Algeria’s renewable energy challenge

The government has unveiled an ambitious plan to reshape Algeria’s energy mix by 2020. But the necessary foreign investment is likely to be hard to come by given the country’s nationalistic tendencies

When it comes to its plans for the development of renewable energy, Algeria certainly does not lack ambition. At the beginning of January, Energy Minister, Youcef Yousfi, announced that in the next decade he would oversee a monumental shift in the source of the country’s power supply.

By 2020, he said, renewables would constitute 40 per cent of Algeria’s energy mix. The target, he added, would involve the launch of 60 renewable energy projects, with a combined capacity of 3,000MW.

The minister’s remarks echoed those of President Abdelaziz Bouteflika just a few weeks earlier. According to Bouteflika, by 2030, the government aims to be producing as much electricity from new and renewable sources as it currently does from gas.

Ambitious power plan

For most countries in the world, increasing the share of renewables to two-fifths of the total energy supply in less than a decade would be a challenge. For a country so reliant on oil and gas as Algeria is, the achievement would be nothing short of remarkable. Algeria generates more than 96 per cent of its export income from hydrocarbons and the sector accounts for almost half of its gross domestic product.

Until the completion of a 150MW gas/solar power plant near Hassi R’Mel earlier this year, renewables met just 0.02 per cent of the country’s total energy consumption. Even Yousfi admits that the plans are “extremely ambitious”.

This is not to say that they are misplaced, however. According to Yousfi, the idea behind the renewables strategy is to prepare the country for the “post-petroleum era”, an eminently sensible plan for such a poorly diversified economy. According to the UK’s BP, Algeria has the equivalent of 55 years of gas reserves at current production, but only 18.5 years of oil.

There is also a strong lobby in the Algerian government that would rather see hydrocarbons reserves preserved for as long as possible. For them, increased sales of power generated from renewable sources would help meet the goal of keeping some oil and gas in the ground for future generations.

In fact, the need for renewable energy production might be more immediate than is suggested by the government’s aim to secure the country’s long-term energy future.

The combination of fast-rising domestic power demand, slow growth in the upstream hydrocarbons sector, and the expansion of gas export facilities means that analysts expect Algeria to suffer a gas supply crunch by 2013-14. It is unlikely that renewables will be able to ease the burden so soon, but it is certainly not too early for the government to be thinking about re-orientating its energy mix.

Equally, if Algeria manages to generate a gas surplus for export in the longer term, it may become susceptible to a weakening in the reliability of demand. The rapid ramping up in recent years of Qatar’s capacity to produce cheap gas for export, the unexpected turnaround in the US’ gas fortunes and the downturn in the global economy have already shown gas exporters that they cannot assume there will always be a strong market for their product.

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Richard Nield is a freelance journalist, photographer and filmmaker covering the Middle East and Africa. In 10 years covering the region, he has been published and broadcast by clients including the BBC, Reuters, Al Jazeera, The Economist, The Financial Times, The Independent and Foreign Policy magazine. He has reported from throughout the region, including Algeria, Egypt, Libya, Morocco, Tunisia, South Sudan, Jordan, Lebanon, Syria, Kuwait and Saudi Arabia.