Algerian 150 MW solar tender concludes with final price of $0.069/kWh, but only a third of capacity assigned

The Algerian Electricity and Gas Regulation Commission has concluded a tender launched in November. The only selected 50 MW solar project will sell power at $0.069/kWh. The authority had shortlisted only eight projects, with a total 90 MW of generation capacity, for the final phase of the procurement.

The Algerian Electricity and Gas Regulation Commission (CREG) has selected only one 50 MW solar project in a tender intended to secure 150 MW of generation capacity across several power plants in the southwest of the country. The procurement exercise began in November.

Malek Drif, co-founder of Africa-focused renewables firm Al-Michkat Renewable Energy, told pv magazine CREG had pre-qualified 93 bidders for the tender but shortlisted only eight in June. Of the shortlisted bidders only five made it to the tender’s final phase and only one was awarded a power purchase agreement, said Drif.

The sole successful project was submitted by the consortium Power Generation, of which Algerian module manufacturer is the largest shareholder, for the 50 MW portion of the available generation capacity allocated in the Biskra region, and will sell power at DZD8.28/kWh ($0.069/kWh).

CREG had set a ceiling price of DZD10.24/kWh for the Biskra allocation. The Ghardaïa region, which was set to have 50 MW of new solar, should have paid no more than DZD10.8/kWh and Ouargla’s planned 30 MW should have supplied solar electricity for no more than DZD11.16. The region of El Oued was set to see 10 MW facilities established at each of Tendala and Nakhla but no ceiling price has been disclosed for those allocations.

High failure rate

With 92 project bids having fallen by the wayside, Drif said many were unable to provide sufficient documentation for the bank guarantees but added the tender information provided by CREG and state-owned power and gas company Sonelgaz was not clear enough. The project developer also blamed the requirement for bidders to work with Algerian engineering, procurement and construction services firms with international experience, while also stressing that the domestic content requirements embedded in the tender played an important role in exercise’s partial failure. According to him, the Algerian solar manufacturing industry has currently limited capacity to provide the required components and help developers reduce project costs.

British investment firm Renewable Energy Partner, which has been active in Algeria since 2013, criticized the tender. “Although disappointing, this outcome was highly anticipated,” a company representative told pv magazine. “A lot of developers, like us, decided not to participate in the tender in the end for various reasons, which meant that a lot of bids were submitted in the first place [but not followed through]. Our advice to the authorities would be to analyze what went wrong and correct them for future [procurement] rounds.”

Algerian solar energy analyst Moloud Bakli told pv magazine one of the reasons of the tender’s outcome was the fact that the ceiling prices were revealed on the same day in which the exercise was finalized. He also estimated that the winning project may have a payback period of up to 15 years. Furthermore, he said offered prices were particularly high compared to those of similar tenders held in North African countries, due to the high costs solar developers have to face in Algeria for civil engineering and logistics.

The Algerian government approved the exercise, as well as a 50 MW tender for the development of off-grid hybrid gas-diesel and solar projects, in early June. Both tenders are part of the country’s plan to deploy 22 GW of renewables generation capacity by 2030, including 13.6 GW of solar.

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