Algeria was the very first country in Africa to apply a Feed-in Tariff scheme for renewable energy. In August 2004, a national program for the promotion of renewable energy was launched: it obliges Sonelgaz, the national public energy operator, to buy energy from renewable sources through a commercial contract. However, this policy failed: it did not lead to any renewable power plant construction.
Algeria must diversify its energy mix
The Algerian energy mix takes advantage of its huge natural reserves of gas and oil: 97% of the electricity generated in 2012 came from thermal power stations. The country has recently reached universal electrification, so the opportunities concern mostly grid-connected systems.
The motives, which encouraged the government to launch an ambitious program of Development of Renewable Energy in 2011, focusing on photovoltaic, are different. Solar energy is the most promising form of energy in this very sunlit area, with one of the highest solar irradiation rates in the world. Algeria wants to ensure its energy independence and to export its surplus of produced electricity, especially to Europe, in order to boost its national economy. Oil and gas reserves will be decreasing in the next decades, therefore the diversification of the energy mix is primordial, especially since Algeria has to respect several contractual obligations to export electricity.
An ambitious program focusing on solar energy
This new National Program for the Development of Renewable Energy is divided into three stages:
- Between 2011 and 2015, pilot projects and test batteries of the several available technologies have been run. The results allowed to adjust the program and to establish a 20-year Feed-in Tariff
- During the second stage, which will run between 2015 and 2020, Algeria will see the development and installation of several power plants. These projects can be piloted by Algerian or foreign developers and investors, both from the public and private sectors. The Program aims at 4,525 MW of installed capacity in the horizon of 2020, of which 3,000 MW will be generated by solar power.
- The third stage, between 2020 and 2030, will increase the total amount of renewable energy power plants to 22,000 MW, of which 13,575 MW of photovoltaic power plants.
The Feed-in Tariff contract is signed between the power plant owner and Sonelgaz. It is effective during a period of 20 years which is divided into two phases: During the 5 first years, there is a unique applied FiT. Then, during the 15 remaining years, the FiT fluctuates in line with the site potential, based on a reference potential of 1500 hours of full-power operation.
The guaranteed Feed-in Tariff, is illustrated below:
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