The scramble for Morocco’s energy future

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This is the story of Morocco, a story of my country paving the way for many other countries.

The economic and social parts of our populations are in dire need of stable, secure, affordable, and clean energy.

There is a problem of profit going from the Global South to the Global North.

Morocco is an exciting investment destination in this world where we are moving to very cost competitive renewable energy.

Morocco has fantastic and unique energy resource. It’s not just wind, but it’s also solar.

We cannot imagine any just transition without an involvement of local communities.

This is a scramble for Morocco’s energy future. My name is Rachel Millard. I’m the clean energy correspondent at The Financial Times. Morocco has some of the best energy resources in the world. Investors are flocking here. But who is this energy really for? And can Morocco make the best of this opportunity?

Morocco is an exciting investment destination. Very stable country, able to attract significant investments, sovereign investment grade rating, good governance, abundant land, really stunning solar resources, wind resources. The world will start to move towards countries that can provide the most competitive energy. And as it happens the most competitive energy, thank goodness, turns out to be renewables. Morocco will start to attract, and it is already starting to attract, energy intensive industries.

Morocco is facing a situation that makes it essential to have an energy transition to move towards green energy. So it’s a country that’s a net importer of fossil fuels.

But at the moment it’s heavily dependent on energy imports because most of its energy at the moment comes from coal and oil. And it doesn’t have much of its own resources. So it currently imports about 90 per cent of its total energy, which clearly makes it firstly very dependent on other countries and also means it has a very high import bill and means it’s generally vulnerable to volatility on global energy markets.

It will help them improve their balance of trade, reduce foreign currency requirements. It will make them much, much more resilient. And all that additional deployment will add to economic growth itself. Initially, these projects that are looking to generate energy and export will add again more economic vibrancy and add to competitiveness of the sector in the country.

We want to ensure that in the future going forward the returns on investments are stable and sustainable for the state, for investors, but mainly for the population so that the population can have access to low cost and clean energy on a sustainable way.

So Morocco has quite ambitious renewable electricity goals. And it increased them towards the end of last year in its latest submission to the COP process, which is trying to galvanise countries around the world to cut their carbon emissions. Its latest target is to triple its renewable electricity capacity to around 15 gigawatts by 2030. And it wants to try and phase out coal-fired power generation by 2040. Morocco produces an increasing amount of its electricity from renewable sources. It produced about a quarter of its electricity from renewable sources, which means it’s doing pretty well compared to many other countries, but still has a long way to go.

Today we are the only African country that is interconnected with Europe and the Atlantic Basin logistically, culturally, but also electricity-wise and gas-wise. We have the only bidirectional electricity and gas connection with Europe and the Atlantic Basin. Africa at all is not responsible of major emissions. Africa is today the only solution when it comes to making sure that we fight the major issues like climate change.

So what’s it really like to start an energy industry from scratch? We travelled to Morocco to find out. Our first stop was a solar farm developed by OCP. OCP is a fascinating case study. It’s Morocco’s massive phosphate-based fertiliser producer. This solar farm powers one of its nearby mines, but there are competing demands for the energy produced here.

These panels have trackers. And the tracker system is making them follow the light of the Sun. It took us around one year and a half to bring this solar farm. We had to rely on the workforce of 1,600 people. 70 per cent of them were local people. It’s built for OCPs needs. And parts of it is going on the grid and then going also to the desalination plants that we established in Jorf Lasfar, 180km from here.

Water scarcity is a massive issue. When we travelled to Morocco we saw in every room and business we went to there were signs warning people to use less water.

We established a big programme to desalinate water using clean energy and to reuse it in our sites and to provide part of it to the communities.

The desalination plant we went to was told by the government to make more water for local people.

So now Morocco is in a big scarcity. We are in the eighth year of scarcity. We leave all the salts and prepare this water to final users, also potable water.

The cost of desalination has come down. When we do that at a renewable energy plant, simply because by adding a small amount of scale it’s not going to cost so much, we’re able to then deliver a plant that can not only serve the renewable energy project, but also can serve the adjacent population not only for their potable water supply, but potentially also for economic activity like agriculture and so on and so forth.

Morocco wants to desalinate water both for people to drink and to produce hydrogen in a low carbon way by splitting it from water using green electricity. This is known as green hydrogen. And the Moroccan government and investors hope that Morocco can become a hub for the fuel. Some critics question whether this is a sensible use of resources.

This is crazy. I mean, we need those desalination to provide water, drinking water for people. How come that we are planning already to export this energy and our water while we do need this energy and this water for our people.

Companies like OCP are all under pressure to cut their carbon emissions. And OCP, in particular, uses a lot of ammonia, which is a compound of hydrogen and nitrogen. And it’s keen to try and clean up the emissions of that product as well.

The need of a green ammonia in terms of desalinated water is a very small amount. We don’t think it’s challenging to provide desalinated water for this industry. Part of our strategy to be carbon neutral by 2040, we need to switch to green ammonia to lower the carbon indirect footprint coming from our imports. So this is why we are relying on this opportunity of having energy, renewable energy, with very low cost to produce low cost to green hydrogen and then green ammonia.

Morocco has competitive, reliable renewable energy, electricity. So obviously, it is one of these handful of perfect destinations for doing electrolysis at scale to make green hydrogen.

I think Morocco is a wonderful country when you can produce green energy and all the downstream integration of green power once you have it – green hydrogen, green methanol, everything.

Producing green ammonia and green hydrogen is a lot more expensive than producing the more carbon intensive versions. It could be anything up to six times more expensive. Is there a business case at the moment? It’s hard to say. Lots of companies trying to build these projects are finding it quite hard to find customers for the project. Obviously, OCP might be its own customer, but that brings its own questions as to the cost of its products.

Decarbonising the green ammonia and providing a green fertiliser can be an important lever to decarbonise the food industry, which is willing to take a premium. So this is why we’re working in consortiums with food aggregators, with farmers, to make the case for green ammonia and green fertiliser production.

In the first wave, phase one, all this stuff was foreign company. Now we have local capability to do it inside Morocco. 60 per cent of this workforce is from the cities and the region.

My name is Mohamed Ellatif. I’m 24 years old. I work here as a solar PV technician. Basically, I live in Marrakesh. And I move wherever there is job opportunities. And the work as well is very good, very collaborative, and a good team. Working here in solar energy makes you relieved knowing that you work in helping the sustainability of our planet. And that gives you pride and privilege.

These projects are great when they’re being built because you do need lots of people to lay the solar panels. But the question really is whether that turns into long-term, consistent employment.

There is an issue of credibility of the benefits that are being touted in these mega projects.

During the operation phase, there’s not a lot of jobs that are created. In the opposite of what they promised, actually, in the beginning, people protest because there’s a lot of land grabbing. And one of the arguments that was used, OK, no, you will have plenty of jobs. And we will also give a priority to the locals, which was not the case, actually. It’s most of those projects.

The promise of jobs is not really as great as it’s been marketed. But also, when we talk about investment, a lot of these projects are actually happening through loans, not through private investments. And when private investment is involved we also know on a global scale that there is a problem of profit going from the Global South to the Global North to the tune of $2tn leaving the Global South to the Global North in net terms, that is. So we know that the investment narrative as well is not as peachy as it’s being marketed.

We cannot imagine any just transition without a real genuine involvement of local communities in all phases, so the design, implementation, and operation of those projects.

This is a wonderful opportunity to create jobs and to create a new industry because we don’t have any legacy, we don’t have any fossil fuels. And the only resource that we have today is solar and wind. And we can make a lot of it. This is why I think it’s more than essential. It’s central to our prosperity and to our industrial strategy.

ACWA Power is a huge Saudi Arabia headquartered company that develops renewable energy and desalination plants around the world. It has developed a wind farm that we went to see in the north of the country.

The wind farm built in 2018 and for a period of construction was for around two years.

It’s in a quite remote location. They had to build new roads. They had to get the local community on board. They had to haul these massive turbines up a very, very steep hill.

As you see, there is a mountain, so there is difficulty of access. We managed to bring all the turbines here in a safe manner and successfully. It is green electricity. And it’s used to feed industrial wells in Morocco. ACWA Power chose Morocco because Morocco is a great place to work and to develop projects, and this area specifically with a high potential of wind.

It’s not a huge site. And it would have employed more people during construction. But again, the question is, how many long-term jobs do these projects create?

People that are working here are around 50 people. We are committed to hire local people to the extent possible. So we are trying to integrate local people depending on the expertise.

ACCIONA is a Spanish conglomerate that builds renewable energy projects and lots of other infrastructure around the world, one of several companies that have been selected by the Moroccan government to potentially build green hydrogen projects.

Morocco will be among the best spots and best locations where to produce green ammonia. Due to its resource, energy resource, wind and solar, and the combination of the two, that will bring us the lowest cost of ammonia production. There’s a big opportunity on the green hydrogen space. 20 per cent of the economy is going to be very difficult to electrify. Those are the so-called hard-to-raise sectors. And the best vector to use for such decarbonisation is going to be green hydrogen and derivatives, molecule derivatives of green hydrogen.

These huge hydrogen projects are questionable for several reasons. Firstly, will they get off the ground given the difficult market for the fuel? Secondly, they will require a huge amount of green electricity. And there are questions over whether that should be better directed towards homes and businesses. And thirdly, many of the large-scale projects that the Moroccan government is inviting investors to develop are in the disputed territories of Western Sahara.

So the global economy and the energy market has shifted substantially over the last year after Trump’s administration literally abandoning the green agenda. Corporates as well as countries are not as enthusiastic about the decarbonisation. And they are more focused now on cost. Our projects are located in the Laayoune region and the Boujdour region. We are going to make sure that our operations will fulfil the international laws, regulations, to make sure that this is going to benefit the local communities, will maintain transparency and integrity.

We have 12 regions in Morocco, six main regions that are gathering a lot of interest from investors, including the three southern provinces.

Instead of exporting hydrogen, British company Xlinks wants to export green electricity directly to Europe via underwater cables. But an Xlinks project to connect Morocco directly to the UK grid was dealt a blow last year when the UK government said it wouldn’t award it a revenue guarantee contract.

They did not feel that they could support this project. We have gone on to now look at how we can implement that project, possibly with some industrial bilateral offtake. Industries are moving away from fossil fuel burning to electric. So we are looking at that. And we are looking at alternative locations. We can deliver secure, competitive supply from Morocco directly underwater into Germany.

The broader question here is whether countries like Morocco will end up making the most of their very rich solar and wind resources. Will it transform their fortunes on the global energy stage?

The regulatory framework is being enacted and reformed to really ensure that investors have access to those opportunities in the most stable, sustainable, but also bankable way.

Energy is such an enabler of life itself. It is the foundation of prosperity. In a country like Morocco where you can generate energy competitively in abundance, well, it’s called renewable resources for that reason. You continue to reduce the cost of your domestic consumption. It’s, in fact, even much more valuable than a resource that you dig out of the ground. This is a fantastic additional economic value proposition.