From gas deals with Algeria to investment in Libyan oil exploration, Europe is increasingly looking across the Mediterranean to the Maghreb to fulfill its energy needs. In addition to holding vast untapped hydrocarbon reserves that will enable Europe to diversify its import mix, the region also has strong potential for electricity generation.
Bilateral energy trade continues to expand with Tunisia, Morocco and Algeria agreeing to integrate their electricity markets with that of the European Union. A deal was inked at the Arab Maghreb Union–EU Council of Energy Ministers in June for a five-year program to harmonize the regulatory frameworks for their electricity markets, as well as foster technology exchanges from the EU to the Maghreb and develop more renewable energy sources in Africa.
“Building a regional electricity market will form a base for fruitful cooperation between the two sides of the Mediterranean,” Algerian Energy Minister Yousef Yousfi said at the meeting.
By 2050, the EU wants to receive 20 percent of its electricity from North Africa, and is backing a massive solar energy scheme to achieve this target. Called Desertec, the $500 billion German project envisions covering 17,000 square kilometers of the Saharan desert with solar panels. Thus far, companies from Morocco, Tunisia, Spain, France and Italy have attached themselves to the initiative. The electricity will be carried to Europe via cables constructed under the Mediterranean Sea.
With sun and space in abundance, North Africa is a key component in the EU’s target to increase the percentage of renewables in its energy mix. According to the German Aerospace Center, solar power plants in the MENA region have the potential to produce 470,000 MegaWatts by 2050. The first pilot project for Desertec will be launched in Morocco later this year and could generate up to 1,000 MegaWatts, while the entire scheme is hoped to be up and running within five years. “Desertec as a whole is a vision for the next 20 to 40 years with investment of hundreds of billions of euros,” European Energy Commissioner Guenther Oettinger said after the meeting of energy ministers. “To integrate a bigger percentage of renewables, solar and wind needs time.”
Electricity exports from North Africa to Europe are already occurring on a small-scale, with a 400-kilovolt power grid link now connecting Algeria to Spain by way of Morocco. In the third quarter of 2009, Sonelgaz began exporting traditional thermal-generated electricity to Europe via the link. The Algerian state energy company reportedly has a temporary surplus of 1,000 MegaWatts, which it would like to sell to Europe, but at higher prices than are currently on offer.
A second European-African interconnection is planned between Tunisia and Italy. A $2.56 billion joint venture between the Tunisian Gas and Electricity Company (Societé Tunisienne de l’Electricité et du Gaz) and Italy’s Terna will see the construction of a 1,000 MegaWatt high-voltage direct current submarine cable.
A tender for this project is expected this year, though Tunisia needs to create a profitable financial model for the concession. Slim Kchouk, the director of Siemens in Tunisia, said: “The challenge is to find a company that will negotiate in advance with Italy an advantageous price per kilowatt hour over the lifespan of the concession so that the project can be profitable.”
Rising local demand poses a perhaps greater threat to the viability of African electricity exports prior to the completion of Desertec. According to Sonelgaz, Algerian demand is growing at 6 percent annually and projected to reach 20,000 MegaWatts by 2015, up from 11,000 MegaWatts this year. In the long term, Africa could very well wind up powering Europe, but at the moment the greater impetus will be to meet its own needs.
