BMI View: Algeria has ambitious investment programme over 2015-202 4 , which will be driving strong gas generation growth. Historically strong gas-fired generation growth rates are supportive of further steady capacity growth, additionally the political situation is relatively stable and Algeria brought a sizeable 460MW Biskra gas plant online ahead of schedule last year. BMI considers these to be positive signs to spur the gas capacity growth.
Algerian state-owned incumbent Sonulgaz is aiming to build nearly 28GW of new capacity by 2025. The utility claims that 15.4GW of this capacity has already been allocated and over the next three years 14.2GW of new capacity will come online, most of which will be gas-fired. BMI has a fairly bullish view on this capacity coming online. Despite lower oil and gas prices, which are detrimental to the revenues that the Algerian state will be receiving, BMI's Country Risk team believes the Algerian GDP will 3.4% CAGR on average over 2015-2019. As another positive sign. Sonulgaz brought the fairly sizable 460MW Biskra gas-fired plant online early. BMI also believes that domestically available gas will help utilities cut the feedstock prices and make it cheaper to develop new gas-fired generation. As a result, BMI believes gas-fired generation will increase over 2015-2024, sidelining renewable generation growth.
The country's power consumption is expected to increase from an estimated 46.0TWh in 2015 to 75.5TWh in 2024. During 2015-2019 the average annual growth rate for electricity demand is forecast at 6.1%, but is predicted to decline later in the decade to an average 5.4% during 2020-2024.
In 2011 the Algerian Council of Ministers approved a new national policy for renewable energy sources, which aims to install 22,000MW of renewable energy capacity between 2012 and 2030.
Low levels of liberalisation in the power sector, difficulties with accessing financing, high corruption and an opaque tendering process for projects all act as drag on Algeria's RRI score and present challenges to developers. In addition, the attack of a gas site by militants in 2013 continues to undermine country's international profile and creates inherent risks of investing in the country.
Key Trends And Developments
Several photovoltaic solar power plant projects, with a combined capacity of 343MW, are currently under way in Algeria, according to electric utility Shariket Kahraba wa Taket Moutadjadida's Engineering Project Chief Baya Belarbi (allAfrica). A total of 90MW of solar projects are being carried out in the provinces of Setif, Bordj Bou Arreridj, Batna, Mila and Souk Ahras. Four solar power plants, with total capacity of 85MW, are being developed in the provinces of Saida, Naama, El Bayadh and Sidi Bel Abbes. An additional 90MW worth of projects are being developed in the M'Sila, Djelfa, Laghouat and Ouargla provinces. Seven solar power projects, totalling 53MW, are also under way in Timimoun, Adrar and In Salah. Three plants, of 9MW, 3MW and 13MW capacity will be built in the regions of Tindouf, Djanet and Tamanrasset, respectively.
In April 2014 when the government launched a feed-in tariff programme for solar PV power plants. The government provides two FiT rates - one for plants of between 1MW and 5MW and the other for more than 5MW. The FiTs will be offered under 20-year power purchase agreements, although different rates will be paid for the final 15 years of the agreement. The government has set a limit on the number of generating hours entitled for FiT payments. For plants of between 1MW and 5MW, the government has set FiT at a reference rate of USD0.20/kWh, for up to 1,500-1,574kWh per year for the first five years. For plants of more than 5MW, a reference rate of USD0.16/kWh will be paid to plants producing 1,500-1,574kWh each year for the first five years.
In December 2013 Algeria's state-owned utility Sonelgaz's subsidiary Societe Algerienne de Production de l'Electrici signed contracts worth USD4.04bn with several firms for the construction of six gas-fired power plants in Algeria. Under the contracts, South Korean firms Hyundai Engineering and Daewoo will build power plants at Bellara and Oumache respectively, while South Korea-based Samsung will build two power plants in Mostaganem and Naama. Additionally, South Korean consortium GS/ Daelim and Spanish contractor Duro Felguera will build power plants in Khenchela and Djelfa provinces, respectively. The six new plants will have a combined capacity of 8,400MW and will cost a total of USD5.96bn, including the generating equipment from GE.
The Algeria Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The Algeria Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for Algeria to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks Algeria's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in Algeria.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).