THE SITUATION

Over the past decade, Morocco’s macroeco-nomic, political, and regulatory stability have helped the country achieve strong economic growth. Rising standards of living combined with rapid population growth have driven sub-stantial increases in Morocco’s energy needs. Yet the fiscal impact of maintaining, much less expanding, Morocco’s energy supply, is tremendous as the country imports 95% of its primary energy supply. Every year Morocco spends upwards of US$80 billion on imported oil, making it particularly vulnerable to external market shocks and further constraining the government’s ability to pursue other develop-ment objectives.

To help Morocco meet its urgent energy needs, bilateral donors created the Fond de Developpement de l’Energie (FDE – Energy Development Fund), a US$1 billion financ-ing institution that serves as a central pillar of the government’s strategy to enhance energy security and pursue low carbon growth. Though the FDE has identified opportunities to help Morocco meet its energy and climate goals, the FDE lacks the financial resources necessary to fully fund a number of projects with significant GHG emissions savings and reduction potential.

THE TRANSFORMATION

Rather than foregoing these opportunities, the Moroccan government has designed an investment plan that will tap US$150 million in financing from the Clean Technology Fund (CTF) to reach financial closure for investments that will capitalize on Morocco’s world-class renew-able energy resources to accelerate Morocco’s shift to a cleaner economy. CTF funds will be deployed to effectively buy down the cost of low carbon growth in Morocco, and will mobilize an additional US$2.5 billion from the Hassan II Fund, Kingdom of Saudi Arabia, United Arab Emirates, African Development Bank (AfDB), and World Bank Group (IBRD, IFC). CTF co-financed projects are expected to achieve 33.8 MtCO2e cumulative GHG emissions savings and reductions.

MoroccoCLEAN TECHNOLOGY FUND

MOROCCO QUICK FACTSECONOMY Projected GDP growth (2013):

4.3%ENERGYAverage annual electricity demand growth (2000–2006):

8.2%Primary energy from fossil fuels (2006):

95%Transport, Industry efficiency improvement goal (2020):

+15%National renewable energy target (% total, 2020):

42%CLIMATETotal GHG emissions (2005):

77.2 MtCO2eNational BAU GHG emissions growth (2005–2030):

+255%Economy energy intensity growth (1971–2007):

+50%Electricity sector emissions growth (1997–2007):

+70%Transport sector emissions growth (1997–2007):

+50%

MOROCCO CTF QUICK FACTSCTF financing:

US$150 millionExpected to leverage:

US$2.471 billionExpected CTF GHG savings:

33.8MtCO2e

“Financing like the Clean Technology Fund […] brings the economics and financial viability of projects closer to reality so implementation is feasible and government subsidies are less needed.”

Hela Cheikhrouhou, Director, African Development Bank’s Energy, Environment

and Climate Change Department

CTF IMPACT: A bright future for MENA energy markets

Another project in Morocco to be supported by CTF financing is the 500 MW concentrated solar power (CSP) plant in Ouarzazate, Morocco—the biggest project of its kind in the world. Backed by the regional Middle East and North Africa (MENA) CTF investment plan, the Ouarzazate CSP plant will receive a total of US$197 million in CTF financing, which is expected to mobilize an additional US$1 billion for the project.

The project is structured as a public private partnership (PPP) between the Moroccan Solar Energy Agency (MASEN) and a private partner selected through a public competitive tender. The first 120–160 MW to come on line by 2014 will help Morocco avoid 240,000 tons of CO2 emissions a year—the same as removing 80,000 cars from the road annually. It is in line with Morocco’s ambitious Solar Plan, launched in November 2009, which aims to produce 2,000 MW of solar energy by 2020.

Updated Fall 2012

MOROCCO CTF PROJECT FOCUS AREA

RENEWABLE ENERGY

RATIONALE:Morocco urgently requires investments to increase its power generation capacity. CTF financing will increase renewable energy penetra-tion, advancing Morocco’s energy, climate, and development objectives.

FINANCINGUS$150 million CTF financing is expected to leverage nearly US$2.5 billion to support Morocco’s renewable energy goals.

EXPECTED RESULTS:• Provide financing for a price per carbon subsidy required to reach financial closure on renewable energy projects• Demonstrate commercial viability of renewable energy technologies in Morocco’s carbon intensive economy to reduce barriers to

investment and stimulate scaled-up private sector investment.• Enhance positive economic, social, and environmental externalities, including reduced local air pollution and GHG emissions, improved

public health, and enhanced energy security and access.

CTF IMPACT: Hybrid renewable energy system to bring power to 80,000 households

A heavy reliance on fossil fuels, rising energy demands, and mounting GHG emissions are pushing Morocco to invest further in one of its most abundant natural resources—the wind—with energy potential estimated at 6,000MW. US$125 million from the CTF will support the implementation of wind/hydro hybrid generating systems that will increase wind power capacity by 1,070 MW and extend rural electrification to nearly 80,000 households in 24 of Morocco’s most isolated and vulnerable districts, including Tanger, Koudia El Baida, Djebel el Hadid, Abdelmoumen, and M’Dez el Menzel. This program combines wind farms with water storage and pumping to help stabilize the grid so it can absorb intermittent wind power. CTF financing is mobilizing US$512 million in co-financing from the AfDB and other sources to cover the project’s total cost of US$2.16 billion.