The trading city of Ouarzazate is known as the ‘door to the desert’, and its wild, remote location has provided the backdrop for film and television spectaculars like Lawrence of Arabia and Game of Thrones. Now it is also known as a global solar superpower.
Morocco is the largest importer of fossil fuels in MENA, importing 94% of energy as fossil fuels from abroad, with growing energy consumption in the horizon. By 2020, 42% of its electricity will come from renewable energy.
In November 2012, MASEN and the consortium, led by ACWA Power, signed a Power Purchase Agreement for the value of $900 million for the sale of net electricity output from the Noor 1 Concentrated Solar Plant, for a contracted tariff of 18.9 US cents per kWh, the lowest ever ascribed at that time for CSP Technology.
By mid-June 2013, the project had achieved financial close and begun construction, with the first phase becoming operational in late 2015. The speed at which the project of this scale moved forward emphasises the progress that can be made through the collaborative approach of the IPP model, and the agility and experience of ACWA Power to lead a consortium.
Noor 1 is the first phase of four linked solar mega-projects with a total investment of $9 billion. Its inauguration in January brought on stream a visionary and ambitious programme to provide nearly half of Morocco’s electricity from renewables by 2020, with some spare to export to Europe.
When the Noor complex is complete, it will be the largest concentrated solar power (CSP) facility in the world. Noor 1 itself comprises 500,000 crescent-shaped solar mirrors positioned in 800 rows to generate 160MW.
ACWA Power has since achieved financial close of the Noor II & Noor III Projects, with construction underway to add another 350MW of solar power, and both are expected to be in commercial operation in late 2017. And when complete, with the addition of Noor IV, a PV plant, the entire complex will produce 580MW of electricity – enough to power a million homes. Its environmental impact stands to be significant, saving approximately 930,000 tons of CO2 per annum by providing an alternative energy source to the imported hydrocarbons that would have otherwise been used as the source of energy.
Environment minister Hakima el-Haite says solar power will help drive Morocco’s growth, explaining that the Noor plant is the first flagship project in this programme and that it is already dispatching green energy into the system during the day and three hours into the night.
The project also directly benefits the development of Ouarzazate province – one of the most disadvantaged regions in Morocco – by providing a foundation for the development of the local economy. In the next 25 years, the Noor complex itself will create thousands of local jobs and indirectly benefit many inhabitants by boosting the local economy.
Beyond the green MWs, the direct benefit for the country and its people, the development of the Noor complex includes a significant component of activity to promote social and economic integration in the region and enhance the employability of local citizens.
The ACWA Power community engagement team has launched a number of projects, including the training of skilled and certified welders, creating an arts and crafts collective for the production of traditional embroidery and ironwork for export, and training farmers in modern methods of sheep and crop husbandry to improve productivity and, in turn, raise incomes, all focused at improving the quality and standard of living of the local community.
Each project has been developed in conjunction with and with guidance from the local authorities, national training organisations and relevant government ministries, to ensure that they are appropriate and properly resourced to maximise impact on the local people.
This successful example in Morocco demonstrates the benefits of inclusive growth models, which allow companies like ACWA Power to confidently invest in emerging markets to deliver the much needed electricity – and green electricity at that – to fuel economic development and the social wellbeing of communities and nations.
“From the moment we place our capital in a country, we become concerned about the long-term health, wealth and happiness of the people, as it is only their success and prosperity over the next few decades that will allow them to afford the electricity that we are supplying and in turn enable our investment to be successful. Thus, for us, our investment in community development initiatives is just that – an investment, and not a cost,” explains Paddy Padmanathan, president & CEO of ACWA Power.
“We invest in the training and development of the local community to provide the necessary skills for plant operation and maintenance over 25 years, and it is an investment in nurturing local SMEs and education and healthcare facilities to drive social development and economic growth.
“At the same time, the local communities invest their time and talent to acquire the skills and know-how to provide a brighter long-term future for them and their families, with the confidence that the growing economic activity in that locale will enable them to participate with this new-found knowledge and capability. It’s a perfect symbiotic union.”
Through job creation, energy generation and reduction of Morocco’s carbon footprint, the Noor project will continue to have a positive socioeconomic impact on the local community and Morocco as a whole for many years to come.
In early February, just a month after the Phase 1 project started to dispatch electricity, Moody’s investor service issued their routine report on the credit standing of Morocco. Given that 95% of Morocco’s energy needs rely on imported fuel, all of it fossil, the analysis showed that the harnessing of significant renewable domestic energy resources is not only credit-positive from an environmental sustainability perspective, but also highly impactful, helping to permanently reduce Morocco’s balance of payment sensitivity to higher energy prices.
Moody’s evaluation confirmed that from an economic perspective, 1 million TOE represents about 4.8% of energy imports in volume terms in 2015. At last year’s oil prices, the savings from reduced imports would have amounted to about 0.3% of GDP. A huge impact from just this one project.