Newly Updated Renewable Energy Program In Algeria

On February 24, 2015, Algeria's Minister of Energy announced the adoption of Algeria's updated development program for renewable energies. The program increases the targeted installed capacity from renewable sources by 2030 from 12 gigawatts ("GW") to 22 GW, with a view to diversifying Algeria's power production by increasing generation from sustainable sources and preserving fossil fuel resources. This new target emphasizes Algeria's significant solar potential and takes advantage of the recent drop in production costs for solar photovoltaic and wind power infrastructures, while primarily satisfying domestic energy demand essentially through three sources of renewable energy: solar photovoltaic power (13.5 GW), solar concentration power (2 GW), and wind power (5 GW). These new targets represent a nearly 400 percent increase in the targeted installed capacity for solar photovoltaic power and wind power, compared to the development program's initial objectives in 2011. In addition to installed capacity for domestic consumption, Algeria's development program also targets up to 10 GW of installed capacity from renewable sources for export purposes, for which the Algerian government is seeking reliable partners willing to provide financing for the projects as well as the required interconnections with the Algerian grid. Renewable power projects will be subject to a specific regime based on a 20-year power purchase agreement ("PPA") with one of the four distribution grid operators, all subsidiaries of the state-owned Sonelgaz Group, and preferential regulatory feed-in tariffs applicable to the produced electricity. Projects with installed capacity of more than 1 megawatt ("MW") will be eligible on an "open-door" basis. Producers will apply with the Algerian energy regulator, the Commission de Régulation de l'Electricité et du Gaz ("CREG"), for authorization to benefit from the feed-in tariff. To qualify, producers must satisfy a number of criteria, including holding an operation authorization and a certificate of guaranteed origin for key materials, such as solar PV panels, both of which will be granted or delivered by the CREG. Finally, authorizations such as building permits as well as environmental impact assessments will be required. The preferential feed-in tariffs will be guaranteed for the 20-year term of the PPA. Base tariffs will range from 12.75 Algerian dinars per kilowatt hour ("DZD/kWh") to 15.94 DZD/kWh (0.12 euros per kilowatt...

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