The Impact of a Renewable Energies Cluster in Southern Countries: Viability and Economic Impact in Morocco

FEM35-05 | May 2013

Title

« The Impact of a Renewable Energies Cluster in Southern Countries: Viability and Economic Impact in Morocco »

By

Prof. Rafael de Arce and Prof. Alejandro Lorca Universidad Autónoma de Madrid y AGREEM, Spain

Contributeurs

Prof. Idriss El Abbassi, Université Mohamed V, Morocco Prof. Abdelamid El Bouhadi, Université Mohamed V, Morocco Prof. Rafael de Arce, UAM – AGREEM, Spain Mr. Fabian Kleinschumacher, UAM – AGREEM, Spain Prof. Alejandro Lorca, UAM – AGREEM, Spain Prof. Ramón Mahia, UAM – AGREEM, Spain Prof. Eva Medina, UAM, Spain Prof. Lahcen Ouhlaj, Université Mohamed V, Morocco Dr. Antonio Roldán-Ponce, Technische Universitat of Dresden, Germany

Note :

This document has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.

Summary :

The installation and operation of RES plants can produce meaningful economic implications in terms of induced production and employment creation, but for obvious reasons, those effects are transitory and only relevant during the phase of the wind or solar plants construction and become just marginal in the 25-30 following years of operation. On the contrary, the implementation of RES manufacturing facilities inland may:

  • extensively and everlasting promote several inter related economic activities,
  • foster knowledge and North ? South technology transfer
  • help the setting up of a local industry
  • induce a more soundness development in the selected regions

 

Moreover, and in that sense, the study of an eventual development of RES manufacturing industries in Morocco not only brings out energy policy matters with an eventual short or medium term impact, but appeals to more significant economy policy issues connected with the structural transformation of Moroccan economy towards a more innovative industry web and an integral strategy for their sustainable development.This research project deals with the very basic conceptual framework of technology transfer, as a way of promoting long ? lasting development of countries. The study aims to understand the needs and the potential benefits of RES technology manufacturing transfer to Morocco.The interest of Moroccan authorities for promoting local R&D, knowledge transfers and manufacturing industries in the field of clean energies is beyond doubt. The Moroccan Agency for Solar Energy (MASEN) is officially required to develop research and development in solar technology and its mission explicitly reckons the ?will for an industrial approach? for the achievement of its objectives, including ?the development of applied research and to the promotion of the technological innovations (..)?. In 2009, the Technopolis Park in Oujda started its construction and the first phase should be almost completed at the end of 2011. This Technopolis Project includes four main areas, and the ?CleanTech? industrial and logistical park is one of them.Natural resources/conditions (density of normal irradiation, geo-morphological characteristics, normal wind?) is a ?sine-qua-non? requirement to establish these plants, but more strategic decisions must be taken into account by entrepreneurs in the following years in order to increase the yield of these investments.As the main conclusions of our research project, we could summarize the following aspects for the creation of a CSP industry in Morocco:

  • A local CSP industry in Morocco presents a likelihood of 7.15 out of 15 (47.7%) but, if we look at the future and given certain ?environment? adjustments during the next decade, the same experts agree that this likelihood increase to an average 10 over 15 (70%), (or 11/15 (73%) in median terms).
  • It is extremely interesting that a CSP industry in Morocco, both now and in the next decade, assessing opportunities is best assessed by those who have experienced recent activity in Morocco than those who have not had any previous business in the area. In this sense, the possibilities of establishing a CSP industry in the country rise to around 12.5 (over 15) in the view of those entrepreneurs operating in Morocco, and a valuation of only 10 from those who, for the moment, has no business experience in the area.
  • Well above the mean, it also appears a group of three cost related barriers. As stated by experts, there is a deadly combination of a high risk premium in the area and lack of international or regional/local financial resources. CSP is a relative young industry and everywhere around the world there exist high initial capital costs for the adoption of CSP manufacturing technology. The most important manufacturing stages are high capital-intensive (glass production, mirror flat, automation for mounting structures,?) and that means that and although some relevant international financing initiatives have been launched (for example the MENA CSP IP, supported by the World Bank and the African Development Bank), access to financing appears to be a major barrier
  • About the CSP Value Chain, three major activities look suitable now for local manufacturing: building up factories, construction of solar structures and manufacturing of minor complementary components such as piping and cable. AS expected, all this activities are clearly those of lower technological requirements and could easily match the actual potential of Moroccan industry.
  • Every CSP manufacturing process could be locally implemented in the next decade given the appropriate changes. Besides, under a feasible scenario of minor or moderate changes, 15 out of the 23 stages could be locally implemented.
  • The greatest concern seems to be about the uncertainty about the regional or country level RES (CSP) market development and prospects. Although a significant number of CSP projects have already been successfully developed in the area, it is crucial to understand that, for the interviewed experts, a steady CSP market growth in Morocco and the MENA region as a whole is crucial to assess a future increasing potential for local manufacturing of CSP components and related services. Even if other weakness or restrictions tend to vanish gradually, no successful future scenario of local manufacturing in Morocco could be envisaged if the volume of the installed CSP capacity within the country and the region doesn’t achieve a critical level of market development.
  • Moving into policy related barriers, one major concern appears well above the group mean ranking the first in order of importance of the entire list of 37 obstacles of different type: the absence or the instability of the fiscal and legislative framework for CSP development.
  • Improvement of the institutional framework at the country level looks absolutely crucial for the instigation of new potential CSP market players and service providers and, for that, it looks quite important to provide an administrative and legislative support, especially for further new entrance companies and foreign investments, and to promote relevant institutions to support long term security planning.
  • It is also interesting to notice that the ?Low level of Multilateral or European institutions commitment/support in order to promote regional initiatives? was also pointed out by experts as an important barrier. It is obvious that, for Europe and other areas, the benefits of a successful CSP industry development in the MENA region would be quite important, but it seems that, in spite of this, business experts don’t really feel a significant commitment of Multilateral or European institution.  Given that CSP industry still being in a ?take off? stage in the area, a greater institutional support from abroad would be apparently necessary.
  • Moving finally to a set of 6 market barriers, the first one is related to ?volatility of CSP market?. The expert opinion is that CSP market is somehow unstable, and that obviously complicates mid and long term planning. In effect, in the opinion of experts, ?the market for CSP systems looks somehow paused at the moment and the sector has been marked by volatility since the technology began to experience a revival in 2004. That up-and-down movement is likely to persist through the remainder of the decade as the price of rival photovoltaic modules continues its dramatic decline?.

STRENGHTS

OPPORTUNITIES

High solar potential (irradiation)

 

Low costs of un-skilled labor employees

Improvement of the institutional framework

Emergent local industry

Political stability

For Europe and other areas, the benefits of a successful CSP industry development in the MENA region would be quite important

Fast expansion of CSP market in North Africa and Asia

WEAKNESS

THREATS

Low level of regional demand for RES (CSP).

Low level of specialization of Moroccan industry in CSP (or RES) technology insufficiently developed infrastructures and low level of automatization / modernization of local industries

Absence or the instability of the fiscal and legislative framework for CSP development

Volatility of CSP market

High level of competition with other RES technologies?.

High risk premium in the area and lack of international or regional/local financial resources

Increase the level of Multilateral or European institutions commitment/support in order to promote regional initiatives

11.  Taking into account a consensus up to 65% in the case of ?minor or modest changes? and up to 80% adding ?significant progress? for the previous scales, we can draw the following alternative scenarios of import dependency and the Economic Effects on the Moroccan Economy:

  • We have found a total effect on Moroccan GDP that moves from 1.27% to 1.77% for 2050. The differences between scenarios are very small in terms of GDP between BAU and ?More likelihood? (around 0.15%). Comparing BAU with ?significant changes Scenario?, these differences can be around 0.5.
  • In all the three scenarios, there are huge differences in terms of number of employees. In the third scenario, the creation of a semi-complete industry of CSP components in Morocco is related with an increase in the number of employments, around 85,000 (average for the entire simulation horizon). In the case of the second scenario, with just a partial installation of this kind of industry in the country, the employment average could be around 40,954 people.

 

12.  Of course, an important debate about the way to finance this investment is crucial, but this issue is clearly out of the scope of this investigation given that we focus on the macroeconomic effects of the CSP deployment in Morocco.