During the first half of 2012, the African Development Bank (AfDB) approved US$800 million in loans to encourage private investment in Morocco’s growing wind and solar markets.

The bank’s support of Morocco’s plan to develop a concentrated solar power (CSP) plant at Ouarzazate and its Integrated Wind/Hydro and Rural Electrification Program is helping the country realise its goal of increasing its installed renewable energy capacity to 42 per cent by 2020.

In May 2012, the AfDB approved a loan for €168 million from its own resources and a concessionary loan for US$100 million from the Clean Technology Fund (CTF) to finance the first phase of the CSP plant at Ouarzazate. The facility aims to generate 120 to 160MW in its first phase and 500MW at full capacity, making it the largest CSP plant in the world.

The project is structured as a public private partnership (PPP) between the Moroccan Solar Energy Agency (MASEN) and a private partner. Estimated at €1.04 billion total cost, the project will be jointly financed by six other agencies including the World Bank, European Investment Bank, Agence Française de développement, German Development Bank (KfW), Neighbourhood Investment Facility (European Commission), and other Moroccan institutions.

In June 2012, the AfDB made its largest project approval to date for 2012 with a loan for €359 million from its own resources and US$125 million from the CTF for Morocco’s Integrated Wind/Hydro and Rural Electrification Program. The project aims to increase national wind power capacity by 1,070MW and expand rural electrification to 79,436 households in 24 of Morocco’s most isolated and vulnerable districts. It is being implemented by Morocco’s public utility, Office National de l’Électricité (ONE), for a total project cost of US$2.16 billion.

The wind/hydro component of the project is designed to maximise production from wind, use excess wind energy to store water for the later production of hydroelectricity, and supply water to generate hydroelectricity during the dry season. The project will also support new transmission infrastructure and water storage facilities. Completion is envisioned for 2017.

“Morocco has emerged as an early leader in developing low carbon, sustainable energy on a large scale, and we are proud to support their drive. Lessons learned from these projects will inform efforts going forward in the country, region and around the world,” commented Hela Cheikhrouhou, director of the AfDB’s Energy, Environment and Climate Change Department.

Morocco’s stable political and regulatory environment, as well as its ongoing experience with IPPs, go a long way to inspire investor confidence, the Bank said.