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Cablegate: Renewable Energy Focus of Doe Visit

VZCZCXYZ0001
RR RUEHWEB

DE RUEHRB #1058/01 3121528
ZNR UUUUU ZZH
R 071528Z NOV 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 9320
INFO RUEHCL/AMCONSUL CASABLANCA 4382
RUEHAS/AMEMBASSY ALGIERS 4921
RUEHTU/AMEMBASSY TUNIS 9735
RUEHMD/AMEMBASSY MADRID 6062
RUEHFR/AMEMBASSY PARIS 5134
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS RABAT 001058

SIPDIS

SENSITIVE

STATE FOR EEB, NEA/MAG, OES/STC AND OES/PCI
DOE FOR EERE - PAUL DICKERSON
USDOC FOR HQ/USFCS/USDOC/CS DG ISRAEL HERNANDEZ
USDOC FOR
3131/USFCS/OIO/RD/ANESA/CREED/GLITMAN/STAUHID I,
HVINEYARD/MAC/ITA/USDOC,
MICHELLEONEILL/OUS/ITA/USDOC

E.O. 12958: N/A
TAGS: ENRG SENV TRGY ETRD ECON EAID MO
SUBJECT: RENEWABLE ENERGY FOCUS OF DOE VISIT

1. (U) Summary: DOE/EERE Chief Operating Officer
Paul Dickerson met with key government, industry,
and development officials central to Morocco's
efforts to expand its renewable energy portfolio and
reduce its 96 percent dependence on imported energy
sources during an October 28 visit to Rabat and
Casablanca. Dickerson explored options for U.S.
firms to provide energy technology and products to
Morocco and opportunities for investment, and
invited further collaboration between DOE policy and
technical experts and their Moroccan counterparts.
End Summary.

2. (U) Dickerson briefed the Charge, ECON, FCS, and
USAID representatives about the activities of the
Department of Energy's Office of Energy Efficiency
and Renewable Energy (DOE/EERE), noting that EERE
can facilitate visits by foreign officials and
researchers to U.S. labs to encourage efforts to
promote renewable energy and energy efficiency.
Dickerson highlighted EERE's work with the State of
Hawaii to create an energy strategy aimed at
producing 70 percent of energy needs locally by
2030. This approach, although designed for island
states or nations fully dependent on imported
energy, may have elements relevant for Morocco,
which imports 96 percent of its energy needs,
Dickerson observed.

3. (U) USAID reviewed for Dickerson its experience
with energy efficiency/renewable energy projects,
highlighting USAID's shepherding role in the 1982
creation of a Center for Development of Renewable
Energy (a project that required a USD 28 million
investment). A more recent activity is planned for
later this year in collaboration with Harvard
Business School that will engage students over a
three week period to prepare an assessment of
renewable energy strategies. Dickerson expressed
interest in forging collaboration between DOE and
USAID in the renewable energy sector, for example in
promoting U.S.-sourced energy technologies such as
renewable energy-powered water pumping systems that
may be recommended by the Harvard assessment.

----------------------------------------
Development Bank Support to Green Energy
----------------------------------------

4. (U) African Development Bank (AfDB) Chief of
Operations (Morocco) Herve-Marie Cariou and
Financial Analyst Wadii Rais described for Dickerson
AfDB's energy sector projects, key to the
Infrastructure pillar of the AfDB's three-fold
country strategy (the other two pillars are
Governance and Social Services). Energy sector
projects account for 40 percent (USD 480 million) of
the AfDB's total USD 1.2 billion portfolio of
lending to Morocco. This is divided into two
projects. The first is to bolster Morocco's
electrical transmission interconnects with Spain and
Algeria, a project nearing completion. The second
project supports the construction, training, and
technical support for operation of a 470 megawatt
(MW) combined cycle solar thermal electrical
generation plant in Ain Beni Mathar (the project
cost is shared by the Global Environment Facility
(GEF) and Morocco's National Electricity Office
(ONE)). The plant will generate 20 MW from solar
energy, and when completed is expected to be the
first operational commercial combined cycle solar
thermal plant in the world.

5. (U) The AfDB is currently developing a Clean
Energy Investment Framework and action plan, pending
board approval, to continue energy sector projects
with a goal of minimizing environmental degradation
and mitigating climate change. Dickerson discussed
EERE's interest in educating investors and
governments about the variety of financial resources
available through institutions such as the AfDB, as
well as the Export-Import Bank and the Overseas
Private Investment Corporation to support innovative
projects in energy efficiency and renewable energy.

----------------------------------------
Ministry of Energy Pushing Wind Projects
----------------------------------------

6. (U) Dickerson next met with Zohra Ettaik, the
head of the Division of Renewable Energy and Energy
Efficiency of Morocco's Ministry of Energy, Mines,
Water, and Environment (MEMEE). Ettaik noted
Morocco's potential for renewable energy
development, including 6,000 MW potential for wind
energy generation, and high solar energy exposure
with 3000 hours of sunshine per year. Morocco has
completed or is constructing almost 500 MW of new
wind generation capacity, and expects private "self-
generation" users to build another 1000 MW capacity
by 2015 following implementation of new laws
allowing self-generators to build up to 50 MW wind
generators, and sell their excess to ONE.

7. (U) Ettaik described portions of Morocco's
energy strategies for renewable energy and
efficiency, including incentive tariffs for
industrial and residential consumers to shift demand
to off-peak hours (the regulations for which have
just been published), and further study of extending
daylight savings time to the entire year following
Morocco's initial experiment with daylight savings
time this summer. Dickerson praised Egyptian
success at saving energy through utilities providing
more efficient bulbs at no cost to consumers, using
savings in electricity subsidies to pay for the cost
of the bulbs. Ettaik explained that Morocco's
Energy Ministry is finalizing such a program, paying
local distributors 1 dirham per month (about 12
cents) for each bulb they will purchase and provide
freely to their consumers. ONE has selected a
French provider for light bulbs, but MEMEE has just
issued a tender for suppliers of light bulbs to the
smaller distributors who will participate.
Dickerson asked if U.S. companies could compete for
further Energy Service Company (ESCO)-type contracts
to identify and implement energy savings in exchange
for payment with the saved costs. Ettaik noted that
the new energy law under development in MEMEE may
include that possibility, but the modalities and
criteria for participation are not yet clear.

8. (U) Ettaik informed Dickerson that Morocco's USD
1 billion Fund for Energy Development, endowed in
part by USD 800 million in gifts from Saudia Arabia
and the UAE, will begin operations in January 2009,
under MEMEE's administration. The "model
convention" between MEMEE and the companies it will
support is still under development, she
acknowledged, but U.S. companies may be able to
apply for funds for energy projects in Morocco.
Finally, she noted, MEMEE intends to host a
conference on the new energy strategy in January
2009, and invites participation from the private
sector (including U.S. firms) to debate and shape
MEMEE's actions to develop Morocco's energy sector.

9. (U) Amal Haddouche, Director of the Center for
Development of Renewable Energy (CDER), told
Dickerson that Morocco is "at a crossroad" in its
energy policy. Public and political awareness of
the advantages of renewable energy and energy
efficiency have reached sufficient levels to spur
actions. Energy Ministry personnel used to have
problems convincing politicians of the value of
efficiency and renewables, Haddouche observed, but
now politicians press the Energy Ministry to develop
more renewable energy sources. The new energy law
under development should contain specific legal,
regulatory and tax provisions to attract investment
in the renewable energy sector, Haddouche predicted.
Morocco has created several special investment zones
throughout the country for clean energy development.
So far, CDER has focused on attracting Spanish and
German companies, but U.S. investment would also be
welcome, Haddouche said. CDER sees Morocco's
geographic position as a driver of renewable energy
development, if Morocco can become a supplier and
transit point for energy commerce between European
and African markets.

10. (U) The new energy law under development will
also expand CDER's mandate to include promoting
energy efficiency, Haddouche said. CDER's
reorganization will allow its regional offices to
work more directly with private firms at identifying
opportunities to increase efficiency and implement
efficiency programs, particularly in Morocco's
industrial sector. CDER personnel would welcome an
opportunity to learn from DOE experts on industrial
efficiency, Haddouche noted. Haddouche welcomed
U.S. companies to participate in its energy
efficiency projects, including through ESCO-type
contracts. She also encouraged U.S. firms to study
the opportunities to work with the new Energy
Development Fund to promote renewable energy and
efficiency. "We need more expertise" to meet
Morocco's goal of reducing its energy use by 15
percent, she stated.

---------------------------------------------
ONE Supports Locally-sourced Energy Equipment
---------------------------------------------

11. (U) Dickerson next met with Tayeb Amegroud,
head of Renewables Division and Driss Ouarraoui,
counselor to the CEO on Energy Efficiency, of the
National Electricity Office (ONE). ONE plans to
spend up to USD 1 billion in investments in the next
5 years, including efforts to upgrade Morocco's
electricity grid. Amegroud further explained the
self-generation provisions under ONE's "Energy Pro"
initiative, modeled on the Kyoto mechanisms for
promoting renewable energies, which supports self-
production of up to 50 MW by heavy users, or a
consortium of heavy users. The Government of
Morocco this summer raised the ceiling from 10 MW to
50 MW to make the option more attractive to
industry, and ONE now offers the option for these
small producers of electricity to generate
electricity away from their manufacturing plant
site, feed it into the grid and recuperate it where
it is needed. This option, however, will also
require further development of the electricity
transfer infrastructure. Because of the inadequacy
and intermittency of supply of renewable origin
(usually wind), ONE guarantees electricity supply to
these self-producers, as well as the purchase of the
excess production. However, Ouarraoui noted that
industrial users have no experience in energy
efficiency and will need outside expertise to
efficiently manage their energy production projects.

12. (U) Amegroud gave an overview of the new
Chourouk initiative, which invites users to enter
into a partnership agreement by which they offer the
roofs of their buildings to ONE to install solar
panels that will feed electricity into the grid.
ONE has issued a pre-qualification tender for the
supply of photovoltaic equipment. The tender
requires that the participating manufacturers of
equipment commit to investing in a local
photovoltaic panels production facility or in the
manufacturing of other components of photovoltaic
systems. The government has created the KYOTO
industrial pole in the Oujda region to host such
activity.

----------------------------------
CGEM Supporting Cleaner Production
----------------------------------

13. (U) Dickerson joined Said Mouline, the head of
the Committee for Environment and Sustainable
Development of the General Confederation of Moroccan
Industry (CGEM) for a discussion of the Moroccan
industrial sector's approach to energy efficiency
and renewable energy. Mouline is also the counselor
on environmental issues to the CEO of the phosphate
producer Groupe OCP, Morocco's largest corporation,
and the head of the Moroccan Association of the
Solar Industry (AMISOL). Dickerson described DOE's
support for the creation of Green Cities, such as
the Masdar City project in the UAE, and Mouline
reported that OCP is planning to convert a mining
site in Khouribga into a new Green City project.
Dickerson offered his office's support of resources
and ideas for the Green City project, particularly
regarding project management. In addition to its
Green City project, Mouline added, OCP is
implementing 14 projects in energy efficiency at its
different industrial sites.

14. (SBU) Comment: Energy efficiency and renewable
energy are areas that Morocco recognizes have great
potential to add to its energy supply, mitigate
damage to its stressed environment, and create
opportunities for GDP growth. The criticality of
both improving the efficiency of energy use and
adding capacity was highlighted by last-minute
intentional blackouts in Casablanca on November 3
caused by excess demand. However, the government
and industry have not yet fully adopted a
comprehensive approach to promote large scale
efforts in either efficiency or renewable energy.
The January 2009 review of Morocco's new energy
policy, and the finalization and implementation of
wind generation plans, the Fund for Renewable
Energy, and incentives to promote private sector
efficiency and renewable generation efforts, could,
if effectively managed, alleviate Morocco's supply
constraints and open new areas for economic activity
and growth. U.S. energy sector firms, with
experience in implementing the types of projects
that Morocco is now envisioning, may find
opportunities to partner with Moroccan government
and industry as Morocco takes new steps in energy
efficiency and renewable energy. End Comment.

15. (U) Mr. Dickerson did not have an opportunity
to review this cable.

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