Algeria Sustainable Transformation of Energy System

S T U DY
CL I M AT E CH A N GE, EN ERGY A N D EN V I RO N M EN T
SUSTAINABLE
By applying a phase model for
the renewables-based energy
transition in the MENA
countries to Algeria, the study
TRANSFORMATION
provides a guiding vision to
support the strategy
development and steering of
the energy transition process.
OF ALGERIA’S
ENERGY SYSTEM The energy transition towards
renewables presents a long-
term opportunity for economic
and social development in
Algeria.
Development of a Phase Model
Algeria has sufficient potential

to export renewable energy in
Sibel Raquel Ersoy, Julia Terrapon-Pfaff various forms in the future,
May 2021 which offers the opportunity
to replace declining revenues
from fossil fuels.
FRIEDRICH-EBERT-STIFTUNG – Sustainable Transformation of Algeria’s Energy System
CL I M AT E CH A N GE, EN ERGY A N D EN V I RO N M EN T
SUSTAINABLE
TRANSFORMATION
OF ALGERIA’S
ENERGY SYSTEM
Contents
Contents
1 INTRODUCTION 2
2 CONCEPTUAL MODEL 4
2.1 The Original Phase Models ........................................................................ 4

2.2 The Multi-Level Perspective and the Three Stages of Transitions ............... 5
2.3 Additions in the MENA Phase Model ....................................................... 6
3 THE MENA PHASE MODEL 8
3.1 Specific Characteristics of the MENA Region ............................................ 8

3.2 Adaptation of Model Assumptions According to the Characteristics
of the MENA Countries ............................................................................. 9
3.3 Phases of the Energy Transition in MENA Countries ................................. 9
3.4 Transfer of the Phase Model to the Country Case of Algeria .................... 10
3.5 Data Collection ......................................................................................... 11
4 APPLICATION OF THE MODEL TO ALGERIA 15
4.1 Categorisation of the Energy System Transformation in Algeria

According to the Phase Model .................................................................. 15
4.2 Outlook for the Next Phases of the Transition Process .............................. 30
5 CONCLUSIONS AND OUTLOOK 32
Bibliography .............................................................................................. 33
List of Abbreviations .................................................................................. 35
List of Units and Symbols .......................................................................... 35
List of Tables .............................................................................................. 35
List of Figures ............................................................................................ 35
1
INTRODUCTION
The Middle East and North Africa (MENA) region faces a wide countries have developed ambitious plans to scale up their
array of challenges, including rapidly growing population, renewable energy production. The significant potential
slowing economic growth, high rates of unemployment, in the MENA region for renewable energy production, in
and significant environmental pressures. These challenges particular wind and solar power, creates an opportunity
are exacerbated by global and regional issues, such as both to produce electricity that is almost CO2 neutral and to
climate change. The region, which is already extremely vul- boost economic prosperity. However, most countries in the
nerable due to its geographical and ecological conditions, region still use fossil fuels as their dominant energy source,
will become more affected by the negative consequences of and dependency on fossil fuel imports in some of the highly
climate change in the future. Drought and temperatures will populated countries poses a risk in terms of energy security
increase in what is already one of the most water-stressed and public budget spending.
regions in the world. With large sections of the population
concentrated in urban areas in the coastal regions, people A transition towards a renewables-based energy system
will also be more vulnerable to water shortages, storms, involves large-scale deployment of renewable energy
floods, and temperature increases. In the agricultural sec- technology, the development of enabling infrastructure,
tor, climate change effects are expected to lead to lower the implementation of appropriate regulatory frameworks,
production levels, while food demand will increase due to and the creation of new markets and industries. Therefore,
population growth and changing consumption patterns. a clear understanding of socio-technical interdependencies
Moreover, the risk of damage to critical infrastructure is in the energy system and the principal dynamics of system
increasing, and expenditure for repairs and new construc- innovation is crucial, and a clear vision of the goal and di-
tion is placing additional strain on already scarce financial rection of the transformation process facilitates the targeted
resources. These multi-layered challenges, arising from the fundamental change (Weber and Rohracher, 2012). An
interplay of economic, social, and climatic aspects, should enhanced understanding of transition processes can, there-
not be ignored, as they pose serious risks to prosperity and fore, support a constructive dialogue about future energy
economic and social development – and ultimately to the system developments in the MENA region. It can also enable
stability of the region. stakeholders to develop strategies for a transition towards a
renewables-based energy system.
Energy issues are embedded in many of these challenges.
The region is characterised by a high dependence on oil and To support such understanding, a phase model for renew-
natural gas to meet its energy needs. Although the region ables-based energy transitions in the MENA countries has
is a major energy producer, many of the MENA countries been developed. This model structures the transition pro-
are struggling to meet growing domestic energy demand. cess over time through a set of transition phases. It builds
Transitioning to energy systems that are based on renewa- on the German phase model and is further complemented
ble energy is a promising way to meet this growing energy by insights into transition governance and characteristics
demand. The transition would also help to reduce green- of the MENA region. The phases are defined according to
house gas (GHG) emissions under the Paris Agreement. In the main elements and processes shaping each phase, and
addition, the use of renewable energy has the potential the qualitative differences between phases are highlighted.
to increase economic growth and local employment and The focus of each phase is on technological development;
reduce fiscal constraints. at the same time, insights into interrelated developments
in markets, infrastructure and society are provided. Com-
Against the backdrop of rapidly growing energy demand plementary insights from the field of sustainability research
due to population growth, changing consumer behaviour, provide additional support for the governance of long-term
increasing urbanisation, and other factors – including change in energy systems along the phases. Consequent-
industrialisation, water desalination, and the increased use ly, the phase model provides an overview of a complex
of electricity for cooling – renewable energy is gaining at- transition process and facilitates the early development of
tention in the MENA region. To guarantee long-term energy policy strategies and policy instruments according to the
security and to meet climate change goals, most MENA
2
Introduction
requirements of the different phases that combine to form

the overarching guiding vision.
In this study, the MENA phase model is applied to the case

of Algeria. The current state of development in Algeria is
assessed and analysed against the phase model. Expert
interviews were conducted to gain insights to specify the
previously defined abstract components of the model. As a
result, further steps for the energy transition (based on the
steps of the phase model) are proposed. This application is
based on findings from previous studies and projects con-
ducted in the MENA region, while case study specific data
was collected for this study by local partners and the expert
Zineb Mechieche.
3
CONCEPTUAL MODEL
2.1 THE ORIGINAL PHASE MODELS1 of flexible options that matches the variable supply from
wind and solar power plants with electricity demand must
The phase model for energy transitions towards renewa- be achieved by extending grids, increasing the flexibility
bles-based low-carbon energy systems in the MENA coun- of the residual fossil-based power production, storage, or
tries was developed by Fischedick et al. (2020). It builds on demand-side management. Furthermore, the development
the phase models for the German energy system transfor- of information and communication technologies (ICT) can
mation by Fischedick et al. (2014) and Henning et al. (2015). support flexibility management. By using PtF/G applications,
The latter developed a four-phase model for transforming different sectors can be more tightly coupled. This involves
the German energy system towards a decarbonised energy adapting regulations, the infrastructure, and accommodat-
system based on renewable energies. The four phases of ing a new market design. Due to the power demand being
the models correlate with the main assumptions deduced four or five times higher in a renewables-based low-carbon
from the fundamental characteristics of renewable energy energy system, improving energy efficiency is a prerequisite
sources, labelled as follows: »Take-off Renewable Energies for a successful energy transition. Following the »energy
(RE)«, »System Integration«, »Power-to-Fuel/Gas (PtF/G)«, efficiency first« principle means treating energy efficiency as
and »Towards 100% Renewables«. a key element in future energy infrastructure and, therefore,
considering it alongside other options, such as renewables,
Energy scenario studies foresee that in the future most security of supply, and interconnectivity (European Commis-
countries, including those in the MENA region, will gener- sion DG Energy, 2019).
ate electricity primarily from wind and solar sources. Other
sources such as biomass and hydropower are expected to be The phase model outlines these socio-technical interde-
limited due to natural conservation, lack of availability and pendencies of the described developments, which build on
competition with other uses (BP, 2018; IEA, 2017). There- each other in a temporal order. The four phases are crucial to
fore, a basic assumption of the phase model is a significant achieve a fully renewables-based energy system. In the first
increase of wind and solar power in the energy mix. This phase, renewable energy technologies are developed and
includes the direct utilisation of electricity in end-use sectors introduced into the market. Cost reductions are achieved
that currently rely mainly on fossil fuels and natural gas. through research and development (R&D) programmes and
E-mobility in the transport sector and heat pumps in the first market introduction policies. In the second phase, ded-
building sector are expected to play a crucial role. Sectors icated measures for the integration of renewable electricity
that are technologically difficult to decarbonise include into the energy system are introduced. These include flexi-
aviation, marine, heavy-duty vehicles, and high-temper- bility of the residual fossil power production, development
ature heat for industry. In these sectors, hydrogen or hy- and integration of storage, and activation of demand side
drogen-based synthetic fuels and gases (PtF/G) can replace flexibility. In the third phase, the long-term storage of re-
fossil fuels and natural gas. The required hydrogen can be newable electricity to balance periods where supply exceeds
gained from renewable electricity via electrolysis. demand is made essential. This further increases the share
of renewables. PtF/G applications become integral parts of
There should be a strong emphasis on adapting the elec- the energy system at this stage, and imports of renewa-
tricity infrastructure because the feed-in and extraction of bles-based energy carriers gain importance. In the fourth
electricity (particularly from volatile renewables) must be phase, renewables fully replace fossil fuels in all sectors. All
balanced to maintain grid stability. Thus, power production the phases must connect smoothly to achieve the target
and demand need to be synchronised, or storage options of a 100% renewables-based energy system. To describe
need to be implemented. Electricity storage is, however, the long-term changes in energy systems in these four
challenging for most countries, and the potential remains phases, the phase model is supplemented by insights from
limited due to geographic conditions. Accordingly, a mix the field of sustainability transition research. Such research
is concerned with the dynamics of fundamental long-term
change in societal subsystems, such as the energy system.
1 Text is based on Holtz et al. (2018).
4
Conceptual Model
2.2 THE MULTI-LEVEL PERSPECTIVE AND »regime« level and avoid lock-in and path dependencies, in-
THE THREE STAGES OF TRANSITIONS novations at the »niche« level are incremental because they
provide the fundamental base for systemic change. Niches
Energy transitions cannot be completely steered, nor are develop in protected spaces such as R&D labs and gain mo-
they totally predictable. The involvement of many actors mentum when visions and expectations become more widely
and processes creates a high level of interdependency and accepted. Therefore, actor-network structures that have the
uncertainty surrounding technological, economic, and power to spread knowledge and change societal values are
socio-cultural developments. Due to the interlinkage of pro- of key importance for the transition process (Geels, 2012)
cesses and dimensions, transition research typically applies this paper introduces a socio-technical approach which goes
interdisciplinary approaches. The multi-level perspective beyond technology fix or behaviour change. Systemic transi-
(MLP) is a prominent framework that facilitates the concep- tions entail co-evolution and multi-dimensional interactions
tualisation of transition dynamics and provides a basis for between industry, technology, markets, policy, culture and
the development of governance measures (Fig. 2-1). civil society. A multi-level perspective (MLP. The govern-
ance of transitions requires experimentation and learning,
At »landscape« level, pervasive trends such as demographic continuous monitoring, reflexivity, adaptability, and policy
shifts, climate change, and economic crises affect the »re- coordination across different levels and sectors (Hoogma
gime« and »niche« level. The »regime« level captures the et al., 2005; Loorbach, 2007; Voß et al., 2009; Weber
socio-technical system that dominates the sector of interest. and Rohracher, 2012). The development of niches in the
In this study, the regime is the energy sector. It comprises framework of »strategic niche management« is an essential
the existing technologies, regulations, user patterns, in- precondition for fundamental change. Within transition
frastructure, and cultural discourses that combine to form phases, three stages with associated policy approaches can
socio-technical systems. To achieve system changes at the be distinguished: »niche formation«, »breakthrough«, and
Figure 2-1
The Multi-Level Perspective
Socio-technical landscape
(exogenous context)
Landscape developments put pressure on

existing regime, which opens up, creating
windows of opportunity for novelties.
New regime
influences
Markets, user landscape
preferences
Industry
Science
Policy
Socio-technical Culture
regime Technology
Socio-technical regime is »dynamically stable«.

On different dimensions there are ongoing processes. New configuration breaks through, taking advantage
of »windows of opportunity«. Adjustments occur in
socio-technical regime.
External influences on niches Elements become aligned,

(via expectations and networks) and stabilise in a dominant design.
Internal momentum increases.
Niche-
innovations
Small networks of actors support novelties on the basis of expectations and visions.
Learning processes take place on multiple dimensions (co-construction).
Efforts to link different elements in a seamless web.
Time
Source: Geels and Schot, 2007
5
»market-based growth«. In the »niche formation« stage, 2.3 ADDITIONS IN THE MENA PHASE
a niche develops and matures, and it may offer solutions MODEL
that can be absorbed by the regime. Within this stage,
expectations and visions that provide direction to learning Assuming that the phase model for the German energy
processes are essential. In addition, actor involvement and transition by Fischedick et al. (2014) and Henning et al.
social networks can support the creation of the necessary (2015) is relevant for the MENA countries, the four tran-
value chains and learning processes at different levels have sition phases remain the same. The »system layer«, which
the potential to advance the technology. was adopted from the original phase models, provides
clear targets for the development of the system by orient-
In the »breakthrough« stage, the niche innovation spreads ing guidelines for decision-makers. Since niche formation
by actors involved, market share, and replication in other processes are required for successfully upscaling niche
locations. At this stage, improved price-performance is innovations, a »niche« layer was added into the original
relevant, and access to necessary infrastructure and markets phase model by Fischedick et al. (2020). A specific cluster
must be open. Amending rules and legislation as well as in- of innovations was identified for each phase: renewable
creasing societal awareness and acceptance serve to reduce energy technologies (phase 1), flexibility options (phase 2),
the barriers to deployment. When the niche innovation power-to-fuel/gas technologies (phase 3), and sectors such
becomes fully price-competitive and specific supportive pol- as heavy industry or aviation that are difficult to decarbonise
icy mechanisms are no longer needed, the »market-based (phase 4). In its breakthrough stage, each innovation cluster
growth« stage is achieved. Renewable energy technologies is dependent on the niche-formation process of the previous
are, at this stage, fully integrated into the system. phase. Therefore, specific governance measures support the
breakthrough and upscaling processes in the current phase.
In later phases, the innovation clusters continue to spread
through market-based growth (Fischedick et al., 2020).
Consequently, the addition of the »niche layer« creates
Figure 2-2
Transition Phase Model for the MENA Regio
Phase IV:
Phase I: Phase II: Phase III: Towards 100%
Take-off RE System Integration PtF/G Renewables
Share of RE in Energy
and Electricity System
Time
Special PtF/G applications + exports NF BT MBG
Power-to-fuel / gases NF BT MBG
Flexibility options NF BT MBG
Re Supply NF BT MBG
NF: Niche Formation BT: Break-Through MBG: Market-Based Growth

Source: Holtz et al., 2018
6
Conceptual Model
a stronger emphasis on the processes that must occur to

achieve the system targets (Fig. 2-2).
Changing the deployment of technologies across markets

is described in a »techno-economic layer«, while the gov-
ernance stages are captured in the »governance layer«. The
aim of this layer is to connect developments in the tech-
no-economic layer with governance approaches to support
the transition phases. Specific measures with a strong focus
on building a renewables-based energy system are included
in the phase model. Factors such as capacities, infrastruc-
ture, markets, and the destabilisation of the existing fossil
fuel-based regime have also been added to the model.
These aspects, however, serve as reflexivity about govern-
ance and need to be individually assessed and adapted for
each MENA country.
This study pays particular attention to the »landscape« level

and its role in pressurising existing regimes and creating
opportunities for system change. Questions regarding the
influence of international frameworks on climate change,
global and regional conflicts, and the long-term impacts of
the Coronavirus Disease 2019 Pandemic (COVID-19) on the
transition processes are discussed in the individual country
case studies. As well as focusing on the need to continu-
ously improve energy efficiency through all the phases, the
model is enlarged with resource efficiency. This assumes the
continuing reduction of material intensity through efficiency
measures and circular economy principles.
7
THE MENA PHASE MODEL
3.1 SPECIFIC CHARACTERISTICS OF THE able energy potential remains untapped. By exploiting this
MENA REGION potential, most of the countries could become self-sufficient
in terms of energy, and they could eventually become net
The original phase model was developed for the German exporters of renewables-based energy. As energy and
context, meaning particular assumptions were made. As the hydrogen imports become an important pillar of Europe’s
MENA region context is different, the fundamental assump- energy strategy (European Commission, 2020), the MENA
tions of the phase model were adapted to suit the char- countries could – in the future – benefit from emerging
acteristics of the MENA countries. Fischedick et al. (2020) synthetic fuel markets and profit from energy carrier exports
outlined the differences and described the adaptations of to neighbouring countries in Europe. In this regard, some
the MENA phase model, which serves as a starting point for MENA countries with infrastructure for oil and gas could
the individual country model transfer in this study. build on their experience in handling gas and liquid fuels.
With the support of power-to-X (PtX) technologies, these
One of the differences is the current energy situation in the energy-exporting MENA countries could switch smoothly
MENA region, which varies from country to country. Several from a fossil fuel phase to a renewables-based energy sys-
countries, including Iraq, are rich in fossil fuel resources. tem. However, to achieve this goal, the infrastructure would
Others, such as Morocco, Tunisia, and Jordan, are highly de- have to be retrofitted on a large-scale for transmission and
pendent on energy imports. Furthermore, subsidised energy storage. For other countries in the MENA region, harness-
prices, as well as non-liberalised energy markets, present ing their renewable energy potentials at a later transition
further challenges for the energy transition in many MENA phase to export PtX products could present new economic
countries (IRENA, 2014). opportunities.
Another fundamental difference to the German context is Yet a further difference is that the electricity grid in Germany
the growing trend in energy demand in the MENA region. is fully developed, whereas most of the MENA countries
According to BP (2019), the Middle East will face an annual have grid systems that need to be expanded, developed
increase in energy demand of around 2% until 2040. The nationally, and connected cross-border. Physical intercon-
power, transport, industrial, and non-combusted sectors are nections exist, but these are mainly in regional clusters (The
mainly responsible for the high increase in final energy con- World Bank, 2013). Therefore, the region lacks the necessary
sumption. An additional contributory factor is population framework for electricity trade. In addition, technical grid
growth, which is expected to further increase – particularly in codes would need to be developed to integrate renewable
Egypt and Iraq (Mirkin, 2010). In addition, energy-intensive energy and balance its variability. Moreover, as there are few
industries, including steel, cement, and chemical, account standards for PV and wind, clear regulations would need to
for a substantial proportion of the energy demand. Energy be established to enable grid access.
demand is increasing due to the installation and expansion
of seawater desalination capacities in most MENA countries: The MENA countries could benefit considerably from global
the electricity demand for seawater desalination is expected advances in renewable energy technologies. Global expe-
to triple by 2030 compared to the 2007 level in the MENA rience in the deployment of renewable energy technology
region (IEA-ETSAP and IRENA, 2012). Furthermore, the adds to the learning curve, which has resulted in cost re-
energy intensity in many MENA countries is high, due to ductions. Against this backdrop, the costs of PV modules
low insulation quality in buildings, technical inefficiencies have fallen by around 80% since 2010, and wind turbine
of cooling and heating technologies, and distribution infra- prices have dropped by 30% to 40% since 2009 (IRENA,
structure. The electricity losses in distribution are between 2019). While the phase model for the German context
11% and 15% in stable MENA countries compared to 4% assumes that renewable energy technologies need time to
in Germany (The World Bank, 2019). mature, the phase model for the MENA context can include
cost reductions. Additionally, there is already a wide actor
Although the MENA region does benefit from significant network of companies that provide expertise in the field of
renewable energy resources, much of the economic renew- renewable energy technologies.
8
The MENA Phase Model
The energy systems in the MENA region are in a develop- ble Transformation of Energy Systems in the MENA Region,
mental phase; renewable energies are attractive, seeing as which was supported by the Friedrich-Ebert-Stiftung (Holtz
they provide sustainability and energy security. Furthermore, et al., 2018; Fischedick et al., 2020). The phases for the
they have the potential to stimulate economic prosperity. MENA region are presented in detail in their dimensions,
However, the conditions for developing renewable energy which are based on supply, demand, infrastructure, mar-
industries are weak due to a lack of supporting frameworks kets, and society. The multi-dimensional perspective of
for entrepreneurship and technological innovation. While transitions research is reflected in these layers, highlighting
in Germany private actors play a major role in small-scale the interrelation of these dimensions during the transition
PV and wind power plants, state-owned companies in the phases. Table 3-1 summarises the main developments in the
MENA region are central to large-scale projects. The mobili- »techno-economic« and »governance« layers, as well as on
sation of capital is an additional significant factor that would the »landscape«, »system«, and »niche« levels during the
require dedicated strategies. four phases.
The renewable electricity supply capacities are expanded

3.2 ADAPTATION OF MODEL throughout the phases to meet the increasing demand for
ASSUMPTIONS ACCORDING TO THE energy from all sectors. A crucial assumption is the need for
CHARACTERISTICS OF THE MENA energy efficiency to be increased considerably in all phases.
COUNTRIES The developments in phases 3 and 4 are dependent on many
technological, political, and societal developments and,
The phases of the original phase model must be adapted therefore, have high uncertainties from today’s perspective.
to correspond to the characteristics of the MENA region.
Based on Fischedick et al. (2020), changes to the original In addition, a more detailed analysis of the influence of the
model were made within the four phases and their temporal »landscape« level was conducted. The assumption is made
description. In addition, the »system layer« description is that the following factors would impact on all phases: I)
complemented by a stronger focus on the destabilisation international frameworks on climate change; II) decarbon-
of the regime, and the »niche layer« is highlighted in each isation efforts of industrialised countries, including green
phase to prepare for the subsequent phase. recovery programmes after the COVID-19 pandemic; III)
global and regional conflicts (affecting trade); IV) long-term
In order to meet the expected increase in the overall energy impacts of the COVID-19 pandemic on the world economy;
demand, the volume of renewables in phases 1 and 2 rises V) geographic conditions and natural resource distribution;
considerably without undermining the existing business of and VI) demographic development.
industries that provide fossil fuel and natural gas. The grid
in the MENA countries is limited in its ability to accommo- Phase 1 – »Take-Off Renewable Energies (RE)«
date rising shares of renewables, which results in greater
emphasis on grid retrofitting and expansion during phase Renewable electricity is already introduced into the electric-
1. Moreover, phase 2 must start earlier than in the German ity system before the first phase, »Take-off RE«, is reached.
case, and the development in some countries could include Developments at the »niche« level, such as assessing
a stronger focus on solutions for off-grid applications and regional potential, local pilot projects, forming networks
small isolated grids. The growing domestic demand for of actors, and sharing skills and knowledge about the
energy in the MENA countries could be satisfied by renew- domestic energy system, are initial indicators that diffusion
ables-based energies and energy carriers, such as synthetic is starting. During this pre-phase stage, visions, and expec-
fuels and gases. While in Germany imports play a consider- tations for the expansion of RE-based energy generation are
able role in the later phases (in phase 3 in particular), excess developed.
energy in the MENA countries could be exported and offer
potential economic opportunities in phase 4. The growing In the first phase, the characteristic development at the
global competitiveness of renewable energies offers the system level is the introduction and initial increase of re-
opportunity to accelerate the niche formation stages in all newable energy, particularly electricity generated by photo-
phases of the transition. However, niche formation process- voltaic (PV) and wind plants. MENA countries could benefit
es would have to be integrated into domestic strategies. considerably from the globally available technologies and
Institutions to support niche developments would need to the global price drops of renewable energies, which would
be established and adapted to the country context. facilitate the market introduction of PV and wind energy. As
energy demand in the region is growing considerably, the
share of renewable energy entering the system would not
3.3 PHASES OF THE ENERGY be capable of replacing fossil fuels at this stage. To accom-
TRANSITION IN MENA COUNTRIES modate variable levels of renewable energy, the grid must
be extended and retrofitted. Laws and regulations come
The Wuppertal Institute developed the phase model for the into effect, aiming to integrate renewables into the energy
MENA countries based on the German phase model and system and to enable renewables-based electricity to enter
the experience gained during the project Development of a the grid. The introduction of price schemes as incentives for
Phase Model for Categorizing and Supporting the Sustaina-
9
investors facilitates the large-scale deployment of RE and regulations including pricing schemes, enter the market and
decentralised PV for households. absorb increasing shares of »surplus« renewables during
times of high supply. The mobility and long-distance trans-
Developments occurring at the »niche« level pave the way port sectors, in particular, contribute to an increase in the
for phase 2. The regional potential of different flexibility op- application of PtF/G. This, in turn, enables the replacement
tions is assessed (e.g. the possibilities for pump storage and of fossil fuels and natural gas. The development of hydro-
demand-side management (DSM) in industry), and visions gen infrastructure and the retrofitting of existing oil and
are developed that broach the issue of flexibility options. gas infrastructure for the use of synthetic fuels and gases
At this stage, the role of sector coupling (e.g. e-mobility, create dedicated renewable supply facilities for international
power-to-heat) is discussed, and business models are ex- exports. Price reductions and the introduction of fees and
plored. Expected flexibility needs and sector coupling lay taxes on fossil fuels not only have a negative influence on
the ground for information and communication technology their market conditions, but they also initiate the phase-out
(ICT) start-ups and new digital business models. of fossil fuels. These developments stimulate changes in
the business models. As PtF/G solutions provide long-term
Phase 2 – »System Integration« storage, considerable export market structures can be es-
tablished.
In phase 2, the expansion of renewable energy continues at
the »system« level, while growing markets still provide room At the »niche« level, experiments with PtF/G applications
for the co-existence of fossil fuel-based energy. The grid play an essential role in sectors that are difficult to decar-
extension continues, and efforts to establish cross-border bonise, such as heavy industry (concrete, chemicals, steel),
and transnational power lines are made to balance regional heavy transport, and shipping. In addition, the potential to
differences in wind and solar supply. At this stage, flexibility export hydrogen as well as synthetic fuels and gases is ex-
potentials (DSM, storage) are recognised, and the electricity plored and assessed. Actor networks are established, initial
market design is adapted to accommodate these options. learning is gained, and business models are studied.
The ICT infrastructure is fully integrated with the energy sys-
tem (digitalisation). At the political level, regulations in the Phase 4 – »Towards 100% Renewables«
electricity, mobility, and heat sectors are aligned to provide
a level playing field for different energy carriers. The direct Renewable-based energy carriers gradually replace the
electrification of applications in the mobility, industry, and residual fossil fuels. Fossil fuels are phased out, and PtF/G
heat sectors adds further flexibility to the system. is fully developed in terms of infrastructure and business
models. As support for renewables is no longer required,
PtF/G applications are developed at the »niche« level to pre- price supporting schemes are phased out. Export market
pare the system for a breakthrough in phase 3. Pilot projects structures are expanded and constitute a crucial sector of
test the application of synthetic fuels and gases under local the economy.
conditions. Green hydrogen is expected to replace fossil
fuels in sectors such as chemical production. In the short
to mid-term, the production of CO2 from carbon capture in 3.4 TRANSFER OF THE PHASE MODEL
energy-intensive industries is acceptable. In the long term, TO THE COUNTRY CASE OF ALGERIA
however, the focus must shift to direct carbon capture from
air or bioenergy to guarantee carbon neutrality. Actor net- The MENA phase model was exploratively applied to the
works create and share knowledge and skills in the field of Jordan case in Holtz et al. (2018). The model was discussed
PtF/G. Based on an assessment of the potentials for different with high-ranking policymakers, representatives from sci-
PtF/G conversion routes, strategies and plans for infrastruc- ence, industry, and civil society from Jordan. It proved to be
ture development are elaborated, and business models are a helpful tool to support discussions about strategies and
explored. policymaking in regard to the energy transition that can also
be applied to other MENA countries. Therefore, the MENA
The water-energy-nexus gains appropriate consideration in phase model was applied to the country case of Algeria after
the framework of integrated approaches, as water is becom- necessary adaptations were made to it. The results illustrate
ing even scarcer due to the consequences of climate change. a structured overview of the continuous developments in
This could result in shortages affecting the energy sector or Algeria’s energy system. Furthermore, they provide insights
competition from other uses, such as food production. into the next steps required to transform Algeria’s energy
system into a renewables-based system.
Phase 3 – »Power-to-Fuel/Gas (PtF/G)«
In order to reflect the specific challenges and opportunities
At the »system« level, the share of renewables increases for the energy transition in Algeria, some adaptations
in the electricity mix, leading to intensified competition to the criteria set of the MENA phase model were made
between renewables and fossil fuels and – temporarily on the landscape level as well. These include factors such
– to high, negative residual loads. Green hydrogen and as the COVID-19 pandemic and global decarbonisation
synthetic fuel production become more competitive due to efforts in light of the Paris agreement. These aspects have
the availability of low-cost electricity. PtF/G, supported by either already affected or will affect the international oil
10
and gas prices and the sector development. Furthermore,

details about the dominant role of fossil fuels in the energy
system and related challenges for the development of the
renewable sector have been assessed. Table 3-1 depicts the
developments during the transition phases.
3.5 DATA COLLECTION
Detailed information on the status and current develop-

ments of the various dimensions (supply, demand, infra-
structure, actor network, and market development) was
compiled in order to apply the phase model to individual
country situations. In a first step, a comprehensive review
of the relevant literature and available data was conducted.
Based on the evaluation and analysis of the available data,
information gaps were identified. The missing information
was completed with the help of expert interviews and on-site
research by local partner institutions. In addition, the local
partner organisations helped to identify the country-specific
challenges and barriers that could hinder the unlocking of
the renewable energy potential in the country. The inter-
viewees included relevant stakeholders with experience in
the energy sector or related sectors from policy institutions,
academia, and the private sector. The expert interviews were
conducted according to guidelines for structured interviews.
The quantitative data used is based on secondary sources,
such as databases from the International Energy Agency
(IEA) and the International Renewable Energy Agency (IRE-
NA), or was calculated using available data to identify the
current status and future trends.
Expert interviews were carried out in Algeria by Zineb

Mechieche to investigate the country-specific challenges and
barriers that could hinder the unlocking of the renewable
energy potential in the country. The main interview partners
were Solar Cluster – Algeria and Tewfik Hasni, as well as oth-
er relevant stakeholders with several years of experience in
Algeria’s energy sector from political institutions, academia,
and the private sector.
11
Table 3-1
Developments During the Transition Phases
Development Phase I: Phase II: Phase III: Phase IV:

before “Take-Off RE’ “System Integration RE’ “Power-to-Fuel/Gas “Towards 100% RE’
phase I (PtF/G)’
* Niche * Breakthrough RE * Market-based growth RE * Market-based growth * Market-based growth

formation RE * Niche formation flexibility * Breakthrough flexibility flexibility option PtF/G
option option * Breakthrough PtF/G * Breakthrough special PtF/G
* Niche formation PtF/G * Niche formation special application and exports
PtF/G application and
exports
* International frameworks on climate change
Landscape
* Decarbonisation efforts of industrialised countries (incl. green recovery programmes after COVID-19 pandemic)
* Global and regional conflicts (affecting trade)
level
* Long-term impacts of the COVID-19 pandemic on the world economy

* Geographic conditions and natural resource distribution
* Demographic development
* RE share in energy system * RE share in energy system * RE share in energy system * RE share in energy system
about 0%–20% about 20%–50% about 50%–80% about 80%–100%
* Market introduction of * Further grid extension * Extension of long-term * Large-scale construction
RE drawing on globally (national and international) storage (e.g. storage of of infrastructure for PtF/G
available technology and synthetic gas) exports
driven by global price drop
* Extension and retrofitting * ICT structures integrate * First PtF/G infrastructure is * Phase-out of fossil fuel
of electricity grid with energy systems (e.g. constructed (satisfying up- infrastructure and business
introduction of smart coming national/foreign models
meters) demand)
* Regulations and pricing * System penetration of * Temporarily high negative * Consolidation of RE-based
schemes for RE flexibility options (e.g. residual loads due to high export models
battery storage) shares of RE
* Developing and * Direct electrification of * Sales volumes of fossil * Full replacement of fossil
strengthening domestic applications in the buildings, fuels start to shrink fuels by RE and RE-based
Power Sector
supply chains for RE mobility, and industry fuels

Techno-economic layer
sectors; changing business

models in those sectors (e.g.
System level
heat pumps, e-cars, smart-

home systems, marketing of
load shedding of industrial
loads)
* No replacement of fossil * No replacement (or only * Existing fossil fuel-based * Stabilisation of PtF/G
fuels due to growing limited replacement) of business models start to business models and
markets fossil fuels due to growing change production capacities (e.g.
markets large-scale investments)
* Development and * Increasing volumes of
extension of mini-grids PtF/G in transport, replacing
as a solution for off-grid fossil fuels and natural gas
applications and remote
locations
* Progressing the energy
transition in end-use sectors
(transport, industry, and
buildings)
* Progressing the energy
transition in the industry
sector, reducing the high
carbon content of certain
products and high emissions
of certain processes
12

phase I (PtF/G)’

exports
* Fundamental * Support adoption of RE * Put pressure on fossil fuel- * Put pressure on system * Put pressure on fossil fuels
recognition (e.g. feed-in tariffs), set based electricity regime components that counteract (e.g. phase out production)
that energy up regulations and price (e.g. reduction of subsidies, flexibility (e.g. phase out
efficiency is schemes for RE carbon pricing) base-load power plants)
the second
strategic
pillar of the
energy system
transformation
• Increasing participation * Withdraw support for * Withdraw support for * Withdraw support for
of institutional investors RE (e.g. phase out feed-in flexibility options PtF/G
(pension funds, insurance tariffs)
companies, endowments,
and sovereign wealth funds)
in the transition
* Increasing awareness of * Measures to reduce * Measures to reduce * Measures to reduce
environmental issues unintended side-effects of unintended side-effects of unintended side-effects of
RE (if any) flexibility options (if any) PtF/G (if any)
* Provide access to * Adaptation of market * Set up regulations and * Access to infrastructure
infrastructure and design to accommodate price schemes for PtF/G and markets (e.g. connect
markets for RE (e.g. set up flexibility options (e.g. transport, replace fossil production sites to
regulations for grid access) fuels and natural gas) pipelines)
* Moderate efforts to * Provide access to markets * Reduce prices paid for * Support adoption (e.g.
accelerate efficiency for flexibility options (e.g. fossil fuel-based electricity subsidies)
improvements adaptation of market
design, alignment of
electricity, mobility, and
Governance layer
heat-related regulations)
Power Sector
System level
* Support creation and * Provide access to

activation of flexibility infrastructure and markets
options (e.g. tariffs for bi- for PtF/G (e.g. retrofit
directional loading of e-cars) pipelines for transport of
synthetic gases/fuels)
* Facilitate sector coupling * Support adoption of PtF/G
between power and end- (e.g. tax exemptions)
use sectors to support the
integration of VRE in the
power sector
* Adaptation of market
design to accommodate
flexibility options
* Investments reallocated
towards low-carbon
solutions: high share of RE
investments and reduce the
risk of stranded assets
* Alignment of socio-
economic structures and the
financial system; broader
sustainability and transition
requirements
* Facilitate sector coupling
between power and end-
use sectors to facilitate the
integration of VRE in the
power sector
* Alignment of electricity,
mobility, and heat-related
regulations
13

phase I (PtF/G)’

exports
* Assessment * Assessment of regional * Assessment of potential for * Experiment with PtF/G
of RE potential potential for different different PtF/G conversion applications in sectors
flexibility options routes such as industry (e.g. steel,
cement and chemical
sectors) and special
transport (e.g. aviation,
shipping)
* Local pilot * Experiment with flexibility * Local pilot projects with * Invest in business models
projects with options PtF/G generation based on for PtF/G exports
RE RE hydrogen and carbon
Techno-economic layer
capture (e.g. CCU/CCS)

* Exploration of business * Exploration of PtF/G-based * Pilot synthetic fuel exports
models around flexibility business models
options including ICT
start-ups and new digital
business models for sector
coupling
• Exploration of new DSM
potentials (e.g. smart
charging and vehicle-to-
grid for EV, flexible heat
pump heating and cooling,
thermal storage fed by
electricity)
* Tap into global experiences
Power Sector
of PtF/G
Niche level
* Development * Development of visions * Development of shared * Development of shared

of shared and expectations for flex- visions and expectations visions and expectations
visions and market and energy system for PtF/G (e.g. strategy and for PtF/G exports (e.g.
expectations integration (regional and plans for infrastructure about target markets and
for RE transnational energy development/adaptation) locations for conversion
development markets) steps)
* Support * Support learning processes * Support learning * Support learning about
learning around flexibility (e.g. local processes around PtF/G PtF/G in sectors such
processes projects) (e.g. local projects for as industry and special
around RE (e.g. PtF/G generation, tap transport (e.g. experiments
local projects) global experiences of PtF/G, for using PtF/G products for
exploration of PtF/G-based glass smelting)
Governance layer
business models)
* Formation * Formation of actor * Formation of PtF/G-related * Support learning
of RE-related networks around actor network (national and around PtF/G exports
actor networks flexibility across electricity, international) (e.g. concerning market
(e.g. joint mobility, heat sectors (e.g. acceptance and trade
ventures) exploration of business regulations)
models around flexibility
including ICT start-ups and
new digital business models
for sector coupling)
• Community- * Development of a * Formation of actor
based shared knowledge base of networks for creating large-
engagement integrated decarbonisation scale synthetic fuel export
and pathways to enable structures (e.g. producers,
involvement alignment and critical mass trading associations,
(e.g. citizen that can help shift the entire marketplaces)
initiatives) sector
* Continuing improvements in energy efficiency
* Continuing the reduction of material intensity through efficiency measures and circular economy principles
Source: Own creation
14
Application of the Model to Algeria
APPLICATION OF THE MODEL

TO ALGERIA
Factsheet although this will depend on the efforts and willingness of

Paris Agreement ratified ✔ key decision-makers in the country.
Green growth strategy ✗
This study aims to support the discussion about Algeria’s
Renewable energy targets set ✔ future energy system by providing an overarching guiding
Regulatory policies for renewable vision for the transition to a renewables-based system.
energy implementation established ✔ In order to assist the development of appropriate policy
Energy efficiency strategy existing ✔ strategies, the current status of Algeria’s energy transition
and potential developments are assessed in detail along the
Power-to-X strategy ✗
proposed phase model.
4.1.1 Assessment of the Current State

4.1 CATEGORISATION OF THE ENERGY and Trends at the Landscape and System
SYSTEM TRANSFORMATION IN ALGERIA Levels
ACCORDING TO THE PHASE MODEL This section discusses the current state and trends of Alge-
ria’s energy system in terms of supply, demand, the oil and
Algeria‘s energy system is highly dependent on fossil fuels, as gas sector, renewable energy, infrastructure, actor network,
the country has abundant oil and gas reserves. As a member and market development.
of the Organisation of the Petroleum Exporting Countries
(OPEC), Algeria is one of the world’s largest hydrocarbon Energy Supply and Demand
producers, deriving over 90% of its hydrocarbon revenues
from export. However, Algeria also has significant solar po- Demographic change, industrial development, and urban-
tential, as it benefits from over 3,000 hours of sunshine per isation all drive Algeria’s rising energy demand. In 2018,
year and has the largest land area on the continent. Thus, Algeria’s total final energy consumption was 36,360 ktoe
Algeria possesses the potential to become a major player (IEA, 2020a). Broken down by sector, transport dominated
in the renewable energy sector. Yet, presently, the country energy consumption (42%), followed by households and in-
is barely exploiting this potential and is at a crossroads for dustry (19% each), and others (21%) (IEA, 2020a) (Fig. 4-1).
the development of a future energy system with competing
visions in the political landscape (Hochberg, 2020). In 2018, the energy mix was dominated by fossil fuels (Fig.
4-2), with natural gas accounting for 63.8%, oil for 35.4%,
Under the framework of the Paris Agreement, Algeria has and coal for 0.6%, while renewable energies had in total a
committed to reducing its GHG emissions by 7% by 2030 negligible share of 0.1% (IEA, 2020a).
compared to the business-as-usual scenario (INDC-Algeria,
2015). With international support, Algeria could even re- The average growth of energy consumption in Algeria be-
duce its GHG emissions by 22% by 2030 (Darby, 2015). tween 2000 and 2017 was around 5%. According to the
However, despite Algeria formulating ambitious renewable Commission for Renewable Energy and Energy Efficiency
energy targets and establishing a regulatory framework for (CEREFE), Algeria had in 2019 a total installed capacity
the deployment of renewable energy technologies, the cur- of 20,963 MW (CEREFE, 2020), of which 96% was from
rent share of renewables in the overall energy mix remains natural gas power plants. According to the Commission for
insignificant. The COVID-19 pandemic has highlighted Energy and Gas Regulation (CREG), Algeria plans to increase
Algeria’s high vulnerability to global oil and gas market its total installed capacity to 36,000 MW by 2028. In addi-
prices. The pandemic has also slowed the pace of Algeria’s tion to natural gas, the expansion will include solar power
energy transition plans. Nevertheless, the crisis could be plants, which are expected to occupy a 15% share of the
the impetus needed to introduce fundamental change and installed generation capacity by 2028 (Hochberg, 2020). A
ultimately prioritise clean energy investments in Algeria, plan may also be pending for the development of a nuclear
15
Figure 4-1
Total Final Energy Consumption (in ktoe), Algeria 1990–2018
40000
35000
30000
25000
[ktoe]
20000
15000
10000
5000
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Transport Industry Residential

Commercial and public services Agriculture/forestry Non-specified
Non-energy use
Source: data based on IEA, 2020a
Figure 4-2
Total Energy Supply (in ktoe), Algeria 1990–2018
60000
50000
40000
[ktoe]
30000
20000
10000
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Oil Natural gas Coal Hydro Biofuels and waste Wind, solar etc.
16
Figure 4-3
Electricity Consumption (in TWh), Algeria 1990–2018
70
60
50
40
[TWh]
30
20
10
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 4-4
Electricity Generation by Source (in TWh), Algeria 1990–2018
80
70
60
50
[TWh]
40
30
20
10
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Oil Natural gas Hydro Solar Wind
17
power plant using the country‘s large uranium reserves to Algeria. Despite recent discoveries, the exploitation of hy-
meet the growing demand for electricity (Xinhua, 2019). drocarbons has decreased in recent years due to fields drying
up and delays to new exploitation. The latter is caused by
Electricity consumption in 2018 amounted to around 66.7 a lack of national approval, insufficient infrastructure, and
TWh, which is almost five times the electricity demand in technical challenges (Dena, 2014). While the country still
1990 (Fig. 4-3). In the summer months, the use of cooling produced about 1.5 million barrels of gas per day in 2005,
technologies is high; thus, demand peaks between 1pm its current daily production has fallen to about 1 million
and 3pm. In August 2019, the highest peak for Algeria was barrels (Germany Trade and Invest, 2020).
registered at 15,656 MW at 2:30pm. According to CREG, it
is estimated that Algeria‘s electricity demand will rise to 150 Reforms intended to facilitate foreign investment and halt
TWh by 2030 and reach 250 TWh by 2050. This increasing this decline in development were established, notably in
demand is driven by changes in consumer behaviour and 2005. However, they were later reversed by the military
in the production processes of industrial goods (Bouznit et and security institutions that had a vested financial and
al., 2020). Although the capacity reserve margin for 2013 power interest in maintaining the status quo (Boersma et
was 47% (The World Bank, 2013), demand for electricity al., 2015). In January 2020, a new energy law aiming to im-
in earlier years exceeded supply (e.g. in 2003 and 2012), prove investment conditions for foreign companies (through
leading to regular civil protests. The industry is also highly mechanisms including low taxation) entered into force in
vulnerable to power outages (Deutsch-Algerische Industrie- Algeria (Henle and Schmitz, 2020).
und Handelskammer, 2018).
Recent political debate has come out in favour of exporting
To tackle the increasing levels of consumption, Algeria is natural gas, whereas the goal is to replace its domestic
planning to integrate a substantial volume of renewable consumption with renewable energy. By exporting all the
energy into its power network. However, this may be a natural gas that it currently uses, Algeria could generate
long road, for by 2018 more than 98% of electricity supply around 200 million USD per year. However, decision-makers
had been generated from natural gas, while the share of in Algeria are cautious, adhering to the narrative of securing
renewables had been around only 1% (Fig. 4-4). energy supplies at all costs (including maintaining existing
subsidy structures), owing to the negative impact of the civil
The figures show that renewables play only a marginal role war in the 1990s. As a result, it is likely that the current
in the energy mix and are not yet able to replace fossil fuels structure of the energy supply regime will remain in place
to meet Algeria’s growing energy needs. This is consistent for some years to come.
with the initial phase described in the MENA phase model.
Renewable Energy
The Oil and Gas Sector
As noted above, renewable sources by 2018 had accounted
Algeria’s substantial hydrocarbon reserves are its economic for 1% of the country‘s electricity generation mix. In 2018,
backbone. As the fourth largest global exporter of liquefied solar power accounted for 84% of the total electricity
natural gas (LNG), the third largest global exporter of lique- generated from renewable sources, while hydropower ac-
fied petroleum gas, and the fifth largest global exporter of counted for 15% and wind power for 1% (Fig. 4-6).
natural gas, Algeria is a net exporting country (Fig. 4-5). The
hydrocarbon sector contributes 45.9% to Algeria’s Gross Despite its slow expansion of renewables, Algeria’s solar
Domestic Product (GDP). Its most important export regions energy potential is among the highest worldwide with daily
are Europe (49%) and North America (36%) (Dena, 2014). average irradiation of 6.57 kWh/m2, making an annual total
Due to its natural resources, Algeria plays a crucial role in the of between 2,000 kWh per m2 and 2,650 kWh per m2. As
European Neighbourhood and Partnership policies. Hence, 86% of Algeria is covered by the Sahara Desert, there is
it has signed several bilateral agreements to integrate free good potential for the implementation of large-scale solar
trade zones (Deutsch-Algerische Industrie- und Handel- projects. The solar thermal potential is around 170,000 TWh
skammer, 2011) per year, while the PV potential amounts to around 13.9
TWh per year (Dena, 2014). Most of the potential is in the
Furthermore, recent discoveries have shown that Algeria has south of the country, while most of the demand comes from
the third largest volume of shale gas resources worldwide the urban centres in the north. Algeria’s flagship concen-
(19,800 bn m3) and 5.7 bn barrels of shale oil (Boersma et trated solar power (CSP) project – a hybrid CSP-gas power
al., 2015). Algeria has considered shale gas fracking, but plant – is located in Hassi R’Mel. The plant has a capacity
public protests against shale gas exploration have halted its of 25 MWp CSP and 125 MW gas. The investment for this
development for the time being. The current pandemic has plant was around 313 million Euros, and it started operating
further impeded any development in this direction due to in 2011. In 2014, the PV power plant in Ghardaia with a 1.1
the global market price drop in oil and gas. MWp capacity started operating, and, in 2018, a further PV
power plant with a 10 MWp capacity was commissioned in
Assessments have also shown that Algeria’s resources could Bir Rebaa. The renewable energy arm of Sonelgaz, SKTM,
far exceed its proven conventional gas reserves. More than has built 22 PV power plants with a total capacity of 343
half of these reserves are located at Hassi R’Mel in central MWp (see Table 4-1). As well as the larger-scale implemen-
18
Figure 4-5
Net Energy Imports (in Mtoe), Algeria 1990–2018
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
0
–20
–40
–60
[Mtoe]
–80
–100
–120
–140
Figure 4-6
Electricity Generation Mix (in GWh), Algeria 2018
11
117
1%
98%
1%
655
Oil Natural gas Renewables Wind Hydro Solar
19
tations, island micro-grids supplied by solar power have its renewable energy and energy efficiency programme,
been constructed to meet local demand in the remote and »Programme national d’énergies renouvelables et d’efficac-
sparsely populated regions in the south. These supply 16 ité énergétique« (PNEREE). This plan foresees the installation
villages with 1.5 GWh per year (Dena, 2014). of 22 GW capacity of renewable energies by 2030, of which
10 GW are intended for export. By 2030, electricity gener-
Central and Western Algeria are prominent locations for ation from renewables is expected to increase by around
wind energy, with an average wind speed of 7.5 m/s. From 40%, which will equate to a 27% share in the energy mix
the few existing studies available, it can be deduced that the (REN21, 2019). Achieving this plan will cost Algeria around
Algerian potential for wind power amounts to 35 TWh per 86.55 bn Euros (Dena, 2014). Table 4-2 summarises the
year. A limiting factor is the high share of sand and dust in different phases of the renewable energy programme and
the air, which could affect the functionality of the turbines. refers to the specific energy technology.
Moreover, transporting heavy wind equipment to remote
desert areas (where the potential for wind power genera- The programme was updated in 2015, setting ambitious
tion is the highest) could be a further challenge, as Algeria’s targets to raise the solar capacity to 13.5 GW by 2030. The
desert road networks are not suitable for this kind of traffic share of PV capacity was increased and CSP was withdrawn
(Dena, 2014). In 2014, the first large-scale wind power pro- from the first implementation phase. The main argument
ject, Kabertène, started operating with an installed capacity for withdrawing CSP technology was its higher costs. How-
of 10.2 MWp (see Table 4-1). ever, as energy scenarios show that Algeria’s overall energy
use splits into 20% for electricity and 80% for heat, the
The potential to use biomass for energy production is limit- government’s decision on CSP might prove to be illogical.
ed and is not included in Algeria’s renewable energy deploy-
ment plan. Likewise, geothermal potential is not considered Table 4-2
Renewable Energy Programme 2030 in Algeria (in MWp)
for large-scale deployment, although some geothermal
potential in areas with limestone and sandstone formations Phase Phase Total
2015–2020 2021–2030
exists (Dena, 2014).
PV 3,000 10,575 13,575
Hydropower potential is also severely limited in Algeria, as Wind 1,010 4,000 5,010
the country suffers from water scarcity. Low rates of precip- CSP – 2,000 2,000
itation, fast discharge, and an extremely high evaporation Cogeneration 150 250 400
rate limit the potential for hydropower generation. In addi- Biomass 360 640 1,000
tion, most of the river wadis are seasonal. Although Algeria Geothermal 5 10 15
has an installed hydropower capacity of 313 MW and could
Total 4,525 17,475 22,000
produce up to 500 GWh electricity per year, only 117 GWh
Source: data based on CEREFE, 2020
was generated in 2018. There is no record of the installed
capacity of small-scale hydropower stations (Dena, 2014). The repercussions of the COVID-19 pandemic, which has
Table 4-1 summarises the operational grid-connected re- led to a global drop in the oil price, are expected to further
newable energy projects in Algeria, which have a combined accelerate the Algerian government’s ambition and political
total installed capacity of 389.3 MWp. will to invest in solar energy (Stahl, 2020). Against this
backdrop, Algeria’s government has recently shown a keen
Despite the current low levels of renewables, the govern- interest in the possibility of replacing gas-fired power plants
ment has the will to combat climate change and secure with solar power plants. The gas could be exported instead
Algeria’s energy supply by implementing renewable energy of burnt in Algeria’s gas power plants, which could generate
projects. Therefore, in 2011 the Ministry of Energy launched foreign currency savings (Henle and Schmitz, 2020).
Table 4-1
Operational Renewable Energy Projects in Algeria
Operational wind power plants

Site Kabertène (Adrar)
Operational Year 2014
Installed Capacity (MWp) 10.2
Operational solar power plants (CSP and PV)
Site Hassi-R’Mel Ghardaia Bir Rebaa Nord Programme de SKTM
(Ouargla)
Type Solar thermal and steam PV PV PV
(natural gas)
Operational Year 2011 2014 2018 2018
Installed Capacity (MWp) 25 (CSP) 1.1 10 343
Source: data based on CEREFE, 2020
20
To meet its targets, Algeria is also planning a solar project, tariffs (FiT) for solar energy, wind energy, and cogeneration,
Tafouk 1, which consists of five 800 MW tenders. The 4,000 which are regulated by the Arrêtés of 2014. The feed-in-
MW project has the potential to increase Algeria’s solar tariffs vary according to the capacity of the power plant.
manufacturing capacity for modules, racks, and cables. It Wind power plants with a capacity of more than 5 MW
also provides momentum for meeting Algeria’s renewable receive 9.5 eurocents per kWh, and smaller wind power
energy targets (Hochberg, 2020). A substantial element plants (under 5 MW) receive 11.9 eurocents per kWh. Solar
of the tender is the requirement for parts to be locally power plants with a capacity of more than 5 MW receive
manufactured; this could cause initial barriers because Al- 11.6 eurocents per kWh, and smaller solar power plants
geria’s solar market is not yet fully developed. Nevertheless, (under 5 MW) receive 14.5 eurocents per kWh. CSP projects
such policies have the potential to encourage knowledge are not included in the FiT scheme (energypedia, 2020).
transfer to the local economy. Located at the crossroads of The National Fund for Renewable Energy and Cogeneration
Europe and MENA, Algeria could, in an optimistic scenario, (FNER, Fond National pour les Energies Renouvelables et la
become a manufacturing supply hub for the renewables Cogénération) was also established by the Executive Decree
industry (ibid.). No. 11-423 in 2011, which is financed by a 1% levy on oil
tax revenues (RCREEE, 2019). Like Jordan, Algeria provides a
Within Algeria, the agricultural sector is a pioneer in using statutory guarantee of priority access to the grid for renewa-
renewable energies. Most of the agricultural sites are in the bles; this is currently a rare mechanism in the MENA region.
remote south, far from the transmission network. Some The Executive Decrees Nos. 06-428 and 06-429 of 2006 and
agricultural facilities have, therefore, invested in solar or 2008 guarantee this priority access (RCREEE, 2012). Fig. 4-7
wind power plants to guarantee uninterrupted business depicts the introduction of energy policy measures and their
operation for cooling, drying, and processing – as well as impact on renewable electricity generation by year.
for irrigation. However, this has not yet become the industry
standard, and the majority of agriculture producers continue The growth in renewable energy generated since 2014 co-
to use diesel generators (Deutsch-Algerische Industrie- und incides with the introduction of the feed-in-tariff. The larg-
Handelskammer, 2018). Several small-scale off-grid projects est growth was achieved the following year after changes
have also been implemented; these include solar kits and were made to the PNEREE. Solar energy accounted for the
solar and wind pumped irrigation systems (CEREFE, 2020). highest share of renewables, which could be a result of its
higher feed-in-tariff. While Fig. 4-7 shows the development
To incentivise the deployment of renewable energies, the of renewable electricity generation and energy policy meas-
Algerian government has set up several financing mecha- ures up to 2018, the first tender was only issued in 2019.
nisms. These include power purchase agreements (PPAs), Perhaps surprisingly, this first tender attracted a low number
regulated by the Executive Decree No.13-218, and feed-in- of bids (Bouznit et al., 2020).
Figure 4-7
Development of Renewable Electricity Generation by Source (in GWh) and Introduction of Energy Policy Measures,
Algeria 1990–2018
800 2009
2008 2018
Amendment of Law on Renewable Energy Algeria‘s
Renewable Energy National Fund electricity final
700
Priority Access consumption
2011
(Law No. 06-429) 76.6 TWh
Renewable Energy
600 and Efficiency (1% RE share)
2006
Law on Renewable Energy Development Plan
Priority Access 2011–2030
500
(Law No. 06-428) 2015
2014
Feed-in Amend-
[GWh]
2004
400 tariff for ment of
Law on Renewable Energy
solar PV PNEREE
Promotion (Law No. 04-09)
installa- 2015–2030
300 tions
2002
1% wind
Law on Energy
Market 84% solar
200
Liberalisation and
creation of CREG 15% hydro
100 (Law No. 02-01)
0
1990 1995 2000 2005 2010 2015
Hydro Solar Wind

21
In summary, when it comes to renewable energy, the Al- economic advantages in the long term. However, the grid
gerian government seems to be taking a gradual approach must be able to integrate a high percentage of fluctuating
rather than making rapid large-scale changes. As long as generation, and the grid extensions will depend on suitable
the government continues to subsidise energy prices and sites for renewables (Platzer, 2016). Necessary adaptations
the well-developed electricity infrastructure near coastal must also be made to control distribution systems, such
demand centres remain in place, the pace of the transition as the net-metering of grid-connected self-producers of
to renewable energy is likely to remain moderate. Despite renewables (RCREEE, 2019). Therefore, the need for a com-
Algeria’s potential for large-scale solar projects, several re- plete overview is essential for all further planning measures.
newable energy projects planned for the period 2006–2014
and 2016–2020 exist only on paper, and renewable energy The time taken to complete the expansion and retrofitting
projects attract negative publicity due to the powerful will depend on the power resource construction and the
oil and gas lobby. Algeria has, therefore, not yet met the motivation of the relevant institutions (Shen et al., 2018).
requirements to be classified as having completed the first Fig. 4-8 depicts Algeria’s electricity transmission network
phase according to the phase model. with its major load centres located in the urban coastal
zones of the country.
Infrastructure
In its current state, Algeria’s transmission infrastructure is
In Algeria, 99% of the population is connected to the unable to integrate large volumes of renewables. Although
national electricity transmission grid. The grid is 30,515 a regulatory framework is in place and liberalisation of the
km in length, 4,497 km of which is a 400 kV high voltage market has started (Law No. 02-01 in 2002 dictates the un-
network. The grid is connected to Morocco and Tunisia bundling of the former vertically integrated utility Sonelgaz
via the Maghreb Interconnection. Libya is also part of this (Ministère De L’Énergie, 2020)), the grid still faces technical
connection (The World Bank, 2013). Towards Morocco, the and regulatory challenges. The Algerian grid is still in the
transmission lines are 225 kV and 400 kV, with an overall ca- expansion phase. Consequently, the development of the
pacity of 1,400 MW. The Tunisian interconnector lines have electricity infrastructure for the integration of renewables
a total capacity of 900 MW, with voltages of 90 kV, 150 kV according to phase one of the phase model has been initiat-
and 220 kV. A 400 kV line has also been ready since 2008 ed but is not yet complete.
on the Algerian side (IRENA, 2014). The Maghreb states
have agreed to reform the transmission grid and to work Institutions and Governance
together to improve and harmonise a joint electricity trade
market. Furthermore, in the Algiers Declaration of 2010 The Ministry of Energy is the key actor in Algeria’s electricity
the nations declared their aim to create a viable market for and energy sector. It supervises the whole energy sector and
electricity within the Maghreb states and to integrate this is responsible for the development and implementation of
market with the EU, in particular with the Iberian Peninsula energy policies and strategies. Due to increasing awareness
(The World Bank, 2013). Work necessary to integrate with of the importance of renewable energy in Algeria, the Min-
the EU is complete on Morocco’s side, while Algeria’s part is istry of Energy Transition and Renewable Energy was created
still under development. Moreover, Algeria has plans to es- to promote the deployment of renewables in the country.
tablish a Pan-Arab Electricity Market; this intent was marked Following measures to unbundle the electricity market in
by the mutual signing of Memorandums of Understanding 2002, the market was divided into several institutions. How-
with other Arab countries in 2017 (Matar, 2020). ever, these are mostly state-owned. Created in 2002, CREG
oversees the electricity and national gas markets to protect
The transmission grid assets are owned by Societé Algéri- the interests of both consumers and operators. CREG also
enne de Gestion du Réseau de Transport de l’Electricité manages and controls public energy services and acts as a
(GRTE – the transmission company owned and operated consultant to the government (energypedia, 2020). In addi-
by Sonelgaz), which acts as a single buyer in the Algerian tion, it publishes tenders for the deployment of renewable
energy market model. Security of supply is the responsibility energy technologies.
of another Sonelgaz entity, Opérateur système électrique.
GRTE has developed plans to extend the transmission grid in On the extraction and generation side, several national
the period 2020 to 2029, creating a total length of 50,280 companies dominate the Algerian energy sector: Sonatrach
km (Mansour, 2020a). The distribution sector is monitored Group is responsible for hydrocarbons, while Sonelgaz
by four distribution companies, who supervise their own Group produces and commercialises electricity and is
system. The Algerian grid presently faces several challenges. responsible for the national distribution of natural gas.
These include one-way communication, high carbon emis- Societé Algérienne de l’Electricité – Algerian company for
sion levels, long transmission lines to deliver power, high electricity (SPE) also produces electricity, while GRTE (the
electricity costs, and fluctuation in the future if increasing Algerian company for electricity transmission) is in charge
levels of renewable energy are fed into the grid (Harrouz of the transmission of electricity. Electricity distribution is
et al., 2017). Currently, 389.3 MWp of renewable energy the responsibility of Societé Algérienne de Distribution de
is fed into the Algerian grid, which provides preferential l’Electricité et du Gaz (SADEG), which was created by the
grid-access conditions for renewables, as it guarantees merger of the four former Sonelgaz distribution compa-
priority of dispatch (RCREEE, 2019). Having a high share of nies: the Societé de Distribution du centre – distribution
renewables in the electricity structure will create substantial company for the centre (SDC), Societé de Distribution de
22
Figure 4-8
Electricity Transmission Network of Algeria Showing Major Load Centres
Legend
Cities
Transmission line
Major load centers
Source: own creation data based on Energydata, 2017
l’ouest – distribution company for the west (SDO), Societé diesel and solar energy projects. The tenders and FiT scheme
de Distribution de l’est – distribution company for the east are part of the Algerian plan to install 22 GW of renewable
(SDE), and Societé de Distribution d’Alger – distribution energy power generation capacity by 2030. Fig. 4-9 depicts
company for Alger (SDA) (Mansour, 2020b). In 1985, the the Algerian institutional framework of the electricity and
Ministry of Energy created the Agency for the Promotion of energy market.
the Rationalisation of the Use of Energy (APRUE) to promote
energy efficiency measures. APRUE is responsible for educa- Since Sonelgaz was restructured as a holding company in
tional and awareness-raising campaigns regarding energy 2002 (Law No. 02-01), experts have argued that Algeria’s
efficiency. efforts to liberalise the market are minimal and still repre-
sent a considerable barrier for the private sector. The legal
IPPs have been permitted to produce and sell electricity un- framework is already mature, but the regulatory framework
der the framework of the single buyer market since 2002. and financial mechanisms have proven to be insufficient
A PPA must be signed with GRTE, which buys the electricity (Hochberg, 2020). According to Boersma et al. (2015), com-
from the IPPs. Currently, 13% of electricity produced in panies operating in the energy sector face bureaucratic and
Algeria comes from IPPs, which are mostly active in the lengthy processes because all communications have to go
fossil fuel sector (Dena, 2014). A tender scheme is in place through Sonatrach or Sonelgaz. This delays the fulfillment of
to drive investment in renewables in Algeria. Contracts, projects and can lead to problems in communication. There-
in form of a PPA, are awarded to companies that bid to fore, the current state of development and effectiveness of
produce the power at the lowest cost. The first tender was the institutional framework places Algeria at the beginning
issued in 2019, seeking a total of 150 MW. However, as the of the first phase towards a renewable-based energy system
tender rules required substantial local manufacture of solar according to the MENA phase model.
modules and other equipment – despite the limited number
of local solar manufacturers – offers were only made for Energy Market and Economy
90 MW, even though the agreement included a mandatory
51% stake for the Algerian entity and finance from Algerian The electricity tariff structure in Algeria varies according to
banks (Bellini, 2019; Hochberg, 2020; Bouznit et al., 2020). the time of the day: there are six tariffs – peak, off-peak,
The selected projects from the 2019 tender round will be main consumption hours, day, night, and one fixed tariff.
developed under a build-own-operate (BOO) scheme with a Furthermore, the tariffs are differentiated based on the type
PPA over 20 years. The government has issued a further ten- of customer (e.g. households and industry), with the latter
der for 50 MW for the development of off-grid hybrid gas/ usually paying more per kWh. The tariffs, therefore, vary
23
Figure 4-9
Electricity Market Structure with Relevant Authorities and Companies
Ministry of Energy
Transition and
Ministry of Energy
Renewable
Energy
Renewable Agency for the Commission for

Commission for
Energy National Company Promotion of the Renewable Energy
Electricity and Gas
of Electricity and Sonatrach Rationalisation of the and Energy
Regulation Development Use of Energy
Gas (Sonelgaz) Efﬁciency
(CREG) Centre (CDER) (APRUE) (CEREFE)
Renewable
Energy Branch
(SKTM) Electricity
Transmission Private Companies
Company (GRTE) (IPPs)
PPA with
GRTE
Gas Transmission
Company
(GRTG) Auctions (PPA
with GRTE)
Sonelgaz
Electricity
Company (SPE)
Government
Distribution
Company (SADEG)
Consumers
Residential
Industrial
Source: own creation data based on Energydata, 2017
between 0.007 and 0.052 eurocents per kWh. The tariff In support of renewables, Algeria has established the Na-
structure is controlled by CREG. tional Energy Efficiency Fund, Fond National de la Maîtrise
de l’Energie (FNME), a renewables and cogeneration
Algeria is a typical rentier state. As well as exporting natural fund financed by taxes and fines. The taxes necessary to
gas and oil, it relies on hydrocarbons for domestic consump- finance the fund are recalculated annually on the basis
tion. Both resources are heavily subsidised. In 2019, around of annual budget requirements for the renewable energy
7.6% of Algeria’s GDP went into subsidies: oil was subsidised and energy efficiency programmes. They are also includ-
by 8.8 bn USD, gas by 2.3 bn USD, and electricity by 2 bn USD ed in the budget law (Deutsch-Algerische Industrie- und
(IEA, 2020b). The electricity price is linked to the subsidised Handelskammer, 2018).
power generation cost of gas power plants. One of the main
barriers for renewable energy development in Algeria is the In terms of private sector finance, it is generally difficult to
low electricity market price resulting from these subsidies. obtain a bank loan for renewable energy or energy efficien-
Furthermore, the low price results in negative externalities; cy projects (Deutsch-Algerische Industrie- und Handelskam-
not only would the energy usage be high, but the cost of mer, 2018) because the sector is still at an early stage in
energy will also not be reflected in the prices of energy-in- Algeria, which makes the risks unpredictable for banks. The
tensive commodities. Subsidy reforms would alleviate fiscal option to finance projects through private equity in the form
pressures and allow for the reallocation of the budget to oth- of investment funds is possible. However, only a small num-
er priorities, such as renewables (RCREEE, 2019). However, as ber of Algerian private firms specialise in this sector. Other
the Algerian government has not yet initiated or announced options include project finance schemes, where repayments
any subsidy reforms, it is anticipated that this situation will are linked to future cashflow. However, a disadvantage of
not change in the near future (Dena, 2014). these schemes is that foreign utilities are only permitted to
own 49% of the holding (ibid.).
In summary, the state-subsidised energy prices are a major

2 The tariffs of 120.5 cDA and 811.47 cDA have been converted by us- barrier for the wider deployment of renewable energy,
ing the currency converter www1.oanda.com and they constrain the Algerian government’s support for
24
renewables. The subsidies distort the market at the expense Greenhouse Gas Emissions
of the energy transition. Until Algeria reforms its fossil fuel
subsidies and actively invests instead in energy diversifica- Algeria ranks third in Africa for CO2 emissions generation
tion, its development towards a renewables-based energy (Hochberg, 2020). In 2014, energy use per capita amount-
system is unlikely to progress. Thus, Algeria is classified to ed to 1,327 kg of oil equivalent (The World Bank, 2014),
remain in the first phase of the transition phase model. which is relatively high compared to the other Maghreb
states. In 2018, the transport sector was responsible for
Efficiency 32% of the CO2 emissions, electricity and heat producers
for 28%, followed by the residential sector at 19%. Industry
In 2011, the Algerian government launched a national accounted for 9% of CO2 emissions in the same year. Since
programme for energy efficiency that was amended in 2005, CO2 emissions had increased by 77% due to increas-
2015. The energy efficiency programme aims to implement ing demographic dynamics, industrial development, and
efficiency targets in the building, transport, and industrial impacts resulting from climate change (Fig. 4-10). Fig. 4-10
sectors. For the building sector, the target is to save more depicts the Algerian CO2 profile, while Fig. 4-11 illustrates
than 30 million toe by 2030 through the use of thermal in- the resulting emissions from heat and electricity generation
sulation in construction, LED lamps, and solar water heaters. by source for 2018.
The transport sector’s target is to save 15 million toe, largely
by replacing conventional fuels with liquefied petroleum Algeria is highly vulnerable to climate change, as it already
gas (LPG) and compressed natural gas (CNG). The industrial experiences significant levels of water stress. Water resourc-
sector is expected to contribute by saving up to 34 million es remain a major challenge. Out of all the Mediterranean
toe by 2030. In total, the government plans to spend 900 countries, Algeria is ranked second only to Spain in terms
bn DA3 on the energy efficiency programme. To achieve of desalination. Desalination in Algeria is largely based on
the measures set out in the plan, the following actions will fossil fuels (Sahnoune and Imessad, 2017). With an installed
have to be taken every year until 2030: 100,000 residential capacity of 2.4 million m3 per day in 2015 for desalination,
buildings will have to adopt thermal insulation measures, this sector generates high levels of CO2 emissions because
10 million energy-efficient lamps will have to be distributed, of its energy-intensive process.
and 1.3 million vehicles will have to be adapted to use liquid
petroleum gas. It is expected that these measures will create Although Algeria’s Nationally Determined Contributions
up to 180,000 jobs (energypedia, 2020; Sahnoune and Im- (NDC) target is to reduce CO2 emissions by 7% by 2030,
essad, 2017). Furthermore, the government plans to reduce emissions are, in fact, increasing due to industrialisation.
gas flaring in power plants by 1% by 2030. In order to decarbonise the transportation sector, which
is responsible for the major share of GHG emissions, pro-
For new technological devices using electricity, gas, or other grammes targeting electrification need to be implemented.
fuel, energy certification and labelling exists. For instance, However, direct electrification will only succeed in reducing
typical residential equipment, such as air conditioning units, GHG emissions if the electricity is generated from renewable
fridges, heaters, lamps, and televisions, are labelled with sources.
energy classifications according to the efficiency Law No.
05-16, introduced in 2015. Measures for energy efficiency Society
in the building sector have not yet been regulated by law;
however, technical documents guide the retrofitting work The number of social, cultural, and environmental organisa-
for thermal insulation and lighting (Deutsch-Algerische tions is increasing in Algeria, and environmental awareness
Industrie- und Handelskammer, 2018). Another plan is to among citizens seems to be slowly rising (BTI, 2020). There
focus on the circular economy by introducing the compost- has also been considerable opposition to certain energy
ing of organic waste and the valorisation of methane gas in projects, particularly a project in southwestern Algeria to
water treatment plants. Clearly, the energy efficiency plan explore the country’s shale gas resources. Unexpected pro-
does include first steps towards resource efficiency. tests by local communities led to countrywide resistance and
have succeeded in halting shale gas exploration in Algeria
An evaluation of the steps taken by Algeria regarding ener- for the time being. Notwithstanding the environmental and
gy efficiency shows that the government has recognised it socio-economic benefits associated with the development
as an essential part of the energy transition. The plans in the of renewable energies, social acceptance of renewable
regulatory framework indicate that Algeria has put energy energy projects should not be taken for granted.
efficiency measures into practice at political level. However,
the targets have not yet been reached, meaning that Algeria Various renewable energy research and training agencies and
is in the first phase of the energy transition according to the institutions have been created. These include the Institute for
MENA phase model. In other words, Algeria has not yet fully Renewable Energy and Energy Efficiency (IAER), APRUE, and
completed the first phase of its energy efficiency measures. the Renewable Energy Development Centre (CDER) (Tuerk
et al., 2015). APRUE organises awareness-raising campaigns
for energy conservation, and CDER disseminates relevant
information about renewables and regularly publishes news
3 around 8 bn Euro on this topic on its website. The Solar Energy Cluster was
25
Figure 4-10
CO2 Emissions by Sector (in Mt CO2), Algeria 2005–2018
+ 77%
140
120
100
80
[Mt CO2]
60
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Electricity and heat producers Transport

Industry Residential
Commercial and public services Other energy industries
Final consumption not elsewhere specified
Figure 4-11
CO2 Emissions from Electricity and Heat Generation by Energy Source (in Mt CO2), Algeria 2018
2%
38.6 Mt CO2 Oil

Gas
98%
created in 2017 by 12 energy companies to strengthen the government still includes fossil fuels in its future vision
the network of national companies and actors operating of the energy system.
in the value chain. These include raw material suppliers,
developers, installers, professional trainers, academics, and A limited number of institutions offer master’s degrees
designers. At present, 34 companies are members of this or PhDs in this field. The IAER offers specific training and
network. The cluster aims to raise awareness and encourage workshops for capacity-building, including courses on
the use of renewable energies, in particular solar energy, by engineering, safety and security, energy auditing, and
providing in-depth information and good practice guidelines project management for installers and technicians (Tuerk
to support the country’s energy transition (Haouari, 2017). et al., 2015). According to CEREFE (2020), between 2017
The creation of the Solar Energy Cluster has led to a new and 2018, 40 people obtained a professional certification in
vision of an Algeria powered solely by renewables; however, energy efficiency, 46 in PV module installation and mainte-
26
nance, and 268 in the installation of PV and solar thermal er market, with Sonelgaz having a monopoly. The tenders
systems. recently issued in Algeria have hitherto failed to balance the
interests of the public sector with those of the private sector
As the financial sector has a limited understanding of the (IPPs) and foreign investment. Contributing factors to the
renewable energy sector, the large-scale deployment of limited number of projects are most likely the strict local
renewable energy projects is difficult in Algeria. Specific content requirements for renewable energy projects.
training for the financial sector is crucial, but this has not yet
become a reality. In summary, at the system level a number of factors cur-
rently limit Algeria’s progress in the energy transition: the
Overall, Algeria has recently established a number of abundance of natural gas resources, subsidised electricity
institutions to raise awareness about renewable energies. prices, energy market structures, hesitant support from
However, the Algerian society does not yet consider environ- institutional actors, and a lack of social readiness to pay for
mental topics as being of consequence. Awareness-raising renewables. All these aspects are preventing Algeria from
campaigns will contribute to this dimension; however, it will achieving its ambitious transition goals. By implementing
take considerable efforts to embed these aspects in people’s the PNEREE and Law No. 02-01 on market liberalisation,
daily habits and mindsets. Algeria has entered the first phase of the energy transition
towards a renewables-based system according to the
Summary of the Landscape and MENA phase model. However, current challenges, such as
System Level Developments the pandemic, could negatively impact progress or hamper
further development. In addition, renewables are not cur-
On the landscape level, the COVID-19 pandemic is expected rently replacing oil and gas due to the growth in energy
to affect the energy transition at least in the short term but demand. In fact, the opposite is true: the consumption of
potentially also in the long term. Other barriers impacting fossil fuels is increasing, GHG emissions are rising, and fossil
the development of the energy transition at system level fuel capacities are being expanded, which is likely to create
reflect technical, financial, and regulatory patterns. technological lock-ins.
Algeria has officially unbundled its electricity market and Table 43 summarises the current trends and goals of the
guarantees priority access for electricity generated from energy transition according to relevant indicators.
renewables, but the electricity market remains a single buy-
Table 4-3
Current Trends and Goals of the Energy Transition
Category Indicator 2005 2010 2015 2018 2020 2030 2050

Carbon Emissions CO2 emissions per unit –10% –12% –3% N/A N/A –7% to 20%
(Compared to of GDP (compared
1990) to BAU)
CO2 emissions per +15% +35% +65% +65% N/A – –
capita
Renewable Capacity Growth (MW) N/A 253 312 solar water 1 GW bio-power
Energy heating targets: from Waste-to-
490,000 m2 of Energy,
collector area 15 MW
(solar CSP) (2020) geothermal, 13.5
GW solar PV, 2
GW CSP, 5 GW
wind (2030)
Share in final energy 0.6% 0.3% 0.1% 0.1% (2017) N/A 40% –
use
Share in electricity mix 1.6% 0.38% 0.23% 1.02% 6% 27% –
Efficiency Total primary energy +46.1% +87.7% +152.5% +174.7% N/A – –
(Compared to supply (TPES)
1990)
Energy intensity of –5.4% +3.2% +18.1% N/A N/A – –
primary energy
Total energy supply +11.1% +33.3% +55.6% +55.6% N/A – –
(TES) per capita
Electricity consumption +80% +100% +200% +220% N/A – –
per capita
Fossil fuel subsidies (% N/A N/A N/A 7.6% of GDP: 8.8 – –
of GDP 2019) bn USD (oil), 2.3
bn USD (gas), 2 bn
USD (electricity)
27
Category Indicator 2005 2010 2015 2018 2020 2030 2050

Buildings Residential final +186% +94% +224.6% +308.1% N/A – –
electricity consumption
(compared to 2005)
Transport Total final energy +55.2% +99.5% +190.9% +186.4% N/A – –
(Compared to consumption
1990)
CO2 emissions in +50% +100% +187.5% +181.3% N/A – –
transport sector
Number of e-vehicles N/A N/A N/A N/A N/A 100,000
Industry Carbon intensity of –4.3% –10.9 % –19.2% –19.2% N/A – –
industry consumption
(compared to 1990)
Value added (% of 57.33% 50.5% 35.7% 39.6% 37.4% (2019) – –
GDP)
Supply Security Natural gas exports +106.5% +82.3% +38.7% +63.9% N/A – –
(compared to 1990)
Oil products imports +243% +597% +2,696% +491% N/A – –
(compared to 1990)
Global crude oil exports N/A N/A –21.76 –29.42 (2018) –27.81% (2019) – –
(compared to 2012) (2017)
Electricity imports +72.2% +103.2% +67.7% +41.9% N/A – –
(compared to 1990)
Electricity exports –7.7% +165.4% +111.5% +96.2 % N/A – –
(compared to 1990)
Electricity access by N/A 98.8 % 99.93% 100% N/A – –
population proportion
Oil reserves (compared N/A +7.87% N/A +7.9% +7.87% – –
to 1999)
Gas reserves (compared N/A –1.15% N/A –0.2% –1.15% – –
to 1999)
Investment Decarbonisation 0.1499 0.3892 0.8838 N/A N/A – –
(Compared to investments (millions USD USD USD
2007) USD)
Socio-economy Population (2019) 43,053,054 – –
Population growth 1.39% 1.80% 2.04% 2% N/A –
Urbanisation rate 63.83% 67.54% 70.85% 72.05% (2017) N/A – –
GDP growth 5.9% 3.6% 3.7% 1.4% N/A – –
Oil rents (% of GDP) 29% 23.3% 12.8% 15.7% N/A – –
Natural gas rents (% 3.9% 3.2% 3.2% 3.1% N/A – –
of GDP)
Jobs in low-carbon N/A N/A N/A N/A 13,776 (2019) – –
industries
Water Level of water stress 92.5% 104.9% 126% 137.9 (2017) N/A – –
Source: based on data from BP, 2020; FAO, 2020; IEA, 2020a; IRENA, 2020; Statista, 2020; The World Bank, 2020
4.1.2 Assessment of Trends and Devel- need to be implemented by the government to achieve
opments at the Niche Level the full introduction of renewable energy in Algerian
Developments at the niche level during each phase are markets.
crucial for reaching the subsequent stages of the energy
transition (see Table 31). With the aforementioned advances ■ Off-Grid PV
made at the system level in Algeria towards renewable en-
ergy, previous and parallel developments have taken place Off-grid PV is a clear niche in Algeria. Remote regions in
at the niche level. While some aspects, such as solar energy the south, as well as highly congested areas in the north
and energy efficiency, are being integrated at the energy face serious challenges in terms of stable energy supply.
system level, other aspects are still at the niche level. Initial Power shortages in the summer threaten reliable produc-
developments are evident in areas such as the electrification tion. The energy demand for industrial activities, such as
of the transport sector or PtX, which are important for cement, ceramics, chemistry, and food production, as
moving forward to the next phases. Algeria shows some well as the construction of new buildings that consume
progress in almost all the relevant dimensions of supply, large amounts of energy, cannot be met solely by the
demand, infrastructure, markets/economy, and society. state (Deutsch-Algerische Industrie- und Handelskammer,
However, important steps towards renewable energy still 2018). To counter this issue, decentralised solutions are
28
required. However, due to the lack of alternatives, diesel production in the south of the country (Boudries-Khellaf
generators are mainly used to meet this demand (ibid.). and Khellaf, 2003).
The exception is in the agricultural sector that possesses
solar-powered irrigation systems. The increasing number of The current global momentum for hydrogen should not be
these systems is proving their feasibility and leading to rising ignored by Algeria and its industrial actors (Kefaifi, 2020).
demand. Algeria has a reforming sector that consists of a number of
ammonia, methanol, and refining plants that have been op-
■ Energy Efficiency erating for over 60 years and use synthetic gas to produce
methanol and ammonia. It could, therefore, be pivotal to
As part of the 2015 Energy Efficiency Plan, Algeria is target- convert the standard process and use hydrogen produced
ing the building sector. Refurbishment measures include the from renewables. However, there are currently no incentives
use of thermal insulation materials; however, this is currently to support such a step.
an immature market in Algeria. Against this background, lo-
cal industrial production must focus on insulation materials 4.1.3 Necessary Steps for Achieving the
and expand these production capacities. Energy auditing is Next Phase
also part of the efficiency plan, but Algeria has few quali- Algeria has already taken first steps towards a renewable
fied specialist companies in this sector (Deutsch-Algerische energy transition and can be categorised as entering the
Industrie- und Handelskammer, 2018). »Take-Off Renewables« phase according to the MENA
phase model. In order to integrate renewables into the
■ E-mobility energy system (described by the phase model as second
phase) and to proceed with the energy transition, efforts
Concrete e-mobility measures are still under development, in the field of renewable energy implementation must be
but some targets do exist. For instance, the Minister of En- increased, and the political willingness to act in this regard
ergy Transition has set a target of 100,000 electric vehicles must be translated into concrete action.
(EV) on the streets by 2030. However, the main aim for the
public transport sector is to switch to electric locomotives to Algeria is a market with high potential for renewables due
replace the many diesel trains still in use. Algeria has plans to its size and resource potential, but challenges remain.
to electrify railway lines, and the planned railway connection The dominance of the oil and gas sector in both the en-
to the south – to Tamanghasset – is also to be electrified. ergy mix and the overall economy hinder the widespread
The electrification in the railway sector could be powered deployment of renewables in multiple ways. Due to the
by solar technology built along the line (Oxford Business COVID-19 pandemic, renewables have become more
Group, 2016). Some discussions are taking place about favourable in terms of costs and available financing. Thus,
electrification of the road transport sector, but there have the government should focus on adopting the increasingly
been no significant developments yet. competitive renewable energy technologies, as they have
been heralded to be the winner of the crisis (IEA, 2020c).
■ Biofuels Gas can act in the short term as a bridging technology for
the energy transition in Algeria, as it is efficient and flexible
The production of biofuels is currently not under consid- and, therefore, compatible with renewable energies. In the
eration in Algeria. However, a pilot project took place to long term, however, gas technology should also be phased
produce bioethanol from the residues of date processing. out.
Blending gasoline with the biofuel produced from the dates
is being tested, and a feasibility study has been conducted To support renewables to take-off, strong governmental sup-
(Dena, 2014). port is required, especially in a country like Algeria with large
fossil fuel resources. For example, the legal and investment
■ Hydrogen and PtX framework conditions for implementing renewables projects
must be revised to make them attractive. While Algeria has a
Two pilot research projects for the development of hydro- clear regulatory framework in place for renewables, it is not
gen were initiated in 2006. Both the “Solar Hydrogen Pilot effective. Tenders for the private sector have had only limited
Project” (implemented by the CDER’s Technological Studies success, and the limitations imposed on foreign investments
and Innovation Department) and the HYDROSOL project (in in Algeria is a definite major barrier. Companies in Algeria
cooperation with the Institute of Technical Thermodynamics should also be incentivised to switch to renewables; for ex-
and Solar Research at the German Aerospace Center (DLR)) ample, through guaranteed revenue from renewable energy
aim to exploit Algeria’s solar potential to produce hydro- generation. This could be in the form of tax allowances or
gen (Deutsch-Algerische Industrie- und Handelskammer, exemptions for renewables, CO2 certifications, or energy
2011). Synthetic fuels are discussed to a limited extent on auditing. Furthermore, by providing an adequate framework
the political level, although Algeria was expected to sign and regulations to support businesses to adopt energy effi-
a Memorandum of Understanding (MoU) with Dii Desert ciency and GHG emissions reduction measures, companies
Energy on hydrogen in 2020 (Hochberg, 2020). An existing could be encouraged to participate in efforts towards the
hydrogen study from 2003 analysed the potential estimated energy transition (Al-Shamali et al., 2019).
29
Furthermore, Algeria must create incentives for the intro- bridging technology in the short term during the transitional
duction and integration of renewable energies and flexibility stage, the aim in the long term must be for renewables to
options. One important step would be to phase out energy become the primary energy source.
subsidies for fossil fuels, which currently hinder the energy
transition. This would give the state fiscal leverage and help To reach this target, it is crucial to increase cooperation
to reduce excessive energy consumption (Al-Shamali et al., between different sectors and levels of governance. On the
2019). vertical level, communication between governance entities
must be enhanced. On the horizontal level, platforms for
Strengthening cooperation with neighbouring countries and cross-sectoral and interdisciplinary dialogue must be created
the EU on technology transfer and capacity-building could to develop a robust, coherent, and comprehensive policy
also help to achieve the goal of a higher share of renewables framework that will facilitate the transformation of the
in the electricity mix. Promoting energy partnerships and energy system towards renewables. The overall objective
alliances, such as the German-Moroccan Hydrogen Alliance should be providing recommendations to strengthen 100%
concluded in June 2020, could be an important step in this renewable energy development in Algeria for the benefit of
direction. Specifically, the introduction of dedicated voca- the population. The energy transition must be considered
tional training, as well as certified courses for stakeholders, within the socio-economic system in which it is deployed.
such as banks, could help to increase domestic capacity Bidirectional interactions between the energy transition and
levels in the renewable energy sector. the socio-economic system can foster synergies (IRENA,
2018). Therefore, policy should consider the energy transi-
To further advance the renewable energy transition towards tion not only from an economic point of view but also from
system integration, Algeria must start to consider flexibility a socio-economic perspective and address broader issues,
options. Some incentives in the e-mobility and hydrogen such as energy and climate justice. The involvement of
sector do exist, but the government has not yet focused on different stakeholders and representatives of the population
these (Hochberg, 2020). The discussion on e-mobility could can increase transparency and participation. For example,
be advanced by imposing a carbon tax on gasoline vehicles assembling different actors for the development of energy
or by introducing electric buses in the public transport sec- scenarios can also increase motivation to engage in the
tor. Establishing a differentiated and dynamic tariff structure energy transition.
could further provide an opportunity to exploit existing flexi-
bility potentials. Moreover, the transmission and distribution In its energy policy, Algeria still displays the typical attitude
networks must be expanded and improved. of a rentier state with a strong focus on fossil fuels, while
ambitions around renewable energies remain mainly on
Another important factor for the system integration of paper. Moreover, the liberalisation of the energy market
renewable energies is the digitalisation of the energy sector. is delayed. An example is Law. No. 02-01, which foresees
This is at a very early stage in Algeria. To make progress in market liberalisation but groups the energy companies
digitalisation, the necessary know-how needs to be trans- into a holding company that owns more than 50% of the
ferred and adapted to the local Algerian context. market. The creation of an independent regulatory authority
could be a first step towards better monitoring of the elec-
Overall, progress will largely depend on political motivation tricity market.
to actively support the energy transition. This not only entails
state investment but also includes designing the necessary Given that the centres of demand are in the north on the
framework conditions to encourage participation and to coast, while all the current energy production around Hassi
attract investment from the private sector. R’Mel is in the south and the renewable energy potential is
also in the Sahara, appropriate infrastructure for transport-
ing energy is a critical component. Whereas transportation
4.2 OUTLOOK FOR THE NEXT PHASES infrastructure for oil and gas is already in place, there is a
OF THE TRANSITION PROCESS lack of smart grid and grid management technology to
bring large amounts of renewable electricity to the coast
As shown in this analysis, Algeria has made some progress (Hasni et al., 2021). Therefore, infrastructure capacity plan-
in the field of renewable energies. With the PNEREE, Algeria ning needs to be approached holistically and developed in
has a useful short to mid-term concept that helps to ad- favour of renewable energy.
dress the challenges faced by the energy sector. However,
for Algeria to achieve its renewable energy targets, it must In summary, gas will remain an important component of the
increase its efforts. Although there is a strong legal frame- energy system in Algeria in the short to mid-term. Neverthe-
work for renewables, practical implementation lags behind. less, renewable energy should be integrated into strategic
This is due to lobbying by the oil and gas sector, which has planning at an early stage to seize economic opportunities
led to the construction of more conventional power plants. and enable a smooth transition. The current PNEREE energy
New fossil fuel generation capacities have long operating plan does not provide an integrated approach to effectively
lifetimes, which could create new path dependencies in the incorporate the entire energy system and align it with long-
energy system. This is an obstacle to a sustainable energy term goals. It is, therefore, recommended that Algeria starts
transition, as shown by the phase model. While gas can be a developing a long-term strategy that takes into account its
30
renewable energy potential to enable the efficient trans-

formation of its energy supply. With the on-going global
decarbonisation efforts and the expected changing demand
from consumers worldwide in the favour of sustainable
fuels, Algeria would be well advised to embark on this
path sooner rather than later to avoid technological lock-in
effects and stranded investments in the fossil fuel sector.
Fig. 4-12 summarises Algeria’s current status in the energy

system transition and gives an outlook on the following
steps.
Figure 4-12
Overview of Algeria’s Status in the Energy System Transition Model
Niche level before Niche level before

Phase I:
phase I phase I
Take off
(take off) (system integration)
Assessment of
RE does not regional
Supply
Assessment for
replace fossil potentials of
RE potential
fuels different
flexibility options
Demand
Local
Efforts to Experiments with
experiments with
accelerate flexibility options
RE
efficiency
improvements
Exploration of
Infrastructure
business models
Extension and around flexibility
retrofitting of including ICT start-
electricity grid Transnational ups and new digital
efforts for business models for
sector coupling
grid
expansion
Market
Development of
introduction of visions for flex-
Economy
Market/
Development of RE market and energy

visions for RE system integration
extensions (regional and
Regulations and transnational energy
markets)
price schemes
for RE
Formation of actor
Formation of RE Increasing networks around
Society
related actor awareness of flexibility across

networks environmental electricity, mobility,
issues heat sectors
time
not yet
completed missing
completed
31
CONCLUSIONS AND OUTLOOK
A clear understanding and a structured vision are prerequi- Algeria can benefit from its resources by using natural gas as
sites for fostering and steering a transition towards a fully a bridging technology along the development pathway. In
renewables-based energy system. The MENA phase model the long term, however, achieving an energy system based
was adapted to the country case of Algeria in order to on 100% renewables should be a realistic objective for the
provide information that would support the energy system’s country. Furthermore, Algeria has sufficient potential to ex-
transition towards sustainability. The model, which built on port renewable energy in various forms in the future, which
the German context and was complemented by insights into offers the opportunity of replacing declining revenues from
transition governance, was adapted to capture differences fossil fuels. In this regard, the structural changes related to
between general underlying assumptions, characteristics of global decarbonisation efforts, which are expected to result
the MENA region, and the specific Algerian context. in decreasing demand for fossil fuels, are likely to become
an important driver for the transition towards renewable
The model, which includes four phases (»Take-off RE«, energy. Therefore, the Algerian government would be well
»System Integration«, »Power-to-Fuel/Gas«, and »Towards advised to take measures to promote investment in low-car-
100% Renewables«), was applied to analyse and determine bon energy technologies. This requires holistic planning to
where Algeria stands in terms of its energy transition to- facilitate system and infrastructure integration, taking so-
wards renewables. The application of the model also pro- cio-economic structures into account. Building trust among
vides a roadmap detailing the steps needed to proceed on decision-makers and other stakeholders is fundamental to
this path. The analysis has shown that interest in renewable realising Algeria’s renewable energy goals, and changes in
energies is growing in Algeria, and the Algerian govern- policy, investment, and behaviour will all be required.
ment has set itself ambitious renewable energies targets.
Although the legal framework and expansion planning for
renewable energies is well developed, regulatory support
for renewable energies and financial incentives have so far
been somewhat limited. Given that fossil fuels play a major
role in Algeria’s energy sector, as well as in the economy as
a whole, the pathway to a renewable energy-based energy
system needs strong government support at all levels to suc-
ceed. In order to gain broader political support, the energy
transition must be recognised by decision-makers as a long-
term opportunity for economic and social development.
32
BIBLIOGRAPHY
BIBLIOGRAPHY
Al-Shamali, A., El-Issa, B., Elmaddah, E., Mansour, I., Rouabhia, I., Fischedick, M., Samadi, S., Hoffmann, C., Henning, H.-M., Pregger,
Al-Thobhani, K., El Saim, N., Fawaz S., Al Harthey, S., Serriya, S., & T., Leprich, U., & Schmidt, M. (2014). Phasen der Energiesystemtrans-
Al-Zoghoul, S. (2019). Energy & climate in the MENA region – Youth formation (FVEE – Themen). FVEE. https://www.fvee.de/fileadmin/
perspective to a sustainable future. Friedrich-Ebert-Stiftung. publikationen/Themenhefte/th2014/th2014_03_01.pdf
https://germanwatch.org/sites/default/files/Energy_and_Climate_MENA_
Region.pdf Geels, F. W. (2012). A socio-technical analysis of low-carbon transitions:
Introducing the multi-level perspective into transport studies. Journal of
Bellini, E. (2019, September 17). Limited success for Algeria’s 150 MW Transport Geography, 24, 471-482. https://doi.org/10.1016/j.
PV tender. PV Magazine. https://www.pv-magazine.com/2019/06/17/lim- jtrangeo.2012.01.021
ited-success-for-algerias-150-mw-pv-tender/
Geels, F. W., & Schot, J. (2007). Typology of sociotechnical transition
Boersma, T., Vandendriessche, M., & Leber, A. (2015). Shale gas in pathways. Research Policy, 36(3), 399–417. https://doi.org/10.1016/
Algeria: No quick fix. Brookings Institution. https://www.brookings.edu/ j.respol.2007.01.003
wp-content/uploads/2016/07/no_quick_fix_final-2.pdf
Germany Trade and Invest. (2020, January 16). SWOT-Analyse – Alge-
Boudries-Khellaf, R., & Khellaf, A. (2003). Estimation de la production rien. https://www.gtai.de/gtai-de/trade/wirtschaftsumfeld/swot-analyse/
de l’hydrogène solaire au sud Algérien. algerien/swot-analyse-algerien-209470
Bouznit, M., Pablo-Romero, M., & Sánchez-Braza, A. (2020). Meas- Haouari, F. (2017, September 15). Un groupement de 12 entreprises
ures to promote renewable energy for electricity generation in Algeria. créent le cluster energie solaire. Algerie Eco. https://www.algerie-eco.
Sustainability, 12(4), 1468. https://doi.org/10.3390/su12041468 com/2017/09/15/groupement-de-12-entreprises-creent-cluster-ener-
gie-solaire/
BP. (2018). BP energy outlook – 2018 edition. https://www.bp.com/con-
tent/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/ Harrouz, A., Abbes, M., Colak, I., & Kayisli, K. (2017). Smart grid and
energy-outlook/bp-energy-outlook-2018.pdf renewable Energy in Algeria. 6th International Conference on Renewable
Energy Research and Applications.
BP. (2019). BP energy outlook – 2019 edition. https://www.bp.com/
energyoutlook Hasni, T., Malek, R., & Zouioueche, N. (2021). Algeria 100% Renewa-
ble Energy: Recommendations for a National Strategy of Energy Transi-
BP. (2020). Statistical review of world energy 2020 – 69th edition. tion. Friedrich-Ebert-Stiftung.
London.
Henle, F., & Schmitz, P. (2020, June 25). Algerische Unternehmen hof-
BTI – Bertelsmann Transformation Index. (2020). Algeria country re- fen auf eine Erholung 2021. Germany Trade and Invest. https://www.gtai.
port 2020. https://www.bti-project.org/en/reports/country- de/gtai-de/trade/branchen/branchencheck/algerien/algerische-unterneh-
report-DZA-2020.html men-hoffen-auf-eine-erholung-2021-260366
CEREFE – Commission for Renewable Energy and Energy Effi- Henning, H.-M., Palzer, A., Pape, C., Borggrefe, F., Jachmann, H., &
ciency. (2020). Transition énergétique en Algérie. Fischedick, M. (2015). Phasen der Transformation des Energiesystems.
Darby, M. (2015, September 4). Algeria targets 7-22% greenhouse gas Energiewirtschaftliche Tagesfragen, 65 (Heft 1/2), 10-13.
emissions cut by 2030. Climate Home News. https://www.climatechange- Hochberg, M. (2020, October 20). Algeria charts a path for renewable
news.com/2015/09/04/algeria-targets-7-22-greenhouse-gas-emissions- energy sector development. Middle East Institute. https://www.mei.edu/
cut-by-2030/ publications/algeria-charts-path-renewable-energy-sector-development
Dena – Deutsche Energie-Agentur. (2014). Länderprofil Algerien. Holtz, G., Fink, T., Amroune, S., & Fischedick, M. (2018). Develop-
https://www.dena.de/fileadmin/dena/Dokumente/Pdf/3217_ ment of a phase model for categorizing and supporting the sustainable
Laenderprofil_Algerien_REG.pdf transformation of energy systems in the MENA region. Wuppertal Institut
Deutsch-Algerische Industrie-und Handelskammer. (2011). Zielgrup- für Klima, Umwelt, Energie.
penanalyse Algerien. Hoogma, R., Weber, M., & Elzen, B. (2005). Integrated long-term
Deutsch-Algerische Industrie-und Handelskammer. (2018). Alge- strategies to induce regime shifts towards sustainability: The approach of
rien – Erneuerbare Energien und Energieeffizienz in Gewerbe und Land- strategic niche management. In Weber M., Hemmelskamp J. (Eds.), To-
wirtschaft. https://www.german-energy-solutions.de/GES/Redaktion/DE/ wards Environmental Innovation Systems (pp. 209–236). Berlin: Springer.
Publikationen/Marktanalysen/2018/zma_algerien_2018.pdf?__blob=- IEA – International Energy Agency. (2017). World energy outlook
publicationFile&v=3 2017. https://www.iea.org/reports/world-energy-outlook-2017
Energydata. (2017). Algeria – Electricity transmission network. https:// IEA – International Energy Agency. (2020a). Data and statistics.
energydata.info/dataset/algeria-electricity-transmission-network-2017 https://www.iea.org/countries
energypedia. (2020, December 16). Algeria energy situation. IEA – International Energy Agency. (2020b, June 2). Value of fos-
https://energypedia.info/wiki/Algeria_Energy_Situation sil-fuel subsidies by fuel in the top 25 countries, 2019. https://www.iea.
European Commission. (2020). A hydrogen strategy for a climate- org/data-and-statistics/charts/value-of-fossil-fuel-subsidies-by-fuel-in-
neutral Europe. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&- the-top-25-countries-2019
source=web&cd=&ved=2ahUKEwiCmuaosdrvAhVNgf0HHe6sDd4QFjA- IEA – International Energy Agency. (2020c). Covid-19 and the resil-
CegQIBhAD&url=https%3A%2F%2F1.800.gay%3A443%2Fhttps%2Fec.europa.eu%2Fcommission%2F- ience of renewables – Renewables 2020 – Analysis. https://www.iea.org/
presscorner%2Fapi%2Ffiles%2Fattachment%2F865942%2FEU_Hydro- reports/renewables-2020/covid-19-and-the-resilience-of-renewables
gen_Strategy.pdf.pdf&usg=AOvVaw0C2qrWCJBh6z9arLPPwMjw
European Commission DG Energy. (2019). Energy efficiency first prin-

IEA-ETSAP, & IRENA – International Energy Agency, Energy Tech-
ciple. 5th Plenary Meeting Concerted Action for the EED, Zagreb.
nology Systems Analysis, & International Renewable Energy
FAO – Food and Agriculture Organization of the United Nations. Agency. (2012). Water desalination using renewable energy [Technology
(2020). 6.4.2 Water stress | Sustainable Development Goals. brief]. http://iea-etsap.org/E-TechDS/PDF/I12IR_Desalin_MI_Jan2013_
http://www.fao.org/sustainable-development-goals/indicators/642/en/ final_GSOK.pdf
INDC-Algeria. (2015). The People’s democratic republic of Algeria.

Fischedick, M., Holtz, G., Fink, T., Amroune, S., & Wehinger, F. https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/
(2020). A phase model for the low-carbon transformation of energy sys- Algeria%20First/Algeria%20-%20INDC%20(English%20unofficial%20
tems in the MENA region. Energy Transitions, 4, 127-139. https://doi. translation)%20September%2003,2015.pdf
org/10.1007/s41825-020-00027-w
33
IRENA – International Renewable Energy Agency. (2014). Pan-Arab Stahl, T. (2020, June 8). USA bremst Ölförderung: Algerien plant riesige
renewable energy strategy 2030: Roadmaps of actions for implementa- Solaranlagen mit 4-Gigawatt-Power. EFahrer.com. https://efahrer.chip.de/
tion. (S. 108). International Renewable Energy Agency (IRENA); League of news/usa-bremst-oelfoerderung-algerien-plant-riesige-solaranlagen-
Arab States. https://irena.org/-/media/Files/IRENA/Agency mit-4-gigawatt-power_102451
/Publication/2014/IRENA_Pan-Arab_Strategy_June-2014.pdf
Statista. (2020). OPEC global crude oil exports by country 2019.
IRENA – International Renewable Energy Agency. (2018). Global en- https://www.statista.com/statistics/264199/global-oil-exports-of-opec-
ergy transformation: A roadmap to 2050. https://irena.org/-/media/Files/ countries/.
IRENA/Agency/Publication/2018/Apr/IRENA_Report_GET_2018.pdf
Tuerk, A., Frieden, D., Steiner, D., Pasicko, R., Kordic, Z., & Kar-
IRENA – International Renewable Energy Agency. (2019). Renewa- akosta, C. (2015). Bringing Europe and Third countries closer together
ble power generation costs in 2018. https://www.irena.org/ through renewable energies. Better.
publications/2019/May/Renewable-power-generation-costs-in-2018
Voß, J.-P., Smith, A., & Grin, J. (2009). Designing long-term policy:
IRENA – International Renewable Energy Agency. (2020). Renewa- Rethinking transition management. Policy Sciences, 42(4), 275–302.
ble capacity statistics 2020.
Weber, K. M., & Rohracher, H. (2012). Legitimizing research, technol-
Kefaifi, A. (2020, February 12). Pour paver la route de la transition ogy and innovation policies for transformative change: Combining in-
énergétique – L’hydrogène comme source alternative. Liberte. sights from innovation systems and multi-level perspective in a compre-
https://www.liberte-algerie.com/contribution/lhydrogene-comme- hensive »failures« framework. Research Policy, 41(6), 1037–1047.
source-alternative-333723
The World Bank. (2013). Middle East and North Africa – Integration of
Loorbach, D. (2007). Transition management: New mode of governance electricity networks in the Arab world: Regional market structure and de-
for sustainable development. Utrecht: International Books. sign. (Report No: ACS7124). http://documents.worldbank.org/curated/
en/415281468059650302/pdf/ACS71240ESW0WH0I0and0II000
Mansour, T. (2020a, September 29). Le grossiste de l’électricité. Final0PDF.pdf
El-Djazair.com. https://www.eldjazaircom.dz/2020/09/29/le-grossiste-
de-lelectricite/ The World Bank. (2014). Energy use (kg of oil equivalent per capita) –
Algeria, Germany, Morocco, Tunisia, Libya, Egypt, Arab Rep., Saudi
Mansour, T. (2020b, September 29). La vitrine du groupe Sonelgaz. Arabia. https://data.worldbank.org/indicator/EG.USE.PCAP.KG.OE?
El-Djazair.com. https://www.eldjazaircom.dz/2020/09/29/la-vitrine-du- locations=DZ-DE-MA-TN-LY-EG-SA
groupe-sonelgaz/
The World Bank. (2019). Electric power transmission and distribution
Matar, J. (2020). The Pan-Arab electricity market – From vision to execu- losses (% of output). https://data.worldbank.org/indicator/EG.ELC.LOSS.
tion and results. ZS
Ministère De L’Énergie. (2020, December 16). Electricité et gaz. The World Bank. (2020). Data. https://data.worldbank.org/indicator/
https://www.energy.gov.dz/?rubrique=electricite-et-gaz EN.ATM.CO2E.KD.GD?locations=IQ
Mirkin, B. (2010). Arab Human Development Report – Population levels, Xinhua. (2019, July 16). Uranium-rich Algeria plans to build nuke power
trends and policies in the Arab region: Challenges and opportunities. Re- plant: minister. Xinhuanet.com. http://www.xinhuanet.com/english/
search Paper Series. UNDP. 2019-07/16/c_138229485.htm
Oxford Business Group (2016): Modernisation of Algeria’s railway net-
work contributing to performance improvements. https://oxfordbusiness
group.com/analysis/all-aboard-expansion-railway-network-will-enable-it-
play-larger-role-overland-transport
Platzer, W., Boie, I., Ragwitz, M., Kost, C., Thoma, J., Vogel, A.,
Fluri, T., Pfeiffer, W., Burmeister, F., Tham, N., Pudlik, M., Bohn, S.,
Agsten, M., Bretschneider, P., Westermann, D., Kranzer, D., &
Schlegl, T. (2016). Supergrid – Approach for the integration of renewa-
ble energy in Europe and North Africa. Fraunhofer. https://www.ise.
fraunhofer.de/content/dam/ise/en/documents/publications/studies/
Study_Supergrid_final_160412_.pdf
RCREEE – Regional Center for Renewable Energy and Energy Effi-

ciency (2012). Renewable energy country profile: Algeria.
https://www.rcreee.org/sites/default/files/algeria_fact_sheet_print.pdf
RCREEE- Regional Center for Renewable Energy and Energy Effi-

ciency (2019). Arab future energy index (AFEX) – Renewable energy
2019. https://www.rcreee.org/content/arab-future-energy-index-
renewable-energy-2019-report
REN21. (2019). Renewables 2019 global status report. REN21 Secretariat.

https://www.ren21.net/gsr-2019/
Sahnoune, F., & Imessad, K. (2017). Analysis and impact of the meas-
ures to mitigate climate change in Algeria. Energy Procedia, 136, 495–
500. https://doi.org/10.1016/j.egypro.2017.10.263
Shen, H., Dai, Q., Wu, Q., Wu, J., Zhou, Q., Wang, J., Yang, W.,
Pestana, R., & Pastor, R. (2018). The state-of-the-arts of the study on
grid interconnection between Iberian Peninsula and West Maghreb re-
gion. Global Energy Interconnection, 1(1), 20-28.
https://doi.org/10.14171/j.2096-5117.gei.2018.01.003
34
LISTS
LIST OF ABBREVIATIONS LIST OF UNITS AND SYMBOLS

APRUE Agency for the Promotion of the Rationalisation of the % Percent
Use of Energy CO2 Carbon dioxide
bn billion
GWh Gigawatt hour
BOO Build, own and operate scheme
ktoe Kilo tonnes of oil equivalent
CCS Carbon capture and storage
CCU Carbon capture and use kV Kilo Volt
CDER Renewable Energy Development Centre kW Kilowatt
CEREFE Commission for Renewable Energy and Energy Effi- kWh Kilowatt hour
ciency m/s Metre per second
CNG Compressed natural gas
Mt Megatonne
COVID-19 Coronavirus disease 2019
Mtoe Million tonnes of oil equivalent
CREG Commission for Electricity and Gas Regulation
CSP Concentrated solar power MW Megawatt
DA Algerian Dinar MWp Megawatt peak
EU European Union TWh Terawatt hour
EV Electrical vehicle W/m2 Watts per square metre
FiT Feed-in tariff
FNER National Renewable Energy and Cogeneration Fund
FNME National Energy Efficiency Fund
GDP Gross Domestic Product
LIST OF TABLES
GHG Greenhouse gas
Table 3-1 Developments During the Transition Phases 12
GRTE Electricity Transmission Company at Sonelgaz
Table 4-2 Renewable Energy Programme 2030 in Algeria
GRTG Gas Transmission Company at Sonelgaz
(in MWp) 20
IAER Institute for Renewable Energy and Energy Efficiency
Table 4-1 Operational Renewable Energy Projects in Algeria 20
ICT Information and communication technologies Table 4-3 Current Trends and Goals of the Energy Transition 27
IPP Independent Power Producer
LNG Liquefied natural gas
LPG Liquefied petroleum gas
MENA Middle East and North Africa LIST OF FIGURES
MLP Multi-level perspective
MoU Memorandum of Understanding Figure 2-1 The Multi-Level Perspective 5
NDC Nationally Determined Contributions Figure 2-2 Transition Phase Model for the MENA Regio 6
OPEC Organisation of the Petroleum Exporting Countries Figure 4-1 Total Final Energy Consumption (in ktoe),
PNEREE National programme for renewable energy and energy Algeria 1990–2018 16
efficiency Figure 4-2 Total Energy Supply (in ktoe), Algeria 1990–2018 16
PPA Power Purchase Agreement Figure 4-3 Electricity Consumption (in TWh),
PtF Power-to-fuel Algeria 1990–2018 17
PtG Power-to-gas Figure 4-5 Net Energy Imports (in Mtoe), Algeria 1990–2018 19
PtX Power-to-X Figure 4-6 Electricity Generation Mix (in GWh), Algeria 2018 19
PV Photovoltaic Figure 4-7 Development of Renewable Electricity Generation
by Source (in GWh) and Introduction of Energy
R&D Research & Development
Policy Measures, Algeria 1990–2018 21
RE Renewable Energy
Figure 4-8 Electricity Transmission Network of Algeria
SADEG Algerian Electricity and Gas Distribution Company Showing Major Load Centres 23
SDA Government Distribution Company – Algiers Figure 4-9 Electricity Market Structure with Relevant
SDC Government Distribution Company – Centre Authorities and Companies 24
SDE Government Distribution Company – East Figure 4-10 CO2 Emissions by Sector (in Mt CO2),
SDO Government Distribution Company – West Algeria 2005–2018 26
Figure 4-11 CO2 Emissions from Electricity and Heat Generation
SKTM Renewable Energy Branch at Sonelgaz
by Energy Source (in Mt CO2), Algeria 2018 26
SPE Sonelgaz Electricity Company
Figure 4-12 Overview of Algeria’s Status in the Energy System
USD US-Dollar Transition Model 31
35
36
IMPRINT
ABOUT THE AUTHORS IMPRINT
Sibel Raquel Ersoy (M.Sc) works as a junior researcher in Friedrich-Ebert-Stiftung | Algeria Office
the research unit »International Energy Transitions« at the 175 blvd KrimBelkacem | Telemly | 1600 Algiers
Wuppertal Institute since 2019. Her main research interests
are transition pathways towards sustainable energy systems https://algeria.fes.de/
in the Global South and modelling the water-energy-nexus.
She has a specific regional research focus on the Middle East To order publications:
and North Africa. [email protected]
Dr. Julia Terrapon-Pfaff is a senior researcher at the Wup- Commercial use of all media published by the Friedrich-
pertal Institute. Her primary research area is the sustainable Ebert-Stiftung (FES) is not permitted without the written
energy system transition in developing and emerging consent of the FES.
countries, with a special focus on the Middle East and North
Africa.
Experts consulted in Algeria:
Zineb Mechieche is a research engineer and specialist in

environmental communication, currently pursuing a Mas-
ter’s degree in climate and media.
Tewfik Hasni is an expert consultant in energy transition

and an engineer in refining and petrochemicals. He spent
most of his career at SONATRACH; in 2002 he founded New
Energy Algeria (NEAL), a renewable energy development
company.
Solar Energy Cluster is a non-profit grouping of actors

from the economic, research and development and higher
education sectors. The aim of the Cluster is to create syn-
ergies between its members. It is also a force of proposal.
ABOUT THIS STUDY
This study is conducted as part of a regional project applying

the energy transition phase model of the German Wuppertal
Institute to different countries in the MENA region. Coor-
dinated by the Jordan-based Regional Climate and Energy
Project MENA of the Friedrich-Ebert-Stiftung, the project
contributes to a better understanding of where the energy
transition processes in the respective countries are at. It also
offers key learnings for the whole region based on findings
across the analysed countries. This aligns with FES’s strate
gies bringing together government representatives, civil
society organisations along with supporting research, while
providing policy recommendations to promote and achieve
a socially just energy transition and climate justice for all.
The views expressed in this publication are not necessarily those of the
Friedrich-Ebert-Stiftung or of the organisations for which the authors
work. ISBN 978-9931-551-17-1
SUSTAINABLE TRANSFORMATION
OF ALGERIA’S ENERGY SYSTEM
A clear understanding of socio-techni- The analysis shows that Algeria has Especially, with the ongoing global de-
cal interdependencies and a structured already taken first steps towards a re- carbonisation efforts and the expected
vision are prerequisites for fostering newable energy transition. According changing demand from consumers
and steering a transition to a fully to the MENA phase model, Algeria can worldwide in the favour of sustainable
renewables-based energy system. To be classified as entering the »Take-Off fuels, Algeria would be well advised to
facilitate such understanding, a phase Renewables« phase. Nevertheless, embark on a sustainable path sooner
model for the renewable energy transi- fossil fuels still play a dominant role in rather than later to seize economic
tion in MENA countries has been devel- the Algerian energy sector and in the opportunities and avoid technological
oped and applied to the country case economy as a whole. To support the lock-in effects and stranded invest-
of Algeria. It is designed to support the renewables take-off, strong support ments in the fossil fuel sector. The re-
strategy development and governance is therefore needed at all levels. Only sults of the analysis along the transition
of the energy transition and to serve as then can the necessary framework phase model towards 100% renewa-
a guide for decision makers. conditions be created to encourage ble energy are intended to stimulate
participation and to attract investment and support the discussion on Algeria’s
from the private sector. To this end, a future energy system by providing an
long-term energy strategy should to be overarching guiding vision for the en-
developed that takes into account the ergy transition and the development of
renewable energy potential to support appropriate policies.
an efficient transformation of the
Algerian energy supply and enables a
smooth transition.
For further information on this topic:

https://algeria.fes.de
https://mena.fes.de/topics/climate-and-energy

Algeria Sustainable Transformation of Energy System

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Algeria Sustainable Transformation of Energy System

Uploaded by

Copyright:

Available Formats

S T U DY

Algeria has sufficient potential

2.1 The Original Phase Models ........................................................................ 4

3 THE MENA PHASE MODEL 8

3.1 Specific Characteristics of the MENA Region ............................................ 8

4 APPLICATION OF THE MODEL TO ALGERIA 15

4.1 Categorisation of the Energy System Transformation in Algeria

5 CONCLUSIONS AND OUTLOOK 32

requirements of the different phases that combine to form

In this study, the MENA phase model is applied to the case

Landscape developments put pressure on

Socio-technical regime is »dynamically stable«.

External influences on niches Elements become aligned,

Source: Geels and Schot, 2007

Special PtF/G applications + exports NF BT MBG

Power-to-fuel / gases NF BT MBG

Flexibility options NF BT MBG

NF: Niche Formation BT: Break-Through MBG: Market-Based Growth

a stronger emphasis on the processes that must occur to

Changing the deployment of technologies across markets

This study pays particular attention to the »landscape« level

THE MENA PHASE MODEL

The renewable electricity supply capacities are expanded

and gas prices and the sector development. Furthermore,

3.5 DATA COLLECTION

Detailed information on the status and current develop-

Expert interviews were carried out in Algeria by Zineb

Development Phase I: Phase II: Phase III: Phase IV:

* Niche * Breakthrough RE * Market-based growth RE * Market-based growth * Market-based growth

* Long-term impacts of the COVID-19 pandemic on the world economy

supply chains for RE mobility, and industry fuels

sectors; changing business

heat pumps, e-cars, smart-

Development Phase I: Phase II: Phase III: Phase IV:

* Niche * Breakthrough RE * Market-based growth RE * Market-based growth * Market-based growth

* Support creation and * Provide access to

Development Phase I: Phase II: Phase III: Phase IV:

* Niche * Breakthrough RE * Market-based growth RE * Market-based growth * Market-based growth

capture (e.g. CCU/CCS)

* Development * Development of visions * Development of shared * Development of shared

Source: Own creation

APPLICATION OF THE MODEL

Factsheet although this will depend on the efforts and willingness of

4.1.1 Assessment of the Current State

Transport Industry Residential

Source: data based on IEA, 2020a

Source: data based on IEA, 2020a

Source: data based on IEA, 2020a

Oil Natural gas Hydro Solar Wind

Source: data based on IEA, 2020a

Source: data based on IEA, 2020a

Oil Natural gas Renewables Wind Hydro Solar

Source: data based on IEA, 2020a

Operational wind power plants

Hydro Solar Wind

Source: own creation data based on Energydata, 2017

Renewable Agency for the Commission for

Source: own creation data based on Energydata, 2017

In summary, the state-subsidised energy prices are a major

Electricity and heat producers Transport

Source: data based on IEA, 2020a

38.6 Mt CO2 Oil

Source: data based on IEA, 2020a