Algeria Power Market Outlook to Business Propensity Indicator (BPI), Market Trends, Regulations and Competitive Landscape

Transcription

1 Algeria Power Market Outlook to Business Propensity Indicator (BPI), Market Trends, Regulations and Competitive Landscape Reference Code: GDPE0569ICR Publication Date: August 2012 Thermal Installed Capacity, Dominant source in Power Mix The power market in Algeria is dominated by thermal fuel sources, which accounted for XX% or XX MW of the country s cumulative installed capacity in Oil-fired plants accounted for a smaller portion of XX% in the total installed capacity. Algeria s thermal capacity is dominated by gas-fired power plants, owing to the large gas reserves based in the Hassi R Mel region. The country also exports part of its natural oil and gas resources. Although the government has ambitious plans to set up renewable energy plants during the next XX years, thermal power plants will continue to dominate the country s power mix. Algeria s thermal installed capacity is expected to increase at a Compound Annual Growth Rate (CAGR) of XX% from Power Market, Algeria, Thermal Installed Capacity (MW), Renewable power generation amounted to only XX GWh in 2011 due to the installation of the Hassi R Mel - Integrated Solar Combined Cycle (ISCC). Power Market, Algeria, Annual Total Generation (GWh) Total Generation (GWh) Thermal Installed Capacity (MW) Source: GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012) Continued Growth in Power Generation The total power generation in Algeria stood at XX GWh in 2000, which increased to XX GWh in 2011 at a CAGR of XX%. Power demand in the country has been rapidly rising at around XX% per year. This is because of greater industrialization, rural electrification and high standards of living. In 2011, around XX% of the power generation came from thermal sources, followed by hydropower (XX%) and renewable sources (XX%). Source: GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012) Renewable Energy, the Way Forward Renewable power has an extremely promising future in Algeria as the government is focusing on the development of renewable power plants. The ministry has introduced a renewable energy program which aims at adding XX MW of renewable energy plants during Of the total, XX MW of capacity is intended to be used for domestic consumption and the remaining XX MW is to be used for export to Europe. Major development in renewable capacity is expected in the field of Concentrated Solar Power (CSP) plants. In early 2012, Desertec Industrial Initiative (DII) signed an agreement with Algeria to develop renewable energy projects in the country. The agreement will promote industrial cooperation and the exchange of technical expertise between the two parties. The ministry is planning to invest $XX billion for renewable energy development. Page 1

2 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Algeria, Power Market, Business Propensity Indicator Methodology Methodology for Evaluating the Business Propensity Indicator for Algeria in Africa Supply Security Regulatory Scenario Infrastructure Macroeconomic Scenario Competitive Scenario Future Potential Methodology Adopted to Arrive at Final Rank Algeria, Power Market, Business Propensity Indicator Supply Security Regulatory Scenario Infrastructure Degree of Competition Macro Economic Factors Future Potential Algeria, Power Market, Business Propensity Indicator Ranking Algeria Power Market Analysis, Algeria, Power Market, Installed Capacity, Installed Capacity: Breakup by Type of Power Plant, Cumulative Installed Capacity Cumulative Thermal Installed Capacity, Cumulative Hydropower Installed Capacity, Cumulative Renewable Installed Capacity, Cumulative Nuclear Installed Capacity, Algeria, Power Market, Annual Power Generation, Annual Thermal Power Generation, Annual Hydropower Generation, Annual Renewable Power Generation, Algeria, Power Market, Import and Export Scenario Algeria, Power Market, Annual Power Consumption, Algeria, Power Market, Power Consumption by sector, Algeria, Power Market, Infrastructure Overview Algeria, Power Market, Active Power Projects Leading Thermal Power Projects Leading Hydropower Projects Leading Renewable Power Projects Algeria, Power Market, Upcoming Power Projects Leading Thermal Power Projects Leading Renewable Power Projects Algeria, Power Market, Transmission Network Overview Algeria, Power Market, Distribution Network Overview Algeria, Power Market, Grid Interconnection Algeria, Power Market, Electricity Trading Algeria, Power Market, Regulatory Structure Algeria, Power Market, Regulatory Structure Overview Algeria, Power Market, Power Sector Reforms Algeria, Power Market, Regulations Algeria, Power Market, Competitive Landscape: Snapshot of Top Power Generating Company Algeria, Power Market, Market Share of Major Power Generating Company Key Company in the Algeria Power Market, SonelGaz Spa SonelGaz Spa, Company Overview SonelGaz Spa, Business Description SonelGaz Spa, SWOT Analysis Page 2

3 9 Appendix Market Definitions Power Installed Capacity Active Installed Capacity Electricity Generation Net Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Electricity Consumption Abbreviations Bibliography GlobalData s Methodology Coverage Secondary research and analysis Primary Research and Analysis Contact Us Disclaimer Page 3

4 1.1 List of Tables Table 1: Ease of Doing Business-Categories and Definitions... 8 Table 2: Country Risk-Categories and Sub-categories... 9 Table 3: BPI Scoring Parameters Table 4: Power Market, Algeria, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Table 5: Power Market, Algeria, Cumulative Installed Capacity (MW), Table 6: Power Market, Algeria, Cumulative Thermal Installed Capacity (MW), Table 7: Power Market, Algeria, Cumulative Hydropower Installed Capacity (MW), Table 8: Power Market, Algeria, Cumulative Renewable Installed Capacity (MW), Table 9: Power Market, Algeria, Annual Power Generation (GWh), Table 10: Power Market, Algeria, Annual Thermal Power Generation (GWh), Table 11: Power Market, Algeria, Annual Hydro Power Generation (GWh), Table 12: Power Market, Algeria, Annual Renewable Power Generation (GWh), Table 13: Power Market, Algeria, Total Annual Imports and Exports (GWh), Table 14: Power Market, Algeria, Annual Power Consumption (GWh), Table 15: Power Market, Algeria, Breakdown of Electricity Consumption, By Sector, %, Table 16: Power Market, Algeria, Leading Active Thermal Power Projects, Table 17: Power Market, Algeria, Leading Active Hydropower Projects (MW), Table 18: Power Market, Algeria, Leading Upcoming Thermal Power Projects, Table 19: Power Market, Algeria, Leading Upcoming Renewable Power Projects, Table 20: Power Market, Algeria, Transmission Line Length, Ckm, ( ) Table 21: Power Market, Algeria, Distribution Line Length, Ckm, ( ) Table 22: Power Market, Algeria, Installed Capacity Share of Major Power Companies (%), Table 23: Sonelgaz Spa, SWOT Analysis Table 24: Abbreviations List of Figures Figure 1: Weights Assigned to the Six Factors (%), Figure 2: Power Market, Algeria, Business Propensity Indicator Ranking Figure 3: Power Market, Algeria, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Figure 4: Power Market, Algeria, Cumulative Installed Capacity (MW), Figure 5: Power Market, Algeria, Cumulative Thermal Installed Capacity (MW), Figure 6: Power Market, Algeria, Cumulative Hydropower Installed Capacity (MW), Figure 7: Power Market, Algeria, Cumulative Renewable Installed Capacity (MW), Figure 8: Power Market, Algeria, Annual Power Generation (GWh), Figure 9: Power Market, Algeria, Annual Thermal Power Generation (GWh), Figure 10: Power Market, Algeria, Annual Hydro Power Generation (GWh), Figure 11: Power Market, Algeria, Annual Renewable Power Generation (GWh), Figure 12: Power Market, Algeria, Total Annual Imports and Exports (GWh), Figure 13: Power Market, Algeria, Annual Power Consumption (GWh), Figure 14: Power Market, Algeria, Breakdown of Electricity Consumption, By Sector (%), Figure 15: Power Market, Algeria, Installed Capacity Share of Major Power Companies (%), Page 4

5 2 Introduction Algeria is a developing economy and is, largely dependent on hydrocarbons, which account for approximately 60% of the country s budget revenues. Located in North West Africa, the country is bordered by Tunisia, Libya, Morocco, Western Sahara, Mauritania, Mali and Niger. The country has a republican form of government with the President as the head of state. Algeria is the 35th largest country in terms of population, according to the International Monetary Fund (IMF). The government has focused its efforts towards diversifying the economy by directing foreign and domestic investment to different infrastructure sectors. However, the efforts have not always been beneficial for the country as it has faced high unemployment and low living standards. In 2002, Algeria entered into an Association Agreement with the European Union, which came into effect in In 2009, the country adopted the complementary finance law according to which new restrictions were imposed on foreign investment, import companies, and domestic consumer credit. According to the law, Algeria s partnership in new foreign investments and foreign import companies is mandated at minimums of XX% and XX% respectively. The law also states that import payments will be made through letters of credit issued by banks. In 2011, the industrial sector contributed an estimated XX% share of the country s Gross Domestic Product (GDP), followed by the services sector (XX%) and the agriculture sector (XX%). Hydrocarbons contribute more than 95% of export earnings. The country has the tenth largest natural gas reserves in the world and is the sixth-largest gas exporter. The total estimated gas reserves were XX trillion cubic feet (tcf) in Algeria ranks XX globally in total oil reserves. The country has an estimated XX billion barrels of proven oil reserves as of January 2012 (EIA, 2012). The Commission Regulation of Electricity and Gas (CREG) is the primary regulatory authority and is responsible for supervising and formulating policies for the country s electricity sector. Sonelgaz is the only government-owned company operating in the Algerian power sector. Gas is the primary fuel used for power generation. The ministry announced its renewable energy program in 2011, which aims to add XX MW of renewable energy plants by According to GlobalData estimates, it is expected that renewable energy will constitute XX% of the total installed capacity by Thermal installed capacity is expected to constitute XX% and the residual XX% is expected to come from hydropower sources. 2.1 GlobalData Report Guidance The report begins with an executive summary capturing the key growth trends in the Algerian power market. Chapter three covers the methodology for evaluating the Business Propensity Indicator. Chapter four provides information on the Business Propensity Indicator for Algeria. Chapter five provides cumulative capacity and power generation information, and segmentation by source of energy from , with forecasts to This is followed by the consumption scenario of the market from , with forecasts to Chapter six provides information on the power infrastructure of the country including the leading active and upcoming power plants by source of energy, existing and planned developments in transmission and distribution infrastructure and cross-country interconnections. Chapter seven provides information on regulatory structure and describes in brief the power regulatory structure and prominent policies influencing the future of the power market. Chapter eight describes the competitive landscape of the country s power market, with a complete description and SWOT analysis of the top companies NOTE: All 2011 market numbers provided in the report are estimates. Page 5

6 4 Algeria, Power Market, Business Propensity Indicator 4.1 Supply Security Algeria s dependence on electricity imports was relatively low in 2010, which is reflected in its import dependency of XX%. The total imports and power generation stood at XX GWh and XX GWh respectively in Regulatory Scenario The Ministry of Energy and Mines (MEM) is the main regulatory authority in the Algerian power sector. The Commission Regulation of Electricity and Gas (CREG) is the primary regulatory authority and is responsible for supervising and formulating policies for the country s electricity sector. The electricity sector in Algeria is unbundled into three sectors: generation, transmission and distribution. 4.3 Infrastructure The country has already achieved a XX% electrification rate, suggesting that the country is very near to achieving full electrification. The capacity replacement required is XX%, as the total capacity requiring replacement stood at XX MW and the total installed capacity stood at XX MW in Degree of Competition The electricity market is highly consolidated in Algeria with Sonelgaz Spa, the government-owned utility, holding the majority share of XX%. The remaining XX% share is held by private utilities. The prices in the electricity market are completely regulated by the Ministry of Energy. CREG is responsible for formulating the electricity prices, which are then approved by the ministry. Page 12

7 4.5 Macro Economic Factors The ease of doing business in the country is ranks XX globally out of XX total countries. Within the ease of doing business measure, the country ranks high on parameters including resolving insolvency and protecting investors. 4.6 Future Potential In 2020, the thermal installed capacity is expected to retain its majority share of the total installed capacity. Gas is expected to continue its predominance with a share of XX% of the installed capacity, followed by renewable (XX%), oil (XX%) and hydro sources (XX%). 4.7 Algeria, Power Market, Business Propensity Indicator Ranking Figure 2: Power Market, Algeria, Business Propensity Indicator Ranking Source: GlobalData, Internal analysis Refer to BPI methodology section for more details Page 13

8 5 Algeria Power Market Analysis, Algeria, Power Market, Installed Capacity, Installed Capacity: Breakup by Type of Power Plant, 2011 Gas-fired plants dominated the Algerian power market in 2011, contributing XX% to the total installed capacity. Hydropower came a distant second, with a XX% share of the total installed capacity. Oil-fired capacity accounted for a share of XX%. This was followed by renewable energy sources, including solar thermal power, which contributed XX% to the country s cumulative installed capacity. Figure 3: Power Market, Algeria, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Oil fired Hydro Renewable Gas-fired Source: GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012). *2011 numbers are estimates Table 4: Power Market, Algeria, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Type of Power Plant Gas Hydro Oil Renewable Source: GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012) * 2011 numbers are estimates Percentage Share Page 14

9 5.1.2 Cumulative Installed Capacity The cumulative installed capacity increased from XX MW in 2000 to XX MW in 2011, recording a Compound Annual Growth Rate (CAGR) of XX% during Gas-fired plants contributed the major share of XX% or XX MW, followed by hydropower sources, which contributed around XX% or XX MW to the total installed capacity. Oil-fired plants and renewable energy plants contributed XX MW or XX% and XX0 MW or XX% respectively to the total installed capacity. During the forecast period ( ), cumulative installed capacity is expected to increase at a CAGR of XX% from XX MW in 2012 to 36,122 MW in Thermal power is expected to remain the dominant source in 2030, though its relative share is expected to decline to XX%. The share of renewable energy is expected to rise considerably to XX%, while the relative share of hydropower is expected to be around XX%. The share of renewable energy is estimated to rise substantially due to the renewable energy program announced by the government in The program aims to achieve XX MW of renewable energy capacity by the end of Figure 4: Power Market, Algeria, Cumulative Installed Capacity (MW), Cumulative Installed Capacity (MW) Source: GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012), Ministry of Energy and Mines Page 15

10 Table 5: Power Market, Algeria, Cumulative Installed Capacity (MW), Years Installed Capacity (MW) Source: : GlobalData, Power etrack, Capacity and Generation Database (April 12, 2012), Ministry of Energy and Mines Page 16

11 9 Appendix 9.1 Market Definitions The geographical coverage of the report is Algeria. The report covers market segments related to installed electricity capacity, generation, consumption, power infrastructure and power regulations. The report covers the whole of Algeria for a quantitative and qualitative assessment of its power market Power According to "Energy Information Administration" power is defined as the rate of producing, transferring, or using energy, most commonly associated with electricity. Power is measured in watts and often expressed in kilowatts (kw) or megawatts (MW) Installed Capacity According to "Energy Information Administration" installed capacity is defined as the amount of electric power delivered or required for which a generator, turbine, transformer, transmission circuit, station, or system is rated by the manufacturer Active Installed Capacity Active installed capacity refers to that component of electric power that actually performs work. It is given in Kilowatts (KW) or Megawatts (MW) Electricity Generation According to "Energy Information Administration" electricity generation is defined as the process of producing electric energy by transforming other forms of energy; also, the amount of electric energy produced, expressed Gigawatt hours (GWh) Net Electricity Consumption Electricity consumption is computed as electricity generated, plus imports, minus exports, minus transmission and distribution losses. It is measured in Gigawatt-hours (GWh) Thermal Power Plant Thermal power is defined as the electricity generated by turbine generators driven by burning fossil fuelscoal, gas and oil Hydropower Plant Hydro power is defined as the electricity generated by turbine generators driven by the gravitational force of running water Nuclear Power Nuclear power is defined as the electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources limited in the amount of energy that is available per unit of time. For example, biomass, geothermal, solar, wind can all be termed as renewable resources Electricity Consumption Electricity consumption is a sum of electricity generated, plus imports, minus exports, minus transmission and distribution losses and measured in Gigawatt-hours (GWh). Page 47

12 9.2 Abbreviations Table 24: Abbreviations Abbreviations Algerian Energy Company Algerian Society of Electricity Production Algerian Society of Gas Transport Algerian Society of Transmission of Electricity Circuit Kilometer Commission Regulation of Electricity and Gas Compound Annual Growth Rate Concentrated Solar Power Concentrated Solar Power Desertec Industrial Initiative Direct Current Electricity and Gas of Algeria Feed-in-Tariffs Gross Domestic Product Herfindahl Hirschman Index Integrated Solar Combined Cycle International Monetary Fund kilovolt Mediterranean Ring Project Ministry of Energy and Mines New Energy Algeria Photovoltaic Sharikat Kahraba Skikda Shariket Kahraba Berrouaghia Shariket Kahraba Cherchell Societe Algerienne de l Electricite et du Gaz Société de Distribution d Electricité et du Gaz de l Est Société de Distribution de l electricité et du Gaz d Alger Société de Distribution de l Electricité et du Gaz de l Ouest Société de Distribution de l Electricité et du Gaz du Centre Transmission and Distribution trillion cubic feet Source: GlobalData AEC SPE GRTG GRTE Ckm CREG CAGR CSP CSP DII DC EGA FITs GDP HHI ISCC IMF kv MED-RING MEM NEAL PV SKS SKB SKC SonelGaz SDE SDA SDO SDC T&D tcf Page 48

13 9.3 Bibliography Abengoa Solar S.A(2011), Algeria, Integrated solar combined-cycle (ISCC) plant in Algeria. Available from [Accessed on April 23, 2012]. Arab Maghreb Union (2008) via Algeria.com, AMU energy ministers rekindle regional co-operation efforts.available from [Accessed on April 13, 2012]. CREG (2010), The establishment of the concession system in the distribution of electricity and gas Available from [Accessed on April 13, 2012]. Duhamel Bernard and Beaussant Henri (2011) EU Energy Strategy in the South Mediterranean. European Parliament, Available from EN.pdf [Accessed on April 13, 2012]. EIA (2012), Energy Information Administration - Algeria: Analysis, Available from (Accessed on April 23, 2012). MEM, (2012): Ministry of Energy and Mining, New and Renewable Energy Potential Available from (Accessed on April 23, 2012). Sonelgaz (2011) via Magharebia.com, Power cuts hit Algeria. Available from (Accessed on April 23, 2012). Sonelgaz, (2012) via North Africa United: Electricity generation - Algeria will invest $ 30 billion by 2020, says Sonelgaz CEO Boutarfa, Available from (Accessed on April 23, 2012). 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports Coverage This report gives detailed information on the country s power market. It examines the country s power market structure and provides historical and forecast numbers for generation, capacity and consumption up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects. The report also provides Business Propensity Indicator (BPI), which benchmarks the country s power sector against other countries in the region by analyzing the power sector of the country on six broad parameters supply security, regulatory scenario, infrastructure, macroeconomics, competition and future potential. Each parameter has a weight assigned, and a weighted average score is calculated to obtain the country s ranking in the region. Page 49

14 9.4.2 Secondary research and analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature Globaldata s proprietary databases like the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database. Further to this, the following secondary information is collected and analyzed to project the country s power market scenario through to 2030, analyzing factors such as the following: The country s macroeconomic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople. Page 50

15 9.6 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. This report is a licensed product and should not to be reproduced without prior permission. Page 51