Investing in Morocco’s renewable energy revolution

Anyone who has gone windsurfing in Essaouria or has felt the sun on their back while trekking through the Moroccan Sahara will understand why the country is a renewable energy leader among emerging economies. Morocco’s physical environment allied with a relatively stable political scene and supportive legal framework means the country already recieves 32% of its electricity needs from renewables sources.

Now the government wants to build on these achievements and ramp up the use of clean energy technology to ensure that 52% of the country’s power comes from solar, wind and hydro by 2030 as well as begin exporting its expertise to the rest of Africa.

Morocco’s strategy of moving towards clean energy was originally borne out of weakness, lacking the abundance of gas and oil reserves enjoyed by its neighbour Algeria meant it faced heavy import bills for hydrocarbons, this cost as well as a desire to reduce greenhouse gas emissions and embrace the future led the country’s government to embrace renewable energy wholeheartedly.

There is little doubt the Kingdom has the environment for such ambitious plans, Essaouira has an average wind speed of between 7 to 8.5 m/s at 10 meters, while the Saharan sun provides around 3000 hours of sunshine a year. But physical attributes need to be allied with the right policies and political backing.

The Moroccan government’s renewables strategy is a combination of funding from international financial institutions (IFIs) such as the African Development Bank, new state policies such as cutting fossils fuel subsidies alongside encouraging private foreign investors to back clean energy projects. The centre piece of this drive is the 580 megawatt Noor (Arabic for light) solar power farm near Ouarzazate, closely followed by the Tarfaya wind farm – a 300 megawatt project which is the biggest of its type in Africa. Both these projects were heavily backed by the government and IFIs to make them a reality.

This environment offers opportunities for those looking to finance energy projects, supply and construct solar and wind facilities or like Elum Energy provide innovative solutions to power issues. Elum Energy is a software as a service company which has developed an energy intelligence platform which uses artificial intelligence to save money on electrical bills. By taking forecasts and monitoring supply Elum uses software to analyse the best time to deploy and save energy.

Now more foreign investors are taking an interest, US firm Nano PV are planning a new solar energy plant in Tangier. Chinese firm Chint are teaming up with Saudi firm ACWA energy to build the Noor VI solar facility which will provide energy at relatively cheap US$ 4.79 c kWh. A wind farm in Taza built by French firm EDF Energies Nouvelle and Japanese Mitsui should come online this year.

Morocco is also using its expertise in renewables to help invest in other African countries. Many African countries have large sections of the population which lack access to electricity, this creates the opportunity to construct new energy infrastructure around renewable energy rather than fossil fuels. African countries can learn a lot from Morocco – it has more financial clout than other nations the continent, but the falling cost of solar and wind installations combined with the increasing efficiency of the equipment means that it is an increasingly viable option and often cheaper than coal and gas. Perhaps most of all Morocco is proof of what can be achieved in terms of clean energy in a frontier market.

Another area in where emerging economies can emulate Morocco is through its legislation. The correct legal framework is important for countries keen to encourage renewable energy, allowing the construction of facilities and easy integration with national grids. Moroccan Law 13 – 09 was passed in 2010 and governs renewable energy in the Kingdom. The law was updated in 2015 to include a metering scheme for renewable projects connected to the grid – private investors are be able to sell some of their surplus energy to the grid. In the past the Office National de l’Elecriticite (ONE) controlled the generation of electricity, now private firms can do the same.

In Morocco renewable projects are typically structured in a particular way:

  • A Special Purpose Vehicle (SPV) is created to operate the project.
  • Long term power purchase agreements are signed between the SPV and ONE or MASEN the Moroccan Agency for Solar Energy.
  • Financing typically comes from international finance institutions IFI’s such as the European Bank for Reconstruction and Development (EBRD) and the Clean Tech Fund but local banks like BMCE have also been heavily involved.
  • The SPV is financed by MASEN which borrows from IFIs who benefit from a state guarantee. MASEN also offtakes the electricity generated by the project. This is done via long term power purchase agreement – the price is based on a tariff tendered by a bidder. MASEN then on sells electricity to ONE.

Now other renewable energy firms can join the party and benefit from the country’s renewables boom the number of private firms looking to invest in the country should rise rapidly. If Morocco can continue to attract private and public investment the falling cost and increasing efficiency of renewables could mean that it beats the emissions targets it set out in COP22 UN Climate Conference in 2016 in Marrakech.


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