.

The country has about 1,785MW of installed coal-fired generating capacity, 1,284MW of hydropower capacity, 600MW of oil-fired capacity, 915MW of simple-cycle gas-fired capacity and 680MW in combined-cycle power capacity. Diesel-fired generation accounts for 179MW of capacity and installed wind power for 282MW of capacity.

Morocco produces just 4,000 barrels a day (b/d) of oil, meaning that it has to import an estimated 187,000 b/d. The situation is mirrored on the natural gas side. Imports are 10 times higher than domestic production. This represents a sizeable burden for the government, which renewable energy could alleviate.

Morocco currently spends in excess of $3bn a year on importing coal and oil to fuel its power plants, as well as on electricity imports from Spain. The power is imported through two 400kV subsea cables that span the 26-kilometre Strait of Gibraltar. In 2005, imports totalled an estimated 1,000GWh. By 2009, the figure stood at 4,587GWh.

The country’s two largest power stations, located at Mohammedia and Jorf Lasfar, are both coal-fired. The Jorf Lasfar plant was built in 1998 with a project finance loan of $1bn, making it one of the first IPPs in the Mena region.

Abu Dhabi National Energy Company’s (Taqa’s) subsidiary, Jorf Lasfar Energy Company, owns the project located southwest of Casablanca. Taqa bought the plant from the US’ CMS Generation in 2007.

Taqa recently decided to expand the facility from 1,400MW to 2,100MW through the addition of two 350MW units. It signed agreements with the government in May 2009 for the project and awarded a contract to Japan’s Mitsui and South Korea’s Daewoo to expand the power plant in April 2011. The first unit is due to be brought online by December 2013 and the second is to follow by April 2014.

Taqa is currently in negotiations to wrap up the financing of the expansion, which is likely to include support from export credit agencies.

Private power projects

In December 2010, ONE selected a partnership of the UK’s International Power and the local Nareva to build a 1,320MW coal-fired IPP at Safi. The group was awarded a 30-year build-own-operate contract. The project will comprise two 660MW generating units and is scheduled for commissioning by 2015.

Morocco power supply, 2010
(Percentage of 26,520.6 GWh)
Thermal 69
Electricity imports from Spain 14.7
Hydropower 13
Wind 2.5
Other 0.8
GWh=Gigawatt hours. Source: MEED

The developers have since brought Japan’s Mitsui & Co into the deal and the group is in discussions with Japan Bank for International Cooperation (Jbic) to cover a large portion of the financing. According to sources close to the deal, financing is coming together and is set to be signed imminently.

ONE originally planned to take responsibility for the supply of coal feedstock and the construction of coal-handling facilities at the Safi port as part of the project. In March 2009, it shifted this responsibility on to the developer.

The latest power plant tender from ONE is for a new 350MW facility to be built on the site of the Jerada thermal power plant. Bids have been invited and are to be submitted by February 2012. The winning bidder will design, procure material and equipment, construct, test and commission the coal-fired unit.

Morocco power demand
2005 18,518
2007 22,608
2010 26,530
GWh=Gigawatt hours. Source: One

On the renewables side, the government aims to generate 4,000MW of electricity from wind and solar plants by 2020. This is equivalent to 42 per cent of its overall installed capacity, making Morocco the most ambitious Mena country when it come to renewable energy.

Overambitious renewable energy targets

It would be easy to dismiss the country’s renewables sector as overambitious – Morocco will almost certainly not achieve these aims. While other countries in the region have talked much about renewable power, and failed so far to deliver, Morocco has already made significant progress.

Rabat has established a body to oversee its renewables sector, the Moroccan Agency for Solar Development (Masen), and has already developed four wind farms, with a combined capacity of 282MW. There are now plans to develop a 150MW wind farm at Taza and a 125MW solar power project at Ouarzazate.

Bids to build the Taza project, which will be constructed on a build-own-operate basis, have been submitted. According to the original bid schedule, project contracts are to be finalised by January 2012 with financial close to follow in July.

The wind farms that are included in the renewables programme will be structured through public-private partnerships, whereby ONE, Societe d’Investissement Energetique and Hassan II Funds will join one or several strategic partners to set up a project company.

After the Taza wind farm, other projects will be tendered, including the Tangier 2 150MW project, a 300MW wind farm at Koudia al-Baida, a 300MW project at Tiskrad and a 100MW wind farm at Boujdour.

Masen has completed its evaluation of technical bids to build the 125MW solar power project at Ouarzazate. Four groups submitted bids and will now be invited to respond with detailed financial offers.

Several additional phases of solar power development will follow at Ouarzazate to bring the site’s combined capacity to 500MW. The second Ouarzazate project will use solar power tower technology. Other solar farms will be installed at Ain Beni Mathar, Foum el-Oued, Boujdour and Sebkhat-Tah at a later stage, according to Masen’s masterplan.

Meeting power demand in Morocco

Despite its natural disadvantages in terms of access to hydrocarbons, Morocco has managed to build up a diversified energy mix. Looking ahead, the greatest challenge for Rabat will be to close the gap between supply and demand and keep pace with rapidly growing power consumption, which is being driven by a rising population.

Morocco cannot afford delays, but the country is notorious for slow progress due to bureaucracy and regulations at the municipal level. However, power projects are rarely cancelled once they have been tendered.

“Things go slowly in Morocco, but they do move forward … and projects don’t get cancelled,” says an international developer. “There are projects across the region where people spend quite a bit of time and money before they are told that the project didn’t have the licences.

“Among the North African markets, Morocco is by far the most open to international developers. All the way across the top of the continent, you have countries that … suffer from power shortages, but they are far less open to private initiatives. [Therefore], compared to its peers, Morocco is an attractive place to be.”

This, combined with its political stability, means Rabat should have plenty of developers lining up to bid on its projects.