NATURAL GAS AND RENEWABLE ENERGY AT CENTER OF

UNCLAS RABAT 002205

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR NEA/MAG AND EB/ESC
USDOC FOR ITA/MAC DAVID ROTH AND AARON BRICKMAN
USDOE FOR GINA ERICKSON AND YOUNES MASIKY
STATE PASS USAID FOR JENNIFER RAGLAND

E.O. 12958: N/A
TAGS: ENRG ECON SENV MO
SUBJECT: NATURAL GAS AND RENEWABLE ENERGY AT CENTER OF
MOROCCAN ENERGY POLICY

REF: A. RABAT 732

B. RABAT 151


1. (SBU) Summary: Government and private industry came
together last month for a one-day conference on Moroccan
energy policy, stressing the need for Morocco to reinforce
its energy sector and render it more competitive.
Diversification of supply was the key message articulated by
Prime Minister Jettou and other government participants.
They outlined plans to expand the share of natural gas from 3
to 20 percent of energy production, while also expanding the
share of renewable energy to 10 percent. Other priorities
include assuring regularity of supply, generalizing access to
energy, limiting consumption, and ensuring protection of the
environment. Among the steps announced by the government was
raising the limit firms are allowed to produce for themselves
from 10 MW to 50 MW, with authorization for transport of any
surplus to other sites on the transmission grid of the
National Electricity Office (ONE). End Summary.


2. (SBU) The October 30 Conference at the Mohammed VI
Conference Center on the coast in Skhirat brought wide
participation by government and private sector participants,
as well as international experts, including the head of the
International Energy Agency. In his opening remarks, Prime
Minister Jettou stressed the critical conjuncture in which
the energy sector finds itself, given the negative impact
rising prices have had on non-producers like Morocco, which
depends on imports for 95 percent of its energy needs. The
government's strategy, he said, is centered on assuring a
regular energy supply, which he argued can best be achieved
by diversifying sources of supply. Important but secondary
goals include generalizing access to energy through
continuation of the government's rural electrification
program, limiting consumption, protecting the environment,
and assuring the security of the nation's energy grid.


3. (SBU) Natural gas plays a central role in the plans
outlined by the government. Currently only 3 percent of
Morocco's energy needs are filled by natural gas. The
government hopes to raise that level to 20 percent by 2012.
To help dynamize the sector, the government envisages a large
LNG terminal, with a capacity of three billion cubic meters
of natural gas per year. The project, initated by the
Moroccan Akwa group, could be launched in 2007. Mohammed El
Hafidi, Director of Electricity and Renewable Energy at the
Ministry of Energy, reminded us in a November 13 meeting,
however, that feasibility studies are not yet complete, and
that the project will proceed only if they are favorable.
Current estimates are that the planned terminal would require
an investment of 1.2 billion USD, and could be in operation
by 2010 or 2011. Akwa has indicated that should plans
proceed, it will seek foreign partners to help it develop the
project. Not yet decided, however, is where the terminal
will be located. Candidates include Tangiers, Mohammedia and
Jorf Lasfar. At the conference, Akwa participants at the
conference also stressed that the success of the project
requires the "fiscal neutrality of the state." Morocco is
also planning to open a 200 megawatt natural gas powered
plant in 2009 that will use gas that Morocco receives from
Algeria as a royalty for a pipeline that traverses Moroccan
territory on its way to Spain).


4. (SBU) El Hafidi also noted that the Ministry is working to
complete the law and accompanying decrees and regulations
that will fully liberalize the electricity sector in coming
years. Other departments are now commenting on the text, he
said, and it should soon be presented to the government for
its approval and transmittal to parliament. The goal, he
said, is to "align Moroccan policy with that in Europe," so
Moroccan manufacturers face a similar cost structure.
Already, he noted Moroccan electricity markets are integrated
with those elsewhere in the Maghreb and with Europe, given
interconnections that allow transfer of up to 700 MW to both
Spain and Algeria.


5. (SBU) In another liberalizing move, the amount of energy
companies can produce has been raised from 10 to 50 MW, and
they are able to move it along the transmission grid to other

sites or sell it to ONE. When liberalization is complete,
they will be free to dispose of it as they wish. (Note: This
is a key shift, as with the earlier restriction, it was not
profitable for companies to operate an independent generator.
End Note.)


5. (SBU) Renewable energy plays a major role in the
government's thinking, and the Ministry of Energy is
preparing a separate law on the subject. Morocco's goal is
to use renewable sources for 20 percent of its electricity--
or 10 percent of its total energy needs. In a November 15
meeting, Zohra Ettaik, Chief of Renewable Energies at the
Ministry of Energies, told Emboff and visiting DOE PDAS for
Energy Efficiency and Renewable Energy John Mizroch that the
GOM also sees a bright future for renewable energy, given its
wind energy resources on the Atlantic and Mediterrean coasts
and in the Atlas mountain range. Currently, ONE has a 54
megawatt wind farm in Tetouan. In 2008, it plans to open two
additional wind projects, a 60 megawatt plant in Essaouira
and a 140 megawatt plant near Tangier, and in 2009 it hopes
to complete a 30 megawatt plant in Oujda. In addition, two
other plants (100 to 200 megawatts each) are also being
planned for Taza in the Middle Atlas and Tan Tan in the
southern coastal plain. By 2012, Morocco hopes to have 250
wind projects and produce 1,000 megawatts of electricity from
windpower.


6. (SBU) Due to the high cost of producuing electricity from
photovoltaic cells, Morocco only uses this technique for
approximately 30,000 rural homes where it is cost prohibitive
to connect them to the nation's electrical grid. However,
Morocco also currently has 140,000 square meters of solar
panels to produce hot water and plans to increase this by
40,000 square meters per year until it eventually reaches
400,000 square meters. Finally the Ministry of Interior has
a small program to capture methane gas. Ettaik added that
her office had recently signed an accord with eight other GOM
ministries (Industry, Housing, Finance, Health, Interior,
Education, Tourism, and Social Development) to increase
energy efficiency in government buildings. The Ministry of
Agriculture signed a separate agreement related to the
pumping of water.


7. (SBU) Comment: Morocco's energy demand is growing by a
steady 6-7 percent each year, and meeting that demand with
affordable energy is a key government priority. Beyond its
natural gas and renewable energy plans, Morocco is also
moving forward with other options, including new generation
coal-fired plants (a tender for two 660 MW plants was
recently issued) and nuclear energy (ref B). Its success in
ensuring the availability of affordable energy will play a
key role in facilitating sustainable economic growth. End
Comment.


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Riley