Algeria will launch a tender for 1 GW of independent power produced renewable capacity this coming June and July, the country’s energy minister Chems Eddine Chitour, has announced.
The objectives of this call for expressions of interest is to select companies to produce 1,000 MW of renewable energy albeit with some conditions for foreign investors. The tender will be divided into ten lots of 100 MW each and will allow projects with foreign financing. The country’s previous tender for renewable energy in 2019 had restricted foreign financing for projects.
The Algerian government published a decree in the official gazette in April empowering the Minister of Energy Transition and Renewable Energies Chems Eddine Chitour to manage and oversee the procurement exercise.
Following the tendering process, the Algerian government will set up a bankable electricity purchase agreement in US dollars for the winning bids by the independent power producers (IPPs). The IPPs will sell electricity at a competitive tariff to state owned utility Sonelgaz.
Algeria’s renewables landscape
The Algerian government plans to diversify its electricity mix. The country targets to deploy a total of 22 GW of clean energy generation capacity by 2030, and at least 13.6 GW must come from solar.
The country currently has an installed solar energy generation capacity of 423 MW as of 2020, according to the International Renewable Energy Agency.
The planned 4GW Tafouk 1 solar project is also gaining momentum, and if implemented, the project will help the country meet its renewable energy targets. Five tenders of 800 MW each are expected to be held for the project.
Localisation requirements in Algeria
In Algeria renewable energy investors are expected to meet certain localisation requirements such as the use of locally manufactured equipment. These are mainly solar panels, assembly structures and electrical cables.
The previous renewables tender in 2019 by the North African country was undersubscribed due to the high localisation requirements. The country had tendered for 150MW of renewable energy capacity and only got bids for 90MW. The tender also required that IPPs source for funding from Algerian finance institutions and 51% stake in the projects be owned by local companies.
Algeria has a relatively limited manufacturing capacity for solar PV modules. Algerian company Milltech has a factory capable of supplying 100MW of solar panels per year whilst another factory in Ouargla is expected to soon produce 160MWp of solar panels per year.
The limited solar panel manufacturing capacity means IPPs might have to import some of the equipment required to fully implement projects.