Wind Power South of the Mediterranean, EWEC, Part III
Wind farms in Morocco boast a 40% load factor, and the standard price for electricity is comparable to the European feed-in-tariffs. That looks like a great place to invest, right? On top of that, you can benefit from the Clean Development Mechanism and sell carbon credits. So why isn’t the market growth even stronger?
Well, the first issue is the weakness of the local demand. This implies that investing South of the Mediterranean is essentially an export business to the EU, which requires that proper power lines be in place. There you start to need international cooperation, which is always a slow process. Fortunately the Union for the Mediterranean was launched last year, as an effort to do just that. However, the implementation has been cumbersome because of the Israeli-Palestinian conflict.
The business is clearly there, with already important investments in Morocco, Egypt and Turkey. The complementarity with CSP makes the case even better. But banks see these countries as risky. Furthermore, investment in Morocco is tightly controlled by the Office National d’Electricité. On the technical side, turbine manufacturers started to look into the specifics of this climate more recently, so that the technology is not fully adapted.
A pan-European transmission grid makes even more sense in order to tap into the potential of non-EU Mediterranean countries, and again HVDC seems to be the answer.
A special session on that topic was held at EWEC, during which Geert Dooms of 3E explored the roadblocks and ways to overcome them for developers and policy makers. This is no walk in the park, but it is feasible and the medium-term prospects are fantastic.
In my next post, I’ll talk about another promising market which has a very good regulatory environment: Chile.
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