ALGERIA POWER MARKET OUTLOOK TO 2025, … · reference code gdpe0796icr | publication date july 2015 algeria power market outlook to 2025, update 2015 – market trends, regulations,

REFERENCE CODE GDPE0796ICR | PUBLICATION DATE JULY 2015

ALGERIA POWER MARKET OUTLOOK TO 2025, UPDATE 2015 – MARKET TRENDS, REGULATIONS,

AND COMPETITIVE LANDSCAPE

Algeria Power Market Outlook to 2025, Update 2015 – Market Trends, Regulations, and Competitive Landscape 2 © GlobalData. This report is a licensed product and is not to be copied, reproduced, shared or resold in any form.

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

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), 2000–2014

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Ann

ual p

ower

con

sum

ptio

n (T

Wh)

GD

P ($

bn)

GDP (constant prices) Annual power consumption Source: GlobalData; IMF, 2015 TWh: Terawatt hour

Mirroring the increase in consumption, annual

power generation grew at a CAGR of XX%

between 2000 and 2014. Most of the increase was

contributed by thermal power, which dominates

power generation.

Power Market, Algeria, Annual Power Generation and Consumption (TWh), 2000–2014

2000 2007 2014

Ann

ual p

ower

con

sum

ptio

n an

d ge

nera

tion

(TW

h)

Annual power consumption Annual power generation Source: GlobalData, Power Database [Accessed on June 10, 2015]

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.


Table of Contents


1 Table of Contents

1 Table of Contents ....................................................................................................................... 4

1.1 List of Tables ...................................................................................................................... 7

1.2 List of Figures ..................................................................................................................... 8

2 Introduction ................................................................................................................................. 9

2.1 GlobalData Report Guidance ............................................................................................ 10

3 Algeria Power Market, Snapshot ............................................................................................... 11

3.1 Macro-economic Factors ................................................................................................... 11

3.2 Supply Security ................................................................................................................. 13

3.3 Opportunities .................................................................................................................... 14

3.4 Challenges ........................................................................................................................ 15

4 Algeria, Power Market, Market Analysis .................................................................................... 16

4.1 Algeria, Power Market, Market Structure ........................................................................... 16

4.2 Algeria, Power Market, Key Market Players ...................................................................... 16

4.3 Algeria, Power Market, Financial Deals ............................................................................. 16

4.3.1 Deal Value and Volume Analysis, 2004 to May 2015 .................................................... 16

4.4 Algeria, Power Market, Demand Structure ........................................................................ 19

4.4.1 Power Consumption by Sector, 2014 ............................................................................ 21

5 Algeria, Power Market, Regulatory Scenario ............................................................................. 22

5.1 Power Sector Reforms ...................................................................................................... 22

5.2 Key Power Sector Regulations .......................................................................................... 23

5.3 Renewable Energy Policy ................................................................................................. 23


Table of Contents


5.4 Algeria, Power Market, Foreign Investment Laws and Regulations ................................... 25

6 Algeria, Power Market, Capacity and Generation Overview ...................................................... 26

6.1 Algeria, Power Market, Cumulative Installed Capacity, 2000–2025 ................................... 26

6.1.1 Installed Capacity by Fuel Type, 2014 ........................................................................... 26

6.1.2 Cumulative Installed Capacity and Annual Generation, 2000–2025 .............................. 27

6.1.3 Cumulative Installed Thermal Power Capacity and Annual Thermal Power Generation,

2000–2025 ................................................................................................................... 30

6.1.4 Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, 2000–

2025 ............................................................................................................................. 34

6.1.5 Cumulative Installed Nuclear Power Capacity and Annual Nuclear Generation, 2000–

2025 ............................................................................................................................. 37

6.1.6 Cumulative Installed Renewable Power Capacity and Annual Renewable Power

Generation, 2000–2025 ................................................................................................ 37

7 Algeria, Power Market, Transmission and Distribution Overview .............................................. 41

7.1 Algeria, Power Market, Transmission Network Overview .................................................. 41

7.2 Algeria, Power Market, Distribution Network Overview ...................................................... 42

7.3 Algeria, Power Market, Grid Interconnection ..................................................................... 43

7.3.1 Interconnection with Tunisia .......................................................................................... 43

7.3.2 Interconnection with Morocco ........................................................................................ 44

7.3.3 Interconnection with Europe .......................................................................................... 44

7.3.4 Electricity Import and Export Trends, 2000–2014 .......................................................... 44

7.4 Algeria, Power Market, Electricity Trading ......................................................................... 46

8 Algeria, Power Market, Competitive Landscape: Snapshot of Leading Power Generating

Companies ............................................................................................................................... 47


Table of Contents


8.1 Key Company in the Algerian Power Market: Sonelgaz Spa ............................................. 47

8.1.1 Sonelgaz Spa, Company Overview ............................................................................... 47

8.1.2 Sonelgaz Spa, Business Description ............................................................................. 47

8.1.3 Sonelgaz Spa, SWOT Analysis ..................................................................................... 49

9 Appendix................................................................................................................................... 53

9.1 Market Definitions ............................................................................................................. 53

9.1.1 Power ............................................................................................................................ 53

9.1.2 Installed Capacity .......................................................................................................... 53

9.1.3 Electricity Generation .................................................................................................... 53

9.1.4 Electricity Consumption ................................................................................................. 53

9.1.5 Thermal Power Plant ..................................................................................................... 53

9.1.6 Hydropower Plant .......................................................................................................... 53

9.1.7 Nuclear Power............................................................................................................... 53

9.1.8 Renewable Energy Resources ...................................................................................... 54

9.2 Abbreviations .................................................................................................................... 55

9.3 Bibliography ...................................................................................................................... 56

9.4 GlobalData’s Methodology ................................................................................................ 57

9.4.1 Coverage ...................................................................................................................... 57

9.4.2 Secondary Research and Analysis ................................................................................ 57

9.4.3 Primary Research and Analysis..................................................................................... 58

9.5 Disclaimer ......................................................................................................................... 59


Table of Contents


1.1 List of Tables

Table 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power

Consumption (TWh), 2000–2020 ................................................................................................. 13

Table 2: Power Market, Algeria, Completed Deals, 2004 to December 2014 ............................................. 17

Table 3: Power Market, Algeria, Annual Power Consumption (TWh), 2000–2025 ...................................... 20

Table 4: Power Market, Algeria, Power Consumption by Sector (%), 2014 ................................................ 21

Table 5: Power Market, Algeria, Wind Energy Feed-in Tariffs, 2014 .......................................................... 24

Table 6: Power Market, Algeria, Solar PV Feed-in Tariffs, 2014................................................................. 25

Table 7: Power Market, Algeria, Cumulative Installed Capacity by Fuel Type (%), 2014 ............................ 26

Table 8: Power Market, Algeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh),

2000–2025 .................................................................................................................................. 29

Table 9: Power Market, Algeria, Leading Thermal Power Plants, 2015 ...................................................... 31

Table 10: Power Market, Algeria, Cumulative Installed Thermal Power Capacity (GW) and Annual Thermal

Power Generation (TWh), 2000–2025 ......................................................................................... 33

Table 11: Power Market, Algeria, Leading Active Hydropower Plants, 2015................................................. 34

Table 12: Power Market, Algeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower

Generation (TWh), 2000–2025 .................................................................................................... 36

Table 13: Power Market, Algeria, Leading Renewable Power Plants, 2015 ................................................. 38

Table 14: Power Market, Algeria, Cumulative Installed Renewable Power Capacity (GW) and Annual

Renewable Power Generation (TWh), 2000–2025 ....................................................................... 40

Table 15: Power Market, Algeria, Transmission Line Length (Ckm), 2000–2020 .......................................... 41

Table 16: Power Market, Algeria, Distribution Line Length (Ckm), 2000–2020 ............................................. 43

Table 17: Power Market, Algeria, Imports and Exports (TWh), 2000–2014 .................................................. 46

Table 18: Power Market, Algeria, Sonelgaz Spa, SWOT Analysis, 2015 ...................................................... 50

Table 19: Abbreviation ................................................................................................................................ 55


Table of Contents


1.2 List of Figures

Figure 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power

Consumption (TWh), 2000–2020 ................................................................................................. 12

Figure 2: Power Market, Algeria, Annual Power Consumption (TWh), 2000–2025 ...................................... 19

Figure 3: Power Market, Algeria, Power Consumption by Sector (%), 2014 ................................................ 21

Figure 4: Power Market, Algeria, Cumulative Installed Capacity by Fuel Type (%), 2014 ............................ 26

Figure 5: Power Market, Algeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh),

2000–2025 .................................................................................................................................. 28

Figure 6: Power Market, Algeria, Cumulative Installed Thermal Power Capacity (GW) and Annual Thermal

Power Generation (TWh), 2000–2025 ......................................................................................... 32

Figure 7: Power Market, Algeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower

Generation (TWh), 2000–2025 .................................................................................................... 35

Figure 8: Power Market, Algeria, Cumulative Installed Renewable Power Capacity (GW) and Annual

Renewable Power Generation (TWh), 2000–2025 ....................................................................... 39

Figure 9: Power Market, Algeria, Imports and Exports (TWh), 2000–2014 .................................................. 45



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 2005. 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 2030. Renewable energy is forecast to constitute XX% of

installed capacity by 2025.



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.


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 2014. 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 2014.

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.


Snapshot


Figure 1: Power Market, Algeria, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), 2000–2020

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Ann

ual p

ower

con

sum

ptio

n (T

Wh)

GD

P ($

bn) a

nd p

opul

atio

n (m

illio

n)

GDP (constant prices) Population Annual power consumption

Source: GlobalData; IMF, 2015



Market Analysis

4.4.1 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

Industrial

Residential

Trade, commerce, and other services

Other

Source: GlobalData

Table 4: Power Market, Algeria, Power Consumption by Sector (%), 2014 Sector Share

Industrial

Residential

Trade, commerce, and other services

Other

Source: GlobalData


Appendix


9 Appendix

9.1 Market Definitions

9.1.1 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.

9.1.2 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.

9.1.3 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).

9.1.4 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).

9.1.5 Thermal Power Plant

A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels.

9.1.6 Hydropower Plant

A hydropower plant is a plant in which the turbine generators are driven by falling water.

9.1.7 Nuclear Power

Nuclear power is the energy released from the fission of nuclear fuel in a reactor.


Appendix


9.1.8 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.


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


Appendix


9.3 Bibliography

AUPTDE (2013). Statistical Bulletin 2013, Issue 22. Arab Union of Electricity. Available from:

http://www.auptde.org/Article_Files/2013.pdf

BP Statistical Review, 2015. BP Statistical Review of World Energy June 2015 [database].

Available from: http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-

review-of-world-energy.html [Accessed on June 10, 2015].

CIA (2015). Algeria: The World Factbook. Central Intelligence Agency. Available from:

https://www.cia.gov/library/publications/the-world-factbook/geos/ag.html [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:

http://faolex.fao.org/docs/pdf/alg133899.pdf

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:

http://faolex.fao.org/docs/pdf/alg133907.pdf

Dodd J. (2015). “Algeria sets 5GW target for 2030”. Windpower Monthly, March 13, 2015.

Available from: http://www.windpowermonthly.com/article/1338069/algeria-sets-5gw-target-

2030 [Accessed on June 8, 2015]

EIA (2014). Country Analysis Brief: Algeria. US Energy Information Administration. Available

from: http://www.eia.gov/beta/international/analysis_includes/countries_long/Algeria/algeria.pdf

IMF, 2015. International Monetary Fund, World Economic Outlook Database, April 2015

[database]. Available from:

http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/weoselco.aspx?g=2001&sg=All+coun

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:


Appendix


http://www.oxfordbusinessgroup.com/analysis/powering-ahead-capacity-increases-are-set-

help-country-deal-rising-demand [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:

http://www.oxfordbusinessgroup.com/analysis/prodigal-sun-renewables-have-huge-potential-

domestic-use-and-possibly-export [Accessed on June 10, 2015]

World Bank (2015). Ease of Doing Business in Algeria. The World Bank. Available from:

http://www.doingbusiness.org/data/exploreeconomies/algeria/ [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 (www.mrs.org.uk) and

Strategic and Competitive Intelligence Professionals (www.scip.org).

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.

9.4.1 Coverage

This report covers the Algerian power market, examining the market structure and providing

historical generation, capacity and consumption forecasts until 2025. It also looks at the market’s

regulatory structure, import and export trends, competitive landscape and leading active and

upcoming power projects.

9.4.2 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


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

9.4.3 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,


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.

Documents

ALGERIA POWER MARKET OUTLOOK TO 2025, … · reference code gdpe0796icr | publication date july 2015 algeria power market outlook to 2025, update 2015 – market trends, regulations,