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Villa Valmer, Marseille, 19 October 2018
Fiscal Reforms for Low Carbon Growth in the
Mediterranean
Support schemes in the South and East
Mediterranean countries
Dr. Emanuela Menichetti
Director, Electricity and Renewable Energy
Geographical coverage
2
Eleven countries of the South and East
Mediterranean (SEMCs)
SOUTH EAST
Israel
Jordan
Lebanon
Palestine
Syria
Turkey
SOUTH WEST
Algeria
Egypt
Libya
Morocco
Tunisia
RE capacity evolution in the SEMCs
3
RE technologies have been progressing at a c.a.a.g.r. of 10% over the last
ten years
Cumulative RE capacity in 2017 was more than double the amount of 2008
SEMCs host 2% of total RE capacity worldwide
Source: OME
Zoom on selected RE technologies
4Source: OME
Net electricity capacity additions by type
5
Natural gas is still dominating the electricity mix in terms of
cumulative capacity
However, net additions of hydro and non-hydro RETs were higher
than natural gas in 2017 vs. 2016 (5 GW vs. 4 GW)
RETs capacity grew by more than 24 GW since 2010, a net addition
of 3 GW per year
Source: OME
RET geographical distribution in the SEMCs
6
Market still concentrated in few countries
Turkey accounting for almost 80% of total capacity
in the SEMCS
Source: OME
RETs capacity by GDP and population
7
GDP and per capita indicators show a less concentrated
distribution
We start seeing the results of policies in place, e.g.:
Morocco, Lebanon
Source: OME
SEMCs slowly getting attractive
8
In 2017, RE investments in the SEMCs were 2% of the total,
about 20 times lower than China’s, 5 times less than in Europe
but larger than the investment size in Brazil
Egypt and Turkey attracted the largest investment flow in 2017,
but things are moving ahead in several countries (e.g.: Jordan,
Lebanon, Israel, Morocco)
Source: UN Environment, Bloomberg New Energy Finance, and OME
SEMCs: ~7 USD bn (2017)
Competitive long-term prices for RETs
9
SEMCs among the lowest bids for solar PV and wind
Average awarded contract prices, USD/MWh
Onshore wind
Offshore wind
Solar PV
Canada 29
Mexico 2929
Peru 3748
Brazil 2035
Morocco
30
Jordan 25
UAE 24
Saudi Arabia
24
India 3840
Zambia 69
SA 5265
Senegal 29
Denmark 53
UK 77
Germany 4553 50
The Netherlands 68
China 55
Sources: OECD/IEA, 2018
Turkey 73
Egypt 30
Established RE targets in the SEMCs
10
Almost + 120 GW of non-hydro
capacity required to meet the
announced targets, 8 times more
than current (2016) levels
Country Energy efficiency Renewable Energy CO2 mitigation
Algeria -9% of energyconsumption
27% of electricitygeneration
Min of -7% (up to -22% if intern. financing)
Egypt -8% of energyconsumption
42% of electricitycapacity (2035)
Israel -17% of electricityconsumption (vs. BAU)
17% of electricitygeneration
-23% compared to BAU
Jordan - 11% of the energy mix (2025)
Min of -1.5% (up to -14% if intern. financing)
Lebanon -3% in electricitydemand vs. BAU (up to -10% conditional target)
15% of electricity and heat (up to 20% conditional)
Min of -15% comparedto BAU (up to -30% conditional)
Morocco -15% of energyconsumption
50% of electricitycapacity (2025)
Min. of -13% comparedto BAU (up to -32%)
Palestine -5% in electricitydemand by 2020 (-384 GWh/yr)
33% of electricity fromsolar PV
-12.8% compared to BAU (up to -24.%)
Tunisia -30% of energy demandvs. BAU (2010)
30% of electricitygeneration
Min of -13% comparedto BAU (up to -28%)
Turkey - 26 GW + full hydro potential (~36 GW)
-21% compared to BAU
Sustainable energy & climate measures
11
Source: UNFCCC Nationally Determined Contributions to the 2030 horizon
No quantification for Egypt in its NDC; data gathered from the Integrated Sustainable Energy Strategy to 2035
No NDCs for Libya, Syria
Policy Support Schemes in SEMCs
12
Regulatory schemes
Fiscal incentives and
public financing
Renewable
energy
targets
Feed-in
tariff/Premium
Quota
obligatio
n
Net
metering/
billing Tendering
Reductions
in sales,
energy CO2,
VAT or other
taxes
Public
investment,
loans, grants,
capital
subsidies or
rebates
AlgeriaYes Yes Yes Yes Yes
EgyptYes Yes Yes Yes Yes Yes Yes
IsraelYes Yes Yes Yes Yes Yes Yes
JordanYes Yes Yes Yes Yes Yes
LebanonYes Yes Yes Yes
LibyaYes Yes
MoroccoYes Yes Yes Yes
PalestineYes Yes Yes Yes Yes Yes Yes
SyriaYes Yes Yes Yes
TunisiaYes Yes Yes Yes Yes
TurkeyYes Yes Yes Yes Yes Yes
Selected case studies from the
South&East Mediterranean region:
Egypt
Lebanon
Morocco
Tunisia
Algeria
RE Policy Framework in Algeria
15
National RE Plan issued in 2011 and revised in 2015
Main law for RE promotion is law No. 04-09 of August 14th of 2004,
setting a feed-in tariff scheme
An Executive Decree No. 13-218 of 18 June 2013 laying down the conditions
for granting premiums for the costs of diversification of electricity production
was adopted by the Government and published in Official Gazette No. 33 of 26
June 2013
A dedicated fund – National Fund for Renewable Energy and Cogeneration -
has been created for financing RE projects. The fund is financed by a 1% of
total oil royalties.
The Ministerial Orders of 2 February 2014 have fixed PPAs for production of
electricity from PV and wind plants with guaranteed tariffs for 20 years. Other
projects of other technologies will be financed after 2021 from 50% to 90%
based on the technology by the fund.
Institutional framework: Ministry of Energy and Mining is the main institution
responsible for energy issues. SKTM – Company of Electricity and Renewable
Energy, subsidiary of Sonelgaz - is the executing company. The Algerian
Electricity and Gas Regulation Commission (CREG) is responsible for defining
prices. Other institutions are: the Renewable Energy Development Centre
(CDER), New Energy Algeria (NEAL), Institute for Renewable Energy and
Energy Efficiency (IAER) and the Agency for the Promotion of the
Rationalization of the Use of Energy (APRUE).
Algerian Renewable Energy Development Program
Solar thermal (CSP) Photovoltaic (PV) Wind Total (MW)
7200 2800 2000 12000
2011 (MW)
2015 (2011 up-dated)
Total: 22000 MW
RE Policy Framework in Egypt
18
RE Targets: 20% RE of the electricity generation in 2022 & 42% RE in 2035
(Integrated Sustainable Energy Strategy, 2015)
Main laws & regulations: Law No. 203 of 2014 on the production of
electricity from renewable energy sources, electricity law of 2015, Cabinet
Decree No. 1947 of 2014 on Feed-in Tariff (1st round), Prime Ministerial
Decree No. 2532 of 2016 on Feed-in Tariff (2nd round), and Prime Ministerial
Decree No. 37/4/15/14 of 2015 on allocating land for RE projects
Main support schemes:
- A) competitive bidding
- B) Merchant scheme
- C) Feed-in Tariff
Source: Egyptian Holding Electricity company
RE Deployment under the different schemes
19
Competitive auctions (BOO scheme), managed by EETC
Gov’t projects, (EPC scheme),managed by NREA
FIT Net metering
Wind Solar Wind Solar Wind Solar Win
d
Solar
250 MW in
Gulf of
Suez under
construction
About 1250
MW in Gulf
of Suez in
pipeline.
250 MW in
West Nile in
pipeline.
200 MW PV in
Kom Ombo under
contracting.
200 MW PV in
West Nile in
pipeline.
600 MW PV in
West Nile in
pipeline.
100 MW CSP in
West Nile in
pipeline
About
1000
MW
Wind
Energy
About 50
MW Solar
Energy
NO
wind
energy
project
has
been
comple
ted.
About
1500
MW
Solar
PV
projects
in
Benban
under
construc
tion
n/a Regulatio
ns
establishe
d for
Solar PV
projects
less than
20 MW
Other RE measures include: Net metering for solar PV projects less than 20
MW; land allocation and permits (7650 Km2 of land), long-term PPA,
governmental guarantees, reduced custom duties (2% only) and conduct of
environmental impact assessment studies and others.
~6 GW under
development
RE Policy Framework in Lebanon
21
Main laws & regulations: The government policy paper of 2010, and
mainly the National Renewable Energy Action Plan (NREAP) of 2016.
RE Targets: 200 MW wind, 250 MW solar PV, 50 MW solar CSP,
331.5 MW hydro, 771.5 GWh of bio-energy and 1.3 MW geothermal
(by 2020).
Main RE support mechanisms: Financing mechanism through the National
Energy Efficiency and Renewable Energy Action (NEEREA).
Other RE measures include: Net metering, LEEREFF (Fund by EIB and AFD).
0 50 100 150 200 250 300 350
Hydro
Solar PV
Wind
Solar CSP
Geothermal
RE Targets in Lebanon, 2020
RE Installed Capacity (MW) in 2017 RE Target (MW) by 2020
22
What is NEEREA?
NEEREA is the National Energy Efficiency and Renewable Energy Action
•A national financing mechanism initiated by the Central Bank of Lebanon in collaboration with the Ministry of Energy and Water, the Ministry of Finance, UNDP, the EU, and the LCEC.
•It was officially launched with the issuance of Circular No. 236 by the Central Bank of Lebanon on 25 November 2010.
•Provides subsidized loans for any type of EE and/or RE projects to private sector entities (individuals, SME’s, or corporate bodies).
• Covers loans by any Lebanese commercial bank with 0.6% interest rate and a repayment period of up to 14 years, in addition to a grant amount released after the project is implemented.
Source: LCEC, 2018
23
• MEW sets the strategic guidance andpriority in energy efficiency and renewable energy
Architecture of NEEREA
• As the national financing institution, BDL sets the framework ofoperation and offers benefits to banks
• MoF defines the subsidies on interest rates for the different sectors ofthe economy
• EU has offered BDL a grant of 12 Million Euros to encourage SME’sin applying for NEEREA
• UNDP partnered with BDL to offer technical support, training,marketing, and awareness raising activities
• LCEC is the technical consultant to BDL, reviewing loan applications,and setting quality control criteria
Source: LCEC, 2018
24
Investments Under NEEREA
2018:
• Approved Loans:
889 (2017 + 200) Projects
511 million USD
(2017 + 110m)
• 56 Pipeline Projects:
50 million USD
Source: LCEC, 2018
25
Distribution of Investments Under NEEREA
NEEREA Indicators - Statistics
RE: Renewable Energy Projects, EE: Energy Efficiency Projects, R3E: Renewable Energy and Energy Efficiency Projects, GB: Green Certified Buildings Projects
Loans Amount per Category
• 667 PV projects:
Total capacity of 32.5 MWp
• Green building loans:
A total of 252 million USD
Source: LCEC, 2018
RE Policy Framework in Morocco
28
An energy strategy was enacted in 2009, a law on renewable energy 13-09,
amended in 2016
RE targets: 42% of electric installed capacity by 2020 and 52% by 2030
An evolving institutional framework; the establishment of the Moroccan
Agency for Sustainable Energy (formerly known as the Moroccan Agency for
Solar Energy), the establishment of an energy investment company (SIE), and
the recent establishment of an independent electricity regulator (ANRE)
Main support scheme (Tendering): Rationale: i) search for the cheapest KWh
through competition and the involvement of the private sector, ii) reduce the
burden on state energy budget, and iii) embed local requirements to benefit
from socio-economic externalities
Other RE measures include: Net metering (EnergiPro for self-production at
HV), indirect subsidies through state-owned companies/agencies (ONEE &
MASEN), land allocation for wind and solar integrated programmes, etc…
Key success factors: an enabling regulatory framework with renewable
energy targets, a consolidated institutional framework, attractive financing
conditions through the involvement of several international financial institutions
and development banks (reducing risk and financing cost).
RE Deployment by Technology in Morocco
29
Solar
CSP
NOOR I: Technology - CSP trough; Capacity - 160 MW; Storage - 3 hours (operational since 2016)
Considered as a show-case of the CSP technology with storage in Morocco to gain experience and
draw lessons for future developments of similar projects in Morocco and in the whole region.
A public-private partnership, bringing together public institutions, private investors and the finance
community, including international financial institutions and development banks. This was key in risk
allocation among stakeholders.
Local industrial integration requirements: around 30%-35% - civil engineering , metal frames and
mounting structures, etc.
NOOR II: Technology - CSP trough; Capacity - 200 MW; Storage - >7 hours & NOOR III: Technology -
CSP Tower; Capacity - 150 MW; Storage - >7 hours. More experience is gained, including ready
workforce and economies of scale, especially benefiting from the already existing infrastructure
developed during the first phase. Further fall of cost, but still has not reached grid parity (Between 130
& 140 $/MWh). Status: testing phase and expected to be commissioned by end of this year 2018
Perspectives: NOOR Midelt – hydrid CSP/PV (evaluation of the bids on going), NOOR Tata, etc.
Solar
PV
NOOR IV: Technology – PV with tracking system; Capacity - 70 MW; (Price – around $40/MWh); Status:
Operational (October 2018). Perspectives: NOOR PV2
Wind Taza (150 MW): under development
The 850 MW auction was launched by ONEE (Office National de l’Electrcite et de l’Eau Potable).
Projects covered under this tender: (Midelt - 150 MW, Tanger - 100 MW, Jbel Ladid - 200 MW, Tiskrad -
300 MW, Boujdour – 100 MW). Awarded in March 2017, price competitiveness and local content
(attributed an important weight in scoring) were key in awarding the tender to the winning consortium.
RE Regulatory Framework in Tunisia
31
Main laws & regulations: Law No. 2015-12 on electricity production from
RE sources (May 2015), Decree No. 2016-1123 on the realization of projects
and sale of RE electricity (August 2016), and Orders on technical specifications
and contracts (February 2017).
RE Targets: increasing the share of RE in electricity generation to 30% in
2030, whereas it stood at only 3% in 2015. To achieve this target, Tunisian Solar
Plan (TSP) aims to achieve an installed RE capacity of 3,815 MW in 2030.
An evolving institutional framework including the Ministry in charge of energy
(Ministry of Industry and SMEs), National Energy Conservation Agency (ANME)
and the Tunisian Electricity and Gas Company (STEG).
Main support schemes :
Tendering: search for the cheapest kWh through competition and the
involvement of the private sector. Applied for Authorizations (RE projects
<=30 MW) and Concessions (RE projects >30 MW) regimes.
Net metering for self-generation at HV/MV and LV.
Other RE support measures include:
Subsidies through state-owned funds :
➢ Energy Transition Fund (FTE): for self-generation RE projects.
➢ Tunisian Investment Fund (FTI): targeting the authorizations &
concessions regimes projects.
RE Policy Framework in Tunisia
32
THREE REGIMES
Self generation
Industries & Services
allowed to produce
electricity for their own
needs and sell the excess
to STEG.
Access to electricity
network in case the R.E
generation site is different
from the consumption site.
Authorizations
For less then :
30 MW Wind,
10 MW PV,
15 MW Biomass,
5 MW other
sources.
Concessions
For higher
capacities,
either to satisfy the
needs of the local
market or for
exportation.
RE deployment under different regimes: Calls for projects
Authorizations: 1st round / May 2017 : 70 MW Wind and 70 MW PV
Authorizations: 2nd round / May 2018 : 130 MW Wind and 70 MW PV
Concessions: May 2018 : 500 MW Wind and 500 MW PV
RE deployment in Tunisia
33
RE deployment under
different regimes :
Updated program for 2020
Conclusions
34
SEMCs represent a minor share of RE capacity at global
level
Their energy mix is still largely dominated by fossil fuels
Although not dramatically, the rate of penetration of RE in
the power sector has been increasing in the past few
years, thanks to dedicated support measures and Energy
Transition/Climate policies associated with an evolving
regulatory framework
Record low levels of electricity price observed in some
countries for wind and solar PV
The reported case studies show deep commitment and
awareness of decision makers and stakeholders
Best practices at international levels applied to design the
regulatory regimes
32 bis boulevard Haussmann75009 Paris - France
We acknowledge the
contribution of OME
members and partners of
the Energy Transition
Committee, and
particularly:
- CDER, Algeria
- EETC and NREA, Egypt
- LCEC, Lebanon
- ONEE, Morocco
- STEG, Tunisia
22 000 MW for local electricity needs, 27% of national electricity share.
Source: Ministère de l’Energie et des Mines
13575
5010
2000
1000 400
15
Solar PV
Geothermal
Wind
Solar Thermal
Biomasse Cogeneration
National Renewable Energy Program
(2015 – 2030)
Source: Energy Ministry
NEAL
Hybrid CSP-gas: 150 MW; 25 MW solar
Creation in 2013 of SKTM, a branch from SONELGAZShariket Kahraba wa Taket Moutadjadida forimplementing the program of renewable energy inAlgeria
Pilot Plants of 1.1 MW in the region of Ghardaïa to test in
situ the following four technologies:
✓ Monocristalline silicon (452 kWc)
✓ Polycristalline silicon (452 kWc)
✓ Thin film CdTe (100 kWc)
✓ Amorphous a-Si (100 kWc)
In service since July 2014.
Wind farm of 10.2 MW at Kabertenne (Adrar):
Number of wind turbine: 12.
The capacity of each: 850KW
In service since July 2014
Mois Site to connect to
RIN
Site to connect
PIAT
Site to connect to
RIS
Capacity (%)
December
2014
Souk Ahras-Laghouat
-Naâma
Kaberten-In Salah-
TimimouneDjanet 75 MW 22 %
January
2015Djelfa
Adrar-Zaouiat Kounta-
Reggane- 36 MW 32 %
February
2015Ouargla-Elbayadh - Tamanrasset 66 MW 51 %
Marsh
2015
Sétif-Batna-Tigharghar-
M-Sila-SaidaAdrar-Aouelef Tindouf 119 MW 85%
April
2015
BBA-Mila-Sidi
Belabbes- - 47 MW 100%
Total 265 MW 53 MW 25 MW 343 MW 100%
Deployment of 343 MW solar PV in High plateaus and in the South
RIN: Réseau interconnecté (interconnected grid)PIAT: Pôle In Salah-Adrar-TimimouneRIS: Réseaux Isolés du Sud (isolated grid of the south)
