THE MOROCCAN RENEWABLE ENERGY MARKET OPPORTUNITIES FOR INVESTORS IN MOROCCO - May 5th, 2010-1
SUMMARY I MOROCCAN RENEWABLE ENERGY MARKET : STRONG II REGULATION AND FRAMEWORK III CONCLUSION Investing in the Moroccan Renewable Energy Market 2
Morocco is Endowed with Strong Natural Resources REGULATION Irradiance level Source : SCHOTT SOLAR 2009 Solar ressources are significant in Morocco as solar irradiance is remarkable (2 300 kwh/m2/year) Solar irradiance in Morocco is 30% higher than the best European sites while investment is identical, hence, leverage is particularly interesting for investors Investing in the Moroccan Renewable Energy Market 3
Morocco is Endowed with Strong Natural Resources REGULATION Wind potential in Morocco is also 30% higher than the best European sites with a 6000 MW in theory Best sites are located in the North, Taza region, Essaouira and the South and with almost 4 000 hrs / year ( wind speed above 10m/s) Investing in the Moroccan Renewable Energy Market 4
One of the Most Advanced Regulation in the Region REGULATION & FRAMEWORK A Local Incentive Regulation Right for a private operator to produce electricity from renewable energy Commercialization to local or foreign consumers via the national electric network (interconnexion with Spain (1400 MW)) Statement system for installations with capacities under 2 MW Compulsory nominative authorizations for projects with an installed capacity over 2 MW Authorizations valid 25 years maximum Issues to Be Clarified or resolved Absence of purchase obligation Absence of a financial or fiscal subsidies system supporting renewable electricity production (particularly in terms of purchase tariffs) The conditions to use the national network The requirements for authorizations of installations over 2 MW 5
The European Regulation is also an opportunity for Moroccan RE REGULATION & FRAMEWORK European Regulation The EU has set up the objective to increase the share of energy consumption from renewable energy to 20% by 2020 Renewable energy produced in a third country shall be taken into account when : A proportion of the electricity is consumed in the Community the electricity is produced by a newly constructed installation that became operational after 25 June 2009 or by the increased capacity of an installation that was refurbished after that date, under a joint project the amount of electricity produced and exported has not received support from a support scheme of a third country other than investment aid granted to the installation Allocation of interconnection capacity by all responsible transmission system operators in the country of origin, the country of destination and, if relevant, each third country of transit Moroccan Renewable Market is a genuine opportunity for the EU to diversify its supply sources in renewable energy 6
A Solid Framework REGULATION & FRAMEWORK A Framework sponsored by ONE ONE has developed over time the most advanced interconnection capacity (1400 MW with Europe, capacity with Algeria and now a capacity progressing towards Mauritania) ONE has developed a lot of pioneering RE projects : The first IPP wind project in Africa (50 MW in the north of Morocco) Other wind projects in Essaouira (60MW Gamesa powered) and Tangiers (140 MW Gamesa powered) Ongoing 300 MW IPP wind project in Tarfaya 20 MW Abengoa powered solar project (Ain Beni Mathar) ONE will be an active party in the Moroccan Solar Plan and in the wind energy development MASEN MASEN is the leading authority for the Moroccan Solar Plan MASEN will be the offtaker of electricity produced An ambitious timetable to make this ambitious initiative concrete (current bidding process for Ouarzazate project) 7
A Solid Framework REGULATION & FRAMEWORK Moroccan Agency for RE The Moroccan Agency for RE is active in promoting RE in Morocco benefiting from the track record of CDER This Agency is working in coordination with ONE and MASEN Banks and Investors The Moroccan Banking System is very sound and experienced in terms of large project finance transactions (total equity of the sector equals EUR 4 billion) The international multilateral banks knows the Moroccan Energy sector very well (EIB, AFD/PROPARCO, KFW, COFIDES participated in the financing of wind and solar projects in Morocco, IFC is also very active in energy projects) Moroccan Equity Investors (insurance companies, pension funds, equity funds) are also keen to participate in the financing of such projects (security on the offtake, long term maturities and stable cash flows) 8
A Solid Framework: A working wind model REGULATION & FRAMEWORK INVESTORS IRR objective 15% Capital Return BANKS Loan WIND PROJECT Average required selling price 70 /MWh + CER LOCAL PURCHASERS UPSIDE Export market Improvement in the CER market 9
A Solid Framework: A solar model to be established REGULATION & FRAMEWORK INVESTORS IRR objective 15% Capital Return BANKS Loan 180 /MWh LOCAL PURCHASERS GOVERNMENT Subsidies SOLAR PROJECT Average required selling price 250 /MWh 300 /MWh FOREIGN PURCHASERS SUBSIDIES In order to get a satisfying return on investment (>15%), it is necessary to : Subsidize costly initial investments (4 million / MW ) Set incentive tariffs via purchase contracts over 15-20 years on the local market and abroad TECHNOLOGIES Each one of PV and CSP technologies have pros and cons A technology mix seems to be the best response for an efficient and profitable solution 10
A Partnership with Spanish Operators will increase the Value MOROCCAN SOLAR PLAN REGULATION Projects and Liquidity are available in the RE Moroccan Market In order to increase the value of these projects we can leverage on : Access to Long Term PPAs with Spanish utilities for Moroccan Projects Access to the Spanish spot market for Moroccan Projects Co-investments with Moroccan Equity Funds in local industrial (components for wind and solar farms) projects to optimize the capex Co-investments with Moroccan Players to develop EPC and O&M expertise 11
The Moroccan Infrastructure Fund The Moroccan Infrastructure Fund («MIF») is an infrastructurededicated private equity fund with MAD 805 million ($100 million) in capital commitments that is mainly investing in Morocco. Attijari Invest («AI»), the Private Equity branch of Attijariwafa Bank, and Emerging Capital Partners («ECP») manage the Fund. Thus, the Moroccan Infrastructure Fund («MIF») is taking benefit of the experience and know-how of both promoters : AWB, is a key strategic partner as it is Morocco's largest bank by assets and the 8th largest bank in Africa Emerging Capital Partners is amongst the best private equity fund managers in Africa with 6 funds totaling more than 1.2 billion dollars The objective of the fund is to take stakes in companies in equity or quasi equity. The investment ticket varies between 50 and 120 million Dirhams (with possible co-investment from Fund s sponsors) in infrastructure projects or related activities, mainly in Morocco but also by partnering with Moroccan companies willing to expand abroad. Attijari is currently working on the structuring of a renewable dedicated fund capitalizing on the MIF investor base. Investing in the Moroccan Renewable Energy Market 12
The Moroccan Infrastructure Fund MIF shareholders count top-ranked Moroccan institutional investors The presence of international shareholders within MIF (35%) proves the growing attractiveness of foreign investors to Morocco MAMDA & MCMA 13
Thank You For Your Attention 14