Morocco and UAE sign a $14 billion water & power deal

From the newsletter

The UAE government has entered into a public-private partnership to invest $14 billion in Morocco's energy and water sectors. The deal will include the construction of 3,000 MW of high-voltage direct current transmission lines and 1,200 MW of renewable energy projects. The electricity generated will be sold to Morocco’s national power utility company ONEE.

• Morocco is investing heavily in its renewable energy and has several mega-projects in the pipeline. It plans to more than double its current share of power generation from renewables to 52% by 2030. 

• The country is utilising its renewable abundance to meet its energy demands and serve export markets. It has signed deals with the UK and Mauritania.

More details

• The deal brings together Key Moroccan and Emirati entities, including TAQA Morocco, Nareva, and the Mohammed VI Investment Fund. The projects will be equally owned by TAQA Morocco and Nareva, with a 15% participation from the Mohammed VI Investment Fund and other public stakeholders.

• Over the last 10 years, Morocco has focused on renewable energy investments, more than doubling its renewable energy capacity from 2,100 MW to 5,400 MW. This places it behind only South Africa at 10,600 MW and Egypt at 6,700 MW. Since January, multiple projects totalling 576 MW and 1,600 MWh in battery storage systems have been announced.

• The country's proximity to Europe is opening up more export opportunities that it is eager to tap into. It plans to invest over $2.7 billion in the energy sector in the next five years. This year alone, it has received about $1.6 billion, including investments in a solar fuel plant that will produce synthetic aviation fuel mainly for export to Europe.

• Multiple manufacturing facilities are opening up, and even old car production facilities are expanding to include electric vehicles. Having overtaken South Africa in car production, Morocco intends to do the same with EVs and has partnered with Chinese and European players for expansion. It is also exploring battery manufacturing for electric vehicles, and these plants will only increase its energy demands, pushing for more investment in generation capacity.

• Besides local demand, there is a growing demand for international electricity trading, with countries seeking cheap and reliable electricity. Currently, there are no restrictions on the source of electricity generation. This might in the future become a requirement, especially with the growing need for sustainable production. Morocco is planning ahead by focusing on new generation plants to be renewable-based. To address intermittency, it is planning pumped hydropower and battery energy storage.

• Morocco is set to hold the 2030 World Cup, and this will demand a lot of energy to power its electric trains, stadiums, recreational facilities, and electric buses that it plans to deploy. This is an opportunity for investors to explore, given Morocco's revised policies that provide tax incentives and focus on establishing industrial zones with reduced taxes and electricity tariffs. For instance, renewables direct investments can attract subsidies of up to 30%.

Our take

• Public-private partnerships can unlock many opportunities where governments alone lack the resources or expertise. However, their success hinges on stronger policy and regulatory support.

• Morocco’s PPP deals with UAE firms which enjoy heavy financial backing from oil revenues, can undertake mega projects with relative ease.

• Other African countries should proactively utilise PPPs as a tool to address their cash-strain issues and expedite infrastructure development. A few nations, such as Kenya, South Africa, Ghana, and Senegal, have successfully employed PPPs for mega projects. More countries across the continent should follow this example.