Morocco Selects Saudi-Led Group For $1bn Solar Deal

A group led by Saudi International Company for Water and Power (ACWA) has won a $1-billion contract to build a 160-megawatt (MW) concentrated solar power plant south of Morocco, which hopes to be a key exporter of clean energy to Europe.

Mustafa Bakkoury, who heads the state’s Solar Energy Agency (Masen), made the announcement at a news conference. ACWA has teamed up with Spanish firms Aries IS and TSK EE for the design, finance, construction, operation and maintenance of the plant near the southern city of Ouarzazate.

An official source told Reuters in June that Masen would select the ACWA consortium for the solar plant, one of the world’s biggest.

Bakkoury said Acwa has priced its offer at 1.62 dirhams ($0.19) for the kilowatt/hour to be produced out of the plant, versus 2.05 dirhams proposed by two other consortia involved in the final selection processes. The two were:
– Abeinsa ICI, Abengoa Solar, Mitsui and Abu Dhabi National Energy Co.
– Enel and ACS SCE.

At 1.62 dirhams, the proposed production cost is far above prices at which electricity is being sold nationally. For the lowest tier of household users in the capital Rabat for instance, private utility firm Redal sells one kilowatt/hour for 0.8 dirhams.

Work on the plant will start before the end of this year and should take two years before the expected start towards end-2014, said Bakkoury who estimated at around $1 billion the value of investment needed in the plant.

The Moroccan government is expected to cover any gap between the cost of producing solar electricity and the price state power utility will pay to buy the electricity from Masen, Bakkoury said in May.

Acwa’s contract is the first in a plan to have 500 MW of solar energy produced in Ouarzazate, under the Moroccan Solar Plan, a government initiative that aims to produce 2 GW of solar power by 2020, which corresponds to 38 per cent of the country’s current installed power generation capacity.

Masen’s next tenders will be for a 50-MW photovoltaic module and CSP towers of at least 50 MW. both in Ouarzazate.

The solar power plan is worth $9 billion in investment and will include five power stations, two of which are located in the disputed Western Sahara.
Facing an electricity demand that rises by an annual seven per cent and a gaping trade deficit from heavy reliance on fossil fuel imports, Morocco also hopes renewable energy will enable it to export electricity to energy-hungry trade partner, the European Union.

Coupled with another multi-billion dollar wind energy development scheme, the solar development plan should reduce Morocco’s annual imports of fossil fuels by 2.5 million tonnes of oil equivalent and prevent emissions of nine million tonnes of carbon dioxide.

Morocco aims to export surplus electricity to Europe via Spain, where it has a power market trading licence that allows it to sell electricity.

But with energy demand expected to double by 2020, officials at state power utility ONE say the percentage of solar-generated electricity that will be exported would depend on availability of surpluses.