Algeria-Morocco Business Dialogue: The Renewable Energy Sector

News | December 22, 2020

On December 16, the EastWest Institute (EWI), together with its partners at the German Chambers of Commerce in Algiers and Casablanca (AHKs), held a webinar entitled “The Renewable Energy Sector: Challenges and Opportunities for Cooperation”—the concluding event in a series of virtual meetings that have formed the backbone of EWI’s Algeria-Morocco Business Dialogue. The webinar brought together five business leaders, three Algerian and two Moroccan, to take part in a cross-border business dialogue aiming to promote greater economic connectivity between the two countries in the renewable energy sector.

The Renewable Energy Sector 

The energy sector is one of the few industries where Algeria and Morocco enjoy some degree of economic cooperation. According to the latest figures of the Observatory of Economic Complexity (2018), almost 90 percent (approximately 622 million USD) of Algeria’s total exports to Morocco came in the form of petroleum gas and refined petroleum. Despite these numbers being a vast improvement in comparison with trade in other sectors between the two countries, these figures remain dwarfed by the sums both Algeria and Morocco trade with third parties in Europe and beyond. 

The renewable energy sector, however, represents a more sustainable and environmentally friendly means for both countries to pursue new avenues of economic cooperation, both with one another and in their respective trade relations beyond the Maghreb, particularly towards Europe. Unlike other countries in the Middle East and North Africa region, Morocco is a net importer of energy, relying on imports for almost 90 percent of its energy needs. Algeria, on the other hand, desperately needs to identify more sustainable means to wean itself off oil and gas exports and diversify its economy. 

Governments in Algiers and Rabat have proposed ambitious plans to harness green energy, which they share across several sources: wind, solar, hydro and geothermal. Yet, there remain significant divergences in their respective accomplishments in this regard with Algeria failing to meet its self-imposed targets to harness wind energy and Morocco beginning to gain international recognition for its commitment to source 52 percent of its electricity needs from renewable energies.

Local Experience

Webinar participants provided astute insights as to the situation on the ground in Algeria and Morocco in terms of successes and failures when it came to their own and government initiatives in renewable energies and energy consumption. A common problem shared by entrepreneurs in the sector on either side of the border is the inability to connect their products to the national electricity grid. 

According to participants, some solar energy in the region is connected to the national grids, however, there remains a lot of room for improvement given the potential in the market and the necessity to become less reliant on non-renewables sources of energy. Currently, participant initiatives include the installation of solar pumping systems for farmers who often experience issues with power shortages, while others provide electricity to individuals in isolated areas. However, the inability to connect to the national grids means entrepreneurs are unable to transfer surplus energy reserves. 

Nevertheless, despite these challenges, participants pointed out the complementarity between Algeria and Morocco in terms of knowledge and expertise and proceeded to highlight several means by which they could exchange competencies. Algeria could learn from Morocco’s proficiency in financial access and institutionalization given the lack of cooperation amongst several ministries in Algiers. At the same time, Algeria is more adept at injections of renewable energy and more advanced in terms of marketing and distribution of renewable energy than its neighbor. Furthermore, both countries could also learn from their regional neighbor Tunisia in terms of developing appropriate regulations for market development. With these ideas and insights in mind, EWI, the AHKs in Algiers and Casablanca, and the participants developed the following policy recommendations. 

Recommendations 

Utilize hybrid energy systems to combine current energy infrastructure with the renewable energy sector. Algeria already has some experience with hybrid energy systems, which are fully convergent, making them useful for cross-border cooperation. Both countries need to develop reliable electricity supplies, which could be achieved via hybridization by combining biogas and solar power. 

Revitalize the DESERTEC project by developing new models to address drawbacks that jeopardized initial enthusiasm for the initiative. Originally envisioned to harness the Sahara’s vast solar energy to produce electricity to meet local and European needs, the project still offers a viable avenue for Algeria and Morocco to develop a large, multinational project, which cannot only meet their own energy needs, but diversify sources of income.  

Offer tax or customs exemptions to locally made goods originating from the region. This could address two of the main issues that have resurfaced throughout the project. It would enable Algerian or Moroccan goods to enter each other’s market, while enabling their local consumers to gain an understanding of the products available across the border. In turn, this would address the purveying lack of trust in Arab or Maghreb-made products in both countries’ respective markets. 

Unify market operators in the renewable energy sector so that they cooperate and act in unison in their efforts to influence and lobby local governments. Again, this policy requires a two-pronged strategy targeting local decision-making and cross-border cooperation, which can then be used in negotiations with third-party stakeholders, particularly Europe. 

Pool resources to target the European market. The EU’s objective to drastically reduce carbon emissions in the bloc, coupled with the reality that the continent needs to seek alternative energy sources, presents North Africa with an immense opportunity to combine its collective bargaining power in future energy negotiations with the EU. 

About the Algeria Morocco Business Dialogue

Despite its vast potential, the Maghreb region is often cited as being one of the least economically integrated regions in the world. The Algeria-Morocco Business Dialogue project has sought to bring together Algerian and Moroccan business leaders from multiple economic sectors with the aim of overcoming obstacles to bilateral trade between the two neighbors.

The dialogues have focused on several industries and topics vital to successful entrepreneurship in Algeria and Morocco such as food security, agriculture, healthcare, the impact of digitalization and new technologies and energy—with a particular focus on how to attract quality investment, ensure environmental protection and empower businesswomen.

COVID-19 unfortunately had a detrimental effect on the overall operation and schedule of the project. Each meeting was originally envisioned as an in-person conference such as the first event on the agricultural industry, which took place as a two-day delegation to Berlin to attend the city’s Green Week—one of the world’s largest international agriculture trade affairs. Travel restrictions and the ongoing pandemic inevitably forced the institute to adapt and change the format of the project from face-to-face meetings to several webinars. Although this meant the discussions between participants were less interactive than originally planned, they proved no less intensive nor productive as the following policy recommendations from our last and previous webinars attest. 

Links to Reports of Previous Briefings:

The Startup Industry

The Healthcare Industry

Cooperation in the Automobile Industry

Women’s Empowerment and Entrepreneurship: Challenges and Opportunities

The Agricultural and Food Manufacturing Sector