1 November 2011
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African Development Bank (Abidjan)

Winds of Change in Morocco's Energy Market (AfDB)

press release

On 28 October 2011, the governing bodies of the Climate Investment Funds (CIF) approved updates to Morocco's investment plan under the Clean Technology Fund (CTF) and an associated program to develop a wind/hydro hybrid generating system and a rural electrification project that aims to increase capacity by 1,070 MW and bring electricity to 79,436 households in 24 of Morocco's most isolated and vulnerable districts. In addition to the technical support it has lent to investment plan and project development, the African Development Bank (AfDB) also plans to contribute U.S.$ 250 million from its own resources and channel a majority of the CTF concessional financing being allocated to Morocco (U.S.$125 million of a total U.S.$ 150 million will flow through the AfDB).

Morocco's public utility, Office National de l'Électricité (ONE), is overseeing the program, which features a wind/hydro component to maximize 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. It will also support new transmission infrastructure and water storage facilities.

This initiative is in line with Morocco's energy strategy formulated in 2009 to address the structural challenges of its energy sector. It calls for 10 percent of energy generation to come from renewable sources by 2012. This figure is being backed by ONE, which plans to install 2,000 MW each of wind, solar and hydro energy to increase installed renewable energy capacity to 42 percent by 2020. Morocco's current installed wind capacity is about 280 MW, but exploitable potential is as much as 25,000 MW.

The AfDB anticipates that channeling concessional financing to Morocco will inspire increased investor confidence and participation. The U.S.$ 150 million of CTF funding is expected to leverage an additional U.S.$ 2.24 billion in funding, representing a leveraging factor of 18. Without AfDB and CTF funding, ONE's financial capacity to launch the program would be significantly compromised and the program could be delayed or its scope reduced. ONE's financial equilibrium would be made vulnerable by the higher cost of wind generation and the associated infrastructure, compared with the average cost of energy generated by ONE using conventional sources.

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