A new Executive Decree was published in the Algerian Official Journal dated 5 March 2017 setting out the tender process for renewable energy and cogeneration projects.
The Executive Decree distinguishes between calls for tenders aimed at investors and calls for tenders by way of auction.
Investor targeted tenders are instigated by the Minister for Energy, in respect of pre-determined quantities of renewable energy.
Whereas auctions can be instigated by the Electricity and Gas Regulation Commission (CREG), in respect of:
(i) renewable energy facilities with a yearly output of between 10 GWh and 20 GWh
(ii) cogeneration facilities with a capped yearly output and capacity of no greater than 12MW
The two procedures differ in the following respect:
– the Ministry of Energy may add a stipulation to an investor targeted tender that the investor also builds an industrial project as a condition of the tender
– we anticipate that only the investor PPA will be negotiable
– the sites for investor tenders will be designated by the Ministry for Energy whereas auction tenders will be provided by the bidder
It was recently reported in the press that Algeria is due to issue a tender for 4GW of solar this year and the Minister of Energy is anticipating a price of 4 cents per kWh. We further understand that this auction will be split into three tenders of 1.3GW each with local content being a key requirement. Whilst 4 cents is comparable to other projects of a similar size, this will be difficult in the context of Algeria given the local content requirement and the number of renewable energy project finance projects in the country to date.