Algeria currently generates a relatively small amount of its electricity (e.g., three percent or 686 MW annually), from renewable sources, including solar (448 MW), hydro (228 MW), and wind (10 MW). Because Algeria needs to export (rather than burn) its hydrocarbon resources that support an overwhelming part of the Algerian economy, the country must now reconsider the role of renewables. Analysts predict that unless Algeria adds significant renewable resources to its power generation mix by 2035, it will need to forego hydrocarbon export revenues to supply domestic power demand. In terms of future renewable energy development, the country’s most abundant renewable resources are solar, wind, hydro, and biomass. Regarding solar power potential, Algeria is home to some of the world’s highest solar irradiance levels, with the capacity to generate 1,850 to 2,100 kilowatts per hour and up to 3,500 hours per year in its desert regions. For wind, Algeria has a 1,300-kilometer Mediterranean coastline with wind speeds of more than eight meters per second, in addition to winds coming off the surface of the Sahel in the South.
Algeria aims to produce 27 percent of its electricity from renewable resources by 2035, mostly from solar power. To reignite the country’s energy transition, in 2021, the Algerian government made a new push to develop strategic partnerships in the field of renewable energies with multiple countries, including China, Germany, and the United States. More specifically, the government seeks to forge relationships with foreign suppliers in engineering services, storage systems, solar-tracking technologies, universal certification solutions, and solar application kits for agriculture. Towards this end, Algeria launched a tender for a one-gigawatt solar energy project in 2021, comprised of building five power generation sites ranging from 50 to 300 MW each. Sonatrach, Algeria’s national oil company, is also launching sizeable solar power projects to transition from oil and gas power generation for its off-grid oil and gas surface processing facilities.
State-owned companies dominate Algeria’s renewable energy sector. Prominent players include Sonatrach (the national oil company), Sonelgaz (the power utility), and the Algerian Energy Company (AEC, a joint venture between Sonatrach and Sonelgaz). U.S. companies interested in doing business in Algeria will primarily interact with SHAEMS, a company owned by Sonatrach and Sonelgaz, created to serve as a one-stop shop for companies pursuing larger IPP renewable energy projects. Upcoming tenders will include Sonelgaz, Sonatrach, AEC, or SHAEMS as the main party to the agreement. Other governmental entities active in renewable energy include the Ministry of Environment and Renewable Energy, the Ministry of Energy and Mines, and the Regulatory Gas and Electricity Commission (CREG). SHAEMS and Sonelgaz engage in long-term (e.g., 20-year) power-purchase agreements (PPAs). Most projects will likely follow a reverse tender process, in which PPAs will go to companies offering to sell power at the lowest price. Sonatrach will base its contracts on a build-transfer-operate basis.
International companies from Germany, China, Italy, Egypt, Spain, and the UK are already working on renewable energy projects in Algeria. Some foreign companies have invested in local manufacturing and have privileged access to tenders. Strategic government-to-government engagements support other competitors and pave the way for their technologies and services in Algeria.
Leading Sub-Sectors/Best Prospects
The Algerian government seeks foreign suppliers of new technology, technical know-how, and expertise in the following areas:
- Engineering for utility-scale PV Solar farms
- Solar photovoltaic (PV) modules
- Storage solutions
- Rotors, swiveling equipment, batteries
- Solar tracking technologies
- Universal certification expertise
- Off-grid stand-alone solar solutions
- Portable water treatment solar-based units
- Solar applications kits for agriculture
- Wind turbines and related equipment
Grid Expansion and Stability
- Advanced utility-scale storage solutions
- Green hydrogen
- Smart grid and grid stability solutions
- Maintenance and repair services, including artificial intelligence diagnostics
- Interconnection MV-HW lines for dissemination of renewable energy within the national electric grid
- A more detailed list of best prospects is in the Algerian Renewable Energy Resource Guide
The Algerian solar power supply chain grew significantly in the last decade and now seeks to add IPP development, engineering and design capabilities, EPC services, inverters manufacturing, storage solution manufacturing, universal certification expertise, and operations and maintenance services. U.S. companies considering relocating their manufacturing capabilities away from Asia may consider Algeria a viable alternative, given its well-developed ecosystem, dynamic, qualified, cost-effective labor, low-cost energy, and Free Trade Agreements with Europe, North Africa, the Middle East, and Africa.
Major Trade Shows
- Exhibition of Renewable Energies (ERA) – October 24-26, 2022, Oran
- Electricity and Renewable Energies Trade Show – February 13-16, 2023, Algiers.
Listings of Public Procurement Announcements
- For more detailed information on Sonlegaz and SHAEMS procurements, please visit the BAOSEM website, the Official Gazette for Energy and Mining Public Procurement Tenders.
- For further information and assistance in exploring opportunities in Algeria’s renewable energies sector, contact Kamal Achab, Senior Commercial Specialist, U.S. Commercial Service Algiers, Kamal.Achab@trade.gov.