Originally published in The National Read the original here.
Last month, under the hot desert sun, King Mohammed VI of Morocco officially cut the ribbon on the construction of a large solar energy plant in the city of Ouarzazate. Upon its expected completion in 2015, the facility will be the largest in the world, with a 500-megawatt capacity.
This is only the beginning of a greater project to develop renewable energy in the kingdom. Currently plans are underway for four more plants and also for wind farms along the Atlantic coast. By 2020, Morocco hopes to source 42 per cent of its total power supply from renewable energy.
Aside from its obvious environmental advantages, this project has the potential to bring great economic benefit to the country.
In the short and medium-term, it will provide employment and will help to ease Morocco’s heavy dependence on energy imports. In the long-term, it could transform Morocco from an energy-importing to an energy-exporting nation.
More than 95 per cent of Morocco’s energy comes from outside the country – making it the leading energy importer in North Africa. Such a heavy reliance on imports has had a detrimental impact on the economy and the kingdom has also been left without any insulation from price fluctuations in the energy market.
According to the World Bank the project will cost an estimated $1.48 billion and much of this expenditure will be funded by the World Bank ($200m), the African Development Bank ($236m), Germany ($136m) and France ($136m). The UAE has also invested $100m.
Weaning itself off outside energy sources is especially important as the Moroccan government not only pays the market price for oil, but also offers significant subsidies, amounting to $6.6 billion in 2012 or 6.8 per cent of GDP.
The IMF authorised a $6.2 billion line of credit in 2012 to ease this economic burden, but expressed concern earlier this year over Morocco’s hesitance to cut public spending. If properly managed, energy production will offer Morocco much greater autonomy over its economic development.
Beyond this domestic benefit, the project in Ouarzazate may signal the beginning of a shift in the energy dynamic in the region as a whole.
After new governments took power in Tunisia and Libya in 2011, hopes were high for a new era of North African regional cooperation.
The Desertec Foundation, a non-profit organisation that supports policies that harness the desert’s solar energy, contributed to the planning of the Ouarzazate plant. The foundation’s website features a map of the Mediterranean, the Sahel and North Africa dotted with solar and wind energy plants and connected in a network of High Voltage Direct-Current (HVDC) transmission lines.
But such rosy expectations have turned sour as North Africa remains mired in political fragmentation and a resulting economic crisis.
While this might spell bad news for much of the region, it means that Morocco is poised to become a leading partner in the energy trade to Europe. As Libya’s oil production came to a near standstill this summer, European nations became anxious to explore other options.
And the news may get even better for Morocco as European countries move away from hydrocarbon to more environmentally sustainable renewable energies.
Already Germany has redirected funds previously invested in development projects in Egypt and reinvested in Morocco. Europe’s wealthiest nation aims to source 60 per cent of its energy from renewable sources by 2050. Undoubtedly there is huge potential for a future trade relationship between the two countries.
However, while Morocco remains relatively stable compared to its neighbours, plans for the project may be complicated by the fact that three of the four other planned plants lie in the Western Sahara.
Morocco claims sovereignty of this region but this assertion is contested internationally and the area is considered a non-self-governing territory by the UN.
In addition to Morocco, the exiled Saharawi Arab Democratic Republic (SADR) also claims rightful sovereignty – a declaration that is recognised by Algeria and the African Union. Previous oil exploration in the region ground to a halt after pressure from SADR.
Even if these southern plants are built without a hitch, other barriers loom large. Offering sustainable energy on the European market will require substantial improvements to the HVDC infrastructure in Europe. Much of this development relies on Spain, the geographic link between Morocco and the rest of Europe, but the southern European country is unlikely to make any swift investment in this sector given the distress its economy is experiencing.
Morocco’s solar energy project will have positive economic benefits as it offers the kingdom greater energy self-sufficiency. It also has the potential to bring significant wealth to the country if the project continues as envisioned, if the market for North African energy remains robust and if the infrastructure needed to allow for exportation to Europe is progressed.
Rather than Libya or Algeria, by harnessing the power of the sun, Morocco may yet be the leading energy provider in North Africa.