the mediterranean leadership summit - tell group - april 2016 v2

TheMediterranean Leadership SummitEnergyNetworksandSecurityofSupplyinEuropeYassineBouhara– ChairmanTellGroup

Malta- April2016

www.tellgroup.net

Memberof

Incollaborationwith

2TheMediterraneanLeadershipSummit- April2016

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World

EU MENAAlgeria

Source:BMWi 2000, Q-Cells 2007 Assumption [email protected]% Mono

POWERTOTHEWORLDAREANEEDEDTOCOVERTHEWORLDENERGYNEEDS

3

EUROPEANENERGYDEPENDENCYDUALCHALLENGE

TheMediterraneanLeadershipSummit- April2016

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Oil34%

NaturalGas23%

Coal18%

NuclearEnergy12%

Hydroelectric7%

Renewables6%

EU28PrimaryEnergyConsumptionBreakdownbyFuel(2014)

Source:Tell Groupanalysis, BPStatistical Review 2015

§ Primary Energy Production: 789,8Mtoe (2013)

§ Net Imports of Energy : 908,9Mtoe (2013)

§ Russia is EU’s 1st Energy Trading Partner

§ EU’s Energy Dependency Rate: 88.4% for Oil and

65.3% forNatural Gas

Source:Eurostat 2013

Source:Tell Groupanalysis, Eurostat

EU28NaturalGasImportBreakdown(2013)

Russia,39.0%

Norway,29.5%

Algeria,12.8%

Qatar,6.7%

Nigeria,1.8%

Lybia,1.8%

Others,8.4%

EU28CrudeOilImportBreakdown(2013)

Russia,33.5%

Norway,11.7%

KSA,8.6%Nigeria,8.1%

Kazakhstan,5.8%

Lybia,5.6%

Azerbaidjan,4.8%

Algeria,3.9%

Iraq,3.6%

Others,14.4%

Source:Tell Groupanalysis, Eurostat

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EUROPEENERGYSUPPLYCHALLENGESCHRONICDEFICIT


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PrimaryEnergyBalanceOutlook(inBnToe)

ReducingrelianceonRussianimports

Energydemandgrowth

CO2emissionslimitsMiddleEast

1990 2005 2020 2035

4

2

0

-2

-4

FSU

Africa

S&CAmerica

NorthAmerica

Asia

Europe

NorthAfricanrenewableenergyplansinlinewithEuropeancleanenergyinitiativesandtargets

DevelopmentofenergycooperationframeworkwithNorthAfricanCountries

NorthAfricancountriesareideallypositionedtoplayakeyroleinEU’sfutureenergysupplyscheme

Source:Tell Groupanalysis, BPEnergy Outlook 2035

5

Region Characteristics:

§ Comprised of Morocco,Algeria and Tunisia:

§ Areaof 3million sqm

§ Population of 85million

§ Common culture, languageand heritage

§ Resource-rich countries (oil, gas, minerals)

§ Major potential for solar and wind energy

MAGHREBRENEWABLEENERGYZONE


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Source:Tell Groupanalysis, Ren21, IRENA

RenewableEnergyTargetsRenewableEnergyInstalledCapacityCurrentMaghreb

renewablescapacity

Algeria

Total renewable energy: 255MW§ Hydropower: 228MW§ Solar PV: 2MW§ CSP: 25MW

2030 targets: 22 GW§ Biomass: 1 GW§ Solar PV / CSP: 13.5 GW / 2 GW§ Wind power: 5 GW

10%Tunisia

Total renewable energy: 323MW§ Hydropower: 66MW§ Solar PV: 20MW§ Wind: 245MW

2030 targets: 4 GW§ Biomass: 300MW§ Solar PV / CSP: 1.5 GW / 500MW§ Wind power: 1.7 GW

8%

Morocco

Total renewable energy: 2,680MW§ Hydropower: 1770MW§ Solar PV / CSP: 160MW§ Wind: 750MW

2030 targets: 6 GW§ Hydropower: 2 GW§ Solar PV and CSP: 2 GW§ Wind power: 2 GW

82%

Maghrebrenewables

capacityby2030

18%

69%

13%

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ALGERIASHAPINGPOWERLANDSCAPEINMEDITERRANEAN


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Country Characteristics:

§ Surface: 2.4 million sqm

§ 10th largest countryworldwide

§ Largest country of theMediterranean basin

§ 10th largest reserves of natural gas (2nd in Africa)

§ 16th largest reserves of crude oil (2nd in Africa)

§ 3rd largest shale gas reserves worldwide

§ One of the highest rate of insolationworldwide

12.2Bn Barrels

provenreserves(OPEP)4.5Tnm3

proven reserves(OPEP)

Crude Oil NaturalGas ShaleGas

20 Tn m3reserves(EIA)

SolarEnergy

Solarpotentialofabout170000TWh/y

(avg of5.7kWh/m2/day)

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SHALEGASVASTANDUNTAPPEDSHALEGASRESOURCES


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§ According to the EIA, Algeria is estimated to hold thethird-largest amount of shale gas resources in the worldafter China and Argentina with 707 tn cubic feet (Tcf) and5.7 bn barrels of technically recoverable shale gas and oilresources, respectively.

§ At the end of May 20 14 , the Algerian cabinet approvedplans to move forward with exploration of the country'sshale gas resources and authorized Sonatrach to seekforeign Partner for its shale gasprojects.

§ In January 2015, Sonatrach announced plans to invest upto $70 bn over the next 20 years to exploit shale gas inthe southern desert. The company expects to producearound 20 bn m3 of shale gas a year from 200 drill sites .

§ The government is offering a range of fiscal incentives forunconventional projects:

§ Royalties fixed at 5%, as opposed to thetypical 5.5-23% range; and§ Income tax reduced to 19%, from 30% forconventional projects .

OilandNaturalGasBassin andPipelineInfrastructureinAlgeria

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WINDENERGYSAHARAWINDPOWER


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§ In Algeria, the first attempt to connect wind turbines to the electricity distributionnetwork started back in 1957, with the installation of a 100 kW wind turbine on the siteof Grand Vent (Algiers).

§ Designed by the French engineer ANDREAU, this prototype was originally installed in St.Alban England. This bipale of pneumatic, variable-pitch, 30 meters height and adiameter of 25 m was bought by Electricité et Gaz d' Algérie and dismantled to beinstalled in Algeria.

§ After solar, wind power constitutes the second axis ofdevelopment for renewable energies in Algeria.

§ Despite having lower wind speed than Morocco andTunisia, the Algeria Sahara benefits from good potential forwind power with wind speeds varying between 2 et 6 m/s.

§ The most promising sites are situated in the region of Adrarin the south where Sonelgaz commissioned 12 turbines tothe Spanish manufacturer Gamesa totaling 10 MW in 2014.The Adrar site serves as a pilot project for a wind capacityprogramthat plans to bring 639 MW online by 2023.

Algeriaaveragewindspeedbyregion(inm/sat10mheight)

Source:WindEnergyDivision,RenewableEnergyDevelopmentCenter

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ALGERIASOLARENERGY13.5GWPLAN


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SolarmapofAlgeria

Source:Renewable Energy Partner

Renewable energyGovernment Plan :

§ 22,000 MW of renewable power generating capacity including 13,500 MWof solar PV at 2030 horizon

§ 20 year PPA anda FiT at circa $0.15 Kwh

§ constructionof over 50 solar PV projects over the next six years

§ The global cost of the renewable electricity program is expected to reachbetween$60-100 bn

§ 300 bn m3 of expected total natural gas savings, over the period of 2011and 2030

PilotPhase

Initialdeployment

Largescaledeployment

Utilityscaledeployment

2011- 2013 2014- 2015 2016- 2020 2021- 2030

CompletedProjects

§ 1.1 MW solar PV plant in Ghardaïa testing four differenttechnologies (monocrystallin, polycrystallin, amorpheus andthin film) commissioned in July2014

Projects in final commissioning stage:

§ 243 MW solar PV plants awarded toYINGLI SOLAR

§ 100 MW solar PV plants allocated toBELECTRIC

Source:Renewable Energy Partner

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VIABILITY


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Source:BNEFFeb2016+RNEEstimatesSource:BNEF, WBL-EL

Source:NREL,Roland Berger

PVGlobalInstallation(GWp) PVCapacityvsDemand(inMW)

LeveragedCostofElecticityofPVvsWind($/KWH)

Best

10%

Low

7 818

29 3138

4556

65 7079

88100

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f

Manuf Market established in China/SouthEastAsia

Next growth wave => India/Turkey/MENA57 GW in 2015, 64 GW in 2016f

80000

60000

40000

20000

China Taiwan SEA Japan Korea USA OthersEU

India Germany ROW

Demand Capacity

80000

60000

40000

20000

China Taiwan SEA Japan Korea USA Others EU

India Germany ROW

80000

60000

40000

20000

China Taiwan SEA Japan Korea USA Others EU

India Germany ROW

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MAGHREBRENEWABLE ASSETSTYPICALRENEWABLEENERGYINVESTMENT


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Inception Proliferation Ubiquity

AlgeriaTunisia

Morocco

Maturemarkets

RenewableEnergyAssetInvestmentCurve

Pre-consent/AssetReadytobebuilt

AssetsUnderconstruction/Expansion

Managementofoperatingassets

HighestValueCreationExpectedIRR>25%

ModerateValueCreationExpectedIRR10-20%

LimitedValueCreationExpectedIRR<10%

Market Cycle

Asset Development Stage

Investor returns

Capital Availability Low High High

Source:Tell Groupanalysis, Renewable Energy Partner

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RENEWABLE ENERGYANDJOBCREATIONRENEWABLEENERGYEMPLOYMENTBYTECHNOLOGY


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Source: IRENA Annual Review 2015

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ALGERIAKEYTAKEAWAYHYBRIDENERGYOPPORTUNITIES


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OilandGasLeaderInMediterraneanBasin

§ Opecmember§ Significant Oil, Gas, Shale gas resources§ Energyprovider for south Europe andMaghreb

EnergyDNA§ Expertise of O&G explorationand exploitation§ Largest Oil extracting company inAfrica§ Energydistributionand management trackrecord

SolidInfrastructure§ Power grid covering 99% of population§ TransMediterraneanpipelines§ International power interconnections

Institutionalframework§ New legislationandenergypolicies§ Government tax incentives§ Attractive Feed-in-tariffs

EnergyDiversification§ Unique potential forwind, solar and hydro power§ Multi technology government renewable energyprogram

BenefitsofSolarEnergy§ Security§ Connecting§ Job Prosperity

14TheMediterraneanLeadershipSummit- April2016

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EU

Source:BMWi 2000, Q-Cells 2007 Assumption [email protected]% Mono

POWERTOTHEEUROPEANUNIONAREAREQUIREDTOCOVERTHEEUENERGYNEEDS

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CONTACTUS


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Tell Markets SPA3 Chemin les CrêtesHydra, Alger - 16035T: +213 21 60 02 60F:+213 21 60 02 65

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DUBAI

Tell Capital SAS13rueduDrLancereaux75008ParisT:+33153578285F:+33153578291

PARIS

Tell LimitedEmiratesFinancialTowers,Office301DIFC, PO Box 506983T: +971 44 53 11 46F: +971 44 53 10 59

[email protected]

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DISCLAIMER


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the mediterranean leadership summit - tell group - april 2016 v2

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