ALGERIA POWER MARKET OUTLOOK TO 2025, UPDATE 2015 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0796ICR PUBLICATION DATE JULY 2015 ALGERIA POWER MARKET OUTLOOK TO 2025, UPDATE 2015 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

2 Executive Summary Algeria s Power Sector Outlook Algeria is very rich in oil and natural gas but has no coal. The economy is heavily dependent on the hydrocarbon sector, which brings in XX% of national revenue, XX% of Gross Domestic Product (GDP), and XX% of export revenue. Algeria ranks XX in the world in terms of natural gas reserves and XX in terms of oil reserves. The power sector is expanding. Aided by a growth in industry and an increasing population, power consumption grew at a Compound Annual Growth Rate (CAGR) of XX% between 2000 and 2014, as shown in the following figure. Power Market, Algeria, Gross Domestic Product ($bn) and Annual Power Consumption (TWh), Mirroring the increase in consumption, annual power generation grew at a CAGR of XX% between 2000 and Most of the increase was contributed by thermal power, which dominates power generation. Power Market, Algeria, Annual Power Generation and Consumption (TWh), Annual power consumption and generation (TWh) Annual power consumption Annual power generation Source: GlobalData, Power Database [Accessed on June 10, 2015] GDP ($bn) Annual power consumption (TWh) Due to the rich reserves of fossil fuels, the power sector is dominated by gas- and oil-based power plants. In 2014, gas-based power plants contributed XX% of installed capacity GDP (constant prices) Source: GlobalData; IMF, 2015 TWh: Terawatt hour Annual power consumption 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Algeria Power Market, Snapshot Macro-economic Factors Supply Security Opportunities Challenges Algeria, Power Market, Market Analysis Algeria, Power Market, Market Structure Algeria, Power Market, Key Market Players Algeria, Power Market, Financial Deals Deal Value and Volume Analysis, 2004 to May Algeria, Power Market, Demand Structure Power Consumption by Sector, Algeria, Power Market, Regulatory Scenario Power Sector Reforms Key Power Sector Regulations Renewable Energy Policy

4 Table of Contents 5.4 Algeria, Power Market, Foreign Investment Laws and Regulations Algeria, Power Market, Capacity and Generation Overview Algeria, Power Market, Cumulative Installed Capacity, Installed Capacity by Fuel Type, Cumulative Installed Capacity and Annual Generation, Cumulative Installed Thermal Power Capacity and Annual Thermal Power Generation, Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, Cumulative Installed Nuclear Power Capacity and Annual Nuclear Generation, Cumulative Installed Renewable Power Capacity and Annual Renewable Power Generation, Algeria, Power Market, Transmission and Distribution Overview Algeria, Power Market, Transmission Network Overview Algeria, Power Market, Distribution Network Overview Algeria, Power Market, Grid Interconnection Interconnection with Tunisia Interconnection with Morocco Interconnection with Europe Electricity Import and Export Trends, Algeria, Power Market, Electricity Trading Algeria, Power Market, Competitive Landscape: Snapshot of Leading Power Generating Companies

5 Table of Contents 8.1 Key Company in the Algerian Power Market: Sonelgaz Spa Sonelgaz Spa, Company Overview Sonelgaz Spa, Business Description Sonelgaz Spa, SWOT Analysis Appendix Market Definitions Power Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary Research and Analysis Primary Research and Analysis Disclaimer

6 Table of Contents 1.1 List of Tables Table 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), Table 2: Power Market, Algeria, Completed Deals, 2004 to December Table 3: Power Market, Algeria, Annual Power Consumption (TWh), Table 4: Power Market, Algeria, Power Consumption by Sector (%), Table 5: Power Market, Algeria, Wind Energy Feed-in Tariffs, Table 6: Power Market, Algeria, Solar PV Feed-in Tariffs, Table 7: Power Market, Algeria, Cumulative Installed Capacity by Fuel Type (%), Table 8: Power Market, Algeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 9: Power Market, Algeria, Leading Thermal Power Plants, Table 10: Power Market, Algeria, Cumulative Installed Thermal Power Capacity (GW) and Annual Thermal Power Generation (TWh), Table 11: Power Market, Algeria, Leading Active Hydropower Plants, Table 12: Power Market, Algeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Table 13: Power Market, Algeria, Leading Renewable Power Plants, Table 14: Power Market, Algeria, Cumulative Installed Renewable Power Capacity (GW) and Annual Renewable Power Generation (TWh), Table 15: Power Market, Algeria, Transmission Line Length (Ckm), Table 16: Power Market, Algeria, Distribution Line Length (Ckm), Table 17: Power Market, Algeria, Imports and Exports (TWh), Table 18: Power Market, Algeria, Sonelgaz Spa, SWOT Analysis, Table 19: Abbreviation

7 Table of Contents 1.2 List of Figures Figure 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), Figure 2: Power Market, Algeria, Annual Power Consumption (TWh), Figure 3: Power Market, Algeria, Power Consumption by Sector (%), Figure 4: Power Market, Algeria, Cumulative Installed Capacity by Fuel Type (%), Figure 5: Figure 6: Figure 7: Figure 8: Power Market, Algeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Algeria, Cumulative Installed Thermal Power Capacity (GW) and Annual Thermal Power Generation (TWh), Power Market, Algeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Power Market, Algeria, Cumulative Installed Renewable Power Capacity (GW) and Annual Renewable Power Generation (TWh), Figure 9: Power Market, Algeria, Imports and Exports (TWh),

8 XXXXX 2 Introduction Algeria is a developing economy and is largely dependent on hydrocarbons, which account for approximately XX% of national revenue. The government has focused its efforts on diversifying the economy by directing foreign and domestic investment to different infrastructure sectors. However, these efforts have not always been beneficial for the country, which has faced high unemployment and relatively low living standards. In 2002, Algeria entered into an Association Agreement with the EU, which came into effect in In 2009, it adopted the complementary finance law, according to which new restrictions were imposed on foreign investment, import companies, and domestic consumer credit. According to this law, Algeria s partnerships in new foreign investments and foreign import companies were mandated at a minimum of XX% and XX%, respectively. The law also stated that import payments would be made through letters of credit issued by banks. In 2014, the industrial sector contributed an estimated XX% share of Gross Domestic Product (GDP), followed by the services sector (XX%) and the agriculture sector (XX%). Hydrocarbons contributed more than XX% of export earnings. Algeria had the XX largest natural gas reserves in the world and was the sixth-largest gas exporter. It also ranked XX in oil reserves (CIA, 2015). Leveling gas production and continuing domestic energy subsidies are concerns for the government. The Electricity and Gas Regulation Commission (Commission de Régulation de l'electricité et du Gaz, CREG) is the primary energy regulatory authority and is responsible for supervising and formulating policies for the power sector. Sonelgaz is the only government-owned company operating in the power sector, and gas is the primary fuel used for power generation. The ministry announced its renewable energy program in 2011, which aims to add XX Gigawatts (GW) of renewable energy plants by Renewable energy is forecast to constitute XX% of installed capacity by

9 XXXXX 2.1 GlobalData Report Guidance The executive summary captures key growth trends in Algeria s power market. Chapter three provides a snapshot of the key parameters affecting Algeria s power sector, as well as key points about its power market. Chapter four provides analysis of Algeria s power market. Chapter five details the regulatory scenario for the Algerian power market and the inward foreign investment scenario. Chapter six provides information on the country s cumulative installed capacity and annual generation trends, both as a whole and according to individual generation source. Chapter seven describes the country s power Transmission and Distribution (T&D) infrastructure, and includes information on interconnections with neighboring countries. The section also covers power imports and exports and upcoming grid-related projects. Note: All 2014 market figures provided in the report are estimates, except where actual data are available. 10

10 Snapshot 3 Algeria Power Market, Snapshot 3.1 Macro-economic Factors Algeria ranked XX out of XX economies in terms of ease of doing business, in the 2015 World Bank index. Its rank in the previous year was XX. Resolving insolvency was the only parameter in which it ranked in the top XX. Access to credit and taxation issues are the most challenging obstacles encountered when doing business in Algeria (World Bank, 2015). In 2014, the GDP, at current prices, amounted to $XX billion. The GDP, at constant prices, grew at a Compound Annual Growth Rate (CAGR) of XX% from 2000 to Due to its proximity to Europe, its economy is highly integrated with the European economy. Algeria is one of the largest producers of natural gas in Africa and is the largest supplier of gas to Europe. As such, it is dependent on demand from West European countries to sustain its growth. The debt crisis in Europe therefore affected the Algerian economy, as demand for exports slowed. With growth in Europe expected to pick up from 2015, the Algerian economy is expected to follow suit. In 2000, the population stood at XX million. It increased at a CAGR of XX% to XX million in From 2015 to 2020, the population is expected to grow at a CAGR of XX% to XX million (IMF, 2015). Power consumption amounted to XX Terawatt hours (TWh) in 2000 and increased at a CAGR of XX% to XX TWh in 2014 due to growing residential demand and rising usage for industrial production. 11

11 Snapshot Figure 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), GDP ($bn) and population (million) Annual power consumption (TWh) Source: GlobalData; IMF, 2015 GDP (constant prices) Population Annual power consumption 12

12 Market Analysis Power Consumption by Sector, 2014 The industrial sector accounted for the highest share of power consumption, with XX% in 2014, followed by the residential sector with XX%. The commercial sector contributed XX% of power consumption, and the remaining XX% was accounted for by other smaller sectors, such as agriculture. Figure 3: Power Market, Algeria, Power Consumption by Sector (%), 2014 Other Trade, commerce, and other services Industrial Residential Source: GlobalData Table 4: Power Market, Algeria, Power Consumption by Sector (%), 2014 Sector Industrial Residential Trade, commerce, and other services Other Source: GlobalData Share 21

13 Appendix 9 Appendix 9.1 Market Definitions Power Power refers to the rate of production, transfer or energy use, usually related to power. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in Megawatts (MW) on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating power from other forms of energy. It also refers to the amount of power produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of power generated, plus imports, minus exports and transmission and distribution losses. It is measured in Gigawatt hours (GWh) Thermal Power Plant A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A hydropower plant is a plant in which the turbine generators are driven by falling water Nuclear Power Nuclear power is the energy released from the fission of nuclear fuel in a reactor. 53

14 Appendix Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydropower and wind are examples of renewable resources. 54

15 Appendix 9.2 Abbreviations Table 19: Abbreviation AEC Algerian Energy Company bcfd billion cubic feet per day CAGR Compound Annual Growth Rate CCGT Combined Cycle Gas Turbine Ckm Circuit kilometer CNI National Investment Council (Conseil National de l'investissement) CREG Electricity and Gas Regulation Commission (La Commission de Régulation de l'electricité et du Gaz) CSP Concentrated Solar Power DNI Direct Normal Irradiance DZD Algerian dinar EGA Electricity and Gas of Algeria FiT Feed-in Tariff GDP Gross Domestic Product GRTE Gestion du Réseau de Transport de l'electricité GW Gigawatt GWh Gigawatt hour JV Joint Venture kv kilovolt kwh kilowatt hour MW Megawatt NEAL New Energy Algeria SIM Semoulerie Industrielle de la Mitidja SKB Shariket Kahraba Berrouaghia SKC Shariket Kahraba Cherchell SKS Sharikat Kahraba Skikda SPE Algerian Society of Electricity Production T&D Transmission and Distribution tcf trillion cubic feet TWh Terawatt hour Source: GlobalData 55

16 Appendix 9.3 Bibliography AUPTDE (2013). Statistical Bulletin 2013, Issue 22. Arab Union of Electricity. Available from: BP Statistical Review, BP Statistical Review of World Energy June 2015 [database]. Available from: [Accessed on June 10, 2015]. CIA (2015). Algeria: The World Factbook. Central Intelligence Agency. Available from: [Accessed on June 10, 2015] CREG (2014a). Arrêté du 2 Rabie Ethani 1435 correspondant au 2 février 2014 fixant les tarifs d achat garantis et les conditions de leur application pour l électricité produite à partir des installations utilisant la filière éolienne. ECOLEX. Available from: CREG (2014b). Arrêté du 2 Rabie Ethani 1435 correspondant au 2 février 2014 fixant les tarifs d achat garantis et les conditions de leur application pour l électricité produite à partir des installations utilisant la filière solaire photovoltaïque. ECOLEX. Available from: Dodd J. (2015). Algeria sets 5GW target for Windpower Monthly, March 13, Available from: [Accessed on June 8, 2015] EIA (2014). Country Analysis Brief: Algeria. US Energy Information Administration. Available from: IMF, International Monetary Fund, World Economic Outlook Database, April 2015 [database]. Available from: tries [Accessed on June 10, 2015] OBG (2014a). Powering Ahead: Capacity increases are set to help the country deal with rising demand. Oxford Business Group. Available from: 56

17 Appendix [Accessed on June 10, 2015] OBG (2014b). The prodigal sun: Renewables have huge potential for domestic use, and possibly export. Oxford Business Group. Available from: [Accessed on June 10, 2015] World Bank (2015). Ease of Doing Business in Algeria. The World Bank. Available from: [Accessed on June 10, 2015] 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with advanced statistical expertise and marketing, market research and consulting backgrounds in the energy industry. GlobalData adheres to the codes of practice of the Market Research Society ( and Strategic and Competitive Intelligence Professionals ( All of GlobalData s databases are continuously updated and revised. The following methodology has been followed for the collection and analysis of data presented in this report Coverage This report covers the Algerian power market, examining the market structure and providing historical generation, capacity and consumption forecasts until It also looks at the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects Secondary Research and Analysis The capacity, generation and consumption data are collected and validated using a number of secondary resources including but not limited to: Government agencies, ministry websites, industry associations, the World Bank, International Monetary Fund (IMF), and statistical databases Company websites, annual reports, financial reports, analyst reports and investor presentations 57

18 Appendix Industry trade journals, market reports and other literature GlobalData s proprietary databases such as 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 Algeria s power market scenario to 2025: The macro-economic scenario Government regulations, policies and targets Government and private sector investment Contract and deal announcements Utility expansion plans The sector s historical 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 supported by primary interviews with industry participants, to verify the market numbers obtained through secondary research and obtain first-hand information on industry trends. A typical research interview fulfills the following functions: Obtains the interviewee s perspective on the market size, growth trends, competitive landscape and future outlook Validates secondary research findings Further develops the analysis team s expertise and market understanding The participants are drawn from a diverse set of backgrounds, including power producers, equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, 58

19 Appendix academic experts, business development and sales managers, purchasing managers, plant managers, government officials and industry spokespersons. 9.5 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. 59