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Algeria Energy Transition

Alternative Energies – Benchmark, differential and local content

Mouloud Bakli – Tell Group

November 2016

Algeria Solar Energy – November 2016 2

Sustained growth of the PV globally

The Algerian renewable opportunity

Zoom on PV manufacturing value chain

Recommendation and possible options for differentiation


A PLANE CAN FLY WITH SOLAR PANELS

MOST IMPORTANT NEWS OF YEAR? SOLAR IMPULSE JUST FINISHED WORLD TOUR, IT WAS IN ALGERIA JULY 2016


> 256 GWpCumulative PV

installation by 2015

> 15% CAGR of annual

installation 2014-20

-18% 2015 solar PV

electricity cost ($/MWh)

One nuclear reactor ~ 0.5~1 GW

120 country

reached parity

Source: BNEF, WBL-EL

Best

10%

Low

7 8

18

29 31

38

45

56

6570

79

88

100

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f

57 GW in 2015, 64 GW in 2016f

FASTEST RENEWABLE ENERGY GROWTH

SUSTAINED AND CONFIRMED GROWTH IN END MARKET FASTEST RENEWABLE ENERGY GROWTH

PV GLOBAL INSTALLATION


30

35

40

45

50

55

60

65

70

75

80

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f

Forecasted Electric Consumption (2013-2024, en TWh)

Intraday Power Consumption (in MWh)

Source: Industry, Tell Group

ALGERIA ELECTRIC CONSUMPTION

A GROWING DEMANDE OF 10 THW EVERY 4 YEARS

Electric consumption in Algeria is expected to

exceed the threshold of 50 TWh in 2017 after

overpassing the of 40 TWh bar in 2013 which

represents an increase of almost 20% in 4 years.

However, the electric consumption per capita is still

at 1260 KWh per year where the worldwide

average is at 3100 kWh

Supported by the household growing demand,

more precisely the demand on white goods’

utilization, the electric consumption will continue

to grow and is expected to reach 60 TWh by 2020

and 70 TWh by 2023

The fast industrial development mixed with

increasing production capacity of the main

strategic sectors (Oil and Gas, metallurgy, heavy

industries,,) risk to further pressure Sonelgaz’s

capacity to provide the needed electricity

The weather conditions have a clear impact on the

electric consumption demonstrating high demand

pics in the summer days


Sonelgaz electricity production reached to 64.7 TWh in

2015, up 6.9% compared to 2014

The main power generation sources were are thermal

centers and steam turbines fueled by gas

Thermal centers absorb 49% of the natural gas transit in

Algeria. In 2015, thermal centers consumed a volume of

17bn m3 in gas

Electric production structure (Sonelgaz, 2015)

Gas turbines

56%Steam

turbines

14%

others

30%

Natural Gas transit (2015)Evolution of production (interconnected north network 1997-2025, in GWh)

1997 20252020201520102000

150 000

0

100 000

50 000

Low Scenario

111 504 GWh

High Scenario

146 843 GWh

1997

20 957 GWh


ALGERIA’S ELECTRICITY GENERATION

CONVENTIONAL THERMAL ELECTRICITY DEPENDENCY

Natural Gas transit (2015)



Thermal Plants

49%

Public

distribution

30%

Sonatrach

clients

11%

Industrials

10%



Algeria plans to generate 22GW of clean energy by 2030

Solar will be the largest source of clean energy production as it would account for 60% of the total 2030 targets

1st Phase (2015-2020) 2nd Phase (2021-2030)

Biomass 360 640

CSP 0 2000

Wind 500 4500

PV 5000 9575

0

5000

10000

15000

In M

W

4000

Solar

60%

Initial Renewable Energy Plan

Solar CSP

Solar PV

Wind

Biomass

13,5 GW

2 GW

5 GW

1 GW

2030 Targets

22 GW

ALGERIAN RNE PROGRAM 2030 SOLAR POWER TO PRODUCE 13.5GW OF ELECTRICITY

New Renewable Energy Program Phasing


AFRICA SOLAR ENERGY DEVELOPMENT

NO. 2 IN THE TOP 50 SOLAR PV PLANTS

Solar Energy Capacité: 343 MW

Djanet (illizi) 3 MW

Adrar (Adrar) 20 MW

Kaberten (Adrar)3 MW

(Tamanrasset) 13 MW

Tindouf9 MW

Aoulef (Adrar) 5 MW

Z.Kounta (Adrar) 6 MW

Timimoune (Adrar) 9 MW

Reggane (Adrar) 5 MW

In Salah (Tamanrasset) 5 MW

Ain Albel (Djelfa)20 MW

Telagh (Sidi-Bel-Abbes

12 MW

Sedrate Leghzel(Naama) 20 MW

Ain Skhouna (Saïda) 30 MW

El Khnag (Laghouat) 20 MW

Oued El Kebrit(Souk Ahras)

15 MW

Aïn Al Bel (Djelfa) 33 MW

Laghouat 40 MW

Oued El Ma (Batna) 2 MW

(El Bayadh) 23 MW

Aïn El Melh (M'sila) 20 MW

El Hedjira (Ouargla) 30 MW

1500 kWh/m²/y

1800 kWh/m²/y

2200 kWh/m²/y

2600 kWh/m²/y

Average solar energy of 5.70 kWh/m2/day

Solar potential of about 170,000 TWh/year


SOLAR PV

VALUE CHAIN REVIEW AND CONTRIBUTIONM

od

ule

PV

WafersPolysilicon Cells Modules

Inst

alla

tio

n /

Bo

S

FeedstockBy-product

production Transformation Assembling

Technical

StudiesInvertersRacking /

MountingEPC

Civil

Engineering

Operations

Management

Development

IPP

Installations of solar equipment account for about 60% of the total value chain of the photovoltaic industry

Value Contribution

(% of equipment cost)

Sector

Sector

28% 19% 19% 34%


SOLAR PV VALUE CHAIN

ANALYSIS OF PV EQUIPMENT SEGMENTS

Elements Attractiveness

Polysilicon Highly capital and energy intensive. Oversupplied worldwide. Difficult to be competitive

Wafers Strong and attractive development potential (especially for type N& Low cost) but transfer of

technology or acquisition is required

Cells Medium potential unless high capacity developed to benefit from economies of scales.

Technological progress (particularly for the PV bifacial), differentiation opportunity

Modules Strong potential but this market is dependent on customs policies (panels imports) however

we can add Glass-Glass opportunity and Coating on glass for dust mitigation

Comments


Illustration Module cost breakdown

Source: Bloomberg, Tell group

Source: Electricity forum

PV Cellule

PV Module

PV Panel

It’s the last step to obtain a final

product called the “PV Module”, where

cells are assembled and electrically

connected

There are various types of modules,

depending on the final usage

The final product includes 60 - 70 cells, with peak power

of 250 to 330wc/module

Prices for modules have significantly decreased from

~$1/Wc in 2010 to less than $0.5/Wc in 2016

45 46 47 47 48 49

53

59 58 5760 60 59

57

Hanwha JA Solar Jinko CanadianSolar

Trina Renesola Yingli

Blended cost ASP

Module prices in USD/ W (2015)

Other material cost 35%

Cell Cost 65%

PV MODULES

SEGMENT REVIEW


SOLAR PV BARRIERS TO ENTRY

BOS AND MODULES ARE THE MOST ACCESSIBLE SEGMENTS

Module assembly

Technical

know-how

required

High

Low High

Low

Barriers to entry

bubbles size represents

capital intensity

Polysilicon

manufacturing

More difficult

markets to enter

Cells manufacturing

EPCIPP

Mounting structure

manufacturing

O&MComponents wholesale


2015 2020 2030

1st Phase

Installation of 4GW2nd Phase : Installation of 10.5GW

Mounting /

RackingOPC

Developmen

t IPP

O&MInvertersTechnical

Studies

PolysiliconWafersCellsModules

Development of equipment manufacturing industriesDevelopment of Modules andBoS activities

SOLAR PHOTOVOLTAIC DEVELOPMENT

TARGETS AND INDUSTRIAL OPPORTUNITIES


LOCAL CONTENT CASE STUDY AND BENCHMARKING

SOUTH AFRICA – LEADER OF SOLAR ENERGY IN THE CONTINENT

Round 1 Round 2 Round 3

Technology Threshold Target Threshold Target Threshold Target

Wind 25% 45% 25% 60% 40% 65%

Solar PV 35% 50% 35% 60% 45% 65%

Solar CSP (without storage) 35% 50% 35% 60% 45% 65%

Solar CSP (with storage) 25% 45% 25% 60% 40% 65%

Average local content percentage is calculated as follows: total local content / total tender value (net of exempted imported content)

Local content

definition

Requirements

threshold and

target

Local content targets as % of total tender value

Local content

calculation

Under RE IPPPP, local content is defined as “the total costs attributed to the project at the commercial operation date, excluding

finance charges, land and mobilisation fees of the operations contractor”

Total local content is calculated as follows:

(+) Total local products (goods, services and works)

(+) Manpower costs (only to the tenderer and not to the suppliers)

(+) Factory overheads

(+) Administration overheads


COST

JOB

SAVINGS

Grid parity in 120 countries

Engine for growth: 40 jobs per MW

Further cost reduction: Bifacial, Coatings on glass (dust mitigation), Back side passivations…

+30% is realistic

Substantial savingOil&Gas Ener

15

2

3

4INNOVATION

LOCALCONTENTMANUF

KEY TAKE AWAY


ARC COATING ENGINEERING

• AntiRelective Arc on Glass

• Makes panel dust and water repelling

• Strongly hydrophobic

• + 3% Efficiency

• +5% Yield

• Tested by ENEL/3Sun

• Qualified by Yingli

SOLAR TECHNOLOGY OPTIONS

EXAMPLE OF 2 KEY DIFFERENTIATORS TO IMPROVE HARVESTING YIELD

BIFACIAL TECHNOLOGY

• Produces Energy from both sides

• < 15% Cost + at cell level

• =>+20-40% More Yield

• Chinese late on this option

• Leaders are US/European

Uncoated GlassEnki CleanARC® Coating

EDF –EN currently installing 90MW bifacial in Mexico


Higher power generation (10% to 35% more)

Broader peak energy generation during the day,

More installation options to optimize power gains

Lower module costs in Wp and lower system costs per kWh

Higher return of investment

Can use smaller land area

BI FACIAL TECHNOLOGY

CONVERTING LIGHT ENERGY LANDING ON BOTH SURFACES

Bifacial gain up to 30% in

the bifacial belt for vertical

E/W orientation

20% add-up gain due to

reduced soiling/sands on

vertical modules

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Criteria for Site Selection in Algeria Comments / Impact

Availability and Quality of solar radiation Amount of incident solar radiation and cloudiness kWh/m2 /day

Availability of vacant land Vacant land for its present as well as for its future development

Accessibility from national highways Transportation cost / Logistic

Distance from existing transmission line Distance from transmission lines to minimize losses

Variation in local climateSolar PV panels degrades with increasing temperatures, i.e. works best within 25C-45C. High wind velocity, extreme

temperatures, shadow on modules, dusting arrays... are to be avoided.

Use of nearby land Auxiliary facilities

Topography of site Flat or slightly south facing slopes

Geotechnical issues / nature of the landConsideration of groundwater resistivity, soil load bearing, pH levels, Old Salt lakes…) and seismic risk are important

criteria...(impact studies…)

Geotechnical political issues Site near sensitive military zones, and historical places should be avoided

Module soiling / dust managementEfficiency of plant could be reduced significantly if modules are soiled / The criteria should include dust particles from traffic,

building activity, agricultural activity or dust storms and module soiling from bird excreta.

Site identification map

ALGERIA SOLAR ENERGY OPTIMIZATION

SITE SELECTION TECHNOLOGY

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