CONFERENCE ENERGY SECURITY IN MOROCCO : SITUATION AND OUTLOOK MOHAMMED TAWFIK MOULINE DIRECTOR OF THE ROYAL INSTITUTE FOR STRATEGIC STUDIES - MOROCCO

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CONFERENCE

ENERGY SECURITY IN MOROCCO : SITUATION AND OUTLOOK

MOHAMMED TAWFIK MOULINEDIRECTOR OF THE ROYAL INSTITUTE FOR STRATEGIC STUDIES -

MOROCCO

BEIJING, March 6th, 2012ENERGY RESEARCH INSTITUTE

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SUMMARY

A national energy situation characterized by a strong external dependence and a significant increase in energy demand

1

3 A new national energy strategy giving the priority to the development of renewable energies and the promotion of energy efficiency

The Moroccan Solar Plan : a strategic project to ensure the country’s energy independence

4

2 Important assets to mobilize to meet the country’s energy needs

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1. A national energy situation characterized by a strong external dependence and a significant

increase in energy demand

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• A strong energy dependence : 93% to 97% of Morocco’s energy demand depends on imports : only hydropower and renewable energy (wind and solar) are produced locally.

A strong energy dependence  

Source : Ministry of energy, mining water and environment

2002 2003 2004 2005 2006 2007 2008 2009 201090.0%

91.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

96.8%

95.6% 95.4%

97.2% 97.1% 97.3% 97.5%

94.6%

93.0%

Energy Dependance Rate

55

• Currently, energy diversification is insufficient because the share of oil and coal remains predominant (83.5%). In 1980, the oil’s share was 83%.

A weakly diversified energy mix

Source : Ministry of energy, mining water and environment

Petroleum Products83%

Coal8%

Water energy8% Natural Gas

1%

Distribution of National Energy Consumption in 1980

Petroleum products61%

Coal22%

Water en-

ergy6%

Nat-ural Gas4%

Imported Electricity6%

Wind energy1%

Distribution of National Energy Consumption in 2010

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• As a function of fluctuations in world energy prices, the energy bill is high and reached 66 billion dirhams (RMB 49,6 billion) in 2010. It significantly affects Morocco’s balance of trade (191 export days in 2011) as well as the state budget through the subsidies allocated by the compensation fund.

An energy bill with high impact on public finances and balance of payments

Source : Currency exchange office, Ministry of energy, mining

water and environment, HCP

2003 2004 2005 2006 2007 2008 2009 20100%2%4%6%8%

10%12%

4.49%5.27%

7.13% 7.69%8.42%

10.12%

6.91%

8.64%

Energy bill% of GDP

2003 2004 2005 2006 2007 2008 2009 20100%2%4%6%8%

10%12%

3.96% 4.57%

6.33% 6.88% 7.46%8.67%

5.98%

7.73%

Oil bill% of GDP

2004 2005 2006 2007 2008 2009 20100%

2%

4%

6%

0.71%1.47% 1.46% 1.85%

3.93%

1.03%

3.09%

Subsidies to oil products% of GDP

77

High growth of energy demand in recent years ...

• The energy sector in Morocco is characterized by a sustained growth in demand (the demand for electricity has increased at a rate of around 8% between 2003 and 2007, whereas this rate was at a level of 6% between 1997 and 2002). This growth in energy demand is expected to accelerate given the requirements of both economic growth and social transition (rapid urbanization and changing lifestyle),  especially as the current energy consumption per capita is low (compared to developing countries).

Source : Ministry of energy, mining water and environment

Evolution of the energy consumption

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… accompanied with the widespread access to electricity and the adoption of new consumption

patterns

• Morocco is one of the African countries where rural electrification is the most advanced in spite of strong economic and geographic constraints: dispersed settlement, unprofitable network expansion, etc..

Source : Ministry of energy, mining water and environment

Rural Electrification rate (RET)

RET

99

An acceleration of this uptrend by 2030

Source : Ministry of energy, mining water and

environment

The national consumption will be multiplied by at least four and at most by 6 between 2007 and 2030

The maximum power demand can then be estimated around 12 000 and 20 000 MW

Production is multiplied by 3,5

PROSPECT ON ELECTRICITY DEMAND (Evolution of the consumption and the power demand 2008-2030)

Power consumption (En 100=4240 MW)

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 20300

100

200

300

400

500

100129.7

141.5200.4

235.8283

471.7

Consumption (En 100 = 24 TWH)*

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 20300

 100

 200

 300

 400

 500

99.83617786744

4

140.621341019186

254.013795923793

129.703360026092

217.179962722954

397

554

Baseline Scenario

Disruptive Scenario

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2. Important assets to mobilize to meet the country’s energy needs

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However, the Moroccan energy sector has many assets including the wind and solar potential

Considerable wind resources

A wind energy potential of 6,000 MW at the sites studied (1.5 times the peak demand),estimated at around 25,000 MW on the whole territory (well above the Spanish potential)

Extensive distribution throughout the territory allowing the supply of remote areas that are not interconnected with the network

>6 m/s

5-6 m/s

4-5 m/s

3-4 m/s

<3 m/s

Inconnu don’tpotentiel offshore

Considerable solar resources

With more than 3000 h/ year of sunshine, meaning an irradiation of ~ 5 kWh/m2/year, Morocco enjoys a considerable solar resource (equivalent to the Southern Europe average)

This potential is particularly important in areas that are badly-served in terms of network and electric production capacity . Very Optimal Cost (9% below the cost of reference)

> 5,5 kWh/m²5,3 à 5,5 kWh/m²5,0 à 5,3 kWh/m²4,7 à 5,0 kWh/m²< 4,5 kWh/m²

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Energy resources that can be mobilized in the medium and long term (oil shale and uranium

extracted from phosphate) A considerable field despite an average quality

More than 100 billion tons of proven reserves in an area of 2200 km2 between:- Tarfaya (86 billion tons)- Timahdit (18 billion tons)

Open-pit reserves with a relatively low cost of extraction10 deposits identified including 2 extensively explored : Timahdit (250 km south of Rabat) and Tarfaya (200 km south of Tan Tan) both being open-pit reserves

1. Tanger2. Timahdit3. Bassin d’Ait Oufella4. Bassin du Haut

Moulouya5. Bassin Bahira Tadla

6. Essaouira7. Bassin du Souss8. Bassin du Oued Dades9. Tarfaya10. Bassin du Guir

Considerable proven reserves, but still limited investigation of their potential as fuel for electricity production

Relatively average calorific quality of Moroccan shale  (best in Timahdit) because of its low oil concentration and important humidity. Nevertheless outcrop near the coast where the extraction and transportation costs are relatively low

Importance of proven reserves and location

Historique

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2 34 105

68

79

37 milliards T

• Morocco ranks 6th in terms of oil shale (50 billions barils) after the USA, Russia, Brazil, the Democratic Republic of Congo and Italy.

• The 1973 and 1979 oil shocks eventually led to the devlopement of oil shale. In the mid 1980s, the research to promote oil shale was stopped (the pyrolysis process is unnatural and the drop in oil prices). Recently, a model factory has been built in Tarfaya to explore a new technology.

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Energy resources that can be mobilized in the medium and long term (oil shale and uranium

extracted from phosphate)

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Insufficiency of oil prospection

• The on and off-shore oil fields are under explored :

Only 290 on and off-shore exploratory oil wells 350 000 km² offshore; with only 34 drilled wells

• Average density of exploratory drillings Morocco : 0, 04 Wells / 100 Km² International level : 10 wells / 100 Km² Deficit of + 7000 wells

Map of sedimentary basins in the North African region

ONHYM

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Energy efficiency is another opportunity which is being promoted

• The energy savings potential was estimated at 13% in 2010 and 23% in 2020 to mainly operate at the industry, transport and building.

Source : Ministère de l’Energie, des Mines, de

l’Eau et de l’Environnement

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Une position géographique stratégique

• Morocco can benefit from its strategic position to assume the role of an international electric platform both as a supplier and a bridge between Europe and the countries of the southern Mediterranean. The advanced status of Morocco with the European Union will enable faster integration into the European market. Moreover, Morocco will be able to seize several opportunities thanks to its location in the Mediterranean which holds about 30% of world oil trade. In this respect, Morocco has put in place an oil terminal in ”Tangier Med” port platform, a major facility which provides the country with a large oil gate on the Strait of Gibraltar  (500,000 m3)

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3. A new national energy strategy to cope with energy dependence by developing renewable

energies and promoting energy efficiency

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Goals of the national energy strategy

• To address the issues previously presented, Morocco set up in 2009 a new energy strategy, encouraged at the highest level of the State. The assigned objectives are :

Securing national energy supply in order to avoid that energy dependency becomes an obstacle for the Kingdom’s development.

Generalizing access to energy to the whole population, in accordance with the main national objectives of human development.

Acting for the preservation of the environment by integrating the energy issues into the framework of sustainable development through the use of renewable energy and energy efficiency.

Maximizing the opportunities offered to Morocco regarding regional integration on the basis of the energy-related geostrategic evolutions, which occur in the Mediterranean and Africa.

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Orientations of the new national energy strategy

• The new energy strategy is based on four major orientations :

A diverse and optimized energy mix based on reliable and competitive technology choices

The mobilization of national resources by the rise of renewable energies (2 GW solar, 2 GW windpower, 2 GW waterpower)

Energy efficiency established as a national priority

Regional integration through the strengthening of the regional cooperation

2020

An institutional upgrade to accompany the implementation of the new strategy

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4. The Moroccan Solar Plan : a strategic project to ensure the country’s energy independence

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Focus on the Moroccan Solar Plan

The integrated Solar energy program, which amounts to an estimated cost of $9 billion, aims at setting up a facility with a production capacity of 2000 MW. The solar plants will consist of a network of 5 interconnected sites by 2020. The installation of these plants will allow to save 1 million tons of oil equivalent (toe) and avoid the emission of more than 3,5 million tons per year of carbon dioxyde.

The integrated solar energy program is in line with international priorities. To address the increasing energy demand and global warming, Morocco puts a strong emphasis on renewable energy and more particularly solar energy. Morocco intends to become a major player in the solar energy sector and to acquire a competitive industry in this field.

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Morocco’s assets to make its solar plan succeed

Morocco’s assets to make its solar ambitions become a reality are:

A strong solar radiation. Carlo Rubbia, a physics Nobel prize winner said: « It rains each year in the Sahara Desert the equivalent of one oil barrel per square meter ». Morocco’s production capacity will complete the European exports regarding the seasonal differences in solar radiation.

The geographic proximity to Europe and the opportunities offered in terms of European energy market integration. In addition, integration would be facilitated by the strengthening of the existing electrical interconnection.

Available and unexpensive land for a large-scaled installation of solar energy collectors.

A competitive cost of the workforce at the regional level.

And a strong experience in directing and implementing in projects of large scope.

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The challenges that Morocco must take up to make it solar plan successful

The challenges that Morocco must take up to make it solar plan successful represents several opportunities for cooperation with China :

To succeed industrial integration,

To master the technology,

To attract competitive and innovative funding.

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Achieving industrial integration

Industrial integration of the energy strategy can be achieved through the involvement of the Moroccan industrial sector. The completion of the necessary equipment for solar/wind farms and / or hybrid is a significant opportunity to seize in order to provide Morocco with a competitive manufacturing platform in this area.

The opportunities in terms of industrial integration are all the more diverse that the production technologies of renewable energies can be exploited in a variety of hybridization patterns and intelligent coupling (hydrogen production, water desalination ...).

For this purpose, Morocco must choose a newer and larger energy paradigm that consists in an ''energy system'‘ that encompasses the energy sector (supply), but also the energy consumption (demand) and other related products (hybridization), to obtain an optimized service in terms of energy resources, economic and social costs and protection of the local and global environment. With this paradigm shift, we should witness the birth of industrial projects using, of course, renewable energies, but not exclusively designed for electricity production

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Mastering the technology

• The sustained pace of the development of production technologies related to renewable energies makes it complex to plan out an optimal choice : There is a need for a permanent technology watch in this field.

• In this regard, Morocco should have a national scientific research in line with the country’s energy strategy, working closely with the industry and open to international scientific collaboration with all the relevant actors including China.

• This research should be focused on emerging technologies in the field of water desalination and solar hydrogen production.

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Financing Morocco’s ambitious projects in terms of renewable energies

The Moroccan government has chosen to support to renewable energy based on the competitiveness of all the available technologies and to foster competition between multiple operators through international tenders

For solar energy, the State has to subsidize the gap between the production cost of solar energy and the purchase price for the ONE (The Moroccan National Electricity Supplier). Wind energy is already in a profitable economic scheme and is developed today in Morocco by the private sector.

Morocco is on the lookout for all existing funding opportunities at the international level (loans at concessional rates, financing for the fight against climate change, etc..)

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Milestones of the Moroccan Solar Plan

November 2009

Presentation of the Moroccan solar energy project in Ouarzazate

January 2010 Creation of MasenMarch, 30th,

2010 Launching of the calls for interest

for Ouarzazate May 24th,

2010 Deadline for the calls for interest

End of 2010 Launching tenders among

shortlisted candidates for the development of the first plant.

2015 Delivery of the first plant 500 MW

2020 Production of 2000 MW

• The initial stage of the Ouarzazate’s first plant (125 to 160 MW) is well advanced with a selection process of the project manager in compliance with international standards. Though at its technical stage, this process already receives a promising commitment from the different shortlisted actors, as well as a funding that is synchronized with the set timeframe.

• MASEN’s Ouarzazate project has indeed attracted some 200 calls for interest in reply the tender that was open from March 30th to May 24th, 2010. 19 international groups have been shortlisted to build Ouarzazate’s plant, among which Alstom and Veolia throuhg their Moroccan divisions.

• During the Durban Summit, the World Bank has approved loans amounting to $297million, aimed at helping Morocco finance Ouarzazate’s solar concentration plant.

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