CONFERENCE ENERGY SECURITY IN MOROCCO : SITUATION AND OUTLOOK MOHAMMED TAWFIK MOULINE DIRECTOR OF THE ROYAL INSTITUTE FO

1. CONFERENCE ENERGY SECURITY IN MOROCCO : SITUATION AND OUTLOOK MOHAMMED TAWFIK MOULINE DIRECTOR OF THE ROYAL INSTITUTE FOR STRATEGIC STUDIES - MOROCCO BEIJING, March 6th, 2012 Energy Research Institute

2. SUMMARY A national energy situation characterized by a strong external dependence and a significant increase in energy demand 1 Important assets to mobilize to meet the country’s energy needs 2 A new national energy strategy giving the priority to the development of renewable energies and the promotion of energy efficiency 3 The Moroccan Solar Plan : a strategic project to ensure the country’s energy independence 4

3. 1. A national energy situation characterized by a strong external dependence and a significant increase in energy demand

4. A strongenergydependence • A strongenergydependence : 93% to 97% of Morocco’senergydemanddepends on imports : only hydropower and renewable energy (wind and solar) are produced locally. Source : Ministry of energy, mining water and environment

5. A weaklydiversifiedenergy mix • Currently, energy diversification is insufficient because the share of oil and coal remains predominant (83.5%).In 1980, the oil’ssharewas83%. Source : Ministry of energy, mining water and environment

6. An energy bill with high impact on public finances and balance of payments • As a function of fluctuations in world energy prices, the energy bill is high and reached 66 billion dirhams(RMB 49,6 billion) in 2010. It significantly affects Morocco’s balance of trade (191 export days in 2011) as well as the state budget through the subsidies allocated by the compensation fund. Source : Currency exchange office, Ministry of energy, mining water and environment, HCP

7. High growth of energy demand in recent years ... • The energy sector in Morocco is characterized by a sustained growth in demand (the demand for electricity has increased at a rate of around 8% between 2003 and 2007, whereas this rate was at a level of 6% between 1997 and 2002). This growth in energy demand is expected to accelerate given the requirements of both economic growth and social transition (rapid urbanization and changing lifestyle),  especially as the current energy consumption per capita is low (compared to developing countries). Evolution of the energyconsumption Source : Ministry of energy, mining water and environment

8. … accompanied with the widespread access to electricity and the adoption of new consumption patterns • Morocco is one of the African countries where rural electrification is the most advanced in spite of strong economic and geographic constraints: dispersed settlement, unprofitable network expansion, etc.. Rural Electrification rate (RET) RET Source : Ministry of energy, mining water and environment

9. An acceleration of thisuptrend by 2030 PROSPECT ON ELECTRICITY DEMAND (Evolution of the consumption and the power demand 2008-2030) Baseline Scenario Disruptive Scenario Consumption(En 100 = 24 TWH)* • The national consumptionwillbemultiplied by at least four and atmost by 6 between 2007 and 2030 • The maximum power demandcanthenbeestimatedaround 12 000 and 20 000 MW • Production ismultiplied by 3,5 Power consumption(En 100=4240 MW) 471.7 235.8 283 141.5 200.4 Source : Ministry of energy, mining water and environment 100 129.7

10. 2. Important assets to mobilize to meet the country’s energy needs

11. >6 m/s > 5,5 kWh/m² 5-6 m/s 5,3 à 5,5 kWh/m² 4-5 m/s 5,0 à 5,3 kWh/m² 3-4 m/s 4,7 à 5,0 kWh/m² <3 m/s < 4,5 kWh/m² Inconnu don’t potentiel offshore However, the Moroccan energy sector has many assets including the wind and solar potential Considerablewindresources Considerablesolarresources • A wind energy potential of 6,000 MW at the sites studied (1.5 times the peak demand),estimated at around 25,000 MW on the whole territory (well above the Spanish potential) • Extensive distribution throughout the territory allowing the supply of remote areas that are not interconnected with the network • With more than 3000 h/​​year of sunshine, meaning an irradiation of ~ 5 kWh/m2/year, Morocco enjoys a considerable solar resource (equivalent to the Southern Europe average) • This potential is particularly important in areas that are badly-served in terms of network and electric production capacity . Very Optimal Cost (9% below the cost of reference)

12. Energy resources that can be mobilized in the medium and long term (oil shale and uranium extracted from phosphate) A considerablefielddespite an averagequality Importance of provenreserves and location • Moroccoranks 6th in terms of oil shale (50 billions barils) after the USA, Russia, Brazil, the DemocraticRepublic of Congo and Italy. • The 1973 and 1979 oilshockseventuallyled to the devlopement of oil shale. In the mid 1980s, the research to promoteoil shale wasstopped (the pyrolysisprocessisunnaturaland the drop in oilprices). Recently, a model factory has been built in Tarfaya to explore a new technology. • More than 100 billion tons of proven reserves in an area of ​​2200 km2 between:- Tarfaya (86 billion tons)- Timahdit (18 billion tons) • Open-pit reserves with a relatively low cost of extraction10 deposits identified including 2 extensively explored : Timahdit (250 km south of Rabat) and Tarfaya (200 km south of Tan Tan) both being open-pit reserves 37 milliards T 6. Essaouira 7. Bassin du Souss 8. Bassin du Oued Dades 9. Tarfaya 10. Bassin du Guir 1 1. Tanger 2. Timahdit 3. Bassin d’Ait Oufella 4. Bassin du Haut Moulouya 5. Bassin Bahira Tadla 2 3 5 10 4 6 8 7 9 Historique • Considerable proven reserves, but still limited investigation of their potential as fuel for electricity production • Relatively average calorific quality of Moroccan shale  (best in Timahdit) because of its low oil concentration and important humidity. Nevertheless outcrop near the coast where the extraction and transportation costs are relatively low

13. Energy resources that can be mobilized in the medium and long term (oil shale and uranium extracted from phosphate)

14. Insufficiency of oil prospection • The on and off-shore oilfields are underexplored : • Only 290 on and off-shore exploratoryoilwells • 350 000 km² offshore; withonly 34 drilledwells • Averagedensity of exploratorydrillings • Morocco: 0, 04 Wells / 100 Km² • International level : 10 wells/ 100 Km² • Deficit of + 7000 wells Map of sedimentary basins in the NorthAfricanregion ONHYM

15. Energyefficiency is another opportunity whichisbeingpromoted • The energy savings potential was estimated at 13% in 2010 and 23% in 2020 to mainly operateat the industry, transport and building. Source : Ministère de l’Energie, des Mines, de l’Eau et de l’Environnement

16. Une position géographique stratégique • Morocco can benefit from its strategic position to assume the role of an international electric platform both as a supplier and a bridge between Europe and the countries of the southern Mediterranean. The advanced status of Morocco with the European Union will enable faster integration into the European market.Moreover, Morocco will be able to seize several opportunities thanks to its location in the Mediterranean which holds about 30% of world oil trade. In this respect, Morocco has put in place an oil terminal in ”Tangier Med” port platform, a major facility which provides the country with a large oil gate on the Strait of Gibraltar  (500,000 m3)

17. 3. A new national energy strategy to cope with energy dependence by developing renewable energies and promoting energy efficiency

18. Goals of the national energystrategy • To address the issues previouslypresented, Moroccoset up in 2009 a new energystrategy, encouragedat the highestlevel of the State. The assignedobjectives are : • Securing national energy supply in order to avoid that energy dependency becomes an obstacle for the Kingdom’s development. • Generalizing access to energy to the whole population, in accordance with the main national objectives of human development. • Acting for the preservation of the environment by integrating the energy issues into the framework of sustainable development through the use of renewable energy and energy efficiency. • Maximizing the opportunities offered to Morocco regarding regional integration on the basis of the energy-related geostrategic evolutions, which occur in the Mediterranean and Africa.

19. Orientations of the new national energystrategy • The new energystrategyisbased on four major orientations : • A diverse and optimized energy mix based on reliable and competitive technology choices • The mobilization of national resources by the rise of renewable energies (2 GW solar, 2 GW windpower, 2 GW waterpower) • Energy efficiency established as a national priority • Regional integration through the strengthening of the regional cooperation

20. An institutional upgrade to accompany the implementation of the new strategy

21. 4. The Moroccan Solar Plan : a strategic project to ensure the country’s energy independence

22. Focus on the MoroccanSolar Plan The integratedSolarenergy program, whichamounts to an estimatedcost of $9 billion, aimsat setting up a facilitywith a production capacity of 2000 MW. The solar plants willconsist of a network of 5 interconnected sites by 2020. The installation of these plants willallow to save 1 million tons of oilequivalent (toe) and avoid the emission of more than 3,5 million tons per year of carbon dioxyde. The integratedsolarenergy program is in line with international priorities. To address the increasingenergydemand and global warming, Moroccoputs a strongemphasis on renewableenergy and more particularlysolarenergy. Moroccointends to becomea major player in the solarenergysector and to acquire a competitiveindustry in thisfield.

23. Morocco’sassets to makeitssolar plan succeed • Morocco’sassets to makeitssolar ambitions become a reality are: • A strongsolar radiation. Carlo Rubbia, a physics Nobel prize winner said: « It rainseachyear in the Sahara Desert the equivalent of one oil barrel per square meter ».Morocco’s production capacitywillcomplete the European exports regarding the seasonaldifferences in solar radiation. • The geographicproximity to Europe and the opportunitiesoffered in terms of European energy market integration. In addition, integration would be facilitated by the strengthening of the existing electrical interconnection. • Available and unexpensive land for a large-scaled installation of solarenergycollectors. • A competitivecost of the workforceat the regionallevel. • And a strongexperience in directing and implementing in projects of large scope.

24. The challenges thatMoroccomust take up to makeitsolar plan successful • The challenges thatMorocco must take up to makeitsolar plan successfulrepresentsseveralopportunities for cooperationwith China : • To succeedindustrialintegration, • To master the technology, • To attractcompetitive and innovativefunding.

25. Achievingindustrialintegration • Industrial integration of the energy strategy can be achieved through the involvement of the Moroccan industrial sector. The completion of the necessary equipment for solar/wind farms and / or hybrid is a significant opportunity to seize in order to provide Morocco with a competitive manufacturing platform in this area. • The opportunities in terms of industrial integration are all the more diverse that the production technologies of renewable energies can be exploited in a variety of hybridization patterns and intelligent coupling (hydrogen production, water desalination ...). • For this purpose, Morocco must choose a newer and larger energy paradigm that consists in an ''energy system'‘ that encompasses the energy sector (supply), but also the energy consumption (demand) and other related products (hybridization), to obtain an optimized service in terms of energy resources, economic and social costs and protection of the local and global environment. With this paradigm shift, we should witness the birth of industrial projects using, of course, renewable energies, but not exclusively designed for electricity production

26. Mastering the technology • The sustained pace of the development of production technologies related to renewable energies makes it complex to plan out an optimal choice : There is a need for a permanent technology watch in this field. • In this regard, Morocco should have a national scientific research in line with the country’s energy strategy, working closely with the industry and open to international scientific collaboration with all the relevant actors including China. • This research should be focused on emerging technologies in the field of water desalination and solar hydrogen production.

27. FinancingMorocco’sambitiousprojects in terms of renewableenergies • The Moroccan government has chosento support to renewable energy based on the competitivenessof all the available technologies and to foster competition between multiple operators through international tenders • For solar energy, the State has to subsidize the gap between the production cost of solar energy and the purchase price for the ONE (The Moroccan National Electricity Supplier). Wind energy is already in a profitable economic scheme and is developed today in Morocco by the private sector. • Morocco is on the lookout for all existing funding opportunities at the international level (loans at concessional rates, financing for the fight against climate change, etc..)

28. Milestones of the MoroccanSolar Plan • The initial stage of the Ouarzazate’s first plant (125 to 160 MW) iswelladvancedwith a selectionprocess of the project manager in compliancewith international standards. Thoughatitstechnical stage, thisprocessalreadyreceives a promisingcommitmentfrom the differentshortlistedactors, as well as a fundingthatissynchronizedwith the set timeframe. • MASEN’s Ouarzazate project has indeedattractedsome 200 calls for interest in reply the tender thatwas open from March 30th to May 24th, 2010. 19 international groups have been shortlisted to buildOuarzazate’s plant, amongwhichAlstomand Veolia throuhgtheirMoroccan divisions. • During the Durban Summit, the World Bank has approvedloansamounting to $297million, aimedathelpingMorocco finance Ouarzazate’ssolar concentration plant.

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