Keynote update Algeria: Transitioning from Fossil fuels to Renewable Energies

Boukhalfa Yaci
Solar Maghreb Rabat, 22 & 23 May 2013

Agenda

Introduction Our Company Brief description of the Algerian Renewable Energies Program Current situation Conclusions

Introduction
As an exporter of oil and gas with limited resources to cover local need and to support export contracts for years and years, Algeria has decided to develop renewable energies as a strategic approach, Electricity demand is increasing at a high rate mainly pushed by domestic air conditioners during summer and agricultural sector, Part of revenues provided by exported fossils resources will serve to develop and execute a program revealed in February 2011 with the aim to install 22 GW of electricity by 2030 (12 GW to cover local needs and 10 GW as an export option) RE Industrial development is a key point of this program.

Brief overview of EnR Engineering Services: Services offered

Solar PV plants Off-grid systems Specific studies

Engineering
Market analysis B2B relationship Industrial projects

Consulting

Training

Engineers Installers

Compagnies

Brief overview of EnR Engineering Services RE Project expertise

Feasibly studies

Site assessment

Administrative process

Engineering

Economic & financial assessment

As a first step before to invest, we estimate performance and cost of a project

We constructed a site ranking model considering multiple criteria (solar radiation, surfaces available, distance to the grid, etc.)

We studied required documentation and duration process to fulfill local and central regulations

We develop a step by step process to study and execute a project

We develop a business model based on a local financing process

The Algerian Renewable Energy and Energy Efficiency Program (2011 2030)

12,000 MW by 2030 CSP plants: 60% focusing on tower + storage. PV solar farm: 24 % using crystalline technology. Wind farm: 16 % of the total

Financial and investment support

An investment code to offer advantage through three mechanisms A general scheme: Exemption for 1 to 3 years during construction: customs duties, VAT, property transfer tax, registration fees, etc. Exemption of tax on profits, tax on turn-over during 3 years which can be extended to 5 years in case of job creation A derogatory scheme: Exemption during 3 years (realization period) and 10 years (exploitation period) All the wilayates of the South, some wilayates of the highlands and some municipalities of some wilayates of the highlands.

Project of national interests (convention regim): Extension of periods exemption: 5 years (realization period) and 10 years (exploitation period)

Financial and investment support

A renewable energy fund (1% of oil & gas fiscality) which: Contribute to finance projects producing electricity using RE and cogeneration plants, Subsidize equipments, cover the feed-in-tariff (tarif de rachat garanti), Stimulate other renewable energies (not producing electricity) Participate to set up new structures like laboratories (control and certification) Other aspects like studies, training, maintenance, etc.

Investment funds (one at a national level and 48 at wilayate level) which: Participate at a level not more than 49% Limit their contribution to 30% of its one fund for each project Can provide risk capital, developing capital or restructuration of the capital RE projects are eligible to these investment funds
Bank loans: Limited to 65 70% of a project Credit loan at a rate of 5,5% with a high level of bonus Mid-term maturity
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Dispatching of RE development process

Renewable Energy Program

Sonelgaz Holding

Private and/or Public Operators Through a feed-in Tariff (to be implemented) ?

12,000 MW by 2030

F-i-T: Mechanism elected by CREG

Source: CREG. Mcanismes dencouragement des EnR en algrie. ERA-EnviroAlgrie, Oran, 17 Oct. 2012
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An important change is necessary in local regulation

2 decrees are in preparation (by CREG): 1. Conditions to access to advantages related to diversification costs by: Removing the auction process (updating diversification costs decree) RE electricity producer will be submitted to standard regime and not special regime concerning grid-connexion to transport grid (>60 kV) or distribution grid (<60 kV) Defining the process to solicit these advantages 1. Certification of RE origin Define conditions to be fulfilled in order to receive a certificate Process of certificate demand Control to be in place during operation period

Minster of Energy will fixe the tariffs guaranteed by technology

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An important change is necessary in local regulation

Solar PV, Solar CSP Wind Biomass Geothermal Cogeneration Plants

Technology Power (MW) RE Resources

Solar insolation (Hours) Wind (m/s)

Due to the non availability of long-term resource data records, the feed-in-tariff could be subject to revision after a 5-year period.

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Existing or announcement of investments

Player
Rouiba Eclairage Condor Aures Solar

Value Chain
PV: from Si to Panel PV: assembling solar panels PV: assembling solar panels

Capacity
140 MW/y 50 MW/y 20 MW/y

Current situation
Starting of production: mid 2014 Extend of capacity is projected Starting of production: June 2013 A J/V company with foreign partner (49% /51%) Starting of production: by the end of 2013 Line in place since many months

ALPV (Algerian PV Company)

PV: assembling solar panels

12 MW/y

Private companies anticipate a development of a local market in solar PV technology.

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Actual status of the program

Technology

Period 2011/2012

Capacity (MW)
1,1 3 10

Type
Grid-connected Off-grid Grid-connected

Remarks
Under construction Commissioning: Sept. 2013 Disseminated over 13 wilayate Starting on Q4 2013 till Q2 2014 Under construction Commissioning: Sept. 2013 Remarks Under tender bid process To be relauched Awarded Under tender bid process

PV PV Wind

Technology

Capacity (MW) 22 22 71,5

Type of equipment 270 Wp 500 kW 650 kVA

Since Jan. 2013

PV modules Inverters Transformers DC combiners

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Development process of a PV project followed by Sonelgaz

A modular Concept of a solar PV plant PV: 1 MWp Inverter: 2x 500 kW Transformer: 2x650 kW Separating Engineering, Procurement and Construction phases
Engineering: CEEG awarded a contract to a Spanish engineering company (end 2012) Procurement of components: local tender process before to launch international tender process (in case of a failed first process) Construction: Local companies will be privileged

Industrial Approach privileged Seek a partnership through important contract awarded Certification of products through a laboratory control

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Next steps
Availability of FIT before this autumn as Sonelgaz will commission two plants, Level of FIT will be probably the same as observed in other countries We expect a solar PV private market mainly oriented to farmers and industrials Probably , first projects will be available in 2014.

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Conclusions
Algeria is facing a major dilemma: how to leave a fossil economy to a green economy fueled by revenue representing more than 96% of exporting goods? An increase of energy consumption at a present rate is unsustainable, RE but also Energy Efficiency is considered as a necessary change in order to satisfy a requirement of environment and a better way to engage the country in a new era with the aim to satisfy local needs in electricity, exporting solar electricity instead of fossil fuels and developing local industry, A program with 22 GW of RE power is under development and a new local industry is emerging in solar photovoltaic An aggressive tariff could push heavily this tendency.

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Thank you for your attention!

www.enrengineeringservices.com

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