Over the last five years, how has the energy mix changed, and what have been the key drivers?
In 2009, the Kingdom of Morocco launched an ambitious energy strategy which essentially seeks to increase the country’s total power and share of renewables in the energy mix. The objective was to reach a 42% share of renewable energy of total power production capacity by 2020. These strategic objectives have been implemented through three mechanisms:
- Public tenders – As a part of the national energy strategy, several projects have been set up through public tenders. For example, the Noor Project in Ouarzazate, part of the Moroccan Solar Plan launched in 2009, is comprised of several solar power plants, mixing photovoltaic and CSP systems, with a total installed capacity of 2,000 MW. Several large-scale wind farms have also been developed through public tenders such as the 300 MW Tarfaya wind farm, the 150 MW Taza wind farm and the four wind farms comprising the 850 MW Integrated Wind Project.
- Law 13-09 – Morocco’s Law 13-09 on renewable energy allows private entities to sell electricity produced from renewable energy sources to other private or public entities. Thus, private entities can conclude contracts for the sale and purchase of electricity from renewable sources (corporate PPAs) without the state having to intervene on the terms and conditions of the contract or the tariffs for the sale of the electricity produced. A few projects have been implemented under this new law such as the 500 MW EEM wind farm project and the 120 MW Khalladi wind farm.
- Institutional changes – Morocco’s Law 38-16 provides for the transfer of every production facility that uses renewable energy resources, whether in operation or under construction/development, from ONEE, the public operator in charge of water and electricity, to MASEN. MASEN has thus seen its prerogatives widen and is now in charge not only of solar energy but also of wind and water-generated power, and any other renewable energy likely to be developed in Morocco. To this end, MASEN has been renamed "Moroccan Agency for Sustainable Energy," replacing its original name: the "Moroccan Agency for Solar Energy."
What is the outlook for the energy and natural resources sector in the next 5 years? In particular:
Key policy decisions
Morocco’s 2009 energy policy states that by 2030, the share of renewable resources will have to reach 52% of installed capacity (20% wind, 20% solar, 12% hydro) which will increase the installed capacity by an additional 10,000 MW. The development of renewable energies is made through several key policy decisions:
- The amendment of Law 13-09 – A reform of Law 13-09 is currently under discussion and is aimed at enabling the development of solar energy through the development of corporate PPAs. Currently the development of solar projects is restricted to public tenders and only for the high and very high voltage grid. The reform will facilitate access to the medium voltage grid.
- The new self-consumption law – A new draft law on self-consumption aims at creating a dedicated legal framework for natural or legal persons to produce electrical energy by their own means and for their own needs. Under the current legal regime, any surplus production of a self-consumption project must be sold exclusively to ONEE, the public operator in charge of water and electricity, whereas the draft law provides that the surplus may be injected into the national power grid for the benefit of the grid operator, up to a limit of 10% of the annual production of the self-consumption installation.
- The new downstream gas sector law – Gas is recognized as a key resource in the country’s energy transition towards a diversified energy mix. For this reason, a new law regulating the import, transport, storage, distribution and commercialisation of gas has been under discussion for some years. It is envisaged that the activities of transport, storage, regasification and management of LNG terminals will be carried out by a single entity that will make its network available and connect any operator whose request is justified.
- The new green hydrogen law – Due to its energy and environmental properties, hydrogen is seen as a potential replacement for hydrocarbons. As a part of Morocco’s energy transition, a new law governing the production, transport, storage, distribution and commercialisation of green hydrogen is currently under discussion.
- Renewed remit for the regulator – The current national electricity regulator (ANRE) will undoubtedly see its mission widen thanks to a legislative reform being discussed that will confer new roles and powers to the regulator. It is expected that the regulator will not only oversee the electricity sector but also the gas and hydrogen sectors.
Main policy challenges
Over the last ten years, there has been a significant increase in legislative and regulatory texts which may have been perceived by investors and operators as a scattered body of law.
It will therefore be necessary to proceed with legal codification relating to the energy sector in order to allow better access to the regulations in force. Moreover, there is a multiplication of actors and an overlapping of their remits, which can create confusion among investors and operators as to who is the competent entity. The governance of the sector should be improved in order to offer operators greater visibility as to the public entities that will be involved in the development of their projects. As an example, for projects developed under Law 13-09, although authorizations are provided by the Ministry of Energy, a technical opinion from ONEE is also required. This creates confusion as to which entity is in charge. There are also issues pertaining to which entity is in charge of the transfer of activities from ONEE to MASEN as mentioned above. The transfer was decided in 2016 but it is still ongoing to this day.
Lastly, given the technological upheavals in the energy sector, it is important to be able to regulate new areas that require dedicated frameworks, such as the production and various uses of hydrogen. A draft framework law on hydrogen is currently being discussed and should be published in the near term. Special attention should be paid to the implementing legislation as the publication of these texts is necessary for the law to take effect.
What are the key investment opportunities in the energy and natural resources sectors over the next five to ten years?
Investment opportunities will arise in the gas sector, for example activities related to the import of gas into Morocco, the management of LNG terminals and the commercialization of gas. In this regard, a call for expressions of interest was launched by the Ministry of Energy in April 2021 for the development of floating storage and regasification units (FSRU), attracting several foreign investors.
The hydrogen sector is also likely to develop in the upcoming years and investment opportunities will be found in the production and storage of hydrogen and in the construction of related infrastructure. New opportunities may also arise with seawater desalination for electrolysis, the chosen method for producing hydrogen in Morocco or with regards to green ammonia, another vector used in the chemical and fertilizer industry. The development of green ammonia could become significant in Morocco, whether the ammonia is intended for the domestic or export market, as OCP, a Moroccan state-owned company, is the world’s foremost producer of phosphate-based fertilizer.
There will likely be a rise in activities related to energy efficiency, which refers to technologies and practices that reduce energy consumption. Energy efficiency is now considered a fourth energy source after fossil fuels, renewable energy and nuclear energy. Investments will need to be made for the development of technologies to assess and measure energy savings.
Lastly, on 14 July 2021, the European Commission adopted a proposal for a new Carbon Border Adjustment Mechanism which will impose a carbon tax on imports of a targeted selection of products from outside the EU, which will certainly encourage the Moroccan industrial sector (automotive, aeronautics, agri-business, textiles, etc.) that exports to Europe to support the development of renewable energies and energy efficiency.
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