RENEWABLE ENERGY FOCUS OF DOE VISIT

UNCLAS RABAT 001058 SIPDIS SENSITIVE STATE FOR EEB, NEA/MAG, OES/STC AND OES/PCI DOE FOR EERE - PAUL DICKERSON USDOC FOR HQ/USFCS/USDOC/CS DG ISRAEL HERNANDEZ USDOC FOR 3131/USFCS/OIO/RD/ANESA/CREED/GLITMAN/STAUHID I, HVINEYARD/MAC/ITA/USDOC, MICHELLEONEILL/OUS/ITA/USDOC E.O. 12958: N/A TAGS: ENRG SENV TRGY ETRD ECON EAID MO SUBJECT: RENEWABLE ENERGY FOCUS OF DOE VISIT ¶1. (U) Summary: DOE/EERE Chief Operating Officer Paul Dickerson met with key government, industry, and development officials central to Morocco's efforts to expand its renewable energy portfolio and reduce its 96 percent dependence on imported energy sources during an October 28 visit to Rabat and Casablanca. Dickerson explored options for U.S. firms to provide energy technology and products to Morocco and opportunities for investment, and invited further collaboration between DOE policy and technical experts and their Moroccan counterparts. End Summary. ¶2. (U) Dickerson briefed the Charge, ECON, FCS, and USAID representatives about the activities of the Department of Energy's Office of Energy Efficiency and Renewable Energy (DOE/EERE),noting that EERE can facilitate visits by foreign officials and researchers to U.S. labs to encourage efforts to promote renewable energy and energy efficiency. Dickerson highlighted EERE's work with the State of Hawaii to create an energy strategy aimed at producing 70 percent of energy needs locally by ¶2030. This approach, although designed for island states or nations fully dependent on imported energy, may have elements relevant for Morocco, which imports 96 percent of its energy needs, Dickerson observed. ¶3. (U) USAID reviewed for Dickerson its experience with energy efficiency/renewable energy projects, highlighting USAID's shepherding role in the 1982 creation of a Center for Development of Renewable Energy (a project that required a USD 28 million investment). A more recent activity is planned for later this year in collaboration with Harvard Business School that will engage students over a three week period to prepare an assessment of renewable energy strategies. Dickerson expressed interest in forging collaboration between DOE and USAID in the renewable energy sector, for example in promoting U.S.-sourced energy technologies such as renewable energy-powered water pumping systems that may be recommended by the Harvard assessment. -------------- Development Bank Support to Green Energy -------------- ¶4. (U) African Development Bank (AfDB) Chief of Operations (Morocco) Herve-Marie Cariou and Financial Analyst Wadii Rais described for Dickerson AfDB's energy sector projects, key to the Infrastructure pillar of the AfDB's three-fold country strategy (the other two pillars are Governance and Social Services). Energy sector projects account for 40 percent (USD 480 million) of the AfDB's total USD 1.2 billion portfolio of lending to Morocco. This is divided into two projects. The first is to bolster Morocco's electrical transmission interconnects with Spain and Algeria, a project nearing completion. The second project supports the construction, training, and technical support for operation of a 470 megawatt (MW) combined cycle solar thermal electrical generation plant in Ain Beni Mathar (the project cost is shared by the Global Environment Facility (GEF) and Morocco's National Electricity Office (ONE)). The plant will generate 20 MW from solar energy, and when completed is expected to be the first operational commercial combined cycle solar thermal plant in the world. ¶5. (U) The AfDB is currently developing a Clean Energy Investment Framework and action plan, pending board approval, to continue energy sector projects with a goal of minimizing environmental degradation and mitigating climate change. Dickerson discussed EERE's interest in educating investors and governments about the variety of financial resources available through institutions such as the AfDB, as well as the Export-Import Bank and the Overseas Private Investment Corporation to support innovative projects in energy efficiency and renewable energy. -------------- Ministry of Energy Pushing Wind Projects -------------- ¶6. (U) Dickerson next met with Zohra Ettaik, the head of the Division of Renewable Energy and Energy Efficiency of Morocco's Ministry of Energy, Mines, Water, and Environment (MEMEE). Ettaik noted Morocco's potential for renewable energy development, including 6,000 MW potential for wind energy generation, and high solar energy exposure with 3000 hours of sunshine per year. Morocco has completed or is constructing almost 500 MW of new wind generation capacity, and expects private "self- generation" users to build another 1000 MW capacity by 2015 following implementation of new laws allowing self-generators to build up to 50 MW wind generators, and sell their excess to ONE. ¶7. (U) Ettaik described portions of Morocco's energy strategies for renewable energy and efficiency, including incentive tariffs for industrial and residential consumers to shift demand to off-peak hours (the regulations for which have just been published),and further study of extending daylight savings time to the entire year following Morocco's initial experiment with daylight savings time this summer. Dickerson praised Egyptian success at saving energy through utilities providing more efficient bulbs at no cost to consumers, using savings in electricity subsidies to pay for the cost of the bulbs. Ettaik explained that Morocco's Energy Ministry is finalizing such a program, paying local distributors 1 dirham per month (about 12 cents) for each bulb they will purchase and provide freely to their consumers. ONE has selected a French provider for light bulbs, but MEMEE has just issued a tender for suppliers of light bulbs to the smaller distributors who will participate. Dickerson asked if U.S. companies could compete for further Energy Service Company (ESCO)-type contracts to identify and implement energy savings in exchange for payment with the saved costs. Ettaik noted that the new energy law under development in MEMEE may include that possibility, but the modalities and criteria for participation are not yet clear. ¶8. (U) Ettaik informed Dickerson that Morocco's USD 1 billion Fund for Energy Development, endowed in part by USD 800 million in gifts from Saudia Arabia and the UAE, will begin operations in January 2009, under MEMEE's administration. The "model convention" between MEMEE and the companies it will support is still under development, she acknowledged, but U.S. companies may be able to apply for funds for energy projects in Morocco. Finally, she noted, MEMEE intends to host a conference on the new energy strategy in January 2009, and invites participation from the private sector (including U.S. firms) to debate and shape MEMEE's actions to develop Morocco's energy sector. ¶9. (U) Amal Haddouche, Director of the Center for Development of Renewable Energy (CDER),told Dickerson that Morocco is "at a crossroad" in its energy policy. Public and political awareness of the advantages of renewable energy and energy efficiency have reached sufficient levels to spur actions. Energy Ministry personnel used to have problems convincing politicians of the value of efficiency and renewables, Haddouche observed, but now politicians press the Energy Ministry to develop more renewable energy sources. The new energy law under development should contain specific legal, regulatory and tax provisions to attract investment in the renewable energy sector, Haddouche predicted. Morocco has created several special investment zones throughout the country for clean energy development. So far, CDER has focused on attracting Spanish and German companies, but U.S. investment would also be welcome, Haddouche said. CDER sees Morocco's geographic position as a driver of renewable energy development, if Morocco can become a supplier and transit point for energy commerce between European and African markets. ¶10. (U) The new energy law under development will also expand CDER's mandate to include promoting energy efficiency, Haddouche said. CDER's reorganization will allow its regional offices to work more directly with private firms at identifying opportunities to increase efficiency and implement efficiency programs, particularly in Morocco's industrial sector. CDER personnel would welcome an opportunity to learn from DOE experts on industrial efficiency, Haddouche noted. Haddouche welcomed U.S. companies to participate in its energy efficiency projects, including through ESCO-type contracts. She also encouraged U.S. firms to study the opportunities to work with the new Energy Development Fund to promote renewable energy and efficiency. "We need more expertise" to meet Morocco's goal of reducing its energy use by 15 percent, she stated. -------------- ONE Supports Locally-sourced Energy Equipment -------------- ¶11. (U) Dickerson next met with Tayeb Amegroud, head of Renewables Division and Driss Ouarraoui, counselor to the CEO on Energy Efficiency, of the National Electricity Office (ONE). ONE plans to spend up to USD 1 billion in investments in the next 5 years, including efforts to upgrade Morocco's electricity grid. Amegroud further explained the self-generation provisions under ONE's "Energy Pro" initiative, modeled on the Kyoto mechanisms for promoting renewable energies, which supports self- production of up to 50 MW by heavy users, or a consortium of heavy users. The Government of Morocco this summer raised the ceiling from 10 MW to 50 MW to make the option more attractive to industry, and ONE now offers the option for these small producers of electricity to generate electricity away from their manufacturing plant site, feed it into the grid and recuperate it where it is needed. This option, however, will also require further development of the electricity transfer infrastructure. Because of the inadequacy and intermittency of supply of renewable origin (usually wind),ONE guarantees electricity supply to these self-producers, as well as the purchase of the excess production. However, Ouarraoui noted that industrial users have no experience in energy efficiency and will need outside expertise to efficiently manage their energy production projects. ¶12. (U) Amegroud gave an overview of the new Chourouk initiative, which invites users to enter into a partnership agreement by which they offer the roofs of their buildings to ONE to install solar panels that will feed electricity into the grid. ONE has issued a pre-qualification tender for the supply of photovoltaic equipment. The tender requires that the participating manufacturers of equipment commit to investing in a local photovoltaic panels production facility or in the manufacturing of other components of photovoltaic systems. The government has created the KYOTO industrial pole in the Oujda region to host such activity. -------------- CGEM Supporting Cleaner Production -------------- ¶13. (U) Dickerson joined Said Mouline, the head of the Committee for Environment and Sustainable Development of the General Confederation of Moroccan Industry (CGEM) for a discussion of the Moroccan industrial sector's approach to energy efficiency and renewable energy. Mouline is also the counselor on environmental issues to the CEO of the phosphate producer Groupe OCP, Morocco's largest corporation, and the head of the Moroccan Association of the Solar Industry (AMISOL). Dickerson described DOE's support for the creation of Green Cities, such as the Masdar City project in the UAE, and Mouline reported that OCP is planning to convert a mining site in Khouribga into a new Green City project. Dickerson offered his office's support of resources and ideas for the Green City project, particularly regarding project management. In addition to its Green City project, Mouline added, OCP is implementing 14 projects in energy efficiency at its different industrial sites. ¶14. (SBU) Comment: Energy efficiency and renewable energy are areas that Morocco recognizes have great potential to add to its energy supply, mitigate damage to its stressed environment, and create opportunities for GDP growth. The criticality of both improving the efficiency of energy use and adding capacity was highlighted by last-minute intentional blackouts in Casablanca on November 3 caused by excess demand. However, the government and industry have not yet fully adopted a comprehensive approach to promote large scale efforts in either efficiency or renewable energy. The January 2009 review of Morocco's new energy policy, and the finalization and implementation of wind generation plans, the Fund for Renewable Energy, and incentives to promote private sector efficiency and renewable generation efforts, could, if effectively managed, alleviate Morocco's supply constraints and open new areas for economic activity and growth. U.S. energy sector firms, with experience in implementing the types of projects that Morocco is now envisioning, may find opportunities to partner with Moroccan government and industry as Morocco takes new steps in energy efficiency and renewable energy. End Comment. ¶15. (U) Mr. Dickerson did not have an opportunity to review this cable.