Algeria plans to increase its solar and renewable energy capacity to 15 gigawatts (GW) by 2035. The North African nation has initiated an initial program to develop 3.2 GW of this target, which constitutes a significant portion of the overall goal. These projects are distributed across 12 wilayas, or states, marking a significant step towards the country's renewable energy goals and demonstrating a geographically diverse approach to energy development.
Scaling Up Solar Capacity
The program, which aims to launch up to 20 utility-scale projects, is a critical component of Algeria’s energy transition. Currently, Algeria possesses 2.87 gigawatts of solar energy, according to data from the African Solar Industry Association (AFSIA). This existing capacity provides a foundation upon which to build. An additional 2.6 gigawatts of solar capacity are presently under actual construction within the country, indicating active progress towards expansion. Despite these developments, natural gas significantly dominates Algeria's national electricity mix, accounting for approximately 95 TWh. In contrast, solar energy contributes only 0.87 TWh to the national electricity supply, noting the substantial shift required to meet the 2035 target. The expansion of solar projects is part of a broader strategy to diversify the energy portfolio and reduce reliance on fossil fuels for domestic consumption.
Strategic Energy Transition Drivers
Achieving Algeria's ambitious renewable energy targets necessitates an acceleration of investments and a transition towards Independent Power Producer (IPP) models. This strategy aims to open the energy market to private sector and international companies, fostering greater competition and efficiency. Long-term plans for the North African nation include exporting electricity through existing connections with neighboring countries and into European markets, positioning Algeria as a potential regional energy hub. The country is also advancing towards securing international financing, leveraging recent amendments to its financial law to facilitate this process and attract necessary capital. Authorities believe that the same, or even more favorable, tariff levels can be attained in Algeria by adopting the IPP model, moving away from the government's traditional Engineering, Procurement, and Construction (EPC) financing and construction model, which has historically dominated infrastructure projects. This shift is expected to introduce more competitive pricing and project delivery.
Infrastructure and Investment Support
State-owned utility Sonelgaz is actively supporting these initiatives by identifying connection sites for all future power generation stations, ensuring that new capacity can be smoothly integrated into the national grid. Sonelgaz is also working to establish an 800-kilometer 'electricity highway' designed to transport energy between Algeria's northern and southern regions, a vital project for grid stability and energy distribution. Steps following the current 3.2 GW program are expected to receive direct support from international bodies, showing the global interest in Algeria's energy transition. This approach aims to replicate successes seen elsewhere, as exemplified by Scatec successfully reducing electricity tariffs in Tunisia to below $0.03 per kilowatt-hour, demonstrating the potential for cost-effective renewable energy.
Expert Views and Challenges
Steps are being taken to meet growing domestic demand, reduce carbon emissions, and free up additional natural gas for export, which can then be sold on international markets. Algeria's motivation for this energy shift differs from traditional models, as the nation does not face fuel import pressures due to its strong domestic gas production. Instead, the focus is on optimizing resource allocation and enhancing energy security. Success hinges on five essential pillars: stable policies, strong power purchase agreements, competitive tenders, rapid licensing processes, and strong partnerships between public and private entities. Yacine Boulfrad, Technical Development Sector Director at Scatec, stated, "The main obstacle is the project ecosystem and regulatory framework, not the technology." This notes that the primary challenge lies in the implementation environment and governance rather than technical capabilities or resource availability.