18 Jun Interview with Leila Benali, Minister of Energy Transition & Sustainable Development, Kingdom of Morocco
Morocco has placed renewables as a key focus in its national development plan. How would you summarize the potential of Morocco as a producer and exporter of renewable energy?
The share of renewables has reached 42% of installed capacity in 2022. We are on a very good track to be beyond the 2030 target of 52% of our installed capacity. These 15 years of experience we have gained between 2009 and 2024 in developing relatively large scale projects in renewable energy provides Morocco with key competitive advantages. Plus, we have more than 30 years of experience in attracting the national or international private sector into the energy space.
Secondly, Morocco has 4.5 gigawatts of renewable capacity installed between wind, solar and hydro. However, the theoretical potential of Morocco is way beyond that, at roughly 25 terawatts of capacity primarily between solar and wind. The major value proposition that we are bringing here is that we are not in a local market anymore. The world has been living through multiple energy transitions and in the 21stcentury these transitions are shorter in time. The transition that is moving the world from fossil fuels to nuclear and renewables takes much less time than before because today we have innovative bubbles, better financing schemes, etc. It is Morocco’s turn to become a major player internationally and to reach that, we need the economies of scale. Between 2009 and 2024, we have been investing roughly half a billion dollars in the energy space primarily in the private sector but driven also by the public sector.
Just for Morocco to cover its demand in a business-as-usual case (and excluding for the time being the Soccer World Cup preparation, the largest event our nation plans to put in place, which will increase the demand) we need to inject US$1 billion per year between now and 2030 and US$ 1.9 billion past 2030. In the renewable energy space, we need to multiply the pace of investments annually by three. In the electricity grids, primarily, we need to multiply the pace of annual investments by five. The country is transforming as fast as possible to enable this investment shock. We need to be ready institutionally and reform the sector as quickly as possible and we need to change the mindset, to be able to install those 25 terawatts. Our key competitive advantages, which I refer to as the ‘CSPI,’ lie in four key areas.
The first “C” is an exceptional combination of a hybrid solar and wind potential. The second key element is stability , the “S” and not only political or policy or regulatory stability, but also contracting and partnership stability. For example, even when our diplomatic relationship with Spain was not at its best, we were able to reverse a gas pipeline between ourselves and Spain so that Spanish gas flowed to Morocco whereas it is usually supplying Spain. We continue to respect our partnerships despite geopolitical or policy changes between partners – partnerships is the P in the acronym. The last “I” is for infrastructure. Infrastructure is very important and the key is integrative planning of infrastructure. We are the only African country that is interconnected with Europe and the Atlantic Basin, gas and electricity wise, bidirectionally. and with infrastructure planning regarding hydrogen pipelines, ports, transport, trades, etc. We continue to strengthen our research & development, human capital and infrastructure as a key part of our added value strategy. We want to ensure that this value-added proposition of being the only corridor between West Africa, the Atlantic Basin, Asia and the European market is strengthened.
What major projects are currently underway to boost renewables in Morocco’s energy mix, such as the 1.6-GW Noor project?
Conceptually, we are trying to multiply the pace of investments in renewable energy by three annually, so we need to have additional large-scale projects such as the Noor project. Also, we accelerated the pace of Noor Midelt. We want to ensure that it is totally de-risked for the investors to continue to finance the project. We will continue the same model for large-scale projects. We know that it is necessary to also liberalize the medium voltage grid and we need to give access to the smaller projects to be developed. The industrial sector needs to have access to low cost, low carbon energy, therefore we need to enable the small industrial plant or the residential consumer to have access to low cost, low carbon energy. We have spent the last couple of years accelerating the regulatory and legislative framework to enable that access.
A second key change is in the grids and transport and distribution. We launched a tender for the “electricity highway” of 3 GW between the southern part of the country and center of the country and Casablanca. That’s one way to unlock that exceptional potential for wind and solar that we have in the southern part of the country. There are exceptional capacity factors there, for example, in some areas we have more than 85% capacity factor for wind. It is nearly like running a traditional gas fired power plant. We need to make sure that we inject more investment into the grid, so that while we are pushing one major project, we are simultaneously pushing and strengthening the rest of the network. That is also very important. We have a list of projects of areas where we need to reinforce our grids. That goes in parallel with the unburdening of our national utility.
Our national utility will be called to focus more and more on transportation and enabling the regionalization of services companies. We have launched the “Sociétés Régionales Multiservices” (SRMs), so now every region will have its own regional service or transport company for electricity distribution, water distribution and water sanitation. These three services will be regionalized. The point is to ensure that for these types of relatively low-risk investments we have more and more private sector. That is why we called for those SRMs to hopefully be open on the stock market in the future. This is a major transformation we are inducing in the transportation and distribution side of the business.
Lastly, we will reduce costs in every part of the value chain because ultimately, in order to produce green hydrogen or green ammonia, we need to have access to the lowest cost, lowest carbon energy possible. For OCP, our phosphate rock miner, phosphoric acid manufacturer and fertilizer producer, to emerge as a competitive fertilizer company after 2030, it needs to have access to the lowest costs, lowest carbon energy possible. Any other type of industry to be competitive in the future must also have access to the lowest cost, lowest carbon electricity possible. On the generation side, we ensure that we are investing in small-and large-scale projects but also in reducing the cost of the transport and distribution of energy and electricity as economically as possible. Everything needs to become agile and competitive.
What has the government done in the past few years to realign legislation to create a supportive and transparent ecosystem for investment into green energies?
In the last couple of years, our focus has been on two laws aimed at granting access to the private players in the industry, as well as the private off-takers, including the residential sector, in order to liberalize medium voltage and facilitate access to low-cost, low-carbon renewable energy. We have also taken steps to ensure fiscal support for instance, solar panels are now exempt from VAT. Additionally, we have implemented several measures to incentivize the development and the importation of the parts that are important for the energy transition.
When it comes to the rest of the energy sector, we are actively enhancing the regulatory framework. For example, in the oil and gas space, we are revising the hydrocarbons code. We need to ensure that green energy can compete on a level playing field with other sources of fuel, particularly in Morocco, where a significant part of our energy and fuel needs are imported.
Our primary metric isn’t simply the volume of imports in oil and gas, but more importantly, it is our ability to complete our rural electrification program. While we’ve reached 99.8% of rural electrification, the last mile remains the most difficult and the most expensive to get. That is why we recognize the need for different business models for the remaining 0.2%. Hence, we’ve launched the Renewable Energy and Global Rural Electrification Project (PERG) 2.0 program which is a combination of large-scale access to the grid for the purpose of decentralization, but mainly focuses on smaller scale, replicable mini-grids.
The idea is very simple: in every remote village, there is a mosque, a school or health center which you can use as an anchor to build your mini grids of solar PV plus batteries thus a whole community can get instant access to power. It is more economically feasible to do this rather than bringing a cable from the national grid with a lower quality of electricity services and access. This model of PERG 2.0 is important because we can replicate it in the rest of Africa where you have 600 million people who do not have access to modern forms of energy. These are the types of projects that are maybe not large in terms of CAPEX but are very important in terms of impact for our population in Morocco but also for the rest of Africa and beyond.
Morocco is increasingly positioned as a development partner for the EU. How do you view the role of Morocco as a major development partner for the EU, particularly in the field of energy?
Here we will be focusing on the “P” of our CSPI concept. We already have great infrastructure that we want to strengthen to increase our connectivity with international markets. Since 2009, international and regional market integration has been a third key pillar of our energy strategy, which we are now deploying. We have a partnership with the EU regarding the Green Deal that we are advancing as fast as we can. We have free trade agreements with the US, theoretically putting us in a good position to take advantage of investments and trade evolutions in the energy transition space globally. We have also embarked on what we call a new generation of win-win strategic partnerships with Asian countries. With like-minded partners, we would like to have a new generation of win-win strategic partnerships where the energy sector is a key part. Today, the vision is to have Morocco as an OTC corridor- Originating, Transiting and Certifying.
It is evident that we have significant potential in green electrons and green molecules and we must ensure that we make the best use of this potential. Regarding “Transit”, we have infrastructure. His Majesty’s vision for the Atlantic Basin is a vision of prosperity and development that His Majesty would like to see implemented for Africa, especially for the Sahara region. “Certification” is also crucial. Today in 2024, multiple carbon market models have emerged, but these carbon markets do not consider the rest of sustainability of the 17 UN Sustainable Development Goals. If you look at the value chain of the energy transition sector, particularly storage and batteries, in our net-zero roadmap, lithium consumption will have to increase by 400% between now and 2050, cobalt consumption will have to increase by 300% and copper, used in transmission and grids, will also increase, along with nickel. The world has yet to develop mechanisms to ensure that, in addition to the carbon content of energy production, we cover other elements of the value chain that we need for our sustainable development goals – including child labor and impact on the environment.
In Morocco, we have embraced progressiveness since the 1990s. Currently, we are in the process of revising our national strategy for sustainable development with a new generation of public policies. We aim at ensuring inclusivity throughout this process. Instead of formulating a national strategy for sustainable development solely within the Ministry of the Environment and deciding on a couple of KPIs between ministries, we have opted for a more extensive approach. We have conducted numerous consultations at both regional and international level, because we have approximately five million Moroccans living abroad who also want to have a say in the sustainable development path of this middle-income country.
There is a very significant statement from His Majesty’s letter to COP28 on the fact that middle-income countries like Morocco have embarked on a sustainable development path while at the same time helping the world solve the climate issue, which is the most critical challenge of the century. Our national strategy for sustainable development is a key part of all this. It is not greenwashing and it very much comes from the people.
The USA is keen on developing the green energy segment in Africa – after the Biden government pledged to spend US$ 55 billion to develop African economies in 2022. How significant of a partner is the USA for Morocco’s energy industry and what kind of synergies are possible between the two markets?
We have a free trade agreement that should enable the US to very much work with us. This relationship withstands the test of time regardless of the administration in charge in the US and regardless of the government in Morocco.
Today, the Inflation Reduction Act plays a big role in inducing and incentivizing investments in the green space, especially post-Paris Agreement and notably after the Chinese subsidies into the solar PV space. Our point is for like-minded, sustainable partners like Morocco, especially those with maritime connections, cooperation between different entities in the public and the private sectors. If we are all serious about this energy transition – achieving the lowest cost, lowest carbon energy transition in the most efficient way – those incentives and subsidies must transcend borders and be more integrated into the rest of the value chain. Let’s not forget about the circular economy, because we cannot mine all the lithium in the world – we have to recycle some of it.
I think it‘s very much an invitation to stakeholders in the US that if we want to ensure that in 10-15 years’ time, we would have decreased the cost of clean energy by 40-50% as it happened in the solar PV space in the last 15 years, it is crucial for those incentives and subsidies to be better targeted. We understand that a large part of it aims at incentivizing investments in US territory, however, we live in a globalized world and supply chains are being globalized. Even during the pandemic, which we thought would lead to the near-shoring of some of those supply chains, it didn’t create the very localized supply chains that we anticipated. From that perspective, Morocco is at the gateway of Europe and literally in front of the US. It is crucial to be more strategic in how we incentivize this major transformation that is happening in the 21st century.
How would you summarize your top personal priorities for 2024 and your vision for the longer term?
We are working to accelerate the pace at multiple levels such as the regulatory framework, liberalization, making sure that our partnerships are of a new generation and the public policies we need to implement are of a new generation. For the rest of the 2024 now that we have tackled the renewable energy space, we need to continue the work on that, but also in the mining sector we need to change the paradigm of the sector in Morocco and beyond. We need a paradigm shift in the mining sector to prepare it for the large demand we have in critical and strategic metals and minerals.
The second key area that we are also pursuing is the environmental space, making sure that we reform our environmental laws to encompass other aspects of sustainability but also making sure that we incentivize circularity. That is a very important aspect of what we are trying to pursue. Another priority is infrastructure, where we aim to support our international and national private players. The Moroccan state needs to have skin in the game to de-risk their investments in Morocco and the region.
Lastly, we are working diligently to ensure that Morocco becomes that OTC corridor. Everything we do is for Morocco to become, by 2030 or 2035, a highly competitive source or transiting space for green electrons and green molecules. If we achieve this, we will have won the strategic bet of the new development model of Morocco. We aim to escape the middle-income trap of 3-6% which means that energy is the strategic bet that Morocco must prioritize.