Powering Up

Morocco’s energy sector —
TAQA’s Jorf Lasfar plant already supplies 40% of Morocco’s electricity and is expanding to meet rising demand

Amid the green fields of Morocco’s Atlantic coast, sit 12 coal mountains, each one the size of a football field. Between them they contain one million tonnes of coal but they still have to be continually replenished to feed the Jorf Lasfar power station.

Located next to the coal mountains, Jorf Lasfar needs 10,000 metric tonnes of coal a day to generate electricity. And that will rise to 15,000 metric tonnes after expansion.

Arriving from the US, Russia, Colombia and other far-flung places into the nearby port, giant grabbers move the coal onto a 3km-long conveyor belt. At the power plant itself, the 6-metre wide chimney stacks tower 135 metres up into the air.

The physical scale of Jorf Lasfar is matched by its economic importance to Morocco. The plant, which is owned and operated by TAQA’s subsidiary, the Jorf Lasfar Energy Company, is the largest coal-fired power plant anywhere in the Middle East and North Africa, and accounts for around 40% of Morocco’s electricity output. Now the site is about to become even more important, with an expansion project to add two units, which will increase the plant’s capacity by 700 megawatts (MW), from 1,356MW to 2,056MW.

“We have agreed with the government of Morocco to expand the Jorf Lasfar power complex,” says Frank Perez, Head of Global Power & Water at TAQA. “With the Jorf 5&6 expansion TAQA will supply approximately 45% of Morocco’s power, making Jorf Lasfar a key part of the infrastructure for the country.”

Expansion plans

In 2009, TAQA signed an agreement with the Office National de l’Electricité et de l’Eau Potable (ONEE), the government body responsible for Morocco’s electricity sector. The following year an engineering, procurement and construction contract was awarded to Japan’s Mitsui & Co and South Korea’s Daewoo Engineering & Construction. Construction work began that September.

The project is running within the budget of US$1.6 billion. The two 350MW units are scheduled to be brought online in December 2013 and April 2014 respectively.

“We are 80% complete on the construction project and are focusing our energies on commissioning of the Unit 5 works,” says Mr Perez. “It’s a very exciting time with lots of activity to achieve our commitment of December 2013.”

It is not just the physical scale of the plant that is impressive. Other aspects of the project have also been challenging the perceptions of what is possible in the current market, not least in terms of financing.

A financing first

TAQA provided interim funding for the project, but in January this year it finalized a US$1.4bn project financing deal. This was the largest international project financing in Morocco in more than a decade. It also marked the first time that Japanese and South Korean export credit agencies had taken part in a project finance deal in Morocco, with Japan Bank for International Cooperation (JBIC), Nippon Export & Investment Insurance (NEXI) and Export- Import Bank of Korea (Korea Eximbank) all involved.

At the time the financing was announced, Majid Iraqui, Managing Director for TAQA in North Africa, said: “The expansion of Jorf Lasfar […] is vital to enabling growth and creating jobs in the economy.”

Jorf Lasfar is just one part of a wider scheme to expand Morocco’s electricity sector. The government is planning to raise installed capacity from 6,350MW in 2010 to 14,500MW by 2020, through a mixture of conventional and renewable sources.

Coal will remain the most important energy source in the future, but the government also has ambitious plans to develop alternative energy. In November 2009, Morocco initiated a strategy to develop 2,000MW of wind power and 2,000MW of solar power by 2020. Hydroelectric will also play an important role in the country’s energy mix.

Domestic demand rises

All this is necessary if Morocco is to keep pace with rising domestic demand for electricity, which is estimated to be growing by around 5% a year at the moment, according to Cornelis van der Waal, business unit leader for energy and environment at research firm Frost & Sullivan. That is down from the 8% annual growth seen between 2005 and 2010, but the fast expansion has still meant that demand has at times come uncomfortably close to Morocco’s total generating capacity.

“The reserve [power-generating] margin plummeted in 2007 and 2008 compared to previous years,” says Mr Van der Waal. “The international consensus is to have a reserve margin of between 10% and 20% of normal capacity as an insurance against breakdowns or sudden increases in energy demand. However, with the pipeline of new generation capacity that was commissioned in 2009 and 2010, this problem has been solved.”

The strong rise in demand is partly because of overall economic growth, with gross domestic product expanding by a healthy 4% to 5% a year in recent times according to the World Bank. That trend is expected to continue in the coming years, with the Economist Intelligence Unit forecasting that the economy will expand by an average annual rate of 4.8% from 2014 to 2017. But other factors are also at play.

According to the government’s Haut- Commissariat au Plan, the population has been expanding, from 30.5 million in 2006 to 32.6 million by 2012, which is helping to push up demand for electricity. More significant still is a rural electrification programme, launched in 1996, which has added almost two million households to the grid, taking the rural electrification rate up to 98% (see chart, left).

With all that in the background, the new capacity at Jorf Lasfar and other sites around the country will provide a welcome addition to the country’s electricity generating capacity. “As Morocco continues to see its economy grow and the need for power grows, maintaining a high plant availability is critical to our success and heritage as a dependable and reliable operator,” says Mr Perez.