Market Trends of Algeria Power Industry
This section covers the major market trends shaping the Algeria Power Market according to our research experts:
Non-hydropower Renewables Energy Generation to Dominate the Market
- As of 2018, oil and gas-fired power plants were dominating the power generation sector of the country. The renewables, including the hydropower electricity, accounted for merely 3.85% of the production capacity. Moreover, the PV and CSP account for only 3.2% of the total power generation capacity in the country, but during the next 10 years, solar power plants, cumulatively, are expected to account for about 15% of power generation.
- In order to reduce the dependency on oil and gas, and reduce the CO2 emissions, Algeria is focusing on the development of the renewable sector. Hence, the government is expected to be dependent on renewable energy, mainly on solar power to increase the power generation capacity.
- Moreover, according to the FiT scheme launched in 2014, the base tariffs range from DZD 12.75 per kilowatt-hour to DZD 15.94/kWH for solar PV projects, which reduces the uncertainties in power tariffs, thereby driving the investments in the Algeria solar PV market.
- In addition, Solar PV in Algeria is in the process of transitioning from the utility-scale sector to increased uptake across residential, commercial, and industrial (RCI) sectors. This, in turn, owing to government policies and foreign investment to support renewable energy-based electricity generation is likely to dominate the Algeria power market during the forecast period.
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Increasing Adoption of Solar Power Plant in the Country Driving the Market
- The country has limited potential for hydropower generation and has little experience with power generation from renewable resources other than solar and hydropower.
- As of August 2019, Algeria had 5600 MW capacity of solar power plants under construction. To achieve further development of the sector, through the National Renewable Energy Development Programme (PNDER), the government aims to install 22,000 MW of renewable power plants with an investment of USD 34 billion, with solar power accounting for a dominant share.
- However, Algeria aims to increase the share of renewables, the share of the conventional power generation sector is expected to remain over 70% for next 15 years, and the country has significantly higher supply capacity than demand. Hence, the economic argument for the inclusion of wind power as a supporting renewable source for solar power is not as strong in Algeria as it is in western countries.
- Hence, the solar power market is expected to dominate and drive the power market during the forecast period.
