Legal reform of the framework on self-consumption of electricity in Morocco

During the last 12 months, the legal framework for renewable energy in Morocco has undergone numerous reforms. Thus, following the bill amending Law 13-09 on renewable energy, it is now the turn of self-consumption regime to be subject to a draft amendment.

The current legal framework of self-consumption can be summed up in a few provisions provided in article 2-2 of the 1963 Dahir creating the Moroccan power utility¹. Those provisions have been amended on several occasions², setting out how individuals or legal entities can produce electricity by their own means and for their own exclusive use.

It should also be noted that a previous text from 1956, which has not been repealed³, provides for the possibility of self-consumption of electricity by the customers of a distribution system.

In this context, the Moroccan Ministry of Energy, Mines and the Environment prepared a draft bill which was published on the website of the General Secretariat of the Government on November 19, 2020 (the Draft Bill), in order to establish a legal framework dedicated to the self-consumption regime allowing for better visibility and greater transparency as to who is eligible for this regime, how the installations are operated and, where applicable, connected to the grid.

The new self-consumption regime

Definition

The Draft Bill defines a self-consumer as any natural or legal person of public or private law who produces electrical energy exclusively for his own needs and who is the owner of the self-consumption installation or exercises a right on it.

Obligation to produce electricity for its own exclusive use

It follows from the definition of self-consumer that the electrical energy produced by the latter must be for its own needs. This means that a self-consumer is not allowed to sell self-generated electricity.

However, the Draft Bill provides for the possibility of selling the surplus production to the network operator (transmission or distribution) within the limit of 10% of the annual production of the self-consumption installation (see below).

Asset ownership

The current legal framework provides that the self-consumer must produce electricity "by its own means". In practice, the notion of self-consumption is subject to a restrictive interpretation by the administration, which may oppose contractual structures aiming at mitigating this principle.

For greater clarity on this notion, the Draft Bill specifies that the self-consumer must be the owner of the self-consumption installation, while opening the possibility of entrusting third parties with the construction and/or operation and maintenance of the installation. In addition, the Draft Bill allows for the self-consumer to not own the land on which the self-consumption installation is located by permitting the self-consumer to merely exercise right on the installation (usufruct, emphyteusis, right of use).

Entities not eligible for self-consumption

The Draft Bill excludes the following entities and operators from the definition of self-consumer:

1. The operator of the national electric transmission network;
2. the operator of the distribution network;
3. the Moroccan Water and Electricity Company (ONEE);
4. producers having concluded power purchase agreements with ONEE in accordance with the provisions of point 6 of Article 2 of Dahir No. 1-63-226 of August 5, 1963;
5. MASEN; and
6. the operator of an electricity production facility in accordance with the provisions of Law 13-09.

These operators, with the exception of network operators, can be qualified as self-consumers if they are customers of an electricity grid operator without, however, having the right to connect to the electricity grid or to inject the surplus electricity produced into the grid.

Self-consumption conditions

The current legal framework provides for the possibility of building electricity production facilities for self-consumption purposes for up to an installed capacity of 50 MW or, if connected to the grid, for a facility with a capacity exceeding 300 MW and subject to a prior authorization by the administration. The conditions of this authorization are not however provided for in the current regulations. In practice, applications for authorizations of self-consumption projects are sent to the Renewable Energy and Energy Efficiency Department (Direction des Energies Renouvelables et de l’Efficacité Energétique). In general, the Renewable Energy and Energy Efficiency Department does not however decide on these applications pending the reform of the legal framework for self-consumption.

The Draft Bill provides for new regimes of self-consumption:

It should be noted that the power of a self-consumption installation composed of several units is determined by the sum of the nominal power of each unit.

Connecting to the national electric grid

Until now, it was possible for self-consumers of electricity to request the connection of their self-consumption facilities to the national power grid as long as the capacity of these facilities was greater than 300 MW, thus limiting the possibility of decentralized production to large consumers or self-consumers with the ability to construct their own power networks.

The Draft Bill grants the possibility to self-consumers to connect to the national electricity grid in order to connect their production installations to their consumption sites provided that the power of the installation is at least equal to 5 MW and within the limit of the capacity of the national grid. This connection requires the operator to pay the amount of the transmission fees relating to the transmission network and, where applicable, to the distribution network as well as the fees due for system services. The amount of these fees will be set by the National Electricity Regulatory Agency (l’Agence Nationale de Régulation de l’Electricité).

The Draft Bill also provides for an obligation for self-consumers looking to connect to the grid to install a smart electricity meter according to the technical specifications provided for in the bill.

How self-consumers can build their own networks

The current legal regime does not provide a legal framework for transporting electricity from the production site to the consumption site beyond the transmission grid connection.

The Draft Bill allows self-consumers, after having been authorized by the administration, to build their own power network connecting the production site to the consumption site at their own expense. In this case, the self-consumers is not allowed to connect to the transmission grid.

Surplus sale

Under the current legal regime, any surplus production in the framework of a self-consumption project must be sold exclusively to ONEE. However no legal or regulatory text specifies what the volume or the selling price is to ONEE.

The Draft Bill provides that surplus production can be injected to the transmission grid to the benefit of its operator and within the limit of 10% of the annual production of the self-consumption facility. The surplus purchase price will be fixed by the National Electricity Regulation Agency.

Conclusion

The provisions of the Draft Bill aim to reinforce the current self-consumption legal framework and are in line with the national energy strategy that seeks to increase the share of electricity in the energy mix. It should be noted, however, that for this text to be fully implemented, a number of implementing decrees must also be jointly adopted.

¹ Dahir No. 1-63-226 of August 5, 1963 establishing the National Electricity Office (ONE), published in the Official Gazette No. 2650 of August 9, 1963
² Dahir establishing Law n° 1-73-201 of 5 chaoual1397 (September 19, 1977) amending and supplementing Dahir n° 1-63-226 of 14 rebia I 1383 (August 5, 1963) creating the National Electricity Office; Decree Law n° 2-94-503 of 16 rabii II 1415 (September 23, 1994) amending Dahir n° 1-63-226 of 14 rabii I 1383 (August 5, 1963) creating the National Electricity Office; Dahir No. 1-94-434 of 18 chaabane 1415 (January 20, 1995) promulgating Law No. 38-94 ratifying Decree-Law No. 2-94-503 of 16 rabii Il 1415 (September 23, 1994) amending Dahir No. 1-63-226 of 14 rabii I 1383 (August 5, 1963) creating the National Office of Electricity; Dahir No. 1-02-01 of 15 kaada 1422 (29 January 2002) promulgating Law No. 28-01 amending and supplementing Dahir No. 1-63-226 of 14 rabii I 1383 (5 August 1963) creating the National Electricity Office; Dahir No. 1-06-168 of 30 chaoual 1427 (22 November 2006) promulgating Law No. 28-05 supplementing Dahir No. 1-63-226 of 14 rabii I 1383 (August, 5 1963) creating the National Electricity Office; Dahir No. 1-08-97 of 20 chaoual 1429 (October 20, 2008) promulgating Law No. 16-08 amending and supplementing Dahir No. 1-63-226 of 14 rabii I 1383 (August 5, 1963) creating the National Electricity Office; Dahir No. 1-15-77 of 14 ramadan 1436 ( July 1st, 2015) promulgating Law No. 54-14 amending and supplementing Article 2 of Dahir No. 1-63-226 of 14 rabii I 1383 (August 5, 1963) establishing the National Electricity Office and Article 5 of Law No. 40-09 relating to the National Office of Electricity and Drinking Water
³ Order of the Minister of Public Works of April 14, 1956 regulating the self-consumption of electricity, published in the Official Gazette No. 2277 of June 15, 1956