New Energy Algeria

Algeria generated 25.8 billion kilowatthours (Bkwh) of electricity in 2002. Conventional thermal sources, of which natural gas accounted for 97%, contributed almost all of Algeria’s electricity supply, supplemented by a small amount of hydroelectricity. As of 2002, Algeria had 5.93 gigawatts of installed generating capacity. The country consumed 23.6 Bkwh of electricity in 2002, exporting excess supply to Morocco and Tunisia. Algeria’s electricity demand is growing at a rapid rate, and the country will require significant additional capacity in coming years.

Algeria has over 140,000 miles of power lines, serving almost the entire population. There are plans to increase the size of the network by 5% in coming years in order to reach isolated rural communities and hydrocarbon developments in the Sahara Desert. As mentioned above, Algeria does export some electricity to its neighbors, and there are plans to export electricity to Europe. Algeria has proposed undersea power connections to Italy and Spain, likely to run in conjunction with natural gas pipelines. However, Algeria’s ability to export electricity in the future will depend upon its ability to build enough generation capacity to meet soaring domestic demand.

State-owned Sonelgaz controls electricity generation, transmission, and distribution in Algeria. A 2002 law converted Sonelgaz into a private company and revoked its monopoly on the power sector, though the Algerian government continues to hold all of the company’s shares. The 2002 law also created the Electricity and Gas Regulatory Commission (CREG) to oversee the newly-opened industry and to ensure non-discriminatory access to the sector. Algeria aims to eventually split Sonelgaz into separate generation, transmission, and distribution companies, though those plans have faced domestic opposition from organized labor. Following privatization, Sonalgaz created a joint venture with Sonatrach, the Algerian Energy Company (AEC), in order to pursue partnerships with foreign investors.

In July 2002, Sonatrach and Sonelgaz formed a joint venture, New Energy Algeria (NEAL), to pursue the development of alternative electricity sources, including solar, wind, and biomass. One project reportedly under consideration is a 120-megawatt (MW), hybrid gas/solar power plant near Timimoun. In January 2003, Algeria and the International Energy Agency agreed on technological cooperation in developing solar power. Overall, Algeria hopes to increase the share of solar in the country’s electricity mix to 5% by 2010.

Natural gas is the largest source of Algeria’s electricity generation. Since the opening of the sector in 2002, there has been considerable private investment in new electricity generating capacity. Algerian law requires that all foreign operators establish joint ventures with AEC, and in return, AEC guarantees that it will purchase all electricity generated by these plants. AEC contracted with Anadarko and General Electric to build the country’s first privately-financed, gas-fired power plant at Hassi Berkine. In August 2003, France’s Alstom agreed to construct a 300-MW power plant at F’Kirina, some 300 miles east of Algiers. Canada’s SNC-Lavalin won a contract in July 2003 to design and build an 825-MW, combined cycle power plant in Skikda, expected to come online in the third quarter of 2005. In 2004, SNC-Lavalin also won a tender to build a 1,200-MW, combined cycle power plant in Tipasa, west of Algiers. In early 2005, Siemens announced that it would build a 500-MW, gas-fired plant in Berrouaghia: tje caility should become operational by the end of 2006.