Power Resource-Rich Algeria Plans Additional 12,000 Megawatts

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Algeria has the potential to become a North African regional powerhouse with natural gas reserves of 4.5 trillion cubic meters and annual gas exports to Europe of more than 60 billion cubic meters, ranking it in the top five global exporters. The country also plans to play a central role in the major the Middle East-North African (MENA) Desertec solar power development, which could provide a significant percentage of Europe's power by 2050.

The Desertec initiative, with contributions from countries throughout the region, targets the supply of 15% of Europe's power requirements by 2050, with 707 terawatt-hours (TWh) annually, and with an estimated investment of $131 billion in high-voltage direct current power transmission lines and $680 billion in solar power plant construction and materials. Algeria aims to have 650 megawatts (MW) of solar power by 2015 and 22,000 MW by 2030.

Algeria also holds an estimated 25,000 trillion cubic feet of shale gas potential. Sonatrach, the state-owned hydrocarbons company, is negotiating exploration agreements with international companies, including Eni SpA's (NYSE:E) (Rome, Italy), Talisman Energy Incorporated (NYSE:TLM) (Calgary, Alberta), Royal Dutch Shell (NYSE:RDS-A) (The Hague, Netherlands) and ExxonMobil (NYSE:XOM) (Irving, Texas). Taking into account the costs and risks attached to the development of non-conventional energy sources, Algeria will offer foreign companies fiscal benefits and improved terms for non-conventional energy development with amendments to oil and gas laws.

Against the backdrop of these grand power potential production plans, the country is currently suffering from chronic power cuts to its domestic consumers. In response, the Minister of Energy and Mines Youcef Youcefi has said that the government has approved a new $24 billion national electricity plan, prepared by state-owned power utility Sonelgaz, to plug the power supply gap over the next five years. Summer demand is more than 10,000 MW with production capacity at 11,000 MW, giving a slender reserve margin.

The plan would see an additional 12,000 MW of power on the grid and $1 billion would be allocated to the rehabilitation the distribution and transmission networks. Power has been cut at times of record consumption in order to be able to reconnect power in a short time rather than risk damage to power cables.

Under the plan, deadlines for the completion of power stations will be reduced from three to five years, and new power stations will be built in the southeast of the country, which has experienced frequent power cuts. Two transmission lines to the area are due for completion, and solar power plants will be built in the El Oued and Bechar provinces.

For related information, see May 7, 2012, article - Siemens Bags Algerian Solar/Combined Project Maintenance Contract and March 26, 2012, article - Solar Power Underpins Algeria' $120 Billion Energy Program.

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