Renewables Prospects Boosted As Auction Progresses
BMI View: The announcement that the Moroccan government has launched the final bidding process for its 850MW wind programme, dubbed 'The Project', yet again highlights the seriousness of the government's conviction towards renewable energy. A lack of domestic thermal energy resources has severely hampered the country's energy security, forcing it to rely extensively on costly imports to meet its electricity demand. Therefore, renewable technology, namely wind and solar power, is an attractive proposition for the country, and tangible progress has been made within the industry. As such, our 10-year forecasts for the Moroccan renewables industry are robust, particularly when compared to the country's regional peers.
It was announced in late February 2014 that the Moroccan government has implemented a final auction for its 850MW wind power programme. 'The Project', which is estimated to be worth US$1.7bn, consists of five wind facilities and will be built under a 'Build Own Operate Transfer' public-private partnership model (PPP). Companies shortlisted after the initial expression of interest phase in 2012 include French EDF Energies Nouvelles and GDF Suez, Saudi ACWA Power and Spanish Acciona, who will now go on to bid to develop the projects.
The Moroccan government's keenness to expand its domestic renewables industry is understandable, considering the country's lack of energy security coupled with the natural potential for renewable electricity generation. At present, Morocco relies heavily on costly imports to meet its electricity demand - which we believe is set to rise by an annual average of 4.6% between 2014 and 2023 (underpinned by economic and demographic fundamentals), exacerbating the situation further. As such, Morocco aims to increase the share of renewable energy's contribution to the total electricity mix to 42% by 2020 - with solar, wind and hydro being the technologies of choice.
|Renewables On The Up|
|Renewables Project Pipeline By Type, (% Of Total Capacity) and Non-Hydro Renewables Capacity By Type (MW) and Total Non-Hydro Renewables Generation (TWh)|
We have been following Morocco's expanding renewables industry over the past few years and tangible progress has undoubtedly been made. The renewables project pipeline is gradually strengthening, made up of solar and wind power projects and international players continue to enter the market - as highlighted by the most recent PPP wind project. In fact, it was announced in February 2013 that GDF Suez had begun construction of a 300MW wind power project in the south of the country, which is due online at the end of 2014 ( see 'GDF Suez Seeking Out Moroccan Renewables', February 8 2013).
In addition, the industry is also attracting growing support from international financial institutions and development banks; for example the 850MW wind scheme is backed by a loan from the African Development Bank (AfDB) and the European Investment Bank (EIB) has previously channelled US$447mn worth of loans to a solar project in November 2012. As such, we forecast relatively strong levels of growth for renewables capacity over our forecast period, with total non-hydro capacity reaching 3.4GW in 2023.