From humble beginnings the potential to reach, not only for components with low entry barriers, but also the more specialist, high-value ones too, seems better than ever before.

By Alison Ebbage

Construction of the 160 MW Noor 1 CSP plant is well underway. The government is currently seeking to award a contract for construction of a second plant at Ouarzazate which, includes two projects: a 200 MW parabolic trough plant (Noor II) and a 100 MW central tower plant (Noor III).

The overriding Moroccan Solar Plan aims to generate 2GW of solar by the year 2020 and the next few years will see further rounds of development; 400 MW to be commissioned in Ain Beni Mathar in 2016, 500 MW to be commissioned in Foum Al Ouad in 2017, 500 MW to be commissioned in Boujdour in 2018 and in 2019 100 MW to be commissioned in Sebkha Tah.

Local manufacture
But what of local component manufacture within that mix? During tendering for the first phase MASEN looked for a local content of around 30% and the winning bidder, Saudi firm ACWA Power, actively factored in local content in order to bring down its price by close to 30% compared to the next cheapest bidder.

Under the Moroccan Solar Plan, the calls for tenders stipulated local content as a key requirement in the evaluation of bids. The 160MW CSP plant near Ouarzazate in Morocco (Noor I), awarded to ACWA Power, includes a 42% local content portion. According to the 2014 edition of the CSP Today Markets Report, this strategy is enabling developers in Morocco to reduce costs and lower the final tariff at which they bid. As a general overview, the expectation is that in the near future, a wider percentage of components and work will be available through local suppliers

In 2012 a study by ESMAP (The Energy Sector Management Assistance Programme), found that sufficient capacity already existed and could bring immediate gains to local manufacturers. It stated that by 2015 Moroccan firms could potentially be producing 30% of the components required to generate the country’s CSP, and that this could rise to 60% by 2025.
Alexis Gazzo, partner at Ernst & Young comments: “There is no escaping the key motivation that the CSP industry can add hugely to GDP. But any industrial plan to up local capacity now needs to be a part of a broader, centralised push from national and regional governments to make this happen.”

He thinks that the region, and especially Morocco holds a distinct advantage in that not only is the expertise already present in certain industries, but that its cost is not prohibitive.
The know-how and expertise to produce certain, non-CSP specific components like metals, cabling and electrical devices already exists with the presence of the automobile and aeronautical industries. The question mark is not about ability, it is about production capacity.

But CSP-specific components are a different matter.
Gazzo comments: “Things like metals are not CSP specific, they have a low barrier to entry because it is more about tweaking existing industries. But more CSP- specific components like receivers and mirrors will need a clear market and tougher volumes to justify the creation of an entire new industry.”

Leith Al-Ali, trainee solicitor at Eversheds, adds: “It will be important to grow the supply chain locally but in a sustainable way i.e. one which allows this to evolve so that it is bankable, which can take time.”

Regional potential
Regional potential is also good and the ESMAP report was optimistic saying that most CSP components could potentially be manufactured throughout the region as a whole. In practise regional industrial integration would mean localised manufacturing and lower export costs as well as the potential for regional collaboration to develop new technologies and transfer knowledge and experience.

Crucially regional networks would also help to build and sustain critical mass.
Gazzo comments: “Having regional as well as local markets means that volumes are higher and that the whole process is less risky from a business viewpoint. For example with something like the highly energy intensive production of mirrors for towers then a country with low energy costs like Saudi would be ideal. Egypt can make float glass, as can Algeria with its abundant natural gas supplies.”

The second stage of development in Morocco should send a clear signal as to the government’s intentions when it comes to local component manufacture.

The next year or so will be crucial. As discussed in the 2014 CSP Today Markets Report. a number of educational, training and research institutions have already been set up in Morocco to help facilitate the creation of local expertise within the renewable sector. This is includes the National Agency for Renewable Energy and Energy Efficiency which provides training plus research and development, L’Institut de Researche en Energie Solaire et en Energies Nouvelles -primarily dedicated to research in solar with the aim of creating synergies between universities and industrial partners. The Societe d’Investissement Energetique meanwhile is involved in investing in key renewables projects.

And having a critical mass of CSP installations will create the potential for local manufacture but whether there will be an actual requirement for it within the tender document is unclear - cost implications of local manufacture may be less but Spanish or German suppliers are proven and reliable.

Al-Ali comments: “Policy deployment and target-setting need to be actively enforced to drive local manufacturing and bring about bankable projects that contribute positively to the country’s macro-economic situation. Continued government investment in human capital is also needed in order to help build a renewable energy knowledge base within the country and ensure that maximum local content requirements are adhered to by project bidders.”

To comment on this article contact the author, Alison Ebbage

Or write to the editor, Jennifer Muirhead