Morocco Is Paying Too Much For Solar Power: Wynn

(The author is a Reuters market analyst. The views expressed are his own.)

By Gerard Wynn

LONDON, May 8 (Reuters) – Morocco is set to pay more for its solar power than far richer countries such as Germany and should switch tack to cheaper solar technologies that can compete better with wind, oil and coal.

The higher cost can probably be attributed to its choice of concentrated solar power (CSP), the competitiveness of which is being questioned as prices of rival photovoltaic (PV) technology tumble.

Morocco plans to install at least 2,000 megawatts (MW) of solar power capacity by 2020 at five sites, which it hopes will account for 14 percent of total power generating capacity by the end of the decade.

It will target both CSP and solar PV in its Moroccan Plan for Solar Energy, or “Solar Plan”, according to the Moroccan Investment Development Agency, but has so far veered towards more expensive CSP at one initial project near the southern city of Ouarzazate.

That contrasts with how developers in California have increasingly ditched CSP for PV over the past three years as a global manufacturing glut sent PV costs plummeting.

CSP uses parabolic or other types of mirrors to concentrate sunlight and create heat and steam to drive a turbine. It is a technology championed by power equipment producers in Spain, Morocco’s neighbour and one of its closest diplomatic allies.

Solar PV converts sunlight directly into electricity using a light-sensitive semiconductor such as silicon.

Morocco would do well to switch to PV, given a far more developed supply chain, commoditised end product and competitive power generation, especially given that the country’s economic troubles make it riskier to experiment with less widely used technologies.

Moroccan authorities anticipated the solar plan would cost $9 billion at its launch in 2009, according to data on the website of the north African country’s solar energy agency, Masen.

The plan will be part-financed by a $1 billion Energy Development Fund, including donations from the Kingdom of Saudi Arabia and the United Arab Emirates.

Morocco has raised additional funds for the first Ouarzazate project from institutions including the European Investment Bank, the French Development Agency (AFD) and the German development bank KfW.

The plan will be delivered through 25-year power purchase agreements (PPA) with independent power producers which earn a fixed rate per unit of solar power they generate.

The aim is to achieve greater energy independence: Morocco is one of the world’s most energy-poor countries, importing around 95 percent of its needs, according to the World Bank.

Energy accounts for more than a quarter of the country’s imports and contributed to a record trade deficit of $23.6 billion last year. Sun-drenched Morocco wants eventually to export its solar energy to Europe.

The U.S. National Renewable Energy Laboratory (NREL) has developed an open-access database measuring solar irradiance calculated according to the sunlight captured by a panel tilted southwards, defined in units of kilowatt hours per square metre per day.

The NREL’s map shows a maximum “Direct Normal Irradiance” (DNI) in southwest Germany of 3.39, compared with 7.47 at Ouarzazate in Morocco.
It shows that the Moroccan project should achieve far more competitive power generation.

But Morocco announced last September that it had given a group led by Saudi International Company for Water and Power (ACWA) a $1 billion contract to build a 160-megawatt (MW) CSP plant, at 1.62 dirham ($0.194) per kilowatt hour.

ACWA last week confirmed further details including the award of construction contracts.

That is more support than for smaller PV installations in Germany, at 0.134 euros ($0.18) per kWh for projects up to 10 MW, and in Britain, at 0.115 pounds ($0.18) for projects above 250 kilowatts, both of which are over 20 rather than 25 years.

Germany has scrapped support for projects over 10 MW.