Algeria to prepare for Energy Transition

. . . and Focus on a Mix

Fossil fuels such as gas for the next 10 years will no doubt be still the main source of hard currency revenue for Algeria. But ruling mean predicting, it belongs to the Government, in the face of the new global irreversible energy changes coupled with the recent resolutions of the COP21 (to be shortly followed by the COP22) ratified by the majority of world countries, would mean for Algeria to prepare for Energy Transition and Focus on a Mix between 2020 and 2030. It is a strategic mistake to reason still on the linear model of energy consumption of the past. Also, the strategy of renewable energy must be part of a clear definition of a new model of energy consumption based on an energy Mix, by evaluating resources to achieve targets that will prepare the reinforcement of national security, the birth of industries of the future, new technologies and environmental industries, object of the anticipated new economic revolution of 2020 through 2040.

It was necessary, before getting on with our subject, to make few remarks on the current approach to development of renewable energy. We must target priority projects that contribute the most to the achievement of our objectives. Without deciding on a position between the photovoltaic (PV) and thermal, we shall discuss the solar heat that fits itself into the regional programme of the South.

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. . . and Focus on a Mix

Fossil fuels such as gas for the next 10 years will no doubt be still the main source of hard currency revenue for Algeria. But ruling mean predicting, it belongs to the Government, in the face of the new global irreversible energy changes coupled with the recent resolutions of the COP21 (to be shortly followed by the COP22) ratified by the majority of world countries, would mean for Algeria to prepare for Energy Transition and Focus on a Mix between 2020 and 2030. It is a strategic mistake to reason still on the linear model of energy consumption of the past. Also, the strategy of renewable energy must be part of a clear definition of a new model of energy consumption based on an energy Mix, by evaluating resources to achieve targets that will prepare the reinforcement of national security, the birth of industries of the future, new technologies and environmental industries, object of the anticipated new economic revolution of 2020 through 2040.

It was necessary, before getting on with our subject, to make few remarks on the current approach to development of renewable energy.  We must target priority projects that contribute the most to the achievement of our objectives. Without deciding on a position between the photovoltaic (PV) and thermal, we shall discuss the solar heat that fits itself into the regional programme of the South. Lack of knowledge in the field might explain the selected programme. Indeed wanting to test all technologies before making one’s choice, does not seem to be the right approach. This could overlook all the studies that prevailed prior to the Hassi R’Mel centre.

The said studies were conducted in collaboration with key research centres such as the US’s ENREL as regulators of solar technology, Germany’s DLR and Spain’s CIEMAT. The Kramer Junction plant works in the USA since 1980 with a capacity of 300 MW uses the same technology as that adopted in the Hassi R’Mel. Solar towers in Spain have been proven for many years. This is to identify the parameters of different technology assessment.

With GTZ of Germany, the decomposition of the value chain by component and by cost helped to set a realistic 70% integration for the solar heat rate. Manufacturers of solar hardware agree with this rate, whilst at the same time accept the required level of electricity export to Europe. Indeed Europe will need to import 15 percent of its needs by 2030 that is the electrical equivalent of 24 GW or the equivalent of 50 billion M3 of gas per year. The study has also defined the modalities:

  • A stable political framework
  • A sustainable local market of size of 250 MW/year
  • An open market between the countries of the Maghreb.

Technologies must correspond to the most important value potential allowing a top rate of integration, the greatest creation of jobs, offering the best match with the electricity market and finally and above all, technologies with the greatest potential for cost reduction up to competitiveness with fossil fuels. In this context, to be effective, it is urgent to link the petrochemical industry by a win/win partnership with SONATRACH; the Department of Industry not necessarily having either the vocation or the experience to drive this segment.

For savings and reduction of costs, thermal energy by hybridization with natural gas can help the Government in these small fiscal times and increased competition of gas world supplies, to make savings of gas as well drastically reduce costs. To achieve this hybridization with the gas that is currently wasted, being burned in flares on the oil and gas fields, we can make use of this flared gas and develop near 29,000 MW of hybrid made up of 70% thermal capacity and 30% gas waste.

On-going projects meant for export off the Maghreb, use Concentrating Solar Power (CSP) Technology. Financing was also similar between that of the Hassi R’Mel project, and the other project in the Maghreb, the Ouarzazate plant. The peculiarity of the financing package for Hassi R’Mel, is the only project with a SORTING of 5.2%. In other words the foreign investor is not remunerated on the total financial investment that is undertaken by the Algerian State. It is also to be reminded that solar power technology had the greatest potential of development in Algeria which could be represented with the equivalent of 170,000 TWH per year. It’s the equivalent of 45000 billion M3/year of natural gas.

The European countries strategy, so as to reduce their energy dependence on Algeria, was geared to mainly rely on wind power and photovoltaics that themselves have limited relations to solar power. Solar power has proved itself well worth for a long time with solar ovens being developed years back such as a CDER in Algiers.  In fact, any CSP system uses three technologies:

  • Parabolic mirrors: like those used at Hassi R’Mel.
  • Solar towers: articulated flat mirrors focus the rays at the top of the tower.
  • Fresnel mirrors: swivel flat mirrors on their axis focus the Sun’s rays on a tube absorber as for the parabolic mirrors.

 In the short term, and in order to comply with the Head of State’s guidelines dating back to 2010 with respect to rapidly implementing a renewable energy programme as well as ensuring the country’s energy security and efficiency (directives renewed by a recent Council of Ministers) and alleviate future energy volatilities, the development of renewable energy ought to be initiated on a large scale; the current undertakings being minor and one-off. And thanks to the action of the Department of Defence which showed its capabilities in close relationship with the Department of Energy.

It could be started experimenting at a small scale before generalising at a larger scale in all military south regions of the Bechar, Ouargla and Tamanrasset regions, where renewable energy would have a significant impact on the local life and residents alike. This action of defence is not unique to Algeria, as shown through the successful South Korean experience, as well as those undertaken by the American, Russian, Chinese and even the French military industrial complexes.  Existing expertise and discipline together with the important areas that they command are an asset at the level of these strategic structures.  These would be required in order to quickly reach the objectives.

The hoped for success of these institutions will show the way to all other segments of the civil society. Thousands of small and medium-sized enterprises (SMEs) would eventually emerge without counting all those interconnection systems with Europe, where Algeria could become an exporter while covering its own domestic needs and achieve the goal of the Department of Energy in the coverage of 40% of domestic needs by 2030. Although the short-term cost recently declined by more than 50%, and it will perhaps be even more in the future, a system of equalization of prices is necessary for profitability and attraction of potential local and international investors.

In short, it is a matter of understanding the real actors and have a strategic vision based not on utopia but realism as one should never believe that laws and organizations changes will solve basic problems. Political actors are of course essential, when it comes to negotiating a market share. The technology partnership and integration generally appeal to private companies. The risk is too big in these days, for an investor to agree to be managed by an Algerian PLC.

It should be based on a Public-Private Partnership arrangement, with for starters the lifting off of all rigid and not adapted constraints of the 51/49% formula from this segment and for that matter from all others within the SMIs/SMEs. The partnership management should be with the foreign partner with the sharing of risk and the necessary need for technology transfer. It must be mentioned that Algeria supports via the transfer of currency of all costs with this established rule in 2009 that did not allow this transfer, limit imports and boost the productive fabric. The error of the repeal of the funding by the “REMDOC” with the generalisation of “CREDOC”, with considerable financial losses according to the Government which wind to be reintroduced in the 2017 budget bill must no longer be renewed.

Written by Dr. Abderrahmane Mebtoul, University Professor, International Expert,  ademmebtoul@gmail.com , Director of Studies Department of Energy / SONATRACH 1974 / 1979 – 1990 / 1995 – 2000 / 2006 and by ,

Engineer Tewfik HASNI, former CEO of NEAL, Expert in Renewable Energy and Energy Transition Consultant.

Translation from French by Microsoft / FaroL  faro@farolco.onmicrosoft.com

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