The World Bank has partnered with Morocco and Egypt on two innovative projects that use a hybrid concentrated solar power (CSP) technology to reduce dependency on fossil fuels and cut greenhouse gas emissions.
These projects have demonstrated that it is possible to develop power plants using this new technology in the Middle East and North Africa (MENA) by delivering clear results. Among them are the avoidance of 20,000 tons of CO2 emissions annually by the plant in Morocco and 40,000 tons of CO2 emissions in Egypt, a reduced dependency on fossil fuels, and job creation within the two countries.
The MENA region is a fast-growing region where energy consumption increases at the rate of about 7 percent each year. Most of the power plants rely on fossil fuels. CSP is a relatively new technology that has high potential for abatement of CO2 and other harmful emissions in the power sector. With public incentives in Spain and the U.S. in recent years, and increased research efforts, the technology is now maturing rapidly and proving its readiness for commercial use.
Several wind power and other smaller renewable projects that the World Bank, KfW of Germany and others have supported in recent years have increased the confidence of countries and financiers in the viability of renewable energy projects in the region and countries like Morocco and Egypt have recently created their own independent agencies for the development of renewable energy projects.
Partnerships created between the countries, renewable energy companies and donors like the World Bank and others allowed for the implementation of the demonstration projects in Morocco and Egypt. To institutionalize this effort, assistance was provided for the two countries to establish specialized national agencies that are gradually acquiring the expertise in CSP project implementation and to come up with needed practical lessons of experience in this regard.
A key concern voiced by various stakeholders is with respect to the benefits to the local economies from the implementation of solar projects. To address this concern the World Bank launched a study on local manufacturing of components and local services. The study analyzed the opportunities and challenges in establishing a regional CSP supply market. The study concludes that while specific components are expected to come from Europe in the short term, the overall management, the steel structures and the civil works could be undertaken by local companies now or in the coming years, as seen in the case of Kureimat project in Egypt.
* More than 600 megawatts (MW) of hybrid gas-solar plants including a total of 40 MW of solar share have been installed during the last three years in the MENA region, demonstrating the feasibility of the technology in developing countries.
* Avoidance of 20,000 tons of CO2 emissions annually by the plant in Morocco and 40,000 tons of CO2 emissions in Egypt, and less dependence on fossil fuels.
* Significant job creation within the countries.
* Specialized renewable energy institutions have been established in Morocco and Egypt.
* Paved the way for further projects and donor commitment in this field – based on successful demonstration of CSP projects in those countries: Morocco announced a plan targeting 2,000 MW of solar electricity production by 2020 and in 2010 launched preparation of a 500 MW plant in Ouarzazate; Egypt plans to build a 100 MW solar plant in Kom Ombo.
* Concessional loans from the Clean Technology Fund (CTF) and the International Bank for Reconstruction and Development (IBRD), as well as support from other donors, have now been mobilized to install 1 GW of purely solar energy plants within the region, helping countries diversify their energy supply, reduce CO2 emissions, and create new jobs and opportunities in local industries.
The World Bank, working with the African Development Bank, Islamic Development Bank as well as Japanese, European, Arab and other donors, launched this new regional initiative to support the deployment of large-scale CSP projects in MENA. There is now a common interest and belief in the solar and wind power in the region.
Contributions from the Global Environmental Fund (GEF) for projects in Morocco and Egypt were about US$100 million in total, with overall project costs of around US$800 million. The MENA Scale-up Initiative will utilize US$750 million of highly concessional loans from the CTF and additional donor funds in the range of US$4.8 billion to finance CSP projects and related transmission infrastructure projects.
In addition to meeting higher energy demand through renewable and sustainable methods, which directly benefits the citizens of Egypt and Morocco, this project is of significant benefit to (i) potential private investors in CSP as it demonstrates the feasibility of CSP projects in MNA, and (ii) local industry which will supply some components and services to a new, growing industry.
Toward the Future
The lessons learned from these first two projects will allow for a smoother implementation of potential follow-up projects, help attract significant private sector interest, reduce cost, and generate knowledge about operating conditions risk.
There is ongoing dialogue around several initiatives to further develop CSP in MENA including the Desertec Industrial Initiative, the Mediterranean Solar Plan, and other regional initiatives. Potential exports to Europe present a good opportunity to reap economies of scale but it is clear that a major part of the energy produced over the initial years will be utilized by the countries themselves to cover their domestic demand of electricity.