Over the past 20 years Morocco has implemented strategies to open up the power sector and the oil products market to international investors, as well as to increase energy access to nearly all of its population.
On the request of Morocco, the International Energy Agency (IEA) reviewed Morocco’s energy policies, noting that the strategies implemented are on target, with notable advances in wind and solar power and on fuel subsidy reform. However, the report notes that while the country’s power sector restructuring is under way, there is scope for further progress in energy efficiency.
IEA views Morocco’s efforts as admirable
“Under political guidance from the highest level, Morocco has shown an admirable determination to play to its strengths, and in our view the National Energy Strategy set out in 2009 has taken Morocco very much in the right direction,” said IEA Executive Director Maria van der Hoeven as she presented the report to an esteemed audience of Ministers, senior officials and diplomatic representatives in Rabat.
Economic growth has been strong, and as a result the energy demand has grown fast. Morocco is 90 % energy-dependent: high international energy prices have hit the balance of payments, and fuel subsidies have placed a strain on the budget. However, in addition to substantial hydropower capacity, Morocco has impressive potential in both wind and solar power. In addition, the upstream investment conditions are attractive. Morocco is also well-integrated into the regional gas and power networks, buying gas from Algeria and electricity from Spain.
The country’s 2009 Energy Strategy aimed to diversify the electricity fuel mix, accelerate the deployment of wind and solar power, place renewed emphasis on energy efficiency, encourage foreign investment in the upstream and pursue regional energy sector integration.
The IEA report concludes that this strategy is very much on target, a view reinforced by the important decisions taken earlier this year to sharply reduce subsidies on transport fuels and on fuel oil. Over the medium term, more coal-fired power using clean coal technology (and later, more gas-fired power) is expected to replace much of the fuel oil currently used in the power grid.
Strategies going forward
Government agencies are now in place to promote both solar and wind power and foster research and development in renewable technologies. While the stated target of reaching 2 gigawatts each of wind and solar capacity by 2020 is ambitious, a start has been made: wind should reach 700 MW capacity this year, and next year the first concentrated solar power (CSP) plant rated at 160 MW should come on stream.
Legislation and institutions are in place to drive improvements in energy efficiency, however more could be achieved in this area. There is also scope for the national power company to be restructured. Combined with the establishment of an energy sector regulator, this would be a major step towards the full liberalisation of the electricity sector, increasing transparency, efficiency and openness to foreign investment.
The report encourages the government of Morocco to persevere on its current course, but in particular to:
- Sustain recent progress in reducing the level of fuel subsidies.
- Reinforce the current energy efficiency strategy through clear regulation and incentives, while taking care to measure progress to date and learn from others’ experience, for example, in the European Union.
- Optimise the deployment of solar power, maximising the use of CSP at peak hours and facilitating the use of photovoltaics, by accelerating work in the medium- and low-voltage area currently under way in Morocco – including access to the grid.
- Accelerate the establishment of an energy regulator to supervise an even more open power market and encourage wider use of gas.
- Maintain the confidence of foreign investment and domestic industry, while also encouraging more R&D in new energies and the transfer of technology.
The IEA has prepared this in-depth review on the request of Morocco, one of its important partner countries. The review has been supported by the European Union.