Global Arab Network | Renewable energy drive - Algeria prepares for post-oil era

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Renewable energy drive - Algeria prepares for post-oil era

Tuesday, 19 October 2010 19:35

Algeria is preparing a new government strategy which highlights the importance of renewable energy sources as the country prepares for what President Abdelaziz Bouteflika has referred to as the “post-oil era”.

The discussion comes on the heels of an annoucement from Algeria’s Electric and Gas Regulatory Commission (CREG) forecasting a significant rise in domestic demand for electricity and gas in the coming years, with natural gas consumption expected to reach 42-55bn cu metres by 2019. Electricity consumption, meanwhile, is projected to rise to 16,500-20,000 MW per annum, reports Global Arab Network according to OBG.

With Algeria currently on track to produce just 6-8% of its electricity from renewable energy sources by 2020, the government is assembling regulatory frameworks, launching new national programmes and offering incentives to encourage national and international companies to invest in renewables.

These include "Horizon 2011", a UNDP-financed program to supply 5500 homes with solar hotwater, and "Al Sol", a program financed by the FNME (Fonds National pour la Maîtrise de l'Energie, National Fund for Energy Management) to supply 2000 individual solar water heaters, half in homes, half in industry.

The Electricity Law of 2002 and the 2004 Decree on Renewable Energy have paved the way for future reforms, allowing network access to all operators and opening the electricity market to renewable energies. The current goal is to raise the share of renewables to 30% by 2030-40.

For the time being, the development of three solar power plants – which should generate a total capacity of 200 MW – lies at the heart of current efforts to generate electricity from renewable sources. In order to rationalise energy consumption, the government has begun introducing energy-efficient lightbulbs at the household level, promoting solar water heaters, and developing plans for high-energy performance buildings.

The list of projects also includes a hybrid power station in Hassi R’mel, currently under construction by the Spanish company Abener and Algeria’s Neal (New Energy Algeria). Initially expected to be completed by August 2010, the plant, powered by gas and solar energy, will produce 150 MW of electricity.

While solar energy remains the main focus of efforts to boost production from renewables, Algeria is looking at other possibilities. The country’s first wind farm – built in the province of Adrar by the French company Vergnet – is expected to become operational in 2012. It will generate 10 MW of electricity.

The government is also investing in research and development. An institute for renewable energies (Institut algérien des énergies renouvelables et de l'éfficacité énergétique, IAEREE) is due to open in Bellil, in the south of Hassi R'Mel.

While the need to attract foreign investment to meet the high costs of developing renewables is evident, the process of building partnerships is not without its problems. The former energy chief, Chakib Khelil, declared last year that the government doesn’t want foreign companies “exploiting solar energy” from Algerian land, and this may yet become a politically sensitive issue.

Though Algeria has affirmed its commitment to boosting the role of renewables, the government appears determined to maintain control over production. Recent articles in the international press have highlighted alleged concerns over the project’s duration and soveriengty issues over production facilities.

With significant growth in demand expected in coming years, along with a government open to investing in renewable energy, Algeria could well become a leader in developing non-oil energy sources. However, aware of the risks posed by volatile oil prices and the resulting need to diversify its energy mix, Algeria must tackle a number of difficult issues before it can take advantage of the long-term opportunities offered by renewable energy sources.

Global Arab Network

This article is published in partnership with Oxford Business Group

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