Is Algeria the next renewable energy El Dorado in Africa? This is something that a growing number of observers believe. To be sure, the country, which is Africa’s third-largest oil provider and among the top ten natural gas producers, appears to be determined to take the lead, albeit from a very low position.
Renewable energy makes up only 3% of the country’s energy mix, with fossil fuels accounting for 97% of power generation and gas accounting for the great majority. Algiers, on the other hand, appears to be gaining a second wind, as the country has issued a call for tenders to pick businesses to create 1 gigawatt (GW) of renewable energy, as a portion of a strategy to reach 4 GW by 2024.
Faced with rising demand (+7% for every year between 2010 to 2018) and diminishing gas and oil resources, the officials are relying on the vast wind and solar capability that has been found but never fully realized. Even though this isn’t Algeria’s first try, the excitement stems from the possibility that this is the right one.
More efforts have been made in recent years to move the country toward renewable energy (RE). A commission entrusted with crafting a national plan for RE shift (the Cerefe) was established at the political level at the end of 2019. In addition, President Abdelmadjid Tebboune did take advantage of the reorganization in June 2020 to create a ministry specialized to RE (integrated, till now, into the environment portfolio). The president nominated Ben Attou Ziane (a pulmonology professor) to succeed Chems Eddine Chitour as the ministry’s head in July of this year.
Chitour had announced the imminent unveiling of the 1 GW contract two months prior, which is estimated to produce roughly $800 million in investments.
“We need to get away from fossil fuels Algeria’s energy future will be renewable,” stated the then-minister, who is educated in thermodynamics and is a specialist in oil refining but was leading the green transition before being dismissed.
Although the country is notable for having nearly 100% electrification, its reliance on gas places it at a loss. Algeria’s main source of electricity and export money, gas, is becoming increasingly scarce, necessitating an urgent need to broaden its energy mix.
Regulatory and economic impediments, however, have been overcome. For the renewable energy industry, the sacrosanct 51/49 rule, which requires any investor in the country to partner with a vast bulk Algerian partner, has been lifted, a measure that has been universally praised.
The utilization of IPPs (independent power producers) to create projects is the second big announcement. This strategy, which is based on the signing of the long-term electricity procurement deal between the state and a private actor, enables the latter to access international finance, which has hitherto been a roadblock in Algeria.