MIDDLE EAST AND NORTH AFRICA (MENA) | ENERGY AND EXTRACTIVES GLOBAL PRACTICE | THE WORLD BANK GROUP M E N A E N E R G Y S E R I E S | R E P O R T N O . 9 4 8 3 4 - M N A Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry M E N A E N E R G Y S E R I E S | R E P O R T N O . 9 4 8 3 4 - M N A MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP Copyright © March 2015 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. 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Araya, ESMAP Designer: Studio Grafik Typesetting: vPrompt eServices Reproduction: AGS Contents Acronyms and Abbreviations xxiv Acknowledgments xxvii Model Notation xxviii Chapter 1 | Executive Summary 1 1.1 Introduction 1 1.2 MENA Countries Face Strong Competition from Leading Solar Markets 1 1.2.1 Concentrated Solar Power (CSP) Industries 1 1.2.2 Photovoltaic (PV) Industries 2 1.3 Egypt and Morocco Show the Highest Attractiveness Index for CSP and PV Component Industries 4 Chapter 2 | Introduction to the Value Chain of Solar Technologies 9 2.1 Concentrated Solar Power (CSP) Technology 9 2.1.1 Parabolic Trough Systems 9 2.1.2 Linear Fresnel Systems 13 2.1.3 Power Tower Systems 15 2.1.4 Dish/Engine Systems 17 2.2 Photovoltaic (PV) Technology 24 2.2.1 Crystalline (c-Si) Technologies 26 2.2.2 Thin Film (TF) Technologies 28 2.2.3 Shared Technologies 31 2.3 Other Related Activities 36 2.3.1 Research, Development and Innovation 36 2.3.2 Project Development 36 2.3.3 Engineering 37 2.3.4 Engineering, Procurement and Construction (EPC) 38 2.3.5 Operation and Maintenance (O&M) 38 Contents | v 2.3.6 Financing 38 2.3.7 Technology Provision 38 2.3.8 Consulting 38 Chapter 3 | Methodology 39 3.1 Introduction 39 3.2 Benchmark Countries Selection 41 3.3 Primary Data Selection and Classification 41 3.4 Model: Data Normalization and Aggregation 43 3.4.1 Ranking of Indexes According to Weighting Factors 44 3.5 Hypothesis Validation 47 3.5.1 Robustness and Consistency Analysis 47 3.6 Solar Industries Value Chain Analysis 49 3.6.1 CSP Industry 50 3.6.2 PV Industries 52 3.7 Identification of Potentially Competitive (Target) Industries and Competitiveness Gaps 53 3.8 Building of Demand Scenarios 54 3.8.1 Increase in Installed Capacity Forecast 55 3.8.2 Component Demand Scenario 57 3.9 Recommendations and Impact Assessment 58 Chapter 4 | Attractiveness Assessment 59 4.1 Benchmark Analysis Summary Results 59 4.2 Algeria 65 4.2.1 Algeria’s Key Strengths and Weaknesses 65 4.2.2 Potentially Competitive Industries 67 4.3 Egypt 72 4.3.1 Egypt’s Key Strengths and Weaknesses 72 4.3.2 Potentially Competitive Industries 73 4.4 Jordan 77 4.4.1 Jordan’s Key Strengths and Weaknesses 77 4.4.2 Potentially Competitive Industries 77 4.5 Morocco 82 4.5.1 Morocco’s Key Strengths and Weaknesses 82 4.5.2 Potentially Competitive Industries 83 vi | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 4.6 Tunisia 88 4.6.1 Tunisia’s Key Strengths and Weaknesses 88 4.6.2 Potentially Competitive Industries 88 Chapter 5 | Strategic Recommendations and Proposed Actions 93 5.1 Introduction 93 5.2 Algeria 93 5.2.1 Gaps Analysis 93 5.2.2 Recommendations 95 5.3 Egypt 100 5.3.1 Gaps Analysis 100 5.3.2 Recommendations 103 5.4 Jordan 108 5.4.1 Gaps Analysis 109 5.4.2 Recommendations 110 5.5 Morocco 114 5.5.1 Gaps Analysis 114 5.5.2 Recommendations 116 5.6 Tunisia 123 5.6.1 Gaps Analysis 123 5.6.2 Recommendations 125 5.7 Recommendations for MENA Regional Cooperation 130 Chapter 6 | National Climate Innovation Center 134 Annexes 145 Annex 1 | Solar Technologies Value Chain Analysis 145 Concentrated Solar Power (CSP) Technology 145 Parabolic Trough Systems 145 Linear Fresnel System 149 Power Tower System 151 Dish/Engine System 153 Analysis of the Value Chain for CSP 155 Photovoltaic (PV) Technology 173 Annex 2 | Solar Energy Development Scenarios 196 Global Solar Industry Scenarios 196 MENA Solar Industry Scenarios 197 Contents | vii MENA Market Potential 199 CSP and PV MENA market potential by 2020 200 Scenarios Sensitivity Analysis 205 Annex 3 | Benchmark Competitiveness Analysis Primary Data Definition 208 Overarching Categories: Production Factors 208 Overarching Categories: Demand Factors 209 Overarching Categories: Risk and Stability Factors 209 Overarching Categories: Business Support 210 Annex 4 | Benchmarking Model and Index Weights 211 Primary Data Normalization 211 Parameter Aggregation 211 Weights Distribution 212 Overarching Categories’ Weights 212 Competitiveness Parameters’ Weighting Factors 215 Primary Data’s Weight Factors 219 Comparison of MENA and Benchmark Countries as Statistical Populations 222 Model Robustness Using Different Aggregations 224 Parameter Aggregation Consistency 228 Annex 5 | Case Studies 229 Case Study: Mirror Industry in Egypt 229 Impacts of Mirror Industry Deployment 231 Case Study: Support Structure Industry in Egypt 231 Impacts of Support Structure Industry Deployment 233 Case Study: Support Structure Industry in Morocco 234 Impacts of Support Structure Industry Deployment 236 Case Study: Thin Film Modules Industry in Morocco 236 Certification and Testing Procedures 239 Case Study: Receiver Industry in Tunisia 239 Annex 6 | Benchmarking Analysis Results 241 Primary Data 241 Weights 248 References 259 viii | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Boxes Box 4.1 | Certification and Testing Institute in Jordan 80 Box 4.2 | Success Story: CSP Industry Development in Spain 86 Box 5.1 | Success Story in PV Module Industry Development: China’s Development of the Crystalline Module Industry 117 Box 5.2 | Success Story: Reduction of Financial Risk in Morocco 121 Boxes | ix Figures Figure 1.1 | Investment Requirements vs. Technology Complexity for CSP Technology Industries 2 Figure 1.2 | CSP Industry Development Opportunities in MENA Countries 3 Figure 1.3 | Investment Requirements vs. Technology Complexity for PV Technology Industries 3 Figure 1.4 | PV Industry Development Opportunities in MENA Countries 4 Figure 1.5 | Competitiveness Parameters in Algeria Compared to Benchmark and MENA Averages 5 Figure 1.6 | Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages 6 Figure 1.7 | Competitiveness Parameters in Jordan Compared to Benchmark and MENA Averages 6 Figure 1.8 | Competitiveness Parameters in Morocco Compared to Benchmark and MENA Averages 7 Figure 1.9 | Competitiveness Parameters in Tunisia Compared to Benchmark and MENA Averages 8 Figure 2.1 | Parabolic Trough Collectors Installed at Plataforma Solar de Almería (Spain) 10 Figure 2.2 | Schematics of a Parabolic Trough Collector 11 Figure 2.3 | General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage 12 Figure 2.4 | Schematics of a Linear Fresnel Collector 13 Figure 2.5 | Functional Scheme of a Power Tower System, Using Molten Salt as HTF, with TES 15 Figure 2.6 | Main Components of a Heliostat 16 Figure 2.7 | Main Components of a Dish/Engine System 18 Figure 2.8 | Schematic Showing the Operation of a Heat-Pipe Solar Receiver 19 Figure 2.9 | Investment Requirements vs. Technology Complexity for CSP Technology Industries 20 x | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.10 | CSP Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries 21 Figure 2.11 | Developing Phases: From Design to Commercial Exploitation 22 Figure 2.12 | Market Share of the Different CSP Technological Approaches, Both Operating (Left) and under Construction (Right), 2012 24 Figure 2.13 | PV Solar Energy Value Chain 25 Figure 2.14 | Polysilicon Manufacturing Value Chain 26 Figure 2.15 | Ingot/Wafer Manufacturing Value Chain 27 Figure 2.16 | c-Si Cell Structure 28 Figure 2.17 | Types of Solar Glass 30 Figure 2.18 | Investment Requirements vs. Technology Complexity for PV Technology Industries 32 Figure 2.19 | PV Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries 33 Figure 2.20 | Global PV Module Pricing Learning Curve for c-Si and CdTe Modules, 1979–2015 35 Figure 2.21 | Market Share of the Different PV Technological Approaches, 2011 36 Figure 2.22 | Value Chain Related to Solar Energy Deployment 37 Figure 3.1 | Global Methodology 40 Figure 3.2 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, with Different Normalization and Aggregation Techniques 48 Figure 3.3 | Rankings of Attractiveness Indexes per Country, Aggregated for PV Technology, with Different Normalization and Aggregation Techniques 49 Figure 3.4 | Investment Requirements vs. Technology Complexity for CSP Technology Industries 51 Figure 3.5 | Investment Requirements vs. Technology Complexity for PV Technology Industries 52 Figure 3.6 | Sample Graph: Country and MENA Average Normalized Attractiveness Index Score 53 Figure 3.7 | Sample Spider Graph Used to Identify Gaps 54 Figure 3.8 | Global and European CSP and PV Yearly Installed Capacity in Different Scenarios, Average 2008–20 55 Figure 3.9 | MENA CSP and PV Installed Capacity in 2020 for 3 Scenarios 56 Figures | xi Figure 3.10 | MENA CSP and PV Yearly Installed Capacity in Different Scenarios, Average 2008–20 56 Figure 4.1 | Normalized Attractiveness Index for Each Country, Aggregated for CSP Industries and Probability Density Function* for MENA and Benchmark Countries 66 Figure 4.2 | Normalized Attractiveness Index for Each Country, Aggregated for PV Industries and Probability Density Function* for MENA and Benchmark Countries 66 Figure 4.3 | Competitiveness Parameters in Algeria Compared to Benchmark and MENA Averages 67 Figure 4.4 | Normalized Attractiveness Indexes for CSP Target Industries in Algeria Compared to MENA Average* 68 Figure 4.5 | Normalized Attractiveness Indexes for PV Target Industries in Algeria Compared to MENA Average* 70 Figure 4.6 | Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages 70 Figure 4.7 | Normalized Attractiveness Indexes for CSP Target Industries in Egypt Compared to MENA Average 72 Figure 4.8 | Normalized Attractiveness Indexes for PV Target Industries in Egypt Compared to MENA Average 73 Figure 4.9 | Competitiveness Parameters in Jordan Compared to Benchmark and MENA Averages 75 Figure 4.10 | Normalized Attractiveness Indexes for CSP Target Industries in Jordan Compared to MENA Average 76 Figure 4.11 | Normalized Attractiveness Indexes for PV Target Industries in Jordan Compared to MENA Average 78 Figure 4.12 | Competitiveness Parameters in Morocco Compared to Benchmark and MENA Averages 79 Figure 4.13 | Normalized Attractiveness Indexes for CSP Target Industries in Morocco Compared to MENA Average 81 Figure 4.14 | Normalized Attractiveness Indexes for PV Target Industries in Morocco Compared to MENA Average 81 Figure 4.15 | Competitiveness Parameters in Tunisia Compared to Benchmark and MENA Averages 82 Figure 4.16 | Normalized Attractiveness Indexes for CSP Target Industries in Tunisia Compared to MENA Average* 83 Figure 4.17 | Normalized Attractiveness Indexes for PV Target Industries in Tunisia Compared to MENA Average* 85 xii | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.18 | Normalized Attractiveness Indexes for PV Target Industries in Morocco Compared to MENA Average 85 Figure 4.19 | Competitiveness Parameters in Tunisia Compared to Benchmark and MENA Averages 88 Figure 4.20 | Normalized Attractiveness Indexes for CSP and PV Technologies in Tunisia Compared to MENA Average* 89 Figure 4.21 | Normalized Attractiveness Indexes for CSP Target Industries in Tunisia Compared to MENA Average* 91 Figure 4.22 | Normalized Attractiveness Indexes for PV Target Industries in Tunisia Compared to MENA Average* 91 Figure 5.1 | Key Axes in a Country’s Development Plan for Solar Component Industries 94 Figure 5.2 | Strengths and Weaknesses of Algeria vs. US in the Solar Glass Industry 94 Figure 5.3 | Strengths and Weaknesses of Egypt vs. United States and China in the Mirror Industry 101 Figure 5.4 | Strengths and Weaknesses of Morocco vs. China in the Structures & Tracker Industry 114 Figure 5.5 | Investment Zones, Main Seaports and International Airports in Morocco 122 Figure 5.6 | Strengths and Weaknesses of Tunisia vs. United States in the Receiver Industry 124 Figure 5.7 | Representation of the Combined MENA Advantages in the Competitiveness Analysis Compared to the Benchmark and MENA Country Averages 131 Figure 5.8 | Key Axes in a Regional Development Plan for Solar Component Industries 132 Figure A1.1 | Parabolic Trough Collectors Installed at Plataforma Solar de Almería (Spain) 146 Figure A1.2 | Schematics of a Parabolic Trough Collector 147 Figure A1.3 | General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage 148 Figure A1.4 | Schematics of a Linear Fresnel Collector 149 Figure A1.5 | Functional Scheme of a Power Tower System using Molten Salt as HTF with TES 151 Figure A1.6 | Main Components of a Heliostat 152 Figures | xiii Figure A1.7 | Main Components of a Dish/Engine System 154 Figure A1.8 | Schematic that Shows the Operation of a Heat-pipe Solar Receiver 155 Figure A1.9 | Investment Requirements vs. Technology Complexity for CSP Technology Industries 156 Figure A1.10 | CSP Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries* 157 Figure A1.11 | Developing Phases: From Design to Commercial Exploitation 158 Figure A1.12 | Market Share of the Different CSP Technological Approaches Both Operating (Left) and Under Construction (Right) as of 2012 160 Figure A1.13 | PV Solar Energy Value Chain 174 Figure A1.14 | Polysilicon Manufacturing Value Chain 175 Figure A1.15 | Ingot/Wafer Manufacturing Value Chain 176 Figure A1.16 | c-Si Cell Structure 177 Figure A1.17 | Types of Solar Glass 179 Figure A1.18 | Investment Requirements vs. Technology Complexity for PV Technology Industries 182 Figure A1.19 | PV Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries 183 Figure A1.20 | Global PV Module Pricing Learning Curve for c-Si and CdTe Modules, 1979–2015 185 Figure A1.21 | Market Share of the Different PV Technological Approaches, 2011 186 Figure A2.1 | Projected Global CSP Installed Capacity, 2008–35 196 Figure A2.2 | Projected Global PV Installed Capacity, 2008–35 197 Figure A2.3 | MENA CSP (Left) and PV (Right) Installed Capacity to 2020 (MW) 197 Figure A2.4 | Global CSP Development: Current Capacity and Capacity under Construction (MW) 198 Figure A2.5 | Global PV Development: Current Capacity and Projected Future Capacity by 2014 (MW) 198 Figure A2.6 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 200 xiv | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A2.7 | Algeria CSP Market Potential to 2020 Taking into Account Market Share Hypotheses 200 Figure A2.8 | Algeria PV Market Potential to 2020 Taking into Account Market Share Hypotheses 201 Figure A2.9 | Egypt CSP Market Potential to 2020 Taking into Account Market Share Hypotheses 201 Figure A2.10 | Egypt PV Market Potential to 2020 Taking into Account Market Share Hypotheses 202 Figure A2.11 | Jordan CSP Market Potential to 2020 Taking into Account Market Share Hypotheses 202 Figure A2.12 | Jordan PV Market Potential to 2020 Taking into Account Market Share Hypotheses 203 Figure A2.13 | Morocco CSP Market Potential to 2020 Taking into Account Market Share Hypotheses 203 Figure A2.14 | Morocco PV Market Potential to 2020 Taking into Account Market Share Hypotheses 204 Figure A2.15 | Tunisia CSP Market Potential to 2020 Taking into Account Market Share Hypotheses 204 Figure A2.16 | Tunisia PV Market Potential to 2020 Taking into Account Market Share Hypotheses 205 Figure A2.17 | Scenarios in Algeria for CSP Potential Market 205 Figure A2.18 | Scenarios in Algeria for PV Potential Market 205 Figure A2.19 | Scenarios in Egypt for CSP Potential Market 206 Figure A2.20 | Scenarios in Egypt for PV Potential Market 206 Figure A2.21 | Scenarios in Jordan for CSP Potential Market 206 Figure A2.22 | Scenarios in Jordan for PV Potential Market 206 Figure A2.23 | Scenarios in Morocco for CSP Potential Market 207 Figure A2.24 | Scenarios in Morocco for PV Potential Market 207 Figure A2.25 | Scenarios in Tunisia for CSP Potential Market 207 Figure A2.26 | Scenarios in Tunisia for PV Potential Market 207 Figure A4.1 | Investment Requirements vs. Technology Complexity for CSP Technology: Group Definition 212 Figure A4.2 | Investment Requirements vs. Technology Complexity for PV Technology: Group Definition 213 Figures | xv Figure A4.3 | Investment Requirements vs. Technology Complexity for CSP Technology 216 Figure A4.4 | Investment Requirements vs. Technology Complexity for PV Technology 217 Figure A4.5 | Production Competitiveness Parameters for CSP Industries 218 Figure A4.6 | Production Competitiveness Parameters for PV Industries 218 Figure A4.7 | Global Attractiveness Index by Country for CSP: MENA and Benchmark 223 Figure A4.8 | Global Attractiveness Index by Country for PV: MENA and Benchmark 223 Figure A4.9 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, with Different Normalization and Aggregation Techniques 226 Figure A4.10 | Rankings of Attractiveness Indexes per Country, Aggregated for PV Technology, with Different Normalization and Aggregation Techniques 227 Figure A5.1 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 230 Figure A5.2 | Comparison of Total Demand for Mirror Industry vs. Range of Production for a Mirror Factory in Egypt, 2014–20 (m2) 230 Figure A5.3 | Cumulative Cash Flow for a Mirror Industry in Egypt, (US$ mil) 231 Figure A5.4 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 232 Figure A5.5 | Comparison of Total Demand for Support Structure Industry vs. Range of Production for a Support Structure Factory in Egypt, 2014–20 (tons) 233 Figure A5.6 | Cumulative Cash Flow for a Support Structure Industry in Egypt, 2013–20 (US$ mil) 234 Figure A5.7 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 235 Figure A5.8 | Comparison of Total Demand for Support Structure Industry vs. Range of Production for a Support Structure Factory in Morocco, 2014–20 (tons) 235 Figure A5.9 | Cumulative Cash Flow for a Support Structure Industry in Morocco, 2013–20 (US$ mil) 236 Figure A5.10 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 237 xvi | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A5.11 | Comparison of Total Demand for TF Modules Industry vs. Range of Production for a TF Modules Factory in Morocco, 2014–20 (MW) 238 Figure A5.12 | Cumulative Cash Flow for a TF Modules Industry in Morocco, 2013–20 (US$ mil) 238 Figure A5.13 | Market Share Evolution for Target Industries Hypotheses, 2401–21 (%) 240 Figure A5.14 | Comparison of Total Demand for Receiver Industry vs. Range of Production for a Receiver Factory in Tunisia, 2014–20 (000 units) 240 Figures | xvii Tables Table 2.1 | CSP Solar Fields 9 Table 2.2 | Main Entry Barriers for the Difficult-to-reach CSP Industries 22 Table 2.3 | Characteristics of Concentrated Solar Power Systems 23 Table 2.4 | Conversion Efficiencies of Different PV Commercial Modules (%) 25 Table 2.5 | Main Entry Barriers for the Difficult-to-reach PV Industries 34 Table 3.1 | Primary Data Related to Production Factors 41 Table 3.2 | Primary Data Related to Demand Factors 42 Table 3.3 | Primary Data Related to Risk and Stability Factors 42 Table 3.4 | Primary Data Related to Business Support Factors 43 Table 3.5 | Global Ranking of Competitiveness Parameters According to Weight 44 Table 3.6 | Ranking of Competitiveness Parameters by Solar Industry (CSP Industries) 45 Table 3.7 | Ranking of Competitiveness Parameters by Solar Industry (PV Industries) 46 Table 3.8 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, When Using Different Normalization and Aggregation Techniques 47 Table 3.9 | Rankings of Attractiveness Indexes Per Country, Aggregated for PV Technology, when Using Different Normalization and Aggregation Techniques 48 Table 3.10 | CSP Solar Industries by Technology 50 Table 3.11 | PV Solar Industries by Technology 51 Table 3.12 | Market Share in Target Industries Hypotheses for Each MENA Country 57 xviii | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.1 | Normalized Attractiveness Index for CSP Component Industries (I) 60 Table 4.2 | Normalized Attractiveness Index for CSP Component Industries (II) 60 Table 4.3 | Normalized Attractiveness Index for Thin Film and Shared PV Component Industries 61 Table 4.4 | Normalized Attractiveness Index for Cristalline PV Component Industries 61 Table 4.5 | Normalized Competitiveness Parameters Included in the Overarching Categories Production Factors and Demand Factors, Aggregated for the CSP Solar Industries 62 Table 4.6 | Normalized Competitiveness Parameters Included in the Overarching Categories Production Factors and Demand Factors, Aggregated for All the PV Solar Industries 63 Table 4.7 | Normalized Competitiveness Parameters Included in the Overarching Categories Risk and Stability Factors and Business Support Factors, Aggregated for All the CSP Solar Industries 64 Table 4.8 | Normalized Competitiveness Parameters Included in the Overarching Categories Risk and Stability Factors and Business Support Factors, Aggregated for All the PV Solar Industries 65 Table 4.9 | Algeria’s Key Strengths and Competitive Gap Weaknesses Analysis 69 Table 4.10 | Impacts and Main Competitors – Algeria 71 Table 4.11 | Egypt’s Key Strengths and Competitive Gap Weaknesses Analysis 74 Table 4.12 | Impacts and Main Competitors: Egypt 77 Table 4.13 | Jordan’s Key Strengths and Competitive Gap Weaknesses Analysis 80 Table 4.14 | Impacts and Main Competitors: Jordan 81 Table 4.15 | Morocco’s Key Strengths and Competitive Gap Weaknesses Analysis 84 Table 4.16 | Impacts and Main Competitors: Morocco 87 Table 4.17 | Tunisia’s Key Strengths and Competitive Gap Weaknesses Analysis 90 Tables | xix Table 4.18 | Impacts and Main Competitors: Tunisia 92 Table 5.1 | Associated Impact on Competitiveness Parameters Due to Recommended Strategic Actions 96 Table 5.2 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Algeria: Production Factors and Demand Factors 97 Table 5.3 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Algeria, Risk and Stability Factors and Business Support Factors 98 Table 5.4 | General Recommendations to Improve the Flexibility of the Labor Market 101 Table 5.5 | Associated Impacts in Competitiveness Parameters Due to Recommended Strategic Actions 103 Table 5.6 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Egypt, Production Factors and Demand Factors 104 Table 5.7 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Egypt, Risk and Stability Factors and Business Support Factors 105 Table 5.8 | Associated Impacts in Competitiveness Parameters Due to Recommended Strategic Actions 110 Table 5.9 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Jordan: Production Factors and Demand Factors 111 Table 5.10 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Jordan: Risk and Stability Factors and Business Support Factors 112 Table 5.11 | General Recommendations to Improve the Flexibility of the Labor Market 115 Table 5.12 | Associated Impacts in Competitiveness Parameters Due to Recommended Strategic Actions 116 Table 5.13 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Morocco: Production Factors and Demand Factors 118 Table 5.14 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Morocco: Risk and Stability Factors and Business Support Factors 119 Table 5.15 | Course on Hot-dip Galvanizing and Corrosion Protection 122 xx | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 5.16 | General Recommendations to Improve the Flexibility of the Labor Market 124 Table 5.17 | Associated Impacts in Competitiveness Parameters Due to Recommended Strategic Actions 125 Table 5.18 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Tunisia: Production Factors and Demand Factors 126 Table 5.19 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Tunisia: Risk and Stability Factors and Business Support Factors 127 Table 5.20 | Potential Autonomy of Individual MENA Countries to Develop Various Industries based on Domestic Demand 131 Table 6.1 | Course on Hot-Dip Galvanizing and Corrosion Protection 137 Table 6.2 | Master’s in Carbon Offsetting Clean Development Mechanism and Carbon Markets 138 Table 6.3 | Course on Sputtering Laser Techniques and Encapsulation 139 Table 6.4 | Financing Specific Actions to be Conducted by CIC 141 Table 6.5 | Access to Information Actions to be Conducted by CIC 142 Table 6.6 | Training: Specific Actions to be Conducted by CIC 143 Table 6.7 | Networking Facilitation Actions to be Conducted by CIC 144 Table A1.1 | CSP Solar Fields 145 Table A1.2 | Main Entry Barriers for the Difficult-to-Reach CSP Industries 157 Table A1.3 | Characteristics of Concentrated Solar Power Systems 159 Table A1.4 | Conversion Efficiencies of Different PV Commercial Modules 173 Table A1.5 | Main Entry Barriers for the Difficult-to-Reach PV Industries 184 Table A2.1 | Projected Global Solar Installed Capacity (GW), 2008–35 196 Table A2.2 | Market Share Hypotheses for Each MENA Country to 2020 (%) 199 Table A4.1 | Weight Factors for Overarching Categories in Industries within Group I: CSP Industries 214 Table A4.2 | Weight Factors for Overarching Categories in Industries within Group II: CSP Industries 214 Table A4.3 | Weight Factors for Overarching Categories in Industries within Group III: CSP Industries 214 Tables | xxi Table A4.4 | Weight Factors for Overarching Categories in Industries within Group IV: CSP Industries 214 Table A4.5 | Weight Factors for Overarching Categories in Industries within Group I: PV Industries 214 Table A4.6 | Weight Factors for Overarching Categories in Industries within Groups II and III: PV Industries 215 Table A4.7 | Weight Factors for Overarching Categories in Industries within Group IV: PV Industries 215 Table A4.8 | Percentage Used to Set up a Weight Factor to Relevant Manufacturing Ability and Material Availability According Technological Complexity: CSP Industries 216 Table A4.9 | Percentage Used to set up a Weight Factor to Relevant Manufacturing Ability and Material Availability According Technological Complexity: PV Industries 217 Table A4.10 | Competitiveness Parameters Associated with Risk and Stability Factors 219 Table A4.11 | Competitiveness Parameters Associated with Business Support Factors 219 Table A4.12 | Weight Factors Applied to Primary Data within the Labor Market Competitiveness Parameter 220 Table A4.13 | Weight Factors Applied to Primary Data within the Material Availability Competitiveness Parameter; Example: Receiver Industry 220 Table A4.14 | Weight Factors Applied to Primary Data within the Relevant Manufacturing Ability Competitiveness Parameter 220 Table A4.15 | Weight Factors Applied to Primary Data within the Fiscal Policy Competitiveness Parameter 220 Table A4.16 | Weight Factors Applied to Primary Data within the Component Demand Competitiveness Parameter 221 Table A4.17 | Weight Factors Applied to Primary Data within the Risk Associated with Doing Business Competitiveness Parameter 221 Table A4.18 | Weight Factors Applied to Primary Data within the Risk Associated with Demand Competitiveness Parameter 221 Table A4.19 | Weight Factors Applied to Primary Data within the Industry Structure Competitiveness Parameter 222 Table A4.20 | Weight Factors Applied to Primary Data within the Innovation Capacity Competitiveness Parameter 222 xxii | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A4.21 | Weight Factors Applied to Primary Data within the Logistical Infrastructure Competitiveness Parameter 222 Table A4.22 | Calculation Methods Used for Parameter Aggregation and Normalization 224 Table A4.23 | Rankings for CSP Technology Using Different Normalization and Aggregation Techniques 226 Table A4.24 | Rankings for PV Technology Using Different Normalization and Aggregation Techniques 223 Table A4.25 | Cronbach’s Alpha (α) for Competitiveness Parameters 228 Table A6.1 | Primary Data Related to Production Factors: MENA Countries 241 Table A6.2 | Primary Data Related to Production Factors: Benchmark Countries 242 Table A6.3 | Primary Data Related to Demand Factors: MENA Countries 243 Table A6.4 | Primary Data Related to Demand Factors: Benchmark Countries 243 Table A6.5 | Primary Data Related to Stability and Risk Factors: MENA Countries 244 Table A6.6 | Primary Data Related to Stability and Risk Factors: Benchmark Countries 245 Table A6.7 | Primary Data Related to Business Support Factors: MENA Countries 246 Table A6.8 | Primary Data Related to Business Support Factors: Benchmark Countries 248 Table A6.9 | Weight Factor for an Industry within an Attractiveness s Index (  i ) – Weighting Overarching Categories: CSP Industries 248 Table A6.10 | Weight Factor for an Industry within an Attractiveness Index (  s i ) – Weighting Overarching Categories: PV Industries 248 Table A6.11 | Weight Factor within an Overarching Category (  s i ,j) – Weighting Competitiveness Parameters: CSP Industries 249 Table A6.12 | Weight Factor within an Overarching Category (  s i , j) – Weighting Competitiveness Parameters: PV Industries 250 Table A6.13 | Weight Factor within a Competitiveness Parameter ( sj ,k ) – Weighting Normalized Primary Data: CSP Industries 251 Table A6.14 | Weight Factor within a Competitiveness Parameter ( sj ,k ) – Weighting Normalized Primary Data: PV Industries 256 Tables | xxiii Acronyms and Abbreviations ADEREE National Agency for the Development of Renewable Energy and Energy Efficiency (Morocco) AGADIR Arab Mediterranean Free Trade Agreement ANME Agence Nationale pour la Maîtrise de l’Énergie (Tunisia) ANOVA Analysis of variance API American Petroleum Institute BIPV Building Integrated Photovoltaic BoPET Biaxially oriented poly-ethylene terephthalate CDM Clean development mechanism CdS Cadmium sulfide CCGT Combined cycle gas turbine CIC Climate Innovation Center CIGS Copper-indium-gallium selenide CIS Copper-indium sulfide CoSPER Committee for Rural Electrification Program (Morocco) CPV Concentrated photovoltaic CSP Concentrated solar power DNI Direct normal irradiation EIB European Investment Bank EPC Engineering, Procurement and Construction contract; occ., Contractor of EPC EPIA European Photovoltaic Industry Association ESMAP Energy Sector Management Assistance Program EU European Union EVA Ethylene-vinyl acetate E&Y Ernst & Young FDI Foreign direct investment FIT Feed-in tariff GAFTA Greater Arab Free Trade Area GCR Global Competitiveness Report GDP Gross domestic product GHG Greenhouse gas GHI Global Horizontal Irradiation GNP Gross national product GW Gigawatt GWe Gigawatt-electric GWh Gigawatt-hour HTF Heat transfer fluid xxiv | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry ICT Information and communication technology IEA International Energy Agency IFC-WB International Finance Corporation (World Bank Group) IPF Investment Promotion Fund IPP Independent power producer ISCC Integrated solar combined cycle ISO International Organization for Standardization ITO Tin-doped indium oxide kW Kilowatt kWe Kilowatt-electric KWh Kilowatt-hour LCD Liquid crystal display LCOE Levelized cost of energy MAD Moroccan Dirham MASEN Moroccan Agency for Solar Energy MEMR Ministry of Energy and Mineral Resources (Jordan) MENA Middle East and North Africa MG-Si Metallurgical grade silicon MW Megawatt MWe Megawatt-electric MWh Megawatt-hour NAMA Nationally appropriate mitigation action NREA New and Renewable Energy Authority (Egypt) NTF-PSI Norwegian Trust Fund for Private Sector and Infrastructure NTM Nontariff measures OEM Original equipment manufacturer O&M Operation and maintenance ONEE Office National De l’Électricité et de l’Eau Potable (Morocco) PB Power block PECVD Plasma-enhanced chemical vapor deposition PER Plan de Energías Renovables (Spain) PERG Global Rural Electrification Program PGESCO Power Generation Engineering and Services Co. (Egypt and Bechtel) PV Photovoltaic PVF Poly-vinyl fluoride RD Royal Decree RE Renewable energy RCREEE Regional Centre for Renewable Energy and Energy Efficiency ROW Rest of the world R&D Research and development SF Solar field SME Small and medium enterprises SITC Standard International Trade Classification Si’Tarc Small Industries Testing and Research Centre (India) SCR Silicon controlled rectifier STA Solar Technology Advisors Acronyms and Abbreviations | xxv STC Standard test conditions SWOT Strengths, weakness/limitations, opportunities and threats TCO Transparent conductive oxide TCS Trichlorosilane (HSiCl3) TES Thermal energy storage TF Thin film US United States of America US$ United States dollar WEO World Energy Outlook xxvi | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Acknowledgments This study was prepared by a World Bank team led by Roger Coma Cunill and composed of Chandrasekar Govindarajalu, Silvia Pariente-David, Fanny Missfeldt-Ringius, Manaf Touati, Fowzia Hassan, and Mohab Hallouda, all of the Middle East and North Africa Region, Energy and Extractives Global Practice. The assessment was drafted by a consortium of consultants composed of Solar Technology Advisors (STA)–– Jorge Servert and Eduardo Cerrajero––and Accenture––Jose Ramón Alonso and Paz Nachón. The team would like to thank the peer reviewers––Mario Ragwitz and Inga Boie (Fraunhofer ISI), and Silvia Martinez-Romero (ESMAP) and Nathalia Kulichenko (GEEDR)––for their valuable comments. The team is grateful for the funding for this study by the Norwegian Trust Fund for Private Sector and Infrastructure (NTF-PSI) and the Energy Sector Management Assistance Program (ESMAP) representing the commitment of the World Bank and these organizations to support the MENA countries in the development of opportunities around solar energy. Stakeholder workshops were conducted in Egypt and Morocco to garner feedback from client countries, industry participants, and donors. Interim results were presented and discussed at the MENAREC (Middle East  North Africa Renewable Energy Conference) (May 2012) and Solar Paces (October 2012) regional conferences. Final results were presented in Morocco in Skhirat (January 2013) and Marrakech (October 2013). Alicia Hetzner edited the report and Marjorie K. Araya (ESMAP) managed the final production. Acknowledgments | xxvii Model Notation Pkc Primary datum (of the country “c”) c p k Normalized datum s  j ,k Weight of data within a Competitiveness parameter (for the industry “s”) s ,c CP j Competitiveness parameter s ,c cp j Normalized Competitiveness parameter s  i ,j Weight of Competitiveness parameters within an Overarching category OC s j ,c Overarching category s ,c oc j Normalized Overarching category s  i Weight of an Overarching category within the Attractiveness index s ,c AI Attractiveness index (of the country “c” for the industry “s”) s ,c ai Normalized Attractiveness index R Mean correlation Superscripts: c Country b Benchmark country m MENA country s Solar industry pv Solar industry related to PV csp Solar industry related to CSP Subscripts: i Overarching category j Competitiveness parameter k Datum xxviii | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 1 CHAPTER ONE: Executive Summary 1.1 Introduction The objective of this study is to assess the analysis, together with an analysis of the solar industry competitiveness of five selected Middle East value chain and the projected component demand. and North Africa (MENA) countries—Algeria, Egypt, Jordan, Morocco and Tunisia—to attract The Attractiveness index for each solar industry private sector investments in the Concentrated is composed of all relevant variables that an Solar Power (CSP) and Photovoltaic (PV) investor would take into account in his/her industries.1 The study develops an Attractiveness decision to set up a manufacturing plant.2 index for these countries and compares them to a The four main factors for such a decision are3: group of Benchmark countries comprising Chile, (i)  Production: productivity, and costs of production China, Germany, India, Japan, South Africa, Spain, factors; (ii) Demand: expected internal and external and the United States. The study also identifies the demand for solar components; (iii) Risk and stability: existing gaps between the MENA and Benchmark Real and perceived risks; and (iv) Business support: countries; and proposes recommendations to Specific support and enabling environment. PV and improve the competitiveness of MENA countries and, CSP are complementary, rather than directly hence, to develop a local solar industry. To achieve competitive. For this reason, developers should these goals, a macro- and microeconomic analysis carefully assess their needs and environment when is carried out through a competitiveness benchmark choosing which solar technology to use. 1.2 MENA Countries Face Strong Competition from Leading Solar Markets 1.2.1 CONCENTRATED SOLAR POWER industries that are best developed based on existing (CSP) INDUSTRIES conventional industries (conventional industries); and a group of industries that, due to their complexity The value chain analysis reveals three groups of and required investment, are not likely to be developed industries with differing technological complexity4 and (difficult-to-reach industries). investment requirements (Figure  1.1). They comprise a group of industries that can be independently Overall, MENA countries have some potential to developed (independent industries); a group of attract investments in manufacturing facilities of 1 This study complements the World Bank study [69] published in March 2011. 2 The Attractiveness index is a synthetic indicator built by aggregating 49 parameters, as described in the Methodology section. 3 Resulting from discussions with leading solar companies. 4 The analysis of technological complexity is based on consulting and interviews with solar experts according to their internal manufacturing processes. Chapter 1 | Executive Summary | 1 Figure 1.1 | Investment Requirements vs. Technology Complexity for CSP Technology Industries High Complexity and Investment Requirements Steam Turbine for the CSP Solar Industry HTF Thermal Oil Electrical Generator HTF Pumps Investment Requirements Mirror Heat exchanger Pumps Storage Tanks Condenser Receiver Structure & Tracker Low Solar Salt Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. conventional (heat exchanger, pumps, storage tanks, Crystalline and Thin Film technologies (shared and condensers) and independent (structure and industries), such as support structure and inverters; tracker and solar salt) industries due to their higher and a group of industries difficult to reach in most Attractiveness index (Figure 1.2). parts of the world, including Benchmark countries, due to their technological complexity and investment 1.2.2 PHOTOVOLTAIC (PV) requirements. Most Crystalline industries, except for INDUSTRIES the module assembly, fall into this last category.6 The value chain analysis of Crystalline and Overall, MENA countries are more suited to develop Thin Film  technologies5 reveals three groups of shared industries such as inverters and support industries with differing technological complexity structures. In the medium term, if current world-wide and investment requirements (Figure 1.3): a group overcapacity were to diminish, investments in Thin of industries related to the Thin Film components Film PV, solar glass, and modules industries could be (TF industries); a group of industries shared by considered (Figure 1.4).  5 Crystalline PV has 80%–90% of market share, with Thin Film largely making up for the remaining. Concentrated Photovoltaic (CPV) has not been included directly in the study due to its lower penetration rate, but CPV technology requirements are included in the CSP and PV technology, because some of the components (trackers, optics, cells), are common to the other two solar technologies. Thus, CPV technology also could be of interest to MENA countries in the future. 6 Crystalline industries represent a market with experienced actors in an over-production capacity situation that has exerted downward pricing pressure on the value chain.Thus, the barriers of entry to this market are very high and currently not suitable to MENA countries. 2 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 1.2 | CSP Industry Development Opportunities in MENA Countries Average 1.0 MENA 0.9 Algeria 0.8 Egypt 0.7 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 Benchmark alt or r s ine er r s Oil r s r ge ive se rro nk mp mp rat ck S rb al an en Mi ce Ta Tra lar u Pu ne rm Tu nd ch FP Re ge So Ge he & m Ex Co HT ora ea FT re al at St ric ctu St HT He ct ru Ele St Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. Figure 1.3 | Investment Requirements vs. Technology Complexity for PV Technology Industries Complexity and Investment Requirements Polysilicon High for the PV Solar Industry Ingots/Wafers Solar Glass Cells Investment Requirements TF Materials c-Si Modules TF Modules Inverters Support Structure Low Low Technology Complexity High Difficult to reach TF Shared PV - Crystalline PV - Thin Film PV - Shared Source: STA/Accenture. Chapter 1 | Executive Summary | 3 Figure 1.4 | PV Industry Development Opportunities in MENA Countries Average 1.0 MENA 0.9 Algeria 0.8 Egypt Attractiveness index 0.7 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 Benchmark lls rs -Si on ss ria ls les er re Ce afe sc ilic gla du ert ctu W le lys r ate o nv r u ots du Po ola M FM I St Ing Mo S TF T or t pp Su Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. 1.3 Egypt and Morocco Show the Highest Attractiveness Index for CSP and PV Component Industries The selected MENA countries lag behind the Benchmark Algeria’s key strengths are the costs of energy countries, but present opportunities  for improving for  industrial consumers,7 its industry structure, their attractiveness to investors. For a given country, and its solar energy targets. The four main aspects attractiveness varies among different component to improve would be its availability of required industries according to the country’s suitability to fulfill components and materials, risks associated with the specific needs of that industry (such as low energy doing business, innovation capacity, and logistical price for energy-intensive industries, availability and infrastructure. Algeria could, however, explore price of critical materials) and investors’ preferences. opportunities in industries with higher energy The strengths and weaknesses of each MENA country requirements such as solar glass, TF materials and for the development a local solar industry follow. TF modules. 7 A low-cost electricity presents a competitive advantage to private investors in energy-intensive industries. However, from the point of view of the country, subsidies to energy consumption introduce tensions in the system because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts[94]. For a country that generates its electricity largely from natural gas, a true price of electricity would need to take into account the LCOE (levelized cost of energy) of a CCGT (Combined Cycle Gas Turbine) plant, estimated at 5$c/kWh, and add to it transportation costs, business margin, and others to arrive at the final number[93]. 4 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 1.5 | Competitiveness Parameters in Algeria Compared to Benchmark and MENA Averages Labor market 1.00 Material availability Logistical infrastructure 0.80 0.60 Innovation capacity Relevant manufacturing 0.40 ability 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Algeria Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. Egypt’s key strengths are its low cost of labor and in some of the conventional CSP industries (heat of energy for industrial consumers;8 its availability exchanger, storage tanks) and to develop the solar of materials for solar industries, particularly glass, glass and Mirror industries, with a strategy to take steel, and stainless steel; and a high manufacturing advantage of regional synergies. Investments in new ability. The key aspect to improve would be its fiscal reflective materials also could be explored in Egypt.9 and financial costs, which undermine the country’s competitiveness. Egypt should focus on developing Jordan’s key strengths for solar industry development the CSP Structure & Tracker industries and the are its fiscal and financial costs, low risk associated Support structure industry for PV. In the medium with doing business, and its higher education rates. term, Egypt could consider opportunities to innovate On the other hand, a weak industrial structure10 and 8 A low cost of electricity presents a competitive advantage for private investors in energy-intensive industries. However, from the point of view of the country, subsidies to energy consumption introduce tensions in the system because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts[94]. Although energy cost for industrial consumers is still low in Egypt, the cost has risen substantially over the past year and is expected to keep increasing because national subsidies to fossil fuels have been reduced. 9 All-aluminum and multilayer aluminum reflectors[6], as well as reflective films ([7], [8]) are entering the market. However, despite having advantages compared with conventional glass Mirrors (light weight, no thermal shock, lower expected price), they also have disadvantages (durability concerns) and scant or no track record. 10 Industrial structure refers to (a) the presence of large international industrial companies, (b) the % of industrial GDP, and (c) local clustering of suppliers needed for the solar industry being considered. Chapter 1 | Executive Summary | 5 Figure 1.6 | Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages Labor market Logistical infrastructure 1.00 Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing Production business Egypt Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. Figure 1.7 | Competitiveness Parameters in Jordan Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Jordan Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. 6 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 1.8 | Competitiveness Parameters in Morocco Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Morocco Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. high cost of industrial energy, combined with lower industries and the Support structure industry for expected local demand are drawbacks to new industrial PV; and in the medium term, consider opportunities developments. However, investments for some niche to innovate in the conventional CSP industries applications, as well as the creation of a regional (condenser, pumps). Certification and Testing Institute, could be explored. Tunisia’s keys strengths are its level of education, Morocco’s key strengths are its planned solar business sophistication, and a better-than-average demand for 2020; the government’s commitment logistical infrastructure. However, a weak industrial and support;11 and the overall industrial structure structure and high cost of energy for industrial in the country, which includes the presence of large customers, combined with low material availability international companies alongside specific local and  relevant manufacturing ability, could pose clustering. The main aspects to improve are the cost drawbacks to new industrial developments. In of industrial energy, materials availability, innovation the short term, the CSP Receiver industry and the capacity, and logistical infrastructure. Morocco could materials industry for PV TF may be of particular focus on developing the CSP Structure & Tracker interest for development in Tunisia. 11 The Moroccan Agency for Solar Energy (MASEN) is a Joint Stock company with a Board of Trustees and a Supervisory Board. MASEN aims at implementing a program to use solar energy to develop integrated electricity production projects with a minimum total capacity of 2000 MW in the areas of Morocco that are capable of doing so[91]. Chapter 1 | Executive Summary | 7 Figure 1.9 | Competitiveness Parameters in Tunisia Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Tunisia Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. The creation of a Climate Innovation Center local solar industries. The CIC could help to fill (CIC) could assist investors, professionals and MENA’s gaps in financing, access to information, policy-makers in MENA countries to develop consulting and training, and networking. 8 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 2 CHAPTER TWO Introduction to the Value Chain of Solar Technologies 2.1 Concentrated Solar Power (CSP) Technology Although, strictly speaking, “concentrated solar • Power block (PB), in which the heat contained power” also could apply to low- and high- in the HTF is used to generate electricity. The concentration photovoltaic systems, the term is more most common approach is to produce high commonly used to describe technologies that use pressure steam, which then is channeled through the thermal energy from solar radiation to generate a conventional steam turbine and generator electricity. These systems can be subdivided in three in a Rankine cycle. The Dish/Engine systems, main subsystems: however, use a Stirling engine. • Thermal energy storage (TES) system, in which • Solar field (SF), in which Mirrors (or, in some excess energy from the SF is stored for further new developments, lenses) are used to use in the PB. The state of the art in this field is to concentrate (focus) sunlight energy and convert use molten salts stored in two tanks (one “cold” it into high temperature thermal energy (internal and one “hot”), and a reversible heat exchanger. energy). This heat is transferred using a heat Additional approaches are steam storage, direct transfer fluid (HTF), which can be synthetic oil use of molten salt as HTF, and experimental (the most widely used), molten salt, steam, air, or prototypes. other fluids. Although they require highly precise, two-axis tracking systems, the point focus To sum up, actual CSP plants utilize four alternative systems enable higher concentration ratios and, technological approaches: Parabolic Trough therefore, higher temperatures and efficiencies. Systems, Linear Fresnel Systems, Power Tower On the other hand, linear focus systems are less Systems, and Dish/Engine Systems. demanding but also less efficient. Either way, as with any concentrating solar technology, only the 2.1.1 PARABOLIC TROUGH SYSTEMS beam (direct) component of the solar irradiation is used, because the diffuse portion does not The Parabolic Trough today is considered a follow the same optical path so will not reach commercially mature technology, with thousands of the focus. megawatts already installed in commercial power Table 2.1 | CSP Solar Fields Point Focus Linear Focus Single focus Power Tower systems* Multiple focus Dish/Engine systems Parabolic Trough systems Linear Fresnel systems Source: Authors. Note: *Multitower solar fields are at a demonstration stage (a 5-MWe plant started operation in 2009). Chapter 2 | Introduction to the Value Chain of Solar Technologies | 9 Figure 2.1 | Parabolic Trough Collectors Installed at Plataforma Solar de Almería (Spain) Source: Photo courtesy of PSA-CIEMAT. plants, mainly in the US and Spain. In 2012 Parabolic certain amount of HTF from the “cold” to the “high” Trough comprised approximately 95 percent of total operation temperature (typically from 300ºC to CSP installed capacity (Figure 2.1). 400ºC). The loops contain from 4 to 8 independently moving subunits called “collectors.” The main Parabolic Trough (as well as Linear Fresnel) is a components of a Parabolic Trough collector are: 2D concentrating system in which the incoming direct solar radiation is concentrated on a focal • HTF Thermal Oil: A synthetic oil is used as line by one-axis-tracking, parabola-shaped Mirrors. heat transfer fluid in all commercial Parabolic They are able to concentrate the solar radiation Trough CSP plants actually in operation. The flux by 30–80 times, heating the HTF to 393ºC. most commonly used oil is a eutectic mixture (A different approach using molten salts as HTF can of biphenyl and diphenyl oxide. Additional fluids heat to 530ºC but is not yet commercially proven.) (such as silicone-based) are under development The typical unit size of these plants ranges from and testing. 30 MWe–80 MWe (megawatt-electric). Thus, they • Mirror: It reflects the direct solar radiation are well suited for central generation with a Rankine incident on it and concentrates it onto the steam turbine/generator cycle for dispatchable Receiver placed in the focal line of the Parabolic markets. Trough collector. The Mirrors are made with a thin silver or aluminum reflective film deposited A Parabolic Trough solar field comprises a variable on a low-iron, highly transparent glass support to number of identical “solar loops” connected in give them the necessary stiffness and parabolic parallel. Each loop can raise the temperature of a shape. 10 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry • Receiver or absorber tube: It consists of two The power block of a Parabolic Trough CSP plant concentric tubes. The inner tube is made of resembles a conventional Rankine-cycle power plant. stainless steel with a high-absorptivity, low- The main difference is that, instead of combustion emissivity coating, and channels the flow of the or a nuclear process, the heat used to generate HTF. The outer tube is made of low-iron, highly superheated steam is collected in the solar field and transparent glass with an antireflective coating. transferred using a HTF. The main components of the A vacuum is created in the annular space. This power block are: configuration reduces heat losses, thus increasing overall collector performance. • Condenser: Although it also is a heat exchanger, • Structure & Tracker: The solar tracking system the condenser’s design is more complex. The changes the position of the collector following condenser affects the overall performance of the apparent position of the sun during the day, the  plant more than the other heat exchangers thus enabling concentrating the solar radiation in the plant because it modifies the discharge onto the Receiver. The S&T system consists of pressure of the turbine. For this reason, the a hydraulic drive unit that rotates the collector turbine manufacturer could try to limit the around its axis, and a local control that governs possible  suppliers of condensers to give a the drive unit. The structure, in turn, must keep performance guarantee, or even include the the shape and relative position of the elements, condenser in its own scope of supply. transmitting the driving force from the tracker • Electrical generator: Within the generator, the and avoiding deformations caused by their rotary movement from the turbine is transmitted own weight or other external forces such as the to a series of coils inside a magnetic field, thus wind. producing electricity due to electromagnetic induction. The design and manufacturing of a generator requires special materials and a highly specialized workforce, available to only a limited Figure 2.2 | Schematics of a Parabolic number of companies around the world. To Trough collector manufacture generators, carbon steel, stainless steel, and special alloys are required, as well as Sun rays copper and aluminum in smaller amounts. • Heat exchanger: Two different sets of heat exchangers are required in the PB. First, HTF- water heat exchangers (usually referred to as 02 03 SGS, or steam generation system) are required to generate the high-pressure and -temperature steam that will drive the turbine. Second, water- water heat exchangers recover the heat from turbine bleeds to preheat the condensate or feed water, thus increasing the Rankine cycle efficiency. If a TES system is included, a reversible, molten salt-HTF heat exchanger also is necessary. To 01 manufacture exchangers, carbon steel and stainless steel are required, as well as copper and 01 Solar Field Piping 02 Reflector 03 Absorber tube aluminum in smaller amounts. Source: STA. • HTF Pumps: The materials commonly used in joints for the range of temperatures and pressures Chapter 2 | Introduction to the Value Chain of Solar Technologies | 11 Figure 2.3 | General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage 01 10 09 08 07 04 02 03 05 06 01 Solar field 05 Condenser 08 Generator 02 Salt storage heat exchanger 06 Cooling tower 09 Steam turbine 03 Cold salt storage 07 Substation 10 Hot salt storage 04 Steam generator Source: STA. required for this application are not compatible blades, and this movement will be transmitted with the chemical composition of the HTF oil. to the Electrical generator to produce electricity. Thus, specific designs and materials, derived The design and manufacturing of a turbine mostly from the petrochemical industry, are requires special materials and a highly specialized necessary. workforce, available to only a limited number • Pumps: Several sets of pumps are required within of companies around the world. Carbon steel, a Parabolic Trough CSP plant: feed water pumps; stainless steel, and special alloys are required for cooling water pumps; condensate pumps; and to manufacture steam turbines. other minor pumps for dosing, sewage, raw • Storage tanks: A large number of tanks and water, and water treatment purposes. If a TES pressure vessels are required in a Parabolic system is included, molten salt pumps also are Trough CSP plant. They include raw and treated necessary. Carbon steel and stainless steel, as water storage tanks; deaerator; steam drum; well as copper, aluminum, and other materials and condensate tank for the Rankine cycle; HTF in smaller amounts, are required to manufacture storage; expansion; and ullage vessels and other pumps. minor tanks for sewage and water treatment • Steam turbine: The expansion of the steam intermediate steps. If a TES system is included, inside the turbine will cause the motion of the rotor molten salt “hot” and “cold” storage tanks also 12 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry are necessary. Carbon steel and stainless steel 2.1.2 LINEAR FRESNEL SYSTEMS are required to manufacture tanks. Linear Fresnel Systems are conceptually simple, The state of the art in the field of thermal energy using inexpensive, compact optics (flat Mirrors) that storage (TES) is to use molten salts. The most common can produce saturated steam at 150ºC–360ºC with mixture used for this purpose is referred to as “Solar less than 1 ha/MW land use. Linear Fresnel systems salt,” and is composed by sodium nitrate (NaNO3) and account for 2 percent of total CSP installed capacity. potassium nitrate (KNO3). As described above, this salt This percentage is expected to increase in the near is stored in two tanks (one “cold” and one “hot”), and a future as the system’s share in the pipeline increases reversible heat exchanger is used to move energy from (Figure 2.1). the solar field and to the power block. The Fresnel system uses flat or slightly curved Mirrors Other elements also are necessary, such as piping, to direct sunlight to a fixed absorber tube positioned insulation, and either flexible piping or rotating above the Mirrors, sometimes with a secondary joints to connect adjacent collectors, as well as reflector to improve efficiency. With flat Mirrors that electric switchgear, water treatment equipment, etc. are close to the ground, Linear Fresnel collectors However, these elements are either unspecific of CSP are less expensive to produce and less vulnerable to technology or, in the case of flexible piping or rotating wind damage. On the other hand, efficiency is lower joints, pose a minor fraction of the investment costs due to a lower concentration ratio, and the intra-day and are a highly specialized component, and thus energy outflow variation is higher than in Parabolic have been omitted from this report. Trough. Figure 2.4 | Schematics of a Linear Fresnel Collector 03 01 Sun rays 02 01 Second stage reflector 02 Primary fresnel reflector 03 Absorber tube Source: STA. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 13 A Linear Fresnel solar field comprises a variable plant. The main difference is that, instead of a number of identical “solar loops” connected in combustion or nuclear process, the heat used to parallel. Each loop can raise the enthalpy of a certain generate superheated steam is collected in the solar amount of HTF. Most[1] commercial applications use field and transferred using a heat transfer fluid. The water as HTF in a Direct Steam Generation (DSG) main components of the PB are: configuration; and, instead of raising the temperature, these applications increase the vapor fraction of the • Condenser: It is analogous to the equipment fluid. The main components of a Linear Fresnel loop are: described for Parabolic Trough plants. • Electrical generator: It is analogous to the • Mirror: Mirror reflects the direct solar radiation equipment described for Parabolic Trough plants. incident on it and concentrates it onto the • Heat exchanger: Most commercial Linear Receiver placed in the focal line of the Linear Fresnel applications use water as HTF in a Direct Fresnel loop. The Mirrors are made with a thin Steam Generation (DSG) configuration. Thus, silver or aluminum reflective film deposited on a the need for heat exchangers is largely reduced low-iron, highly transparent glass support to give compared to in a Parabolic Trough plant. The Solar them the necessary stiffness. They are similar to Field will act as SGS (Steam Generation System), the Mirrors for Parabolic Trough, differing in size generating the high-pressure and temperature and shape. Alternatively, aluminum foils are being steam that will drive the turbine. Water-water heat tested by some leading companies (3M). exchangers are still necessary to recover the heat • Receiver or absorber tube: Receiver is made from turbine bleeds to preheat the condensate of stainless steel with a high-absorptivity and or feed water, thus increasing the Rankine cycle low-emissivity coating, it channels the flow of efficiency. Carbon steel and stainless steel, as well the HTF. The tube is placed inside a secondary as copper and aluminum in smaller amounts, are reflector with a flat cover made of low-iron, required for their manufacture. highly transparent glass with an antireflective • Pumps: Several sets of pumps are required within coating. This configuration reduces heat losses a Linear Fresnel CSP plant: feed water pumps, and increases the half-acceptance angle,12 thus cooling water pumps, condensate pumps, and increasing overall performance. other minor pumps for dosing, sewage, raw water • Structure & Tracker: Solar tracking system and water treatment purposes. Carbon steel and changes the position of the mirrors following the stainless steel are required for their manufacture, apparent position of the sun during the day, thus as well as copper, aluminum, and other materials enabling concentrating the solar radiation onto in smaller amounts. the Receiver. S&T consists of several drives that • Steam turbine: It is analogous to the equipment rotate the mirrors, and a local control that governs described for Parabolic Trough plants. the drive unit. The structure, in turn, must keep • Storage tanks: A large number of tanks and the shape and relative position of the elements, pressure vessels are required in a Linear Fresnel transmitting the driving force from the tracker, CSP plant. They include raw and treated water and avoiding deformations caused by their own storage tanks, the deaerator, the steam drum, weight or other external forces such as the wind. the condensate tank for the Rankine cycle; and other minor tanks for sewage and water The power block of a Linear Fresnel CSP plant treatment intermediate steps. Depending on the resembles a conventional Rankine-cycle power DSG configuration, additional steam drums could 12 The half-acceptance angle is the angle of the maximum cone of light that will reflect onto the focus; it is used to characterize non- ideal optic systems. 14 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.5 | Functional Scheme of a Power Tower System, Using Molten Salt as HTF, with TES 01 10 04 09 08 07 02 03 05 06 01 Solar field 05 Condenser 08 Generator 02 Receiver 06 Cooling tower 09 Steam turbine 03 Cold salt storage 07 Substation 10 Hot salt storage 04 Steam generator Source: STA. be required for the solar field. Carbon steel and in a field of heliostats. Multitower systems also are stainless steel are required for their manufacture. under development. Power Tower systems currently represent 3 percent of total CSP installed capacity The state of the art in the field of thermal energy (Figure 2.1). This share is expected to increase in the storage (TES) is to use molten salts. However, the near future because its share in the pipeline is higher use of water (phase change) in Linear Fresnel plants than 3 percent. makes it difficult using actual molten salts. Short-term energy storage using steam is the usual approach in Concentration factors for this technology range these plants, if any[1]. are between 200 and 1,000. Plant unit sizes could range between 10 MW and 200 MW so are suitable Other elements also are necessary, such as piping, for dispatchable markets. Integration in advanced insulation, electric switchgear, and water treatment thermodynamic cycles also is feasible. equipment. However, these elements are either not specifically for CSP technology or pose a minor Although less mature than the Parabolic Trough fraction of the investment costs, so have been technology, after a proof-of-concept stage, the omitted from this report. Power Tower is taking its first steps into the market with three commercial plants that are in operation in 2.1.3 POWER TOWER SYSTEMS southern Spain: PS1O0 and PS20 (11 and 20 MWe, using saturated steam as heat transfer fluid) and The Power Tower systems, also known as Central Gemasolar (17 MWe, using molten salts as HTF). Receiver systems, have more complex optics than Sierra SunTower, a 5-MWe plant in Lancaster, the systems above because they are based on a California (US) started operation in 2009 using a 3-D concentration concept. A single solar Receiver multitower solar field. is mounted on a tower, and sunlight is concentrated by means of a large paraboloid that is discretized Chapter 2 | Introduction to the Value Chain of Solar Technologies | 15 To this day, more than 10 different experimental Figure 2.6 | Main Components Power  Tower plants have been tested worldwide, of a Heliostat generally small demonstration systems between Facets 0.5 MWe and 10 MWe. Most of these plants operated in the 1980s. Structure Elevation Azimuth A wide variety of heat transfer fluids including Torque tube saturated steam, superheated steam, molten salts, atmospheric air, or pressurized air can be used. Drive mechanism Temperatures vary between 200ºC and 1,000ºC. Pedestal tube Falling particle Receiver and beam-down Receiver are other promising technologies but further from the Local control market. Source: Photo courtesy of PSA-CIEMAT A Power Tower solar field comprises a variable number of identical heliostats, which reflects the sunlight towards the Receiver. The heat transfer fluid configuration, such as flat or cavity systems; or temperature will reach 250ºC to 700ºC, depending by their technology, such as tube, volumetric, on whether the HTF used is air, steam, molten salt, panel/film, and/or direct absorption systems. or others. The main components of a Power Tower Super alloys or ceramics are the usual material solar field are: for Receivers. • Structure & Tracker: Solar tracking system • Mirror (or “facet”): Reflects the direct solar changes the position of the Mirrors on the radiation incident on it and concentrates it onto the heliostats, following the apparent position of the Receiver. The Mirrors are made with a thin silver or sun during the day and enabling concentrating aluminum reflective film deposited on a low-iron, the solar radiation onto the Receiver. Each highly transparent glass support to give them the heliostat performs two-axis tracking with a drive necessary stiffness. They are almost identical to that rotates the Mirrors and has a local control the Mirrors for Parabolic Trough, differing only in that governs the drive unit. The structure, in turn, size and shape. Although small heliostats can be must keep the shape and relative position of the made of flat glass, a slight curvature is necessary elements, transmitting the driving force from the for larger sizes.13 tracker, and avoiding deformations caused by • Receiver:14 Collects the radiation reflected by the the elements’ own weight or other external forces heliostats and transfers it to the HTF as heat. The such as the wind. Receiver is the real core of a Power Tower system and the most technically complex component, The power block of a Power Tower CSP plant because the former must absorb the incident resembles that of a Rankine-cycle power plant. The radiation under very demanding concentrated main difference is that, instead of a combustion solar flux conditions and with minimum heat or nuclear process, the heat used to generate loss. Receivers can be classified either by their superheated steam is collected in the solar field and 13 Due to non-ideal optics because the sun is not a point focus. 14 The Receiver has been included in the solar field to keep an analogous structure for all CSP technologies, although, in Power Tower systems, the Receiver is physically within the power block. 16 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry transferred using a HTF. The main components of the for CSP technology, or comprise a minor fraction of power block are: the investment costs so have been omitted from this report. • Condenser: It is analogous to the equipment described for Parabolic Trough plants. 2.1.4 DISH/ENGINE SYSTEMS • Electrical generator: It is analogous to the equipment described for Parabolic Trough plants. These systems are small modular units with • Heat exchanger: Two different sets of heat autonomous generation of electricity, that is, each exchangers are required in the power block. First, Dish/Engine set has its own solar field and power HTF-water heat exchangers (usually referred to as block, except for the power regulation switchgear. SGS, or Steam Generation System) are required to generate the high-pressure and temperature Dish/Engine systems are parabolic 3-dimensional steam that will drive the turbine. This set will not concentrators (thus requiring two-axes tracking) be necessary if steam is used as HTF. Second, with  high concentration ratios (600–4000), and a water-water heat exchangers are used to recover Stirling engine or Brayton mini-turbine located  at the heat from turbine bleeds to preheat the the focal point that uses hydrogen, helium, or air condensate or feed water, thus increasing the as  working fluid. Current Dish/Engine systems Rankine cycle efficiency. If a molten salt TES range  from 3 kWe (that is, Infinia) to 25 kWe (that system is included, a reversible molten salt- is, Tessera Solar). Their market niche is both HTF heat exchanger also is necessary, unless in  distributed/on-grid and remote/off-grid power the same molten salt is used as HTF. Carbon applications. steel and stainless steel are required for their manufacture, as well as copper and aluminum in Since the design of Dish/Engine systems is modular, smaller amounts. they can compete with PV to serve the same • Pumps: They are analogous to the equipment applications. Typically, standalone PV systems are described for Parabolic Trough plants. used for rural electrification or electricity supply in • Steam turbine: It is analogous to the equipment remote water pumping stations. Power capacity of described for Parabolic Trough plants. this kind of application normally ranges from a few • Storage tanks: They are analogous to the tenths of a kW to several hundred kW. equipment described for Parabolic Trough plants. Besides the higher investment costs for Dish/Engine The state of the art in the field of thermal energy compared to photovoltaic systems, additional storage (TES) is to use molten salts. The most concerns need further technical development. One common mixture used for this purpose, “Solar example is engine reliability. salt,” is composed of sodium nitrate (NaNO3) and potassium nitrate (KNO3). As described above, this Two decades ago, Dish/Engine Stirling systems salt is stored in two tanks (one “cold” and one “hot”), with concentration factors of more than 3,000 suns and a reversible heat exchanger is used to move and operating temperatures of 750ºC had already energy from the solar field and to the power block. demonstrated their high conversion efficiency, at This heat exchanger is not necessary if the molten annual efficiencies of 23 percent and 29 percent salt is used directly as the HTF. peak[2]. However, Dish/Engine systems have not yet surpassed the pilot project plant operation phase. Additional necessary elements are piping, insulation, electric switchgear, and water treatment equipment. A Dish/Engine solar field comprises a variable However, these elements are either not specifically number, from one to dozens, of reflective elements, Chapter 2 | Introduction to the Value Chain of Solar Technologies | 17 Figure 2.7 | Main Components of a Dish/Engine System Stirling engine Receiver Mirror Structure Local control Source: Photo courtesy of PSA-CIEMAT. or  “facets,” in the shape of a paraboloid, or “dish.” vaporizing liquid sodium on the absorber surface, Each dish can raise the temperature of a certain condensing it onto the engine’s heater tubes. amount of working fluid from the “cold” to the “high” This process enables reaching more uniform operation temperature (up to 850ºC). The main temperatures, although complexity and cost are components of a Dish/Engine solar collector are: higher as well. • Structure & Tracker: Solar tracking system • Mirror: Reflects the direct solar radiation incident changes the position of the collector following on it and concentrate it onto the Receiver placed the apparent position of the sun during the day, in the focal point of the dish. The Mirrors can thus enabling concentrating the solar radiation be made with a thin silver or aluminum reflective onto the Receiver. Each collector performs two- film deposited on a low-iron, highly transparent axes tracking with a drive that rotates both the glass support to give them the necessary dish and  the Receiver and has a local control stiffness and parabolic shape. These Mirrors are that governs the drive unit. The structure, in turn, similar to those for Parabolic Trough, although must keep the shape and relative position of the differing in size and shape. Although small facets elements, transmitting the driving force from the can be made of flat glass, a slight curvature is tracker, and avoiding deformations caused by necessary15 for larger sizes. A different approach the elements’ weight or other external forces such can use a reflective layer coating a flexible film, as the wind. The high precision required, together which is given the parabolic shape through with the weight of the set Receiver plus the engine vacuum. and the necessity to avoid the “arm” that holds • Receiver: Dish/Engine Receivers can be smaller the Receiver blocking too much light, make this a versions of those used in Power Tower systems. demanding task. However, simpler versions adapt the heater tubes of a Stirling engine, although it is hard to integrate The power block of a Dish/Engine CSP collector is multiple cylinder engines[3]. Liquid-sodium, a compact set comprising the Receiver described heat-pipe solar Receivers solve this issue by above plus either a Stirling engine, or a Brayton 15 Due to non-ideal optics because the sun is not a point focus. 18 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.8 | Schematic Showing the Operation of a Heat-pipe Solar Receiver 06 07 08 09 05 04 CONCENTRATED IRRADIATION 03 02 01 01 Sodium pool 04 Heat engine 07 Sodium vapor 02 Condensing sodium 05 Generator 08 Sodium liquid in wick 03 Engine heater tubes 06 Engine working fluid 09 Absorber surface Source: Adapted from [3]. turbine and a compressor. The main components of world. On the positive side, the small size of the power block are: the equipment required increases the range of possible manufacturers. Stirling engines are less • Electrical generator: Induction generators are demanding. The main expected issue (the high used on Stirling engines tied to an electric utility precision required in the piston fabrication) is grid. These generators are off-the-shelf items that probably solvable if a country has motor vehicle can provide single or three-phase power with high industries. Carbon steel, stainless steel, and efficiency. For turbines, a different approach might special alloys are required to manufacture turbines be advisable. The high-speed output of the turbine and engines. can be converted to high-frequency alternate current in a high-speed alternator, converted to Dish/Engine systems have not been conceived with direct current by a rectifier, and then converted thermal energy storage as a guiding principle, although to either 50 Hz or 60 Hz power by an inverter. experimental approaches using thermochemical • Heat exchanger: No heat exchanger is energy storage have been made [4]. necessary per se because the heat transfer takes place at the engine heater tubes. Other elements also are necessary, such as wiring, • Turbine or engine: The design and manufacturing insulation, and electric switchgear. However, these of a turbine and compressor for a Brayton elements are either nonspecific to CSP technology cycle requires special materials and alloys and or comprise a minor fraction of the investment costs a highly specialized workforce––available to so are omitted from this report. a limited number of companies around the Chapter 2 | Introduction to the Value Chain of Solar Technologies | 19 Figure 2.9 | Investment Requirements vs. Technology Complexity for CSP Technology Industries High Complexity and Investment Requirements Steam Turbine for the CSP Solar Industry HTF Thermal Oil Electrical Generator HTF Pumps Investment Requirements Mirror Heat exchanger Pumps Storage Tanks Condenser Receiver Structure & Tracker Low Solar Salt Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. Analysis of the value chain for CSP A close examination of the value chain reveals three considered difficult to reach in most parts of clusters of industries with differing technological the world, even in Benchmark countries, which complexity16 and investment requirements have successfully developed their solar industries. (Figure  2.9). The three clusters are: a group of This group includes the Steam turbine, Electrical industries that can be independently developed generator, HTF Thermal Oil, and HTF Pumps. (independent industries), a group of industries that are best developed with the backing of existing The conventional group of industries (Condenser, conventional industries (conventional industries), and Heat exchanger, Pumps and Storage Tanks), outlined a group of industries that, due to their complexity and in orange in Figure 2.9, relies on existing industries. required investment, are not likely to be developed These industries are easier to develop in countries based on the demand for solar applications alone that already have conventional pressure vessel and (difficult-to-reach industries). tank and pump industries. Due to their technological complexity and large The independent group of industries, highlighted in investment requirements, the group of industries blue in Figure 2.9, includes the Structure & Tracker, at top right in Figure 2.9 and outlined in green are solar salt blending, Mirror, and Receiver industries. 16 The analysis of technological complexity is based on consulting and interviewing solar experts based on their internal manufacturing processes. 20 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.10 | CSP Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries 1.0 Average MENA 0.9 Algeria 0.8 Egypt 0.7 Attractiveness index 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 benchmark r r r ps Oil r ps r lt ine s er ge se ive to rro nk sa ck um m era al rb en an Mi ce ta Tra lar Pu rm tu nd FP ch en Re ge So he & m ex Co lg ora HT ea re FT ica at St ctu St HT He ctr ru Ele St Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. These industries can be developed independently CSP industries (in blue); and, according to their as part of solar industry development so long as the relative industrial base, on the conventional CSP right conditions for the latter exist. industries (in yellow).17 These two, therefore, are considered target industries. Overall, particularly in the short and medium terms, MENA countries are better suited to develop Some of the barriers to enter the difficult-to-reach the conventional and independent groups of group of industries include: industries. These groups, therefore, are considered target industries. Figure 2.10 shows the overall Status industry score using the normalized Attractiveness Since 2006, CSP has had a renaissance, mainly index by CSP solar industry and by country. in the United States and Spain. Today, programs are starting in China, India, Australia, South Africa, The four difficult-to-reach industries (Steam turbine, Morocco, Algeria, Egypt, and other countries. Electrical generator, HTF Thermal Oil and HTF According to the IEA (International Energy Agency): Pumps, marked in green) are the least interesting CSP industries for selected MENA countries to focus “CSP is a proven technology. The first on in their current context. The recommendation is commercial plants began operating in California for the MENA Region to focus on the independent in the period of 1984 to 1991, spurred by 17 The rest of the CSP industry analysis and recommendations in the report refers to these two groups of industries. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 21 Table 2.2 | Main Entry Barriers for the Difficult-to-reach CSP Industries HTF Thermal Oil HTF Pumps Steam Turbine Electrical Generator Most sales are undertaken by a small number of companies: BASF (Germany) GE Power (US) Alstom (France) GE Power (US) Dow Chemical (US) KSB (Germany) GE Power (US) MAN Turbo (Germany) Linde (Germany) MAN Turbo (Germany) Siemens (Germany) Entry Solutia (US) Mitsubishi (Japan) Barriers Siemens (Germany) High capital requirements High technology and innovation requirements Skilled workers, technicians, engineers, and scientists requirements Source: Authors. Figure 2.11 | Developing Phases: From Design to Commercial Exploitation 3. Construction 4. Construction of a 1. Develop theoretical 2. Laboratory tests of a scale prototype commercial prototype design and field test and field test 5. Construction 6. Construction 7. Revision of technology of a pilot project of a commercial plant for optimization Source: STA/Accenture. federal and state tax incentives and mandatory Parabolic Troughs account for the largest share long-term power purchase contracts. A drop in of the current CSP market, but competing fossil fuel prices then led the federal and state technologies are emerging. Some  plants now governments to dismantle the policy framework incorporate thermal storage.”––[5] p. 9 that had supported the advancement of CSP. In 2006, the market resurged in Spain and the Concerning the path from theoretical design to United States, again in response to government commercial exploitation, the classical phases measures such as feed-in tariffs (Spain) and followed by CSP have been: policies obliging utilities to obtain some share of power from renewable and from large solar If applied to the four CSP technologies, the status of in particular. each is: As of early 2010, the global stock of CSP • Parabolic Trough: Stage 7 - Revision of technology plants neared 1 GW capacity. Projects now in for optimization development or under construction in more • Power Tower: Stage 6 - Construction of than a dozen countries (including China, India, commercial plant Morocco, Spain and the United States) are • Linear Fresnel and Dish/Engine: Stage 5 - expected to total 15 GW. Construction of pilot project. 22 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 2.3 | Characteristics of Concentrated Solar Power Systems Annual Solar-to- Water Possible Electricity Land Cooling Backup/ Efficiency Occupancy* (m3/ Storage Hybrid Solar Outlook for Technology (%) ha/MWe MWh**) Possible Mode Fuels Improvements Parabolic 15 Large 3,000 Yes, but not Yes No Limited Trough 2.7 or dry yet for DSG*** Linear 8–10 Medium 3,000 Yes, but not Yes No Significant Fresnel 1 or dry yet for DSG Power 20–35◊ Medium 2,000 Depends Yes Yes Very Tower 1.6 or dry on plant significant configuration Dish/ 25–30 Small None Depends Yes, but Yes Through mass Engine on plant in limited production configuration cases Source: Authors. Note: *Based on operating power plants data. **Megawatt-hour. ***DSG: Direct steam generation. ◊Concepts need to be proven in commercial power plants that are in operation. Previous figures came from simulations. Typical solar-to-electricity annual conversion market. However, despite having advantages efficiencies and other relevant factors for the four compared with conventional glass Mirrors (light technologies, as compiled by a group of experts, are weight, no thermal shock, lower expected price), listed in Table 2.3[5]. they also have disadvantages (lower reflectivity, durability concerns), and a scant or no track The values for Parabolic Trough, by far the most record. mature technology, have been demonstrated • New Power Tower projects seem to prefer commercially. Those for Linear Fresnel, Dish/Engine, larger scale on the order of 100 MWe that use and Power Tower systems are, in general, projections superheated steam or molten salts as thermal based on component and large-scale pilot plant test fluids. data, and the assumption of mature development • Activity in Dish/Engine systems focuses on small of current technology. Major improvements can be dishes with low-maintenance Stirling motors. achieved in the not-so-mature technologies. • Linear Fresnel systems are at an earlier stage of development. The focus seems to be their Trends optimization for steam augmentation in fossil • Parabolic Trough technology is leading the power plants or their use for air conditioning or commercial deployment around the world, but the water desalination. model based on thermal oil must be improved. Actual efforts include developing larger collectors (current standard span: 5.76 m); optimizing the design of the heat storage systems; and raising the working temperature to 500ºC by developing new absorber tubes and using new fluids such as water/steam, molten salts, or inert gases. All- aluminum and multilayer aluminum reflectors[6] as well as reflective films ([7],[8]) are entering the Chapter 2 | Introduction to the Value Chain of Solar Technologies | 23 Figure 2.12 | Market Share of the Different CSP Technological Approaches, both Operating (left) and under Construction (right), 2012 Fresnel Power 5% tower Fresnel Power 3% 2% tower 26% Parabolic Parabolic trough trough 95% 69% Parabolic trough Power tower Fresnel Source: NREL Database Source: STA/Accenture based on [9]. 2.2 Photovoltaic (PV) Technology This technology converts solar energy directly into a set of additional application-dependent system electricity using the photovoltaic effect. When solar components (such as inverters, batteries, electrical radiation reaches a semiconductor, the electrons components and mounting systems) to form a PV present in the valence band absorb energy and, being system. PV systems are highly modular, that is, excited, jump to the conduction band and become free. modules can be linked to provide power ranging These highly excited, nonthermal electrons diffuse, and from a few watts to tens of megawatts (MW). some reach a junction at which they are accelerated into a different material by a built-in potential (Galvani R&D and industrialization have led to a portfolio of potential). This acceleration generates an electromotive available PV technology options at different levels of force that converts some of the light energy into electric maturity. Commercial PV Modules may be divided energy. Unlike CSP, solar PV can use all radiation (direct into two broad categories: wafer-based Crystalline and diffuse) that reaches the system. silicon (c-Si) and Thin Films. The basic building block of a PV system is the PV An overview of the main PV technologies follows: cell. It is a semiconductor layer that converts solar energy into direct-current (DC) electricity. PV cells • Crystalline silicon (c-Si) Modules are interconnected to form a PV Module, typically ○ Single-Crystalline silicon (sc-Si) up to 50W–200W. The PV Modules combine with ○ MultiCrystalline silicon (mc-Si) 24 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 2.4 | Conversion Efficiencies of The large variety of PV applications enables a range Different PV Commercial Modules (%) of different technologies to be present in the market Crystalline Silicon Thin Film that demonstrate a direct correlation between (c-Si) (TF) cost and efficiency. The lower cost (per watt) to sc-Si mc-Si a-Si/µc-Si CdTe CIS/CIGS manufacture some of the module technologies, 14–20 13–15 6–9 9–11 10–12 namely, Thin Films, is partially offset by the higher Source: [10]. area-related system costs (support structure, required land, wiring) due to their lower conversion • Thin Film (TF) Modules: efficiency. ○ Amorphous (a-Si) and Micromorph (µc-Si) silicon Chips for electronic devices share many of the ○ Cadmium-Telluride (CdTe) resources and manufacturing processes with PV ○ Copper/Indium Sulfide (CIS) and Copper/ elements, especially if silicon-based. However, the Indium/Gallium di-Selenide (CIGS). purity level required for solar cells is “five nines” (99.999 percent), whereas electronic-grade silicon Conversion efficiency is defined as the ratio between must be “nine nines.” the produced electrical power and the amount of incident solar energy per second. Conversion efficiency is one of the main performance indicators of PV cells and modules. Table 2.4 provides the current efficiencies of different PV commercial modules.18 Figure 2.13 | PV Solar Energy Value Chain Quartzite gravel or quartz (SiO2) Metallurgical Grade Si Silane (CH4) High purity Polysilicon Monocrystalline silicon ingot Multicrystalline silicon ingot Monocrystalline silicon wafers Multicrystallion silicon ribbons Multicrystalline silicon wafers Amorphous silicon deposition Solar cell CdTe/CIGS Soda Lime glass PV module Support structure TCO Installed PV system Electronic components TF technologies c-Si technologies Common technologies Source: STA. 18 Table 2.4 illustrates the range of optimum values. The influence of angle, temperature and diffuse/direct irradiation share must be compared when selecting a technology. A one-year simulation of the system is recommended. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 25 Figure 2.14 | Polysilicon Manufacturing Value Chain Hydrochloric acid HCl Hydrogen (H2) (HCl) Metallurgical High purity Grade silicon Trichlorisilane Quartzite gravel Coke Reduction (MG-Si) Dissolve in HCl (TCS) Siemens Electronic grade or quartz (SiO2) in Arc furnace _ + distillation process poly-silicon Coke (C) ˜1,800º C (9 nines) Modified Poly-silicon Various gases process (6–7 nines) REC/Tokuyama Chemical Upgraded MG-Si refinement (>5 nines) Source: STA. 2.2.1 CRYSTALLINE (c-Si) are blown over silicon at high temperature, they TECHNOLOGIES decompose to high-purity silicon. This ultra- pure TCS is subsequently vaporized (distilling The following components belong to the value chain the TCS achieves an even higher level of purity) of Crystalline silicon PV and could be considered for and flowed into a deposition reactor in which it is local manufacturing in MENA countries. retransformed into elemental silicon. Different processes exist with different • Polysilicon: In the first step to make solar cells, advantages and drawbacks. These processes the raw materials—silicon dioxide of either include the Siemens process[11], REC process, quartzite19 gravel (the purest silica) or crushed vapor-to-liquid Tokuyama deposition, or chemical quartz—are first placed into an electric arc refinement processes starting with MG-Si which furnace, in which a carbon arc is applied to release blow different gases through the silicon melt to the oxygen. The products are carbon dioxide remove the impurities. and molten silicon. This simple process yields After any of these processes, polysilicon has commercial brown Metallurgical Grade silicon typical contamination levels in the ppb (parts per (MG-Si) of 97 percent purity or better, useful in billion) range, and can be cast into square ingots many industries but not the solar cell industry. and undergo the wafering process to produce mc-Si MG-Si is purified by converting it to a silicon cells. For sc-Si cells manufacturing, the atomic compound that can be more easily purified by structure of the silicon must be dealt with first. distillation than in its original state, and then • Ingots/Wafers: Solar-grade purified polysilicon converting that silicon compound back into can be cast into square ingots and undergo pure silicon. Trichlorosilane (TCS, HSiCl3) is the the wafering process to produce mc-Si cells silicon compound most commonly used as the directly. For sc-Si cells manufacturing, the atomic intermediate, although silicon tetrachloride (SiCl4) structure of the silicon must be dealt with first. In and silane (SiH4) also are used. When these gases the more widely used[12] Czochralski method, 19 Quartzite, not to be confused with the mineral quartz, is a metamorphic rock formed from quartz-rich sandstone that has undergone metamorphism. 26 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.15 | Ingot/Wafer Manufacturing Value Chain High purity Polysilicon Crunching Melting Ribbon drawing Casting Czochralski Multicrystalline Multicrystalline Monocrystalline silicon ribbons silicon ingot silicon ingot Cutting Wafering Multicrystalline Monocrystalline silicon wafers silicon wafers Source: STA. single crystals of very pure silicon are grown. then polished to remove saw marks. State-of- However, they contain impurities[13], which limit the-art manufacturing processes try to optimize usage.20 light absorption by surface micromachining of the The wafering process starts from the ingot, polished wafer. either single-crystal or poly-silicon. Wafers are Doping (adding impurities to) the wafers is sliced one at a time using a circular saw whose required for cell manufacturing. However, certain inner diameter cuts into the rod, or many at doping techniques must be undergone during once with a multiwire saw. A diamond saw ingot manufacturing. For Crystalline silicon, some produces cuts that are as wide as the wafer— dopants can be added in the crucible during 0.5 millimeter thick. Approximately one-half of the Czochralski process. Doping polyCrystalline the silicon is lost from the ingot to the finished silicon does have an effect on the resistivity, circular wafer.21 Polysilicon ingots can be cast mobility, and free-carrier concentration. However, directly in a rectangular shape, reducing silicon these properties strongly depend on the waste. polycrystalline grain size, which is a physical An alternative method for mc-Si is ribbon parameter that the material scientist can drawing. In a continuous process, a wafer-thin manipulate. ribbon or sheet of multiCrystalline silicon is drawn • c-Si Cells: Single-crystal wafer cells tend to be from  a polysilicon melt, avoiding most of the expensive. Moreover, because they are cut from silicon loss caused by sawing. The wafers are cylindrical ingots, they do not completely cover 20 For some electronic applications, single-crystal wafers are required. Even if “nine nines” purity silicon (99.9999999%) is used, during the Czochralski crystal growth the crucible slowly dissolves oxygen into the melt that is incorporated into the final crystal in typical concentrations of around 25ppma. To have even lower concentrations of impurity atoms (e.g. oxygen), Float Zone Crystal Growth is used. 21 Silicon waste from the sawing process can be recycled into polysilicon, but the majority of the energy is not recovered. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 27 a square solar cell module without a substantial Figure 2.16 | c-Si Cell Structure waste of refined silicon. On the other hand, (1) Surface contact multiCrystalline silicon, or polyCrystalline silicon (mc-Si or poly-Si) is made from cast square (2) Antireflective coating ingots. Mc-Si or poly-Si is large blocks of molten (3) n type silicon silicon carefully cooled and solidified. These cells are less expensive to produce than single-crystal (4) p type silicon silicon cells but also less efficient. Single-crystal wafers are usually lightly p-type (5) p+ type silicon doped. To make a solar cell from the wafer, a (6) Back contact surface diffusion of n-type dopants (boron and/or Source: STA. phosphorus) is performed on the front side of the wafer. This diffusion forms a p–n junction a  few hundred nanometers below the surface. The traditional way22 of doping (adding impurities although in recent years methods of forming them to) silicon wafers with boron and phosphorus is to on mc-Si have been developed. introduce a small amount of boron in the crucible The wafer then has a full area metal contact during the Czochralski process. made on the back surface. The rear contact is One of the key processes in silicon surface formed by screen-printing a metal paste, typically micromachining is the selective etching of a aluminum. A grid-like metal contact made up sacrificial layer to release silicon microstructures. of fine “fingers” and larger “bus bars” is screen- Improving the surface texturing is one of the printed onto the front surface also using a silver important factors required to increase the solar paste. After the metal contacts are made, the cell short-circuit current, hence the solar cell solar cells are given connections such as flat conversion efficiency, due to the enhanced wires or metal ribbons and encapsulated, that absorption properties of the silicon surface[14]. is, sealed into silicone rubber or ethylene vinyl Because pure silicon is shiny, it can reflect up acetate (EVA). to 35 percent of sunlight. To reduce the amount • c-Si Modules: The encapsulated solar cells are of sunlight lost, an antireflective coating is put interconnected and placed into an aluminum on the silicon wafer. The most common coatings frame that has a BoPET (biaxially oriented poly- used to be titanium dioxide and silicon oxide. ethylene terephthalate) or PVF (poly-vinyl fluoride) Silicon nitride is gradually replacing them as the back sheet and a glass or plastic cover. Front antireflective coating because of its excellent and rear connections are channeled through the surface passivation qualities. Actual commercial junction box. solar cell manufacturers use silicon nitride because it prevents carrier recombination at the surface of 2.2.2 THIN FILM (TF) TECHNOLOGIES the solar cell. Some solar cells have textured front surfaces that, like antireflective coatings, increase The following components belong to the value chain the light coupled into the cell. Such surfaces can of Thin Film PV and could be considered for local usually only be formed on single-crystal silicon, manufacturing in MENA countries. 22 A more recent way of doping silicon with phosphorus is to use a small particle accelerator to shoot phosphorus ions into the ingot (ion implantation). By controlling the speed of the ions, it is possible to control their penetrating depth. This new process, however, generally has not been accepted by commercial manufacturers of solar cells because it is more expensive and complex, although it has advantages for the manufacture of electronic devices such as metal–oxide–semiconductor (MOS) transistors. 28 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry • TF Modules: Three main types of Thin-Film finally encapsulated with EVA or molybdenum Modules can be described: thin-film silicon23 sputtered over glass. (TF-Si), cadmium telluride (CdTe), and copper- CIS/CIGS and, in some recent indium-(gallium) amphid films (CIS/CIGS). Unlike developments, TF-Si can be manufactured on with Crystalline Modules, the manufacturing a transparent conductive organic film instead process of Thin-Film Modules is a single process of on glass by means of low-temperature that cannot be split up. Two different manufacturing deposition techniques, resulting in flexible approaches can be considered: modules especially useful for building- ○ “Superstrate” approach: For CdTe and integrated applications (BIPV). TF-Si Modules, the manufacturing process • Solar glass: Solar glass can be defined starts by depositing a transparent conductive depending on the final use (Figure 2.17). oxide (TCO) such as zinc or tin oxide on the General requirements can be defined for any of front glass superstrate. The thin (approximately these applications, such as: 1/100th times “thinner” than in crystalline ○ Tight tolerances in overall dimensions, warp, cells) photoactive films24 are deposited next, and others either by sputtering,25 PECVD26 or chemical ○ Surface quality, smoothness, and planarity to deposition. Between each deposited layer, a avoid coating problems laser or mechanical patterning is performed ○ Edge shape and quality required for assembly to create the conductive paths for electron ○ Durability and small loss of properties with evacuation. A final conductive layer, or “back aging contact,” connects the electric circuit; usually ○ Reliability and repeatability. a carbon paste doped with copper or lead and • TF Materials: The main materials required for TF a final layer of silver paint are used. Modules are: ○ “Substrate” approach: For CIS/CIGS ○ Transparent conductive oxides (TCO): Modules, the manufacturing process starts The TCO layer is usually divided in two layers: by sputtering a molybdenum (Mo) layer on the a highly conductive thick TCO layer, and a rear soda lime glass substrate. diffusion barrier. The main layer can consist of To apply the thin CIGS film, industrial tin and/or zinc oxides, with dopants such as manufacturers use either a single-step co- cadmium or aluminum. Indium tin oxide (ITO, evaporation or a two-step method: deposition or tin-doped indium oxide) is a solid solution of the copper-indium-gallium precursor and of indium (III) oxide and tin (IV) oxide, typically ulterior selenization. As with CdTe Modules, 90  percent In2O3 and 10 percent SnO2 by a CdS layer is applied to act as the n-type weight. ITO is one of the most widely used semiconductor. transparent conducting oxides because of its A TCO layer (in fact, two layers: a regular two chief properties––electrical conductivity tin or zinc oxide and an ITO or Al doped and optical transparency––as well as the ease oxide) closes the circuit, and the module is with which it can be deposited as a Thin Film. 23 Three different technologies lie within this term: amorphous silicon (a-Si), micromorphous silicon (mc-Si) and tandem Thin Films (a-Si + mc-Si). The third is the most advanced development. 24 These films usually are cadmium sulfide/cadmium telluride (CdTe Modules); cadmium sulfide/various sulfides and/or selenides (in CIGS) of copper, indium and gallium (CIS/CIGS Modules); and amorphous/microcrystalline silicon (tandem TF-Si). 25 Sputter deposition is a method of depositing thin films. It erodes material from a “target” source onto a “substrate” by bombarding the target with energetic particles. Sputtered atoms ejected into the gas phase are not in their thermodynamic equilibrium state and tend to deposit on all surfaces in the vacuum chamber. Thus, a substrate (such as a wafer) placed in the chamber will be coated with a thin film. Sputtering usually uses an argon plasma.[89] 26 Plasma-enhanced chemical vapor deposition (PECVD) is a process used to deposit thin films from a gaseous state (vapor) to a solid state on a substrate. The process involves chemical reactions, which occur after creation of a plasma of the reacting gases. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 29 Figure 2.17 | Types of Solar Glass Thin Film PV Substrate Superstrate Technology Technology (CIS/CIGS) (TF-Si, CdTe) Low-iron front glass Standard back soda- Low-iron front glass Standard back glass lime glass Anti-reflective Anti-reflective Sodium content coating Standard back glass coating Mo coating Front electrode (TCO – ITO) Source: STA. However, its cost has increased over the last from blast furnace refining of lead. Only a small years due to low availability of Indium and amount of Te, estimated to be approximately alternative uses in electronic devices such as 800 metric tons per year, is available. However, liquid crystal displays (LCDs). it has had few uses in history so it has not yet ○ Molybdenum: The main commercial source been the focus of geologic exploration. of molybdenum is molybdenite (MoS2)[15]. ○ Cadmium chloride (CdCl2): As noted Molybdenum is mined as a principal ore, and above, cadmium chloride does not occur in also is recovered as a byproduct of copper nature. Anhydrous cadmium chloride can be and tungsten mining. prepared by the action of anhydrous chlorine ○ Cadmium sulfide (CdS): Cadmium sulfide or hydrogen chloride gas on heated cadmium occurs in nature as rare minerals, but is more metal. Hydrated CdCl2 also can be obtained prevalent as an impurity substituent in similarly from the metal, or from cadmium oxide or structured zinc ores, the major economic cadmium carbonate. sources of cadmium. As a compound that ○ Copper sulfide (CuS): Copper sulfides is easy to isolate and purify, CdS is the describe a family of chemical compounds and principal source of cadmium for all commercial minerals with the formula CuxSy, both minerals applications[16]. and synthetic. Prominent copper sulfide ○ Cadmium telluride (CdTe): Cadmium minerals include Cu2S (chalcocite) and CuS telluride does not occur in nature but is (covellite). In the mining industry, the minerals obtained from its base elements, cadmium bornite or chalcopyrite, which consist of and tellurium. Cadmium occurs as a minor mixed copper-iron sulfides, often are referred component in most zinc ores and therefore is to as “copper sulfides.” a byproduct of zinc production. The principal ○ Selenium precursors: Selenium is found source of tellurium is from anode sludge impurely in metal sulfide ores, in which it produced during the electrolytic refining of partially replaces the sulfur. Commercially, blister copper. Te also is a component of dusts selenium is produced as a byproduct in 30 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry the refining of these ores, most often during commonly used to move the collector following copper production. A usual approach in TF the apparent position of the sun during the day, Modules manufacturing is to produce the rotating the collector around its axis or axes, with copper selenide directly on the module, in a a local control to govern the drive unit. process referred to as “selenization.” Welded, hot-dip galvanized carbon steel ○ Indium precursors: Zinc ores are the primary frames are the usual choice, although aluminum source of indium[17], in which it is found in structures can be used in building-integrated compound form. The indium is leached from applications for which weight limits might apply. slag and dust of zinc production. Further • Inverter: An electrical power converter changes purification is done by electrolysis. direct current (DC) to alternating current (AC). ○ Gallium precursors: Elemental gallium does The converted AC can be at any required voltage not occur in nature, but as the gallium  (III) and frequency with the use of appropriate compounds in trace amounts in bauxite and transformers, switching, and control circuits. zinc ores. Gallium is, then, a byproduct of the Solid-state inverters have no moving parts and production of aluminum and zinc. The sphalerite are used in a wide range of applications from for zinc production is the minor source. Most small switching power supplies in computers to gallium is extracted from the crude aluminum large electric utility high-voltage direct current hydroxide solution of the Bayer process. applications that transport bulk power. Grid-tied inverters used to supply AC power 2.2.3 SHARED TECHNOLOGIES from DC sources such as solar panels are sine wave inverters, designed to inject electricity into The following components belong to the value chain the electric power distribution system. Such of both crystalline silicon and Thin Film PV, and could inverters must synchronize with the frequency be considered for local manufacturing in MENA of the grid. They usually contain one or more countries. “maximum power point tracking” features to extract the maximum amount of power and • Support structure: The structure must keep include safety features such as anti-islanding the shape and relative position of the modules, protection.27 The manufacturing of the inverter avoiding deformations caused by their weight is similar to any electronic device based on or other external forces such as the wind, and semiconductor technologies. The main issues to transmitting the driving force from the tracker, if solve are the manufacturing of silicon controlled included. In building-integrated applications, the rectifiers (SCR), or thyristors,28 and the design of a structure also must distribute the loads toward circuitry able to minimize the harmonic distortion. the structural elements of the building. Analysis of the value chain for PV Although the solar tracking system is not indispensable, as it is in concentrating For PV industries, Crystalline and Thin Film value applications, it increases the overall production chains have been selected as a reference by and usually is profitable for most locations. Rack- which to analyze the potential to develop a solar or crown-and-pinion electric drives are the most industry in MENA countries.29 Clustering PV-related 27 In the event of a power failure on the grid, it is generally required that any inverters attached to the grid turn off in a short time. Shutdown prevents the inverters from continuing to feed power into small sections of the grid, known as “islands.” Powered islands present a risk to workers, who may expect the area to be unpowered. Additionally, without a grid signal to synchronize with, the power output of the inverters may drift from the tolerances required by customer equipment connected within the island, resulting in damage to the equipment. 28 Thyristor manufacturing processes are similar to those of multilayer thin-film solar cells. However, higher purity materials and restrictive quality controls must be applied. 29 Crystalline PV has 80%–90% of market share, with Thin Film largely making up the remainder. Due to its lower penetration rate, Concentrated Photovoltaic (CPV) has not been included directly in the study. However, CPV technology requirements are included in the CSP and PV technology because some of the components (trackers, optics, cells) are common to the other two solar technologies. Thus, CPV technology also could be of interest to MENA countries in the future. Chapter 2 | Introduction to the Value Chain of Solar Technologies | 31 Figure 2.18 | Investment Requirements vs. Technology Complexity for PV Technology Industries Complexity and Investment Requirements Polysilicon High for the PV Solar Industry Ingots/Wafers Solar Glass Cells Investment Requirements TF Materials c-Si Modules TF Modules Inverters Support Structure Low Low Technology Complexity High Difficult to reach TF Shared PV - Crystalline PV - Thin Film PV - Shared Source: STA/Accenture. industries (Figure 2.18) revealed three clusters with all of the 2011 global Polysilicon demand could have differing technological complexity and investment been met by the top producers[18]. This context requirements. of over-production makes it more difficult for new entrants to gain a foothold. Thus, no new entrants The group of industries at the top right in Figure 2.18 worldwide are expected, from either MENA or (circled in green), are industries that, due to their Benchmark countries, until a change in the supply or technological complexity and large investment demand paradigm drives a more attractive business requirements, are considered difficult to reach in case. Barriers against any new production facility most parts of the world, including in Benchmark entering the market both for Crystalline or Thin Film countries that have successfully developed the solar technologies currently are too high. industry. Most Crystalline industries, except for the module assembly, fall into this category. Another The group of industries related to Thin Film significant aspect that emerged in the analysis is the components (TF) are in the middle quadrant (circled particular situation surrounding Crystalline industries. in blue). The Crystalline Module assembly industry They are a market with experienced actors in an has a similar range of technological complexity over-production capacity situation that has exerted a and required investment. The shared component downward pricing pressure on the value chain. Using industries, Support Structure and Inverters, have the first step in the production chain as an example, 32 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.19 | PV industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries Average 1.0 MENA 0.9 Algeria 0.8 Egypt Attractiveness index 0.7 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 Benchmark lls rs -Si on ss ria ls les er or t Ce afe sc ilic gla du ert pp ure W le lys r ate o Inv Su ruct ots du Po ola M FM Ing Mo S TF T St Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. lower technological complexity and investment countries to focus on the development of Inverters requirements. and Support Structures. In the medium term, if world overcapacity were to diminish, there would For these reasons, and taking into account the be an opportunity for Thin Film PV, Solar Glass, and current overcapacity, the selected MENA countries Modules-related industries to develop. are better suited for the development of the Shared industries (marked in yellow), which, therefore, are Beyond the numerical analysis, certain entry barriers considered target industries. In the medium term, to the crystalline industry make it difficult for it to get if world overcapacity were to diminish, there would a share in the polysilicon, ingots/wafers, and cells be an opportunity for Thin Film and Crystalline PV industries. The main obstacles in these markets are industries to develop. shown in Table 2.5. Figure 2.19 describes the industry development Status opportunities for MENA countries (in terms of Solar PV power is a commercially available and normalized Attractiveness index) for each PV reliable technology with a significant potential for technology, taking the MENA average as the long-term growth in nearly all world regions. reference. PV and CSP are complementary rather than directly For these reasons, at this time, MENA countries competitive. For this reason, developers should are better suited for the development of the Shared carefully assess their needs and environment when industries which, therefore, are considered target choosing which solar technology to use. industries. The recommendation is for the MENA Chapter 2 | Introduction to the Value Chain of Solar Technologies | 33 Table 2.5 | Main Entry Barriers for the Difficult-to-reach PV Industries Polysilicon Ingots/Wafers Cells High capital requirements The market remains The wafer industry Most competitors are dominated by the well- is dominated by vertically integrated so have established*polysilicon 5 companies*sharing over Entry better control over costs. producers. 90% of the global market. barriers Most customers have long- Companies on the back end Many skilled workers, term contracts with existing of the value chain are well technicians, engineers, and suppliers, impeding new positioned to move into this scientists in this field are entrants. segment. required. Source: Authors. Note: *As noted in the corresponding technical worksheet. PV technology is very versatile, so it generally can be • Emergency systems are needed in many substituted with competitive advantages compared applications in which 24/24h supply security is to conventional supply for electrical supply systems required. of every kind. Examples are: • Its important value as a sustainable and renewable resource significantly decreases its environmental • Rural areas isolated from the distribution grids, with impacts compared to other technologies. great advantages with respect to electrification of • Generally, fewer permit requirements and other various applications administrative processes are required than for • Street furniture, safety systems, and other, not other sources of energy, and the installation time extensively distributed systems for PV applications is shorter. • Urban areas interconnected with relatively dense • Installation is limited to a few devices, rendering distribution grids O&M relatively simple. • Integration in buildings to decrease solar impacts • If the operation conditions are severe, life of the and improve insulation, and for self-consumption equipment will be reduced. backed up with conventional grids • Utility-scale electricity production in power plants PV is a commercially mature technology and is usually interconnected with power outputs in the expanding very rapidly due to effective supporting MW range. policies and recent dramatic cost reductions. Additionally to commercial PV Modules, a range of The development of solar PV intends to satisfy technologies is emerging, including concentrating different types of demands for electricity thanks to the photovoltaic (CPV) and organic solar cells, as well characteristics of accessibility and equivalent costs as novel concepts with significant potential for of this resource compared to other possibilities. The performance increase and cost reduction. According basic characteristics of solar PV are: to IEA[10], Crystalline silicon (c-Si) Modules represent 85 percent-90 percent of the global annual market • The resource is dispersed, limiting energy surface today. Thin Film accounts for 10 percent-5 percent intensity. of global PV Module sales. Emerging technologies • The seasonal, daily and hourly character of the encompass advanced Thin Films and organic cells. power supply curve conditions the coupling of The latter are about to enter the market via niche demand and supply. applications. Concentrator technologies (CPV) use • Off-grid systems need energy storage systems to an optical concentrator system that focuses solar effectively couple demand and supply. radiation onto a small high-efficiency cell. CPV 34 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.20 | Global PV Module Pricing Learning Curve for C-Si and CdTe Modules, 1979–2015 100,00 Global Module Averange Selling Price (2010 USD/Wp) 1979 1979 2006 c-Si price increase due to polysilicon shortage 1992 1992 10,00 1998 1998 2002 2002 2004 2004 2011 2011 2010 2010 $1.3-1.5 $1.3–1.5 $1.52 $1.52 2015 2015 $1.08 1,00 $1.08 22%price 22% reductionfor pricereduction each foreach doublingof doubling ofcumulative cumulativevolume volume 2014 2014 $1.05 $1.05 0,10 1 10 100 1,000 10,000 100,000 1,00,000 Cumulative Production Volume (MW) c-Si CdTe Source: IRENA[19]. technology is being tested in pilot applications. These countries account for almost 80 percent of Novel PV concepts aim at achieving ultra-high the total global capacity. Other countries (including efficiency solar cells via advanced materials and new Australia, China, France, Greece, India, Italy, South conversion concepts and processes. They are the Korea, and Portugal) are gaining momentum due subject of basic research. to new policy and economic support schemes. Accelerated deployment and market growth in turn Figure 2.20 gives an overview of the cost and will bring about additional cost reductions from performance of different PV technologies, although economies of scale, significantly improving the recent changes in the Crystalline PV market have relative competitiveness of PV by 2020 and spurring caused a downward pricing trend. additional market growth. Trends Crystalline silicon (c-Si) cells and modules capacities The global PV market has experienced vibrant are located primarily in Asia. Almost 50 percent of growth for more than a decade with an average this capacity is located in China. The rest is produced annual growth rate of 40 percent. The cumulative in Taiwan (over 15 percent), the EU (over 10 percent), installed PV power capacity has grown from 0.1 GW Japan (slightly less than 10 percent), and the US in 1992 to 14 GW in 2008. In 2008 annual worldwide (less  than 5.0 percent). While a large part of c-Si installed new capacity increased to almost 6 GW. Modules are assembled in China, most of the Thin Film manufacturing plants are located in other Four countries have a cumulative installed PV parts of the world. The leaders are the US, the EU, capacity of 1 GW or above: Germany (5.3 GW), Spain Japan, and Malaysia[20]. (3.4  GW), Japan (2.1 GW), and the US (1.2  GW). Chapter 2 | Introduction to the Value Chain of Solar Technologies | 35 Figure 2.21 | Market Share of the Different PV Technological Approaches, 2011 sc-Si TF-Si 40% 3% CIS-CIGS 3% Thin film 14% mc-Si Other Cd-Te 45% 1% 8% Other mc-Si sc-Si Cd-Te TF-Si CIS-CIGS Source: STA/Accenture based on [21]. 2.3 Other Related Activities Even though the present analysis focuses on the R&D in solar is connected mainly to leading solar component industry, a group of economic universities and to dedicated public R&D centers. activities are necessary for the development of solar Within the 5 MENA countries, only Cairo University energy in a country and are a source of value and (Egypt) ranks among the world’s 500 top universities wealth (Figure 2.22). in R&D (Shanghai index)[22]. To close the gap, strong commitments from governments and collaboration In the short term, there are other options for involving with leading R&D centers are essential. local countries in these activities, such as local content requirements in solar tenders. However, in 2.3.2 PROJECT DEVELOPMENT the medium term, to become competitive in these activities, local Egyptian organizations will have The activity of project development is bound to be to perform at a level similar to those of the leading carried  out locally. The activity comprises multiple foreign organizations that could be hired to perform aspects related to resource and grid analysis, local the same role. legislation and constraints, environmental and social issues, and specific documents and projects that 2.3.1 RESEARCH, DEVELOPMENT, must be prepared and presented to the authorities AND INNOVATION for approval. Research and Development (R&D) is a common Experience shows that, in the first projects, element in the Benchmark countries.China, international companies with good technical Germany, Japan, Spain, and the US have developed backgrounds are the leaders, complemented with large R&D programs and maintained a long-term local expertise. Later, local companies take the lead. commitment. R&D has been a useful tool not only to develop technology and new products but also to Project development experience in the five analyzed grown the skills and capabilities of local engineering MENA countries, related primarily to wind energy, and construction companies. could be a reference point for future development of this activity. 36 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 2.22 | Value Chain Related to Solar Energy Deployment From Idea R&D Project Development Techology Provision Consulting Financing Engineering Component Manufacturing To Execution Procurement Source: STA/Accenture. 2.3.3 ENGINEERING great experience in power plant design, construction, and management. Engineering is a key component in solar power plants. Although it is more demanding in CSP than in Following the experience gathered in the first PV, engineering is a critical element for both because power plants, PV engineering capabilities could be these kinds of installations almost always have unique developed locally as well as through partnerships in features. Solar power plants are capital intensive and projects abroad, reaching a fully competitive level. composed of repetitive elements.These plants have some critical elements for which a track record and CSP local engineering capabilities are more difficult to experience in large projects are a must.30 acquire without external support due to their greater complexity and risk when compared to PV power MENA countries have experience in power plant plants and because of the bankability requirements.31 construction and in the petrochemical industry, and both could be applied to solar power plants. In the first projects, local supply could handle at For instance, the PGESCO (Power Generation least the conventional parts of the power plant (civil Engineering and Services Company) joint venture works, electrical lines, substations) and local project between the Egyptian government and Bechtel has legalization and associated administrative tasks. 30 Both PV and CSP plants’ solar fields consist of multiple repetitions of individual, complex, and nearly autonomous units (set of module strings + inverter for PV; SCA loops for CSP). The double implication of this characteristic is that (a) experience in analogous plants is valuable because the basic element will be very similar and require little adaptation, but (b) any mistake made in the definition and/or adaptation of the base unit will scale up. 31 Small-scale projects can be financed through conventional mechanisms because the promoter can provide its own assets as collateral. However, for utility-scale projects, more complex and leveraged financing structures are used (Project Finance). The financing entity usually requires several conditions. These could include great previous experience by the engineering firm; financial guarantees from the EPC contractor and/or the main suppliers; and previous studies assessing the solar resource, legal, and insurance details. The compliance of a project with all of these requisites from the financing entity is referred to as “bankability.” Chapter 2 | Introduction to the Value Chain of Solar Technologies | 37 To achieve a higher share of local supply, local the first years to ensure fulfillment of its guarantees, enterprises could follow several paths. Local capacity often required by the financing entity as part of the building, joint ventures and partnerships, or technical financing contract. assistance contracting with technology suppliers are the most advisable. Thus, during the first years, this task would be carried out by the EPC company, which probably would The larger MENA countries could leverage their subcontract part of it to local individuals or companies. larger expected market and past experience to build Later, a local industry could be developed based on engineering capacities. However, size alone might the experience gained by these local subcontractors. not be enough and should not be blindly relied upon. Jordan and Tunisia also could take advantage of O&M local industry development will be driven niche experience to focus on particular elements of mainly by installed capacity because this expertise the engineering value chain. cannot be gained in the component manufacturing processes but only from operating power plants. 2.3.4 ENGINEERING, PROCUREMENT, AND CONSTRUCTION (EPC) 2.3.6 FINANCING Most utility-scale renewable energy projects being Utility-size solar projects have large financial developed globally are financed using “Project needs that lead to sophisticated analysis and risk Finance.” In this financing structure, the project itself assessment of the entire project and of the sponsor. is the collateral of the loan. The financial institution Local banks’ capacity building is a must if they are to usually requests to contract a company with a good play a role in future project financing. track record and enough financial strength to assume the technology, construction, and performance risks 2.3.7 TECHNOLOGY PROVISION through a turnkey EPC contract. In this contract, performance and delivery dates are fixed, and Technology provision is related to R&D and past track penalties and guarantees are defined. record. The owner of the know-how for a specific technology will provide licenses, technical support, It would be difficult for local companies to fulfill customized applications, and expert services to these requirements in the short term. Nevertheless, promoters, component manufacturers, and/or involvement in the first projects as subcontractors engineering companies. would build experience and references. 2.3.8 CONSULTING Moreover, even if the first EPC contracts were granted to foreign companies, local employment Partnerships between international highly specialized would be generated either by direct hiring or through companies with a good experience in solar strategy, subcontracting local companies. technology, financing, communication, social, and environmental aspects could join hands with local 2.3.5 OPERATION AND consultant firms to serve the local market by advising MAINTENANCE (O&M) both authorities and companies. Operation and maintenance (O&M) is a relevant part of the value chain because it creates a long-term source of revenues. Usually, the EPC company or one of its subsidiaries will take over these activities during 38 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 3 CHAPTER THREE: Methodology 3.1 Introduction The methodology is oriented to identify the potential 4. Identification of the industry for which each to develop different solar components manufacturing MENA country is more competitive, and of the industries in the five considered MENA countries, gaps between MENA and Benchmark countries and to outline recommendations for increasing the 5. Micro analysis of demand scenarios for selected attractiveness to invest in these countries. components to verify viability for the development of these industries in MENA countries. To achieve these goals, a macro- and 6. Recommendations for enhancing microeconomic analysis have been carried out competitiveness and increasing attractiveness through a competitiveness benchmark analysis, to foreign investors of each MENA country, and two complementary analyses: the solar focused on the most suitable industries, and industry value chains and the projected component quantification of associated impacts. demand scenarios. The main steps followed in the methodology are shown in Figure 3.1. “Nations compete in offering the most 1. Competitiveness benchmark analysis, comprising: productive environment for business.” a) Selection of the sample of Benchmark —Michael Porter[23] countries b) Identification of relevant primary data correlated to the attractiveness of a country The whole process is set out from the decision logic to be the recipient of investment in solar of a private investor. Data has been gathered around components industries four main axes of decision: c) Aggregation of primary data to build Attractiveness indexes model 1. Production factors d) Hypothesis validation to verify the relevance 2. Demand factors of the selected Benchmark countries, the 3. Risk and stability factors relevance and consistency of the primary 4. Business support factors. data, and the stability and robustness of the model Strategic recommendations and associated impacts 2. Analysis of the solar industry value chains emerge from this process. 3. Projection of component demand scenarios by country, both internal and external Chapter 3 | Methodology | 39 Figure 3.1 | Global Methodology 1 2 3 Benchmark countries Solar industry Projected component identification analysis demand scenarios ?? ?? ?? ?? ?? ??,?? Hypothesis Relevant available validation parameter identification Model 4 5 Industry identification and Country-solar industry gaps analysis 6 Recommendations and impact assessment Source: STA/Accenture. 40 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 3.2 Benchmark Countries Selection Benchmark countries from all major regions of the in the solar industry, future potential and interest in world were selected for comparison against the renewable energies, and geographic location. Based selected MENA countries (Algeria, Egypt, Jordan, on these criteria, a final list of Benchmark countries Morocco, and Tunisia). The multicriteria analysis was drafted: Chile, China, Germany, India, Japan, considered current level of activity and experience South Africa, Spain, and the United States of America. 3.3 Primary Data Selection and Classification The selection of the raw data and ready-made indexes availability for the countries under study. The weighting used as primary data was an interactive process. and aggregation of the primary data in the context of Based on the team members’ expert judgment, the the model was based on their relevance; no individual project team identified categories and subcategories datum defined a country’s attractiveness. that would impact the attractiveness of a country to the investor in a manufacturing facility of solar components. The primary data were aggregated into 12 In parallel, a survey was made  of available data that “Competitiveness parameters” and further into  4 could be used in the analysis. Thus, the final choice “Overarching categories” (Table 3.1, Table 3.2, was driven by the relevance of information and its Table 3.3, and Table 3.4).32 Table 3.1 | Primary Data Related to Production Factors Overarching Competitiveness Main Data c Category OC is,c Parameter CPjs,c Primary Data Pk Sources 1. Production 1.1. Labor market 1.1.1. Labor costs [24] factors 1.1.2. Labor market efficiency [25] 1.2. Material 1.2.1. Glass manufacturing in the country [26] availability 1.2.2. Stainless steel manufacturing in the country [27][28] 1.2.3. Steel manufacturing in the country [29] 1.2.4. Oil manufacturing ability in the country [30][31] 1.2.5. Copper manufacturing in the country [32][33] 1.2.6. Silicon manufacturing in the country [34] 1.2.7. NaNO3/KNO3 availability [35] 1.3. Relevant 1.3.1. Existence of synergic industries Own elaboration manufacturing 1.3.2. Literacy rates [36] ability 1.3.3. Higher education and training [25] 1.4. Cost of energy 1.4.1. Cost of energy (industrial) [37][38][39][40] 1.5. Fiscal and 1.5.1. Paying taxes rank [41] financial cost 1.5.2. Lending interest rate [42] 32 Definition of the primary data can be found in Annex 3. Chapter 3 | Methodology | 41 Table 3.2 | Primary Data Related to Demand Factors Overarching Competitiveness Main Data c Category OC is,c Parameter CPjs,c Primary Datum Pk Sources 2. Demand 2.1. CSP and PV 2.1.1. CSP Growth Scenario to 2020 [43] factors component demand 2.1.2. PV Growth Scenario to 2020 [43] 2.1.3. Global Horizontal Irradiation (GHI), yearly [44] maximum 2.1.4. Direct Normal Irradiation (DNI), yearly [44] maximum 2.1.5. Electricity demand growth, change 2010 [45] over 2009 2.1.6. Energy imports, net, as a % of energy use [10][46][47] [48][49][50] 2.1.7. Cost of energy (residential) [38][30] 2.1.8. CSP Global potential market for components [43] to 2020 2.1.9. PV Global potential market for components [43] to 2020 Table 3.3 | Primary Data Related to Risk and Stability Factors Overarching Competitiveness Main Data c Category OC is,c Parameter CPjs,c Primary Datum Pk Sources 3. Risk and 3.1. Risk associated 3.1.1. Corruption index [51] stability with doing factors business 3.1.2. Ease of Doing Business ranking 2012 [41] 3.1.3. Ease of Doing Business 20072012 ranking [41] change factor 3.1.4. Inflation rate [52] 3.1.5. OECD country risk [53] 3.2. Risk associated 3.2.1. Existence of clear stable regulatory [54][55] with demand framework for RE (Renewable Energy) [56][57] 3.2.2. Existence of incentives for PV 3.2.3. Existence of incentives for CSP 3.2.4. Existence of RE associations 3.2.5. Total solar PV capacity 3.2.6. Total CSP capacity 3.2.7. Agency for the development of RE 3.2.8. Competition in the electricity sector 3.3. Financial risk 3.3.1. Access to credit [58] 42 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 3.4 | Primary Data Related to Business Support Factors Overarching Competitiveness Main Data c Category OC is,c Parameter CPjs,c Primary Datum Pk Sources 4. Business 4.1. Industrial 4.1.1. Presence of large international industrial [59] support structure companies factors 4.1.2. % industrial GDP (gross domestic product) [52] 4.1.3. Local clustering Own elaboration 4.2. Innovation 4.2.1. Patent filings per million population 2010 [60][58] capacity 4.2.2. Global Competitiveness Report 2011-12 [61] innovation score 4.2.3. Global Competitiveness Report 2011-12 [61] technological readiness 4.2.4. Business sophistication [25] 4.3. Logistical 4.3.1. Quality of port infrastructure 2010 [62][25] infrastructure 4.3.2. Global Competitiveness Report 2011-12 [61] infrastructure 4.3.3. Logistics performance index [63] 3.4 Model: Data Normalization and Aggregation The model aggregates the primary data (Annex 3 and The aggregation model follows33: Annex 4) into different Competitiveness parameters that are further aggregated into Overarching 1. The aggregation impact of each normalized categories, and finally into an Attractiveness index datum within its Competitiveness parameter per industry and country. The weighting for each is modeled through a weighting factor s j ,k aggregation is related to the impact of the datum on which fulfills the normalization condition.34 For a the component’s value chain and on the decision to given country and solar industry, the score for a invest. Competitiveness parameter is equal to Each primary datum has been normalized through: CPjs ,c = ∑a k s j ,k × pk c Pkc − min (Pk ) For easier comparing, the Competitiveness c pk = max (Pk ) − min (Pk ) max parameters are normalized in tables Each country’s normalized datum ranges from 0 to 1, CPjs ,c cps ,c = where 1 would be associated with the highest value j ma CPjs max ( ) and 0 with the lowest. Normalized data have been redefined to have a positive correlation with the 2. The aggregation impact of each Competitiveness Attractiveness indexes where necessary. parameter within its Overarching category is 33 Methods and a sensitivity analysis are presented in Annex 4. 34 j ,k = 1, ∑ j β i , j = 1, ∑ i γ i = 1. ∑ k αs s s Chapter 3 | Methodology | 43 modeled through a weighting factor  s i ,j which 3.4.1 RANKING OF INDEXES fulfills the normalization condition. For a given ACCORDING TO WEIGHTING country and solar industry, the score for an FACTORS Overarching category is equal to s s For each industry, the weighting factors (  i , j and  i ) OC s i ,c = ∑ j s i ,j × CPjs ,c represent the relative importance of each Overarching category and Competitiveness parameter to an For easier comparing, the Overarching categories investor. The weighting factors have been aggregated are normalized in tables through multiplication with the aim of identifying the most significant Competitiveness parameters for OC s ,c ocis ,c = i each solar industry. max OC s i ( ) 3. The aggregation impact of each Overarching The aggregated weighting factors were ranked category within the Attractiveness index is in order, from highest to lowest, setting a ranking modeled through a weighting factor  s i which by solar industry. An average of Competitiveness fulfills the normalization condition. For a given parameters’ rankings by solar industry was calculated country and solar industry, the Attractiveness by which position number 1 is the most weighted index is equal to index and 12 the least weighted index within each solar industry. Annex 4 shows the relative position AIs ,c = ∑i s i × OC s i ,c for all Competitiveness parameters by solar industry. For easier comparing, the Attractiveness indexes Table 3.5 | Global Ranking of are normalized in tables Competitiveness Parameters According to Weight AIs ,c Global ai s ,c = max AIs ( ) Ranking Competitiveness Parameter 1 Financing risk 4. Partial scores that aggregate Competitiveness 2 Relevant manufacturing ability parameters, Overarching categories, and 3 Component demand Attractiveness indexes for groups of industries 4 Material availability and/or countries provide valuable information. 5 Risk associated with doing business 6 Risk associated with demand For each industry primary data, Competitiveness 7 Labor market parameters and Overarching categories weight35 8 Cost of energy (industrial) s s s (  j ,k ,  i , j and  i ) represents their relative importance 9 Fiscal and financial costs for an investor. 10 Innovation capacity 11 Logistical infrastructure 12 Industry structure 35 Weights are presented in Annex 4. 44 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 3.6 | Ranking of Competitiveness Parameters by Solar Industry (CSP Industries) HTF Competitiveness Electrical Heat HTF Thermal Solar Steam Storage Structure Parameters Condenser Generator Exchanger Pumps Oil Mirror Pumps Receiver Salt Turbine Tanks & Tracker Financing risk 1 1 3 1 1 1 1 1 3 1 4 3 Relevant 2 2 2 2 2 2 2 2 2 2 1 5 manufacturing ability Component 6 3 3 3 3 6 6 5 3 3 4 3 demand Material 2 7 1 7 7 2 2 8 1 9 2 1 availability Risk associated 4 4 5 4 4 4 4 3 5 4 7 6 with doing business Risk associated 4 4 5 4 4 4 4 3 5 4 7 6 with demand Labor market 7 8 7 8 8 8 7 6 7 6 3 2 Cost of energy 7 8 7 8 8 9 8 10 7 8 6 9 (industrial) Fiscal and 7 8 7 8 8 9 9 9 7 10 9 8 financial costs Innovation 10 6 10 6 6 7 10 7 11 7 11 10 capacity Logistical 11 11 11 11 11 11 11 11 10 11 10 11 infrastructure Industry 11 11 11 11 11 11 11 11 11 11 11 11 structure Chapter 3 | Methodology | 45 Table 3.7 | Ranking of Competitiveness Parameters by Solar Industry (PV Industries) Ingots/ Modules Solar TF TF Support Competitiveness Parameters Cells Wafers c-Si Polysilicon Glass Materials Modules Inverter Structure Financing risk 1 1 3 1 1 1 3 3 3 Relevant manufacturing ability 2 2 1 6 6 2 1 5 5 Component demand 3 3 3 2 2 6 3 3 3 Material availability 9 10 1 12 6 2 1 1 1 Risk associated with doing business 3 4 6 4 4 4 7 7 6 Risk associated with demand 3 4 6 4 4 4 7 7 6 Labor market 6 6 5 8 8 7 5 2 2 Cost of energy (industrial) 6 8 9 3 3 7 6 6 9 Fiscal and financial costs 10 9 8 9 12 9 9 9 8 Innovation capacity 8 7 10 7 9 10 10 10 10 Logistical infrastructure 11 11 11 10 10 11 11 11 11 46 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Industry structure 11 11 11 10 10 11 11 11 11 3.5 Hypothesis Validation The first hypothesis validation confirmed that MENA normalization and aggregation techniques were countries and Benchmark countries are statistically used. Their results are shown in Table 3.8 and different in terms of Competitiveness parameters, Table 3.9: Overarching categories and Attractiveness indexes. • Rescaling factor analysis, linear aggregation (base The second hypothesis validation checked whether case) different normalization and aggregation techniques • Rescaling equal weights, linear aggregation had any relevant effect on ranking. • Rescaling factor analysis, geometric aggregation • Rescaling equal weights, geometric aggregation In addition, for non-value-chain-related indexes, • Z-scores equal weights, linear aggregation. consistency was checked using Cronbach’s Alpha [64]. Of the two normalization techniques used, z-score transformation converts data to a common scale 3.5.1 ROBUSTNESS AND with a mean of 0 and a standard deviation of 1, CONSISTENCY ANALYSIS which means that variables with extreme values have more of an effect. The rescaling method is used to Competiveness parameters were calculated using normalize indicators by linear transformation and different normalization and aggregation techniques is often considered useful because it can widen to check for relative ranking variations. The following the range of indicators lying within small intervals. Table 3.8 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, When Using Different Normalization and Aggregation Techniques Rescaling, Equal Rescaling, Rescaling, Weights, Factor Analysis, Equal Weights, Z-scores, Equal Linear Geometric Geometric Weights, Linear Base Case Aggregation Aggregation Aggregation Aggregation CSP Score Rank Score Rank Score Rank Score Rank Score Rank United 1.00 1 1.00 1 1.00 1 0.98 2 1.00 1 States China 0.91 2 0.98 3 0.94 2 1.00 1 0.90 3 Japan 0.88 3 0.91 4 0.75 3 0.91 4 0.69 4 Germany 0.86 4 0.99 2 0.57 7 0.87 5 0.95 2 South Africa 0.78 5 0.61 7 0.59 6 0.76 7 –0.15 7 Spain 0.77 6 0.89 5 0.61 5 0.92 3 0.60 5 India 0.72 7 0.55 8 0.66 4 0.78 6 –0.35 8 Chile 0.65 8 0.70 6 0.31 9 0.72 8 0.10 6 Egypt 0.52 9 0.42 11 0.35 8 0.60 11 –0.47 10 Morocco 0.43 10 0.51 9 0.29 10 0.67 9 –0.43 9 Tunisia 0.39 11 0.47 10 0.21 11 0.62 10 –0.49 11 Algeria 0.22 12 0.29 13 0.05 12 0.41 13 –1.00 13 Jordan 0.22 13 0.34 12 0.04 13 0.49 12 –0.85 12 Chapter 3 | Methodology | 47 Table 3.9 | Rankings of Attractiveness Indexes Per Country, Aggregated for PV Technology, when Using Different Normalization and Aggregation Techniques Rescaling, Rescaling, Equal Factor Analysis, Rescaling, Equal Z-scores, Equal Weights, Linear Geometric Weights, Geometric Weights, Linear Base Case Aggregation Aggregation Aggregation Aggregation PV Score Rank Score Rank Score Rank Score Rank Score Rank United States 1.00 1 1.00 1 0.87 2 0.98 2 1.00 1 China 0.98 2 0.98 3 1.00 1 1.00 1 0.90 3 Japan 0.97 3 0.91 4 0.87 3 0.91 4 0.69 4 Germany 0.96 4 0.99 2 0.75 5 0.88 5 0.95 2 India 0.79 5 0.55 8 0.80 4 0.78 6 –0.35 8 South Africa 0.76 6 0.61 7 0.75 6 0.77 7 –0.15 7 Spain 0.73 7 0.89 5 0.74 7 0.92 3 0.60 5 Chile 0.61 8 0.70 6 0.55 9 0.72 8 0.10 6 Egypt 0.58 9 0.42 11 0.59 8 0.60 11 –0.63 11 Morocco 0.43 10 0.51 9 0.54 10 0.68 9 –0.43 9 Tunisia 0.42 11 0.50 10 0.50 11 0.62 10 –0.49 10 Algeria 0.26 12 0.29 13 0.32 12 0.41 13 –1.00 13 Jordan 0.25 13 0.34 12 0.28 13 0.49 12 –0.85 12 Figure 3.2 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, with Different Normalization and Aggregation Techniques 13 Base case 12 11 10 Rescaling, equal weights, Global CSP Attractiveness index ranking 9 linear aggregation 8 7 Rescaling, factor analysis, 6 geometric aggregation 5 4 3 Rescaling, equal weights, geometric aggregation 2 1 - Z-scores, equal weights, linear aggregation ile ain es ina n y ica ia pt co ia a n eri Ch an pa rda Ind nis y roc tat Afr Ch Sp Eg Alg Ja rm Jo Tu dS Mo uth Ge ite So Un Source: STA/Accenture. Note: Zone defined by the average plus/minus one standard deviation is shown. 48 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 3.3 | Rankings of Attractiveness Indexes per Country, Aggregated for PV Technology, with Different Normalization and Aggregation Techniques 13 Base case 12 11 10 Rescaling, equal weights, Global PV Attractiveness index ranking linear aggregation 9 8 7 Rescaling, factor analysis, geometric aggregation 6 5 4 Rescaling, equal weights, geometric aggregation 3 2 1 Z-scores, equal weights,l inear aggregation - es an ia a ile co isia dan ain ina y pt eria fric an Ind roc tat Ch Jap Egy Tun Ch Sp Jor Alg rm A dS Mo th Ge ite Sou Un Source: TA/Accenture. Note: Zone defined by the average plus/minus one standard deviation is shown. Aggregation follows both the linear and geometric Even though small differences exist among the results, techniques, although the base case scenario is the overall trend does not depend on the technique described using the linear aggregation. used. In other words, the results are robust because they are not driven by the weighting scheme. 3.6 Solar Industries Value Chain Analysis Two main paths to convert solar energy into electricity subsystems: Solar Field, which collects solar energy are considered36: the thermal process and the and converts it to heat; Power Block, which converts photovoltaic process. heat energy to electricity; and sometimes, between them, a Thermal Energy Storage (TES) system. Four In the thermal process, Concentrated Solar Power alternative technological approaches––Parabolic (CSP) technologies use Mirrors to concentrate the Trough, Power Tower, Linear Fresnel and Parabolic sunlight and convert it into high temperature heat. Dish Systems––can be described. The component This heat is used in either a conventional Rankine industries in Table 15 have been chosen for this cycle or a Stirling engine to move an electrical study because they make up a major share of the generator. CSP plants can be divided in three main overall investment cost of CSP projects. 36 The complete value chain is presented in Annex 1. Chapter 3 | Methodology | 49 Table 3.10 | CSP Solar Industries by Technology Process Subsystem Technology Solar industry CSP Solar Field Parabolic Trough HTF Thermal Oil Power Tower Mirror Receiver Linear Fresnel Structure & Tracker Dish/Engine Mirror Receiver Structure & Tracker Power Block Parabolic Trough Condenser Power Tower Electrical generator Linear Fresnel Heat exchanger HTF Pumps Pumps Steam turbine Storage tanks Dish/Engine Stirling Engine* Thermal Storage Parabolic Trough Solar salt Power Tower Linear Fresnel Note: *This solar technology has not been considered in this document because Dish/Engine systems are not yet commercially available. Therefore, the demand expected for these elements is not large enough to justify the development of a component supply line. The basic building block of a photovoltaic (PV) and technological complexity have been analyzed. system is the PV cell, which is a semiconductor device This information has been used to guide the that converts solar energy into direct-current  (DC) construction of Attractiveness indexes, and for the electricity due to the photovoltaic effect. PV cells microeconomic analysis of the selected industries.39 are interconnected to form a PV Module, typically in the range of 50–200 Watts (W). The PV Modules, 3.6.1 CSP INDUSTRY when combined with a set of additional application- dependent components (such as support structure, A close examination of the value chain reveals three inverters, and batteries37), form a PV system. clusters of industries with differing technological complexities and investment requirements R&D and industrialization have led to a portfolio of (Figure  3.4).40 The three clusters are a group of available PV technology options at different levels of industries that can be independently developed maturity. Commercial PV Modules may be divided (independent industries); a group of industries into two broad categories: wafer-based Crystalline which are best developed on the backing of existing silicon (c-Si) and Thin Films (TF). Table 3.11 describes conventional industries (conventional industries); the component industries selected for PV systems. and a group of industries which, due to their complexity and required investment, are not likely For each solar industry,38 the value chain, demand to be developed based on the demand of solar forecast, production facility size, required investment, applications alone (difficult-to-reach industries). 37 Batteries have not been considered in this document because they are part of the value chain only in small-scale PV systems for standalone applications. For this reason, the demand expected for these elements is not enough to justify the development of a component supply line. 38 Although the CSP Structure & Tracker and PV Support Structure industries have been considered separately in most of this document, a facility producing CSP structures can be easily adapted to produce PV structures, and vice versa. 39 For details, see Annex 1 and Annex 2. 40 The analysis of technological complexity is based on consulting and interviews with solar experts according to their internal manufacturing processes. 50 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 3.11 | PV Solar Industries by Technology Process Subsystem Technology Solar industry PV Module Crystalline Cells Ingots/Wafers Modules c-Si Polysilicon Thin Film Solar Glass TF Materials TF Modules Inverter Inverters Support Structure Fixed structure Support Structure Single axis Support Structure Double axis Tracker* Note: *The tracking precision for non-concentrating solar technologies as such PV is comparatively low, so it has been assumed that the Tracker industry will be included in the Support Structure industry. Figure 3.4 | Investment Requirements vs. Technology Complexity for CSP Technology Industries High Complexity and Investment Requirements Steam Turbine for the CSP Solar Industry HTF Thermal Oil Electrical Generator HTF Pumps Investment Requirements Mirror Heat exchanger Pumps Storage Tanks Condenser Receiver Structure & Tracker Low Solar Salt Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. Chapter 3 | Methodology | 51 Figure 3.5 | Investment Requirements vs. Technology Complexity for PV Technology Industries Complexity and Investment Requirements Polysilicon High for the PV Solar Industry Ingots/Wafers Solar Glass Cells Investment Requirements TF Materials Modules c-Si TF Modules Inverters Support Structure Low Low Technology Complexity High Difficult to reach TF PV - Crystalline PV - Thin Film PV - Shared Source: STA/Accenture. Due to their technological complexity and large The independent group of industries (highlighted in investment requirements, one group of industries blue in Figure 3.4) includes Structure & Tracker, Solar (Figure 3.4, top right, circled in green), is considered salt blending, Mirror, and Receiver. These industries difficult to reach in most parts of the world, including can be developed independently as part of solar in Benchmark countries that have developed the industry development so long as the conditions for solar industry successfully. These industries include solar industry development exist. Steam turbine, Electrical generator, HTF Thermal Oil, and HTF Pumps. 3.6.2 PV INDUSTRIES The conventional group of industries (Condenser, Crystalline and Thin Film have been selected as Heat Exchanger, Pumps, and Storage Tanks) (circled the two main solar PV technologies to develop in orange in Figure 3.4) refers to those industries that a solar industry in MENA countries.41 Clustering rely on existing industries and that, therefore, are easier PV-related industries revealed three clusters with to develop in countries that already have conventional differing technological complexity and investment pressure vessel and tank and pump industries. requirements (Figure 3.5). 41 Crystalline PV has 80%-90% of market share, with Thin Film largely making up the remainder. Due to its lower penetration rate, Concentrated Photovoltaic (CPV) has not been included directly in the study. However, CPV technology requirements are included in the CSP and PV technology because some of the components (trackers, optics, cells) are common to the other two solar technologies. Thus, CPV technology also could be of interest to MENA countries in the future. 52 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry The group of industries at the top right in Figure 3.5 the greater maturity of this Crystalline industries, (circled in green), are industries that, due to their including their over production capacity, which technological complexity and large investment makes it more difficult for new entrants to gain a requirements, are considered difficult to reach in foothold. Using the first step in the production chain most parts of the world, including in Benchmark as an example, global Polysilicon demand in 2011 countries that have successfully developed the solar could have been met by the top producers[18]. No industry. Most Crystalline industries, except for the new entrants worldwide are expected until a change Module assembly, fall into this category. Another in the supply or demand paradigm drives a more significant aspect that emerged in the analysis is attractive business case. 3.7 Identification of Potentially Competitive (Target) Industries and Competitiveness Gaps The primary data are used for each industry to Spider graphs were built with the normalized measure each MENA country against the Benchmark Competitiveness parameter scores of each MENA countries. In this way, the industries in which MENA country, compared to the MENA and Benchmark countries are or can become competitive (target) countries’ average. These graphs are used to identify are identified, and the gaps to be addressed for gaps between MENA and Benchmark countries. each MENA country are detected. The normalized Overarching categories are highlighted in colors. Attractiveness index score has been graphed (Figure 3.6) for each MENA country for comparison with the average score of MENA countries (blue line). Figure 3.6 | Sample Graph: Country and MENA Average Normalized Attractiveness Index Score 0.65 0.60 ILL US TR Attractiveness Index Score ATI 0.55 VE 0.50 0.45 0.40 . . ... r ... .. .. ps n.. c.. rro . or. lar ce at m ru Co St Mi He Ra So Pu St Source: STA/Accenture Chapter 3 | Methodology | 53 Figure 3.7 | Sample Spider Graph Used to Identify Gaps ILL US Labor market TR AT Logistical infrastructure 1.00 IV E Material availability 0.80 0.60 Innovation capacity Relevant manufacturing 0.40 ability 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Country Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. Note: Overarching categories are highlighted in colors 3.8 Building of Demand Scenarios In thinking about solar industry development, demand To set up one of the industries within the solar supply is perhaps the less adaptable factor. If there is no chain, a minimum demand should exist so that a current or projected demand (internal or external) threshold technical and economical production in a country, it is unlikely that the solar component capacity can be reached. This demand can come industry will develop, even if other conditions exist.42 from the country in which the industry is established (internal demand) or from exports (external demand). However, once demand surpasses a certain Three steps have been followed to build potential minimum threshold related to the minimum market volume estimation: technical-economically viable capacity of a factory, additional demand may prove not so significant for • Solar power installed capacity forecast to 2020. the development of the industry. • Market share evolution forecast to 2020. 42 A special example of this is China which, due to its very specific strengths, developed the solar industry market mainly for export, before developing the internal market. 54 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 3.8 | Global and European CSP and PV Yearly Installed Capacity in Different Scenarios, Average 2008–20 10 Yearly Installed Capacity, GW/year 7.9 8 6 4 2.8 2 1.3 0.3 0 Global European PV Conservative scenario PV Base case PV Optimistic scenario CSP Conservative scenario CSP Base case CSP Optimistic scenario Source: [65]. • Combining the previous forecasts, the expected Additionally, demand for solar components not only market volume and, therefore, the demand to is domestic but also can come from other countries, be supplied by the manufacturing sector of each and regions. Therefore, demand from four separate MENA country are forecasted. regions––neighboring MENA countries, the MENA Region as a whole, the European Union, and the From these solar installed capacity projections, a rest of the world (ROW)––has been forecasted. The component demand scenario has been built for the methodology to define the component demand is selected industries in each specific MENA country. based on the forecasted installed capacity in each of In the long run, the yearly installed capacity is a these regions43 per: key element to determine whether a manufacturing industry will have stable demand. • Projections to 2020 for Europe and the rest of the world[65]. 3.8.1 INCREASE IN INSTALLED • Objectives and plans to 2020 for each MENA CAPACITY FORECAST country[57], [66], [67]. The driving force for internal demand is the growth Global and European forecasted installed capacity of installed capacity of solar power plants in each includes three scenarios: conservative, moderate MENA country. Therefore, a forecast to 2020 has (used as a base case), and optimistic (Figure 3.8). been made to deduce the solar component demand Modifications were made to the projections in[65] in each of the five MENA countries. to include Algeria and Morocco’s solar plan targets 43 A linear hypothesis was used to determine annual growth. Chapter 3 | Methodology | 55 Figure 3.9 | MENA CSP and PV Installed Capacity in 2020 for 3 Scenarios 4000 3000 Installed Capacity, MW 2000 1600 1,525 800 1,100 1000 450 400 300 200 150 50 0 Algeria Egypt Jordan Morocco Tunisia PV Conservative scenario PV Base case PV Optimistic scenario CSP Conservative scenario CSP Base case CSP Optimistic scenario Source: STA/Accenture. Figure 3.10 | MENA CSP and PV Yearly Installed Capacity in Different Scenarios, Average 2008–20 500 400 Yearly Installed Capacity, MW/year 300 188 198 200 135 100 100 56 50 38 25 19 6 0 Algeria Egypt Jordan Morocco Tunisia PV Conservative scenario PV Base case PV Optimistic scenario CSP Conservative scenario CSP Base case CSP Optimistic scenario Source: [65]. 56 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 3.12 | Market Share in Target built for the components considered feasible to be Industries Hypotheses for Each MENA developed in each MENA country. Country CSP/PV The basic scenario hypothesis is that a fraction of CSP/PV Forecasted Market Share domestic, MENA Regional, European and rest of the Actual in 2020 world (ROW) demand could be met from each MENA Market Share, Estimated (%) country under study if appropriate actions are taken. (%) Target Domestic 25.0 80.0 After discussion with industry leaders, and taking into account the necessity of a track record to supply Neighboring 0.0 5.0 countries components in the energy business, the following Other MENA 0.0 2.5 hypotheses on demand growth were made: countries Europe 0.0 1.0 1. There are three main types of solar component ROW 0.0 0.5 industries, in terms of feasibility for each MENA country to be competitive in the market: Note: *It has been estimated for target industries that the forecasted market share will be reached in 2018, then a) Target industries: Those for which a MENA stay flat. As described in sections 2.1 and 2.2, the target industries are: country is likely to be competitive in the short or medium term if appropriate actions • The independent and conventional groups of CSP industries: Condenser, Heat exchanger, Mirror, Pumps, are taken (as described in epigraphs 2.1 Receiver, Storage tanks, and Structure & Tracker • The shared PV industries: Inverter and Support Structure. and 2.2). b) Neutral industries: Those for which a MENA country might reach a certain market share which were disclosed after the publication of the in the medium or long term, but only through World Energy Outlook[43]. A linear hypothesis was partnerships with technology proprietors or used to determine annual growth. In the long run, an extensive and expensive research and the yearly installed capacity is the key number to development process. determine whether a manufacturing industry will have c) Difficult-to-reach industries: Those with stable demand. strong entry barriers, such as an oligopolistic market situation, high capital requirements, For MENA countries, [57], [66] and [67] define a and/or patent-protected knowledge similar “moderate” scenario, and conservative and requirements. No market share was optimistic scenarios were built (Figure 3.9) following considered for these industries. the same proportions as forecasted in [65]. Both for 2. The hypothesis of increase in market share is the PV and CSP, the moderate scenario was taken as same for both CSP and PV technologies. the baseline for the present analysis. 3. A domestic market share increase hypothesis for each MENA country was made, to reach 80 A linear hypothesis was explored to determine annual percent in 2018 for target industries. growth. 4. Market share to be supplied by each MENA country to its neighboring countries (the 3.8.2 COMPONENT DEMAND nearest two from those in this study) was SCENARIO estimated to reach a 5.0 percent of the demand for target industries in 2020. Based on these solar power installed capacity 5. MENA Regional (nonneighboring countries) forecasts, a component demand scenario was market share to be supplied by each MENA Chapter 3 | Methodology | 57 country was estimated to be 2.5 percent of the 8. A linear increase from actual to forecasted demand for target industries in 2020. market share has been assumed. 6. A market share for Europe equal to 1.0 percent, and for ROW equal to 0.5 percent in 2020 has Demand projections do not include the additional been assumed. demand that could arise from the development of 7. Actual market share was estimated to be niche applications for PV and be developed at the 25 percent for domestic demand. No participation same time as the main PV market. in foreign markets has been assumed, as of today. 3.9 Recommendations and Impact Assessment Finally, strategic recommendations are presented to encourage the development of solar component industries and minimize the gaps with Benchmark countries. The associated impacts of these recommendations were evaluated taking into account investment, cash flow, and number of jobs created; and using specific market information about each industry44 • Investment necessary for the deployment of a factory • Maximum and minimum production capacity of a factory per year • Component production cost • Component market price • Number of employees per factory. 44 As shown in Annex 5 Case Studies. 58 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 4 CHAPTER FOUR: Attractiveness Assessment 4.1 Benchmark Analysis Summary Results Benchmark countries were selected for comparison that industry (low energy price for energy-intensive against the five selected MENA countries (Algeria, industries, availability and price of critical materials) Egypt, Jordan, Morocco, and Tunisia) through a and investors’ preferences. multicriteria analysis. It evaluated their current levels of activity and experience in the solar industry; future Even though, statistically, Benchmark countries potential and motivation to develop renewable perform significantly better than MENA countries, energies; and geographic location covering all major the analysis shows that the attractiveness of some regions of the world. MENA countries comes closer to the average value of Benchmark countries for certain industries, Based on the three criteria, a group of countries was highlighting industries of particular interest for those proposed by the team and a preliminary analysis countries to develop. carried out. After joint consideration between the project team and the World Bank, a final list was drafted Table 4.3 and Table 4.4 show the attractiveness of comprising eight countries: Chile, China, Germany, each country for the development of the different PV India, Japan, South Africa, Spain, and the US. components, normalized against the best Benchmark country for that component (whose value is, then, According to the analyses performed,45 Egypt and equal to 1). For a given country, attractiveness varies Morocco are the MENA countries that show the for the different component industries according to highest Attractiveness index for both CSP and PV the country’s suitability to fulfill the specific needs of component industries, followed by Tunisia. Table 4.1, that industry (such as low energy price for energy- Table 4.2, Table 4.3, and Table 4.4 show the intensive industries, availability and price of critical normalized Attractiveness index ai s ,c for each country materials) and investors’ preferences. and solar industry. Even though, statistically, the Benchmark countries Table 4.1 and Table 4.2 show the attractiveness of perform significantly better than the 5 MENA each country for the development of the different CSP countries, the analysis shows that, for certain components normalized against the best Benchmark components, some MENA countries are close to the country for that component (whose value then is equal average value of the 8 Benchmark countries. to 1). For any given country, attractiveness varies for the different component industries according to The following tables highlight the specific strengths the country’s suitability to fulfill the specific needs of and weaknesses of each country, comparing its 45 The methodology is described in chapter 3, Methodology. Chapter 4 | Attractiveness Assessment | 59 Table 4.1 | Normalized Attractiveness Index for CSP Component Industries (I) Electrical Heat HTF Condenser Generator Exchanger HTF Pumps Thermal Oil Mirror Algeria 0.2 0.1 0.3 0.2 0.1 0.2 Egypt 0.5 0.5 0.5 0.5 0.5 0.5 Jordan 0.2 0.1 0.2 0.2 0.1 0.2 Morocco 0.4 0.4 0.3 0.4 0.4 0.5 Tunisia 0.4 0.4 0.3 0.4 0.4 0.4 Chile 0.6 ⊕ 0.7 0.5 0.6 0.6 0.6 China 0.9 ⊕ 0.7 1.0 ⊕ 0.8 ⊕ 0.7 0.9 Germany 0.9 0.9 ⊕ 0.8 0.9 0.9 0.9 India ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 Japan 0.9 0.9 0.9 0.9 0.9 ⊕ 0.8 South Africa ⊕ 0.7 0.9 0.6 ⊕ 0.8 0.9 ⊕ 0.7 Spain ⊕ 0.8 ⊕ 0.8 ⊕ 0.7 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 United States 1.0 1.0 1.0 1.0 1.0 1.0 Average ALL 0.6 0.6 0.6 0.6 0.6 0.6 Average BENCHMARK ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 Average MENA 0.3 0.3 0.3 0.3 0.3 0.3 Table 4.2 | Normalized Attractiveness Index for CSP Component Industries (II) Steam Storage Structure & Pumps Receiver Solar Salt Turbine Tanks Tracker Algeria 0.2 0.2 0.2 0.1 0.3 0.3 Egypt 0.5 0.5 0.4 0.5 0.5 ⊕ 0.7 Jordan 0.2 0.2 0.2 0.1 0.3 0.3 Morocco 0.4 0.4 0.3 0.4 0.4 0.5 Tunisia 0.4 0.4 0.3 0.4 0.4 0.4 Chile 0.6 0.6 0.9 ⊕ 0.7 0.5 0.5 China 0.9 ⊕ 0.8 1.0 ⊕ 0.7 1.0 1.0 Germany ⊕ 0.8 0.9 0.5 0.9 ⊕ 0.8 ⊕ 0.8 India ⊕ 0.7 ⊕ 0.7 0.4 ⊕ 0.7 ⊕ 0.7 0.9 Japan 0.9 0.9 0.4 0.9 0.9 0.9 South Africa ⊕ 0.7 ⊕ 0.7 0.4 0.9 ⊕ 0.7 ⊕ 0.8 Spain ⊕ 0.8 ⊕ 0.8 0.5 ⊕ 0.8 ⊕ 0.7 ⊕ 0.7 United States 1.0 1.0 0.5 1.0 1.0 0.9 Average ALL 0.6 0.6 0.5 0.6 0.6 ⊕ 0.7 Average BENCHMARK ⊕ 0.8 ⊕ 0.8 0.6 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 Average MENA 0.4 0.3 0.3 0.3 0.4 0.4 60 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.3 | Normalized Attractiveness Index for Thin Film and Shared PV Component Industries Support Solar Glass TF Materials TF Modules Inverter Structure Algeria 0.2 0.2 0.3 0.3 0.3 Egypt 0.5 0.5 0.5 0.6 ⊕ 0.7 Jordan 0.1 0.2 0.2 0.3 0.3 Morocco 0.4 0.4 0.4 0.4 0.4 Tunisia 0.4 0.4 0.3 0.4 0.4 Chile 0.7 0.6 0.5 0.5 0.5 China ⊕ 0.7 0.9 1.0 1.0 1.0 Germany 0.9 1.0 0.9 ⊕ 0.7 0.9 India ⊕ 0.7 0.6 ⊕ 0.7 ⊕ 0.8 0.9 Japan 0.9 0.9 0.9 0.9 0.9 South Africa 0.9 ⊕ 0.7 0.6 0.6 ⊕ 0.7 Spain ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 0.6 ⊕ 0.7 United States 1.0 0.9 1.0 0.9 0.9 Average ALL 0.6 0.6 0.6 0.6 ⊕ 0.7 Average BENCHMARK ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 Average MENA 0.3 0.3 0.3 0.4 0.4 Table 4.4 | Normalized Attractiveness Index for Cristalline PV Component Industries Cells Ingots Wafers Modules c-Si Polysilicon Algeria 0.2 0.1 0.2 0.2 Egypt 0.5 0.5 0.5 0.5 Jordan 0.2 0.1 0.2 0.1 Morocco 0.4 0.4 0.3 0.4 Tunisia 0.4 0.4 0.3 0.4 Chile 0.6 ⊕ 0.7 0.5 ⊕ 0.7 China ⊕ 0.8 ⊕ 0.7 1.0 ⊕ 0.7 Grmany 1.0 1.0 0.9 0.9 India ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 ⊕ 0.7 Japan 0.9 0.9 0.9 0.9 South Africa ⊕ 0.7 0.9 0.6 0.9 Spain ⊕ 0.8 ⊕ 0.8 ⊕ 0.7 ⊕ 0.7 United States 1.0 1.0 1.0 1.0 Average ALL 0.6 0.6 0.6 0.6 Average BENCHMARK ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 ⊕ 0.8 Average MENA 0.3 0.3 0.3 0.3 Chapter 4 | Attractiveness Assessment | 61 Table 4.5 | Normalized Competitiveness Parameters Included in the Overarching Categories Production Factors and Demand Factors, Aggregated for the CSP Solar Industries Production Factors Demand Factors Fiscal Relevant Cost of and CSP Labor Material Manufact. Energy Financial Component CSP Market Availability Ability (Industrial) Costs Production Demand Demand Algeria 0,3 0,0 0,3 1,0 0,2 0,3 0,5 0,5 Egypt 0,8 0,2 0,4 0,4 0,1 0,4 ⊕ 0,6 ⊕ 0,6 Jordan ⊕ 0,6 0,0 0,2 0,1 0,8 0,2 0,5 0,5 Morocco 0,5 0,0 0,2 0,1 ⊕ 0,7 0,2 0,8 0,8 Tunisi 0,5 0,0 0,2 0,2 0,9 0,3 0,5 0,5 Chile 0,5 0,3 0,3 0,0 0,9 0,4 ⊕ 0,6 ⊕ 0,6 China 0,9 1,0 0,9 0,2 0,5 1,0 1,0 1,0 Germany 0,3 0,3 1,0 0,0 1,0 ⊕ 0,7 0,3 0,3 India 1,0 0,3 ⊕ 0,7 0,2 0,3 ⊕ 0,7 ⊕ 0,6 ⊕ 0,6 Japan 0,5 0,5 1,0 0,0 0,8 0,8 0,3 0,3 South Africa ⊕ 0,6 0,2 ⊕ 0,6 0,2 ⊕ 0,6 0,5 0,9 0,9 Spain 0,2 0,2 ⊕ 0,7 0,0 1,0 0,5 0,8 0,8 United States ⊕ 0,7 0,5 1,0 0,4 0,9 0,8 0,8 0,8 Average ALL ⊕ 0,6 0,3 ⊕ 0,6 0,2 ⊕ 0,7 0,5 ⊕ 0,6 ⊕ 0,6 Average ⊕ 0,6 0,4 0,8 0,1 0,8 ⊕ 0,7 ⊕ 0,7 ⊕ 0,7 BENCHMARK Average 0,5 0,1 0,3 0,4 0,5 0,3 ⊕ 0,6 ⊕ 0,6 MENA Prob H1 42% 98% 100% 86% 77% 100% 38% 38% Note: Prob H1 is the probability that Benchmark countries are different than selected MENA countries, analysis of variance (ANOVA). The countries are split in two groups (MENA and Benchmark), for which average and variance values are calculated. The ratio of the variances in both groups follows an F-distribution, yielding the probability of both groups being statistically different populations. A high value of the indicator Prob H1 means a high probability of Benchmark and MENA countries being different in the corresponding Competitiveness parameter. Competitiveness parameters and Overarching market is the closest parameter, especially for PV categories, aggregated for all CSP (Table 4.5, industries, although similarities can also be found in Table 4.6) and PV (Table 4.7, Table 4.8) component cost of energy (industrial), fiscal and financial costs, industries. As can be seen, even though Benchmark and component demand parameters. countries perform significantly better than MENA countries, different countries achieve their The Labor market Competitiveness parameter competitiveness on the basis of different strengths. includes both labor costs (which are more positive It also is remarkable that there are some factors for in MENA countries) and productivity (better in most which no statistically significant difference between Benchmark countries), somehow balancing the effect Benchmark and MENA countries can be established, between Benchmark and MENA. Thus, the average as reflected by the indicator Prob H1. The labor results are similar for both groups of countries. 62 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.6 | Normalized Competitiveness Parameters Included in the Overarching Categories Production Factors and Demand Factors, Aggregated for All the PV Solar Industries Production Factors Demand Factors Fiscal Relevant Cost of and PV Labor Material Manufact. Energy Financial Component PV Market Availability Ability (Industrial) Costs Production Demand Demand Algeria 0,3 0,1 0,3 1,0 0,2 0,3 0,3 0,3 Egypt 0,8 0,3 0,4 0,4 0,1 0,5 0,4 0,4 Jordan ⊕ 0,6 0,0 0,2 0,1 0,8 0,3 0,4 0,4 Morocco 0,5 0,1 0,2 0,1 ⊕ 0,7 0,3 ⊕ 0,6 ⊕ 0,6 Tunisi 0,5 0,1 0,2 0,2 0,9 0,3 0,4 0,4 Chile 0,5 0,2 0,3 0,0 0,9 0,3 ⊕ 0,6 ⊕ 0,6 China 0,8 1,0 0,9 0,2 0,5 1,0 0,8 0,8 Germany 0,2 0,5 1,0 0,0 1,0 ⊕ 0,6 1,0 1,0 India 1,0 ⊕ 0,6 ⊕ 0,7 0,2 0,3 ⊕ 0,7 0,5 0,5 Japan 0,4 0,8 1,0 0,0 0,8 0,8 ⊕ 0,6 ⊕ 0,6 South Africa ⊕ 0,6 0,4 ⊕ 0,6 0,2 ⊕ 0,6 0,5 0,5 0,5 Spain 0,2 0,4 ⊕ 0,7 0,0 1,0 0,5 ⊕ 0,6 ⊕ 0,6 United States 0,5 ⊕ 0,7 1,0 0,4 0,9 0,8 ⊕ 0,6 ⊕ 0,6 Average ALL 0,5 0,4 ⊕ 0,6 0,2 ⊕ 0,7 0,5 ⊕ 0,6 ⊕ 0,6 Average 0,5 ⊕ 0,6 0,8 0,1 0,8 ⊕ 0,6 ⊕ 0,6 ⊕ 0,6 BENCHMARK Average 0,5 0,1 0,3 0,4 0,5 0,3 0,4 0,4 MENA Prob H1 4% 100% 100% 86% 77% 99% 97% 97% Note: Prob H1 is the probability that Benchmark countries are different than selected MENA countries, analysis of variance (ANOVA). Due to its high energy subsidies, Algeria introduces Benchmark countries are better positioned a distortion in the analysis of the energy cost for technologically, for steady development of CSP industrial purposes.46 plants, poor solar resource and lack of incentives in some Benchmark countries and the high potential of On fiscal and financial costs, Benchmark countries MENA countries balance the score. For PV, on the have a better average than MENA countries. other hand, incentives exist in Benchmark countries, Nevertheless, some MENA countries such as Jordan, and weather conditions are more propitious. Morocco and Tunisia are near, or even outperform, the Benchmark average value. Benchmark countries show better performance in the Overarching category of Ri sk and Stability Demand forecast for CSP components in both Factors as a whole, especially in the Financing Benchmark and MENA countries is similar. Although Risk parameter. Thus, improving this parameter 46 Most MENA countries have subsidized energy. Egypt has the lowest price of electricity for domestic use, but Algerian subsidies for industrial consumers are higher [39] [40]. Chapter 4 | Attractiveness Assessment | 63 Table 4.7 | Normalized Competitiveness Parameters Included in the Overarching Categories Risk and Stability Factors and Business Support Factors, Aggregated for All the CSP Solar Industries Risk and Stability Factors Bussines Support Factors Risk Associated Risk to Doing Associated Financing Risk and Industry Innovation Logistical Bussines CSP Business to Demand Risk Stability Structure Capacity Infrastructure Support Algeria 0,2 0,1 0,0 0,1 ⊕ 0,7 0,0 0,0 0,1 Egypt 0,3 0,3 0,5 0,5 0,3 0,2 0,2 0,2 Jordan 0,4 0,0 0,0 0,1 0,1 0,3 0,3 0,3 Morocco 0,5 0,5 0,3 0,4 0,8 0,2 0,2 0,3 Tunisi ⊕ 0,6 0,3 0,3 0,4 0,3 0,3 0,4 0,4 Chile ⊕ 0,7 ⊕ 0,7 ⊕ 0,7 0,8 0,3 0,3 0,5 0,4 China 0,5 0,8 ⊕ 0,6 ⊕ 0,6 1,0 0,3 0,5 0,5 Germany 1,0 0,8 0,8 1,0 1,0 0,8 1,0 1,0 India 0,2 ⊕ 0,7 ⊕ 0,7 ⊕ 0,7 0,1 0,3 0,2 0,2 Japan 1,0 ⊕ 0,6 0,8 0,9 0,9 1,0 0,8 1,0 South Africa 0,5 0,4 1,0 0,9 0,2 0,3 0,4 0,4 Spain 0,8 1,0 ⊕ 0,7 0,8 0,8 0,4 0,8 ⊕ 0,7 United States 1,0 ⊕ 0,6 1,0 1,0 1,0 0,8 0,8 0,9 Average ALL ⊕ 0,6 0,5 ⊕ 0,6 ⊕ 0,6 ⊕ 0,6 0,4 0,5 0,5 Average ⊕ 0,7 ⊕ 0,7 0,8 0,8 ⊕ 0,7 0,5 ⊕ 0,6 ⊕ 0,6 BENCHMARK Average 0,4 0,2 0,2 0,3 0,4 0,2 0,2 0,3 MENA Prob H1 95% 100% 100% 100% 71% 97% 99% 98% Note: Prob H1 is the probability that Benchmark countries are different than selected MENA countries, analysis of variance (ANOVA). should be a priority, and it is a point for which Figure 4.1 and Figure 4.2 show the normalized collaboration among MENA countries would yield Attractiveness index for each country, aggregated mutual benefits. for CSP and PV technologies, respectively. The figures show each MENA and Benchmark country’s The Competitiveness parameter regarding Industry Attractiveness index (x-axis) and normal distributions structure shows a better result for the Benchmark for MENA and Benchmark countries. countries. Nevertheless, some MENA countries such as Algeria and Morocco reach or outperform the Benchmark country average value. Logistical infrastructure is the weakest point within the Business Support Factors and is a field in which coordinated efforts would be synergetic for all MENA countries due to their physical proximity. 64 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.8 | Normalized Competitiveness Parameters Included in the Overarching Categories Risk and Stability Factors and Business Support Factors, Aggregated for All the PV Solar Industries Risk and Stability Factors Bussines Support Factors Risk Associated Risk to Doing Associated Financing Risk and Industry Innovation Logistical Bussines PV Business to Demand Risk Stability Structure Capacity Infrastructure Support Algeria 0,2 0,1 0,0 0,1 ⊕ 0,7 0,0 0,0 0,2 Egypt 0,3 0,4 0,5 0,5 0,3 0,2 0,2 0,2 Jordan 0,4 0,0 0,0 0,1 0,1 0,3 0,3 0,3 Morocco 0,5 0,5 0,3 0,4 0,8 0,2 0,2 0,4 Tunisi ⊕ 0,6 0,3 0,3 0,4 0,3 0,3 0,4 0,4 Chile ⊕ 0,7 ⊕ 0,7 ⊕ 0,7 0,8 0,3 0,3 0,5 0,4 China 0,5 0,8 ⊕ 0,6 ⊕ 0,7 1,0 0,3 0,5 ⊕ 0,6 Germany 1,0 1,0 0,8 1,0 1,0 0,8 1,0 1,0 India 0,2 ⊕ 0,7 ⊕ 0,7 ⊕ 0,7 0,1 0,3 0,2 0,2 Japan 1,0 0,8 0,8 1,0 0,9 1,0 0,8 0,9 South Africa 0,5 0,4 1,0 0,9 0,2 0,3 0,4 0,4 Spain 0,8 0,9 ⊕ 0,7 0,8 0,8 0,4 0,8 ⊕ 0,7 United States 1,0 0,5 1,0 1,0 1,0 0,8 0,8 0,9 Average ALL ⊕ 0,6 ⊕ 0,6 ⊕ 0,6 ⊕ 0,6 ⊕ 0,6 0,4 0,5 0,5 Average ⊕ 0,7 ⊕ 0,7 0,8 0,9 ⊕ 0,7 0,5 ⊕ 0,6 ⊕ 0,6 BENCHMARK Average 0,4 0,2 0,2 0,3 0,4 0,2 0,2 0,3 MENA Prob H1 95% 100% 100% 100% 71% 97% 99% 98% Note: Prob H1 is the probability that Benchmark countries are different than selected MENA countries, analysis of variance (ANOVA). 4.2 Algeria 4.2.1 ALGERIA’S KEY STRENGTHS very ambitious targets for solar energy development AND WEAKNESSES in the country. Algeria’s key strength is the cost of energy for On the other hand, the main aspects to improve industrial consumers,47 its industry structure, marked would be the Overarching category of Production by the presence of multiple international companies, factors, specifically Material availability of required and the fact that Algeria has recently announced components and materials, Risk and stability Factors, 47 A low-cost electricity presents a competitive advantage to private investors in energy-intensive industries. However, from the point of view of the country, subsidies to energy consumption introduce tensions in the system because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts [94]. For a country that generates its electricity largely from natural gas, a true price of electricity would need to take into account the LCOE (levelized cost of energy) of a CCGT (Combined Cycle Gas Turbine) plant, estimated at 5$c/kWh, and add to it transportation costs, business margin, and others to arrive at the final number [93]. Chapter 4 | Attractiveness Assessment | 65 Figure 4.1 | Normalized Attractiveness Index for Each Country, Aggregated for CSP Industries and Probability Density Function* for MENA and Benchmark Countries 0.5 South Africa 0.4 Tunisia Germany Spain Probability Distribution, CSP Morocco Japan 0.3 China India Jordan Algeria 0.2 Egypt Chile United States 0.1 0 0 0.2 0.4 0.6 0.8 1 1.2 MENA Countries Benchmark Countries Source: STA/Accenture. Note: *The underlying hypothesis is that both Benchmark and MENA countries follow a normal distribution whose average and standard deviations are those corresponding to the Benchmark and MENA countries, respectively. Figure 4.1 illustrates the plausibility of the cluster hypothesis (H1). See Table 4.5 to Table 4.8 (ANOVA analysis). Figure 4.2 | Normalized Attractiveness Index for Each Country, Aggregated for PV Industries and Probability Density Function* for MENA and Benchmark Countries 0.5 Tunisia 0.4 Morocco China South Africa India Probability Distribution, PV 0.3 Spain Germany Algeria Jordan Japan 0.2 United States Egypt 0.1 Chile 0 0 0.2 0.4 0.6 0.8 1 1.2 MENA Countries Benchmark Countries Source: STA/Accenture. Note: *The underlying hypothesis is that both Benchmark and MENA countries follow a normal distribution whose average and standard deviations are those corresponding to the Benchmark and MENA countries, respectively. Figure 4.1 illustrates the plausibility of the cluster hypothesis (H1). See Table 4.5 to Table 4.8 (ANOVA). 66 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.3 | Competitiveness Parameters in Algeria Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing Production business Algeria Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. specifically Risk associated with doing business, and in oil and gas supply. Significantly, Algeria is moving Business Support Factors, specifically Innovation in this direction, having announced a substantial capacity and Logistical infrastructure.48 20-year plan for solar development. This plan calls for 5 percent renewable energy installed capacity 4.2.2 POTENTIALLY COMPETITIVE by  2017, and 20 percent by 2030, of which INDUSTRIES 70  percent would be CSP, 20 percent PV, and the remaining 10 percent wind power. Algeria is different from its neighboring countries in some respects. As one of the world’s largest natural Hosting one of the world’s first Integrated Solar gas exporters, in the short term, Algeria may not Combined Cycle (ISCC) plants,49 Algeria also has experience the same drive to diversify its energy gained a valuable insight into the development, sector through solar energy in order to increase its construction, and operation of this type of plant–– energy independence. However, the country could experience that could be put to use as the sector have other motivations to develop its solar industry, develops in the Region. As a natural gas producer, such as the opportunity to free more gas for export, or Algeria will have opportunities to combine this the will to diversify industrial structure by developing resource with CSP technology in future projects a new industry in the face of a possible reduction as well. 48 For details on the Benchmark analysis, refer to Benchmark analysis summary results, section 4.1. 49 ISCC Hassi R’mel is a 150-MWe combined cycle hybridized with a 25-MWe equivalent CSP solar field. It was the first ISCC plant in the world to start construction although Morocco’s ISCC Ain Beni Mathar was the first operating plant of this type in the world[9]. Chapter 4 | Attractiveness Assessment | 67 Figure 4.4 | Normalized Attractiveness Indexes for CSP and PV Technologies in Algeria Compared to MENA Average* 1.0 0.9 0.8 0.7 0.6 0.5 CSP Industries 0.4 0.3 0.2 0.1 - er or er s il or s er lt ie s r e ns rat ng u mp a lo irr u mp cevi ar sa turb ta nk acke e a m M l r nd ge n xc h F p her P Re So m ge & T Co al te HT F T tea tora ure ic a S ctr He HT S uc t Ele Str Algeria Average MENA Average Benchmark Algeria 1.0 0.9 0.8 0.7 0.6 0.5 PV Industries 0.4 0.3 0.2 0.1 - lls -Si n ss ls les ter re s fer ico ia ctu Ce gla c er du ter Wa les il Inv tru lys Mo lar Ma du ots tS Po So TF Mo TF Ing or pp Su Algeria Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. Despite Algeria’s experience and political will to level of higher education could translate into higher develop solar energy, the competitiveness analysis innovation capacity for the country. performed highlights some areas for the country to improve to increase its competitiveness and Figure 4.4 and Figure 4.5 show the normalized encourage investment by foreign and local firms. Attractiveness index of Algeria for the CSP and Specifically, Algeria could take actions to overcome PV selected industries, compared to the MENA gaps in financial country risk and human capital countries’ average. constraints,50 and to consider how increasing the 50 For details on Benchmark analysis, see Benchmark analysis summary results 4.1. 68 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.9 | Algeria’s Key Strengths and Competitive Gap Weaknesses Analysis Key Strengths Competitive Gap Weaknesses Production Material availability: Algeria Labor market: Monthly wages are not competitive factors already has a significant glass compared to other MENA countries. industry and an emerging steel Material availability: Despite having glass and industry. steel, it lacks other composite and raw materials Relevant manufacturing ability: needed to develop solar industries, including Based on current industrial stainless steel, copper, and silicon. capability, Algeria has synergic industries such as Float glass and crude steel. Cost of energy: From an investor’s point of view, Algeria’s electricity price represents a competitive advantage for the establishment of energy-intensive industries. Demand factors CSP and PV component demand: Ambitious domestic goals have been set for solar installed capacity in PV (800 MW) and CSP (1,525 MW) to 2020. Risk and Risk associated with doing business: Algeria, as stability factors well as its neighboring countries, is still going through a political transition that may lead to a reduction in risk once it is complete. Risk associated with demand: Giving visibility to the pipeline of energy projects would be an important step toward reducing the risk associated with demand, particularly in the case of a country which does have domestic fossil fuel resources. As this is the Algerian case, the development of solar energy is very much a political decision rather than one of security of supply. Financing risk: Algeria needs to take steps to overcome financing country risk, especially improving access to credit. Business Industry structure: Gas Innovation capacity: For industries whose support factors resources in the country are an innovation requirements are not high, such as advantage for industries such as Support Structure, Structure & Tracker, Storage solar glass. tank, and Solar glass, potential local lack of innovation capability can be overcome through collaboration with technological partners in the short term. Logistical infrastructure: Improving infrastructure would make it easier for investors to develop new industries in the country. Chapter 4 | Attractiveness Assessment | 69 Figure 4.5 | Normalized Attractiveness Indexes for CSP Target Industries in Algeria Compared to MENA Average* 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - er er rro r s vie r lt ks ke r ns ng Mi mp ce sa tan Tra de he Pu Re lar ge Co n ex c So ra e& at sto ctur He Str i Algeria Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. Figure 4.6 | Normalized Attractiveness Indexes for PV Target Industries in Algeria Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - re ss ctu les ls r gla te ria tru du er te lar ts Mo Inv Ma So or TF pp TF Su Algeria Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. 70 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.10 | Impacts and Main Competitors – Algeria Investment Typical Yearly Jobs Industry (US$ mil) Production per Factory Top Companies (Country) Solar glass 80–150 400 t/day Various* • AGC Solar (Belgium) • Guardian (US) • Pilkington (UK) • Saint Gobain Solar (Germany) TF Materials 20 60 MW Various* • 5N Plus Inc. (Canada) • Advanced Technology and Materials (US) • Hitachi Metals (Japan) TF Modules 12 8 MW 30–40 • Best Solar (China) • First Solar (US) • Sharp (Japan) Note: * Depends on the number of types of glass to be produced and the capacity of the entire Float glass line. ** Depends on the number of chemical products or components to be manufactured and the capacity of the entire chemical factory. Having competitive energy costs,51 and with the industries. Top companies in the corresponding backing of political will, Algeria could find it of markets also are shown. particular interest to consider the industries that have higher energy requirements: Solar glass is one of the minor products of Float glass production lines, accounting for only 0.7 percent • Solar glass (35 percent of production costs) of the total average production worldwide. A Float • TF Materials (15 percent of production costs) glass line requires significant investment; its main • TF Modules (10 percent of production costs). consumers are the automotive, construction, and furniture industries[68].52 Additionally, Algeria should consider the possible synergies for solar energy development that TF Materials are produced by chemical industries. could arise with companies already in the country. Setting up a chemical facility only to produce TF However, based on the analysis above, to become materials, which are a small part of the industry a competitive country for solar industry development portfolio, is not advisable. However, existing chemical in the medium and long terms, Algeria needs to industries might be encouraged to diversify their concentrate on improving its access to financing. production toward TF Materials. If any of the MENA countries were to develop a TF Modules production 4.2.2.1 Potential Impact facility within the frame of Regional cooperation and Choosing the right approach to enter new markets demand, feasibility of this alternative would increase. requires knowing the potential to be competitive. Table 4.9, based on Algeria’s key strengths, depicts There are few barriers to create a TF Modules industry the investment, production, and jobs required for although, when scale becomes important, access to a typical factory for the potentially competitive capital could become a limiting factor. The main issue is the current overcapacity in this sector. 51 A low-cost electricity presents a competitive advantage to private investors in energy-intensive industries. However, from the point of view of the country, subsidies to energy consumption introduce tensions in the system because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts[94]. For a country that generates its electricity largely from natural gas, a true price of electricity would need to take into account the LCOE (levelized cost of energy) of a CCGT (Combined Cycle Gas Turbine) plant, estimated at 5$c/kWh, and add to it transportation costs, business margin, and others to arrive at the final number[93]. 52 As of 2007, the Float glass market reached 44 million tons, worth 21 billion ¤ before additional processing (laminating, tempering, coating), and up to 60 billion ¤ after processing [68]. Chapter 4 | Attractiveness Assessment | 71 4.3 Egypt 4.3.1 EGYPT’S KEY STRENGTHS 202054 renders a remarkable Component demand. AND WEAKNESSES Its lower financial risk, measured as higher access to credit, in comparison with other MENA countries From the point of view of solar industrial development, should also be noted. Egypt’s key strengths are in the Overarching category of Production factors: low cost of labor market The following analysis was based on Egypt’s and low cost of energy for industrial consumers53; background and historical data. The underlying availability of material for solar industries, particularly assumption for this choice is that Egypt will regain glass, steel, and stainless steel; and a high its political, social, and economic stability (necessary manufacturing ability. Its planned CSP deployment to conditions for any investment). Figure 4.7 | Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages Labor market Logistical infrastructure 1.00 Material availability 0.80 0.60 Innovation capacity Relevant manufact. ability 0.40 0.20 Industry structure Cost of energy - (industrial) Financial risk Fiscal and financial costs Risk associated with Component demand demand Risk associated with doing business Production Egypt Demand Benchmark country Average Risk and Stability MENA country Average Business Support Source: STA/Accenture. 53 A low cost of electricity presents a competitive advantage for private investors in energy-intensive industries. However, from the point of view of the country, subsidies to energy consumption introduce tensions in the system because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts[94]. Although energy cost for industrial consumers is still low in Egypt, the cost has risen substantially over the past year and is expected to keep increasing because national subsidies to fossil fuels have been reduced. 54 The intermediate objective of the Egyptian solar plan, as communicated by the Ministry of Electricity and Energy, is 1100 MW for CSP and 200 MW for PV. 72 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.8 | Normalized Attractiveness Indexes for CSP and PV Technologies in Egypt Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 CSP Industries 0.5 0.4 0.3 0.2 0.1 - ne ks er r s oil ps lt r tor r r ive ge se mp rro sa rak rbi tan um al era en an ce Mi tu lar Pu rm &T FP e Re nd ch en So am rsg he re ex Co lg HT FT tu Ste Sto ica at uc HT He ctr Str Ele Egypt Average MENA Average Benchmark Egypt 1.0 0.9 0.8 0.7 0.6 PV Industries 0.5 0.4 0.3 0.2 0.1 - lls s -Si n ss ls s er re Ce fer c ilico gla ria ule ert ctu Wa les lys lar ate od Inv Stru ots o du Po So F M TF M or t Ing M T pp Su Egypt Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. The key aspect to improve are the Fiscal and Structure for PV (Figure 4.8, highlighted in yellow) financial costs. Due to its high interest rates and low emerge as the clearest industries for development ranking, and as indicated in the World Bank’s Paying in Egypt due to their higher overall competitiveness Taxes ranking, Egypt has a competitive gap when in comparison to the other MENA countries. These compared to not only the Benchmark countries but two solar industries share a common basis in steel also the MENA countries. manufacturing and handling, so developing one of these industries will in part develop the other. 4.3.2 POTENTIALLY COMPETITIVE However, while Egypt has a greater competitive INDUSTRIES advantage with these two solar industries, these industries also are likely to develop in other MENA In the short term, both the Structure & Tracker industry countries. for CSP (Figure 4.5, highlighted in red) and Support Chapter 4 | Attractiveness Assessment | 73 Table 4.11 | Egypt’s Key Strengths and Competitive Gap Weaknesses Analysis Key Strengths Competitive Gap Weaknesses Production Labor market: Low wages are Relevant manufacturing ability: Based on factors attractive, especially for industries current industrial capability, further capacity whose labor costs represent a high building for glass and pressure vessels percentage of production costs. As could increase Egypt’s competitive edge an example, the labor cost in the through training or alliances with technology Structure & Tracker industry represents providers[69]. 35% of the total production costs. Fiscal and financial cost: Egypt has previous Material availability: Some key materials experiences with implementing fiscal are produced in the country, such as incentives for other industries.* These steel and Float glass. experiences could be replicated to drive the development of solar component industries. Cost of energy: For some industries, such as Polysilicon and Ingots/ Wafers, energy costs are significant, representing almost one-third of the production costs. Nevertheless, no encouragement for energy- intensive industries is forecasted. On the contrary, energy costs are to be increased toward international prices. Demand CSP and PV component demand: CSP and PV component demand: Although factors Recently announced ambitious CSP targets are ambitious, domestic targets domestic goals for solar installed goals for PV solar installed capacity are not. capacity in CSP could prove an However, the expected electricity demand important driver for the development growth, current shortage, and the abundant of associated industries. solar resource support the rationale for solar promotion policies. Risk and Risk associated with demand: While Risk associated with doing business: Egypt is stability the earlier projected solar capacity still going through a political transition. Once factors for CSP (100 megawatt, or MW) it is complete, reduction in risk may occur. and PV (20 MW) in Egypt by 2020 Risk associated with demand: Egypt’s is not enough to develop any solar electricity sector is essentially a monopoly. industry, the recently announced new Thus, it is particularly important to give intermediate targets within the 2030 visibility to the pipeline to reduce the risk plan are promising. associated with demand for utility scale projects. In addition, efforts to promote the visibility of private (power purchase agreement, or PPA) and self-consumption projects pipelines are relevant (a solar cluster or governmental body could take on this role). Financial risk: Particularly in the case of medium-to-large investment projects, such as the development of the Mirror industry (investment needed is on the order of US$40 million). (Continued) 74 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.11 | Continued Key Strengths Competitive Gap Weaknesses Business Industry structure: There are large Industry structure: No local clustering in the support international industrial companies in country, although at least one attempt in the factors Egypt, of which some (Saint Gobain) glass manufacturing sector is in progress. are associated with CSP components. Innovation capacity: For industries whose innovation requirements are not high, such as Support Structure, Structure & Tracker, and Storage tank industries, potential local lack of innovation capability can be overcome through collaboration with technological partners in the short-term. Nevertheless, Egypt hosts good Universities and research centers that, with appropriate incentives, could lead the way. Logistical infrastructure: The identification of suitable sites, to cluster manufacturing capability for the different solar component industries, could reduce this gap. Source: STA/Accenture Note: *As an example, poultry breeding companies have been exempted from corporate tax for 10 consecutive years, beginning the year after the company commences production. Figure 4.9 | Normalized Attractiveness Indexes for CSP Target Industries in Egypt Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - se r er r s r lt ks er en ng rro mp ive sa an ck d ha Mi Pu ece lar et Tra Co n ex c R So rag re & at Sto tu He Str u Egypt Avreage MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. The development of metal fabrication industries, The Mirror industry presents a highly valuable particularly Heat exchanger and Storage tanks opportunity for Egypt. The Solar glass and Mirror (highlighted in red), also may also be of particular industries require a high investment, but considering interest in the short and medium terms due to the Egypt’s high Attractiveness index in access to existing capacity in the country. financing and taking into account that Float Chapter 4 | Attractiveness Assessment | 75 Figure 4.10 | Normalized Attractiveness Indexes for PV Target Industries in Egypt Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - re ss s ter le tu ial du gla er uc ter Inv Mo Str lar Ma TF So t TF or pp Su Egypt Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. glass is already manufactured in the country, the conventional CSP industries (Heat exchanger, Storage development of these industries could be prioritized. tanks) in the short and medium terms. Solar glass and Besides, hosting an ISCC plant55 has given Egypt Mirror development are additional opportunities to be valuable insights into the development, construction, implemented in the medium term, with a strategy to and operation of this type of plant. This experience take advantage of Regional synergies. may be put to valuable use as the sector develops in the Region. 4.3.2.1 Potential Impact Choosing the right approach to enter new markets Finally, new reflective materials56 are emerging in the requires knowing the potential impact associated with market that Egypt could explore as both a threat and these industries. Table 4.12 depicts the investment, an opportunity. production, and jobs required in a typical factory for the selected industries to be developed in Egypt. Top Figure 4.9 and Figure 4.10 show the normalized companies in the corresponding markets also are Attractiveness index of Egypt for the CSP and shown. PV selected industries, compared to the MENA countries’ average. Egypt has some entry barriers to the Mirror industry, such as developing a complex manufacturing line and Based on the analysis above, Egypt should focus highly skilled workforce requirements to run the line. on developing the Structure & Tracker industry for In addition, the industry is capital intensive, so not CSP and the Support Structure industry for PV,57 many new companies are able to enter this market. and to consider opportunities to improve some of the However, there is already Float glass manufacturing 55 Kuraymat ISCC is a 120-MWe combined cycle hybridized with a 20 MWe equivalent solar field. It started operation in June 2011 [9]. 56 All-aluminum and multilayer aluminum reflectors[6], as well as reflective films ([7], [8]) are entering the market. However, despite having advantages compared with conventional glass Mirrors (light weight, no thermal shock, lower expected price), they have disadvantages as well (durability concerns) and a scant or no track record. 57 Detailed in Case Studies. 76 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.12 | Impacts and Main Competitors: Egypt Investment Typical Yearly Jobs per Industry (US$ mil) Production Factory Top Companies (Country) Mirrors 39 2,000,000 m2 125–250 • 3M (US) • Alanod Solar (Germany) • Flabeg Gmbh (Germany) • Glasstech Inc. (US) • Glaston (Finland) • Guardian Ind. (US) • Pilkington (Japan) • Rioglass Solar (Spain) • Saint-Gobain (France) Structure 10 70 MW 40–65 • Sener (Spain) • Siemens (Germany) • Mecasolar (Spain) Heat exchanger Various Adaptable Various • Aitesa (Spain) • GEA (Germany) • Alfa Laval (Sweden) Storage tanks • Taco Inc, (US) • Flagsol (Germany) • Sleegers Engineered (Sweden) Note: * Structure can be developed for CSP (Structure & Tracker) and PV (Support Structure) technologies. ** Depends on the number of products to be manufactured and the capacity of the factory. in the country, and its presence gives a head start to of cheap steel. The lack of related industries in the this development. country (conventional metal fabrication industries, especially heat recovery systems and pressure The main barrier to the creation of a Structure & Tracker vessels) is one of the main entry barriers for the Heat or Support Structure industry could be the availability exchanger and Storage tanks industries. 4.4 Jordan 4.4.1 JORDAN’S KEY STRENGTHS with high risks associated with demand, could pose AND WEAKNESSES drawbacks to new industrial developments. Jordan’s key strengths for solar industry development 4.4.2 POTENTIALLY COMPETITIVE are fiscal and financial costs,58 low risk associated INDUSTRIES with doing business, and Innovation capacity as indicated by the levels of higher education in the Jordan’s high dependency on fossil fuels makes the country. development of renewable energies of particular interest to the government. The country already On the other hand, a weak Industry structure and has a renewable energy target, expected to result high cost of energy for industrial purposes, combined in 600 MW of solar energy in 2020. In practice, this target is being implemented at the institutional level.59 58 As defined by the Paying Taxes indicator of the World Bank’s Ease of Doing Business Report [41]. 59 Jordan’s Ministry of Energy and Mineral Resources (MEMR) launched the first round of unsolicited proposals in May 2011. Thirty-four applications qualified: 12 wind projects, 15 solar photovoltaic projects, 2 concentrating solar photovoltaic projects, and 5 solar thermal projects. Two wind projects and 12 solar photovoltaic projects were approved [95]. The aggregate capacity of the 2 wind projects is approximately 200 megawatts; the aggregate capacity of the 12 solar photovoltaic projects is the same. In May 2013, MEMR received proposals for each of the approved projects. Formal project awards are pending, and MEMR is hosting clarification meetings with a number of bidders. Chapter 4 | Attractiveness Assessment | 77 Figure 4.11 | Competitiveness Parameters in Jordan Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Jordan Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. There are options to ensure a high local supply share, indicate promising potential. If the political will exists, which may vary depending on the project.60 In the some local promising private projects and niche long term, however, due to the size of the country, applications could be supported. Moreover, within domestic demand for CSP and PV components alone the frame of Regional cooperation, some activities is not likely to be enough to foster the development related to solar energy industry development could of a solar industry in Jordan rather than in another be set up in Jordan (for example, a Certification and MENA country. Testing Institute, as discussed in Box 4.1). Solar industry development in Jordan does not have Figure 4.11 and Figure 4.12 show the normalized clear drivers. Nevertheless, compared with other Attractiveness index of Jordan for the CSP and PV MENA countries, Jordan’s innovation capacity,61 selected industries compared to the MENA countries’ high education rates, and labor market efficiency62 average. 60 For example, the US-based company supplying solar steam boilers to the planned 100MW CSP project in Ma’an, is expected to install an advanced manufacturing facility in Jordan to supply the JOAN1 project with its solar steam boilers. 61 Measured in terms of patent filings per million population and Innovation, Business sophistication, and Technological readiness scores in the Global Competitiveness Report (Benchmarking Analysis Results). 62 Literacy rates above 90% (Source: UNDP Report 2011 [36]); labor market efficiency rate of 3.97 compared to US rate of 5.57 (Source: WEF[90]). 78 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.12 | Normalized Attractiveness Indexes for CSP and PV Technologies in Jordan Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 CSP Industries 0.5 0.4 0.3 0.2 0.1 - ker ser or lt er ps il ror s ver e ks sa al O mp bin rat ng rac um an en Mir cei lar ne tur Pu ha rm et &T nd FP Re So l ge exc rag he Co am HT ure FT ica Sto Ste at uct HT He ctr Str Ele Jordan Jordan Average MENA Average Benchmark 1.0 0.9 0.8 0.7 0.6 PV Industries 0.5 0.4 0.3 0.2 0.1 - lls ls les s er re -Si n ss fer ia ico ert Ce ctu gla c du ter Wa les Inv il Mo tru lys lar Ma ots du So tS Po TF TF Mo Ing or pp Su Jordan Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. 4.4.2.1 Potential Impact industry, it also requires a business model and a Due to the country’s comparatively high innovation market analysis. Table 4.14 depicts the investment, capacity, Jordan could lead the development of a production, and jobs required in a typical factory for certification and testing institute, which could be an the selected industries to be developed in Jordan. asset to the entire MENA Region.63 Even though a Top companies in the corresponding markets also certification and testing institute is not a component are shown. 63 This is not to say that other MENA countries could not develop a certification and testing institute themselves. However, as discussed in the individual country details, these countries also could have other priorities in terms of solar component industry development. Thus, the certification and testing institute could be an opportunity for Jordan to capitalize on and to promote Regional collaboration. Chapter 4 | Attractiveness Assessment | 79 Table 4.13 | Jordan’s Key Strengths and Competitive Gap Weaknesses Analysis Key Strengths Competitive Gap Weaknesses Production Labor market: Both the labor Material availability: Access to raw materials and factors market efficiency and wages are components is essential for the development of strengths from an investor’s point solar industries. of view. Relevant manufacturing ability: Jordan’s score for Fiscal and financing cost: The cost this Competitiveness parameter is slightly lower of taxes borne by a company and than the MENA average because Jordan currently the administrative burden of tax has no important presence of synergic industries. compliance for firms are at a level Cost of energy: The cost of energy for industrial similar to the best- positioned consumers is relatively expensive when compared Benchmark countries.1 to the other analyzed MENA and Benchmark countries. Demand CSP and PV component demand: Jordan has a low factors CSP and PV Component demand parameter. Risk and Risk associated with doing business: Several of stability Jordan’s neighboring countries are still going factors through a political transition, which puts Jordan in the middle of an unstable environment. Risk associated with demand: Jordan has an oligopoly of power generation2 through concession areas. Financial risk: Access to financing needs to be improved even for small and medium investments. Business Innovation capacity: Innovation Industry structure: Although there is strong support is one of Jordan’s strengths. The presence of large international industrial companies, factors country ranks 3rd among the Arab no local cluster in related sectors has been League in the Global Innovation identified. Index 2011 [70]. Note: 1 As per data extracted from the International Finance Corporation-World Bank (IFC-WB) Paying Taxes Rank. 2 Renewable energy plants typically are small or medium-sized, especially when PV technology is used. These sizes enable small and medium enterprises (SMEs) to participate as independent power producers (IPPs), greatly increasing the development of the sector. An oligopoly of power generators could thwart this development, unless some kind of obligation to buy energy from IPPs is imposed on the companies belonging to the oligopoly. The effect of an oligopoly blocking the entrance of IPPs has never been seenbecause it is not possible to detect something that is not happening, and the oligopolic companies do not openly oppose the IPPs. Box 4.1 | Certification and Testing Institute in Jordan The services that could be covered by the Certification and Testing Institute are: • Qualification, certification, and co-OEM (Original Equipment Manufacturer) certification • Measurement of performance under standard test conditions (STC) and specific ambient conditions • Individual testing and random sample measurements of Solar Modules • Testing for special conditions, for example, for ammonium or transport loads • Prototype testing for development projects • Benchmarking of Photovoltaic Modules • Yield measurements, specifically energy yield • Long-term testing of open-air weathering in different climate zones • Assessment of light-aging in Thin-Film Modules • Application of analytical methods, including thermograph and electroluminescence. Source: STA/Accenture. 80 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.13 | Normalized Attractiveness Indexes for CSP Target Industries in Jordan Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - ks er lt r er r s r ive se rro sa ck mp n ng ta en Tra Mi ce lar Pu a ge nd ch Re So & ora ex Co re St ctu at He ru St Jordan Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. Figure 4.14 | Normalized Attractiveness Indexes for PV Target Industries in Jordan Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - e ss ls les er tur ia ert gla du ter uc Inv Mo lar Str Ma So TF ort TF pp Su Jordan Average MENA Average Benchmark Source: STA/Accenture. Table 4.14 | Impacts and Main Competitors: Jordan Investment Typical Yearly Jobs per Top Companies Industry (US$ mil) Production Factory (Country) Certification and 1–15 Not applicable 5–30 • NREL (US) testing institute • DLR (Germany) • CIEMAT (Spain) Chapter 4 | Attractiveness Assessment | 81 4.5 Morocco 4.5.1 MOROCCO’S KEY STRENGTHS The main aspects for Morocco to improve are the AND WEAKNESSES Cost of energy for industrial purposes and the availability of Materials, as well as Innovation capacity Morocco’s key strengths for solar industry and Logistical infrastructure. Based on the analysis development are its planned demand (CSP and performed,65 for the short term, Morocco could focus PV) for 2020, the government’s commitment and on developing the Structure & Tracker industry for support,64 and the structure of companies in the CSP and the Support Structure industry for PV. In the country. The third includes the presence of large medium term, Morocco could consider opportunities international companies alongside specific local to improve some of the conventional CSP industries clustering. This clustering is particularly important (Condenser, Pumps). TF Modules development is for small and medium enterprises (SMEs), which another opportunity to be implemented if current otherwise might not be able to share and benefit world overcapacity were to decrease. These from new ideas and projects. opportunities will increase if Morocco follows a Figure 4.15 | Competitiveness Parameters in Morocco Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing Production business Morocco Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. 64 The Moroccan Agency for Solar Energy (MASEN) is a Joint Stock company with a Board of Trustees and a Supervisory Board. MASEN aims at implementing a program to develop integrated electricity production projects from solar energy with a minimum total capacity of 2000 MW in the areas of Morocco that are capable of hosting the plants to do so[91]. 65 Morocco has a similar Attractiveness index for the Mirror industry. However, the lack of local Float glass production has been considered a handicap that makes this industry less advisable because common practice is to avoid road transportation of glass products farther than 600 km [88]. 82 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.16 | Normalized Attractiveness Indexes for CSP and PV Technologies in Morocco Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 CSP Industries 0.4 0.3 0.2 0.1 - se r to r ge r ps Oil rro r mp s ive r sa lt bin e nk s ke r en era an um al Mi ce ta rac d n h P r m Pu e lar tu r e T Co n lg e xc F e R So m g & te HT Th ea ora re tr ica ea H TF St St c tu c H ru Ele St Morocco Morocco Average MENA Average Benchmark 1.0 0.9 0.8 0.7 0.6 0.5 PV Industries 0.4 0.3 0.2 0.1 - re rs ter lls -Si n ss ls les afe ico ctu ia Ce gla c er ter du les il sW Inv tru lys lar Mo Ma du tS ot Po So Mo TF TF Ing or pp Su Morocco Average MENA Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. strategy to take advantage of Regional synergies, emerge as the clearest industries for development in that is, collaboration with Algeria on TF Material Morocco. The reason is their higher Attractiveness manufacturing and demand aggregation. index in comparison to the other industries in the country. Although Morocco has a competitive 4.5.2 POTENTIALLY COMPETITIVE advantage, these industries typically offer high INDUSTRIES local content. In addition, they are among the first industries to be developed once projects arise. In the short term, both the Structure & Tracker industry Thus, there could be competition from countries, for CSP (Figure 4.13, highlighted in red) and Support such as Egypt, that are pursuing the local project Structure for PV (Figure 4.14, highlighted in yellow) pipeline. Chapter 4 | Attractiveness Assessment | 83 Table 4.15 | Morocco’s Key Strengths and Competitive Gap Weaknesses Analysis Key Strengths Competitive Gap Weaknesses Production Fiscal and financial cost: Labor market: Morocco stands below selected MENA and factors According to the data Benchmark average values for this parameter because its extracted from the World Labor market efficiency is low.* The weight of this factor is Bank [58], the lending high for technologically complex components. interest rate in Morocco’s Material availability: Each industry must implement a specific financial market is the plan to obtain the raw materials and composites needed lowest among selected because materials such as flat glass, stainless steel, and MENA countries. silicon are not available locally. Relevant manufacturing ability: Morocco still has lower literacy rates than neighboring countries. This parameter should be improved to ensure future capability in industrial sectors such as the solar sector. Cost of energy: Morocco’s energy supply depends largely on imports (fossil fuels and electricity). On one hand, this is a compelling reason to develop solar energy, which can also drive industry development. However, having to import fuels and electricity initially thwarts industrial growth if the energy available for purchase is cheaper than what can be produced through solar energy. Demand CSP and PV component factors demand: Morocco has an ambitious target for solar energy development (2,000 MW for 2020) that could attract foreign and local investors. Risk and Risk associated with Risk associated with demand: There are no clear incentives stability doing business: In the for solar projects. To date, the national target has not been factors last 4 years, Morocco’s clearly divided between CSP and PV. annual real GDP growth Financing risk: Some solar industries require a significant has risen from 3.7% to amount of investment to start up. Strengthening the legal 6.0%. This increase could rights of borrowers and lenders would narrow Morocco’s boost growth and job existing gap with Benchmark countries and make the creation[71]. country a more attractive investment destination. Business Industry structure: Innovation capacity: For industries whose innovation support Strong presence of large requirements are not high,** potential local lack factors international industrial of innovation capability can be overcome through companies. collaboration-partnerships with technology providers. For other industries for which technological barriers are higher,*direct ownership of one of the technology leaders would be more reasonable. Logistical infrastructure: The identification of suitable sites in which to cluster manufacturing capability for the various solar component industries could reduce the existing gap in the Logistical infrastructure Competitiveness parameter. Source: STA/Accenture. Note: * Labor market efficiency is measured by the 7th pillar of the Global Competitiveness Index. The index reflects the efficiency and flexibility of the labor market, which are critical for ensuring that workers are allocated to their most efficient use in the economy. Labor market efficiency is composed of flexibility and efficient use of talent [25]. ** Those for which the weight of the Competitiveness parameter, “Innovation capacity,” is not outstanding. These include, for CSP, Structure & Tracker, Heat exchanger, and Storage tanks. For PV, they include TF and c-Si Modules, Support structure, Solar glass, and Inverter 84 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.17 | Normalized Attractiveness Indexes for CSP Target Industries in Morocco Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - r r r s r lt ks er ge ive se rro mp sa ck an en an Mi ce Tra lar Pu et nd ch Re So rag & ex Co e Sto at tur He uc Str Morocco Average MENA Average Benchmark Source: STA/Accenture. Figure 4.18 | Normalized Attractiveness Indexes for PV Target Industries in Morocco Compared to MENA Average 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - ss s les er e ial tur ert gla du ter uc Inv Mo lar Ma Str So TF TF ort pp Su Morocco Average Mena Average Benchmark Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. For CSP, the development of conventional industries Morocco’s score for the TF (Thin Film) Modules such as Condenser and Pumps (highlighted in red) manufacturing industry is slightly higher than the may be of particular interest in the country in the MENA average, and international experience medium term. shows that domestic demand is highly relevant for Chapter 4 | Attractiveness Assessment | 85 Box 4.2 | Success Story: CSP Industry Development in Spain Box Figure 1 | CSP Installed Capacity in Spain, 2007–11 MW 1,200 1049 800 532 400 232 61 11 0 2007 2008 2009 2010 2011 Source: [72]. Spain’s decision to invest in solar energy, specifically solar power, comes largely from its geographic location and high dependency on fossil fuel imports. Because Spain’s local energy supply is lower than the EU (European Union) average, it imports close to 80% of its fuel. At the same time, Spain must meet the EU 20/20/20 commitments, which include a 20% reduction in GHG (greenhouse gases) emissions, 20% renewable energy, and a 20% reduction in primary energy consumption. To meet these targets, Spain set a national objective of almost 35 GW (gigawatts) of wind power and 11.5 GW of solar power, to be achieved by 2020. Spain’s feed-in tariff (FIT) legislation provided the necessary incentive to encourage the growth and development of the CSP Industry. When Royal Decree (RD) 841 was introduced in 2002, Spain became the first country in the world to introduce a FIT for solar thermal power. This legislation was further developed by RD 436 in 2004 and RD 661 in 2007, which increased the FIT rate again; and also the CSP target of 500 MW by 2010.* Besides the favorable regulatory framework, other factors have combined to explain the Spain’s leadership in CSP: • Continuous support for research and technological development since the late 1970s • Receptiveness of Spanish companies, which could rely on highly trained human resources and commit to investments financed mostly by “Project Finance” in commercial terms. The total contribution of the sector to GDP in 2010 was ¤ 1650 million, of which 89.3% corresponded to construction activities, manufacturing of equipment and components, and exports, while the rest corresponded to plant operations. If the necessary support suffices to achieve the penetration rate settled in the draft Renewable Energies Plan (PER) 2011–2020, the contribution to GDP could more than double to ¤ 3,517 million in 2020. The total number of people employed by the sector in 2010 was 23,844. In addition, the production of solar thermal energy in Spain avoided importing roughly 140,000 tons of oil. Furthermore, the success of the sector in Spain is not limited to the construction of plants for renewable electricity generation. CSP has an important component of technological leadership and innovation that has developed in parallel. The sector’s effort in R&D represents 2.67% of its contribution to GDP. This figure is twice the average for Spain and is higher than the overall rates in countries that include Germany and the US. The sustained R&D effort combined with FIT and proper industry environment has boosted CSP industry and technology in Spain. FIT, which was a key element to make possible the construction of solar power plants in the country, has a cost that was not passed through completely to end users but was turned into public debt. Contention about the public debt has led to the removal of FIT in Spain for new power plants. FIT was useful to gain momentum, but, if the industry is to continue, cost reduction is necessary. Source: STA/Accenture. Note: *RD 1614/2010, published on December 7, 2010, and additional regulations since have made the environment for investors and developers take a turn for the worse. 86 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 4.16 | Impacts and Main Competitors: Morocco Investment Typical Yearly Jobs per Industry (US$ mil) Production Factory Top Companies (Country) Structure* 10 70 MW 40–65 • Sener (Spain) • Siemens (Germany) • Mecasolar (Spain) Pumps Various Adaptable Various** • Alstom (France) • ABB (US) • GE Power (US) • Kraftanlagen Munchen (Germany) • MAN Turbo (Germany) • KSB (Germany) TF Modules 12 8 MW 30–40 • Best Solar (China) • First Solar (US) • Sharp (Japan) Source: STA/Accenture. Note: * Structure can be developed for CSP (Structure & Tracker) and PV (Support Structure) technologies. ** Depends on the capacity of the factory. the development of a solar industry.66 Based on 4.5.2.1 Potential Impact Morocco’s solar target, the development of Thin Choosing the right approach to enter a new market Film Modules may be of interest to the country.67 requires knowing the potential impact associated with In the medium term, once the module industry these industries. Table 4.16 depicts the investment, has been established, the Materials industry for TF production, and jobs required in a typical factory for Modules also may be developed. Nevertheless, in the selected industries to be developed in Morocco. the short term, the current PV overcapacity does not Top companies in their corresponding markets also encourage any investment in any country. are shown. Figure 4.17 and Figure 4.18 show the normalized There are few barriers to establishing a TF Modules Attractiveness index of Morocco for the CSP and PV industry although, when scale becomes important, selected industries compared to the MENA countries’ access to capital could become a limiting factor. average. The lack of related industries in the country In addition, regarding PV, and based on the analysis (conventional industry involving pumping and fluid performed, Morocco has several opportunities in the handling) is one of the main entry barriers to the short and medium terms. The recommendation is to Pumps industry. focus on developing the Structure & Tracker industry for CSP and the Support Structure industry for PV, The TF Modules industry requires significant capital and to consider opportunities to improve some of the investment and energy supply to carry out the conventional CSP industries (Condenser, Pumps). TF manufacturing processes. To compete with the rest Modules development is another opportunity to be of players, Morocco needs to exploit economies of implemented in the medium term, using a strategy scale. that will leverage Regional synergies. 66 See Success story: CSP industry development in Spain (Box 4.2). 67 For details regarding the reason that TF is proposed as an alternative rather than Crystalline, see section 2.2,Photovoltaic (PV) Technology. TF is more modular and needs less initial investment than Crystalline technologies. Chapter 4 | Attractiveness Assessment | 87 4.6 Tunisia 4.6.1 TUNISIA’S KEY STRENGTHS Availability and Relevant manufacturing ability, AND WEAKNESSES could impede new industrial developments. In the short term, because Tunisia ranks above the MENA Tunisia has a significant advantage due to its average, both the Receiver industry for CSP and geographic location in the MENA Region. Geography, the Materials industry for PV TF may be of particular together with the country’s other strengths, makes interest for development in the country. However, Tunisia a possible Regional hub for the development Tunisia is still far from the Benchmark countries’ of certain solar industry components. The country’s attractiveness, so special incentives and a strong keys strengths are level of education, business political will are required to achieve its development. sophistication, and a better-than-average logistical infrastructure and logistics performance index 4.6.2 POTENTIALLY COMPETITIVE compared to the selected MENA countries’ average. INDUSTRIES A weak Industry structure and high Cost of energy In the medium term, both the Receiver industry68 for for industrial purposes, combined with low Material CSP (highlighted in red) and the Materials industry Figure 4.19 | Competitiveness Parameters in Tunisia Compared to Benchmark and MENA Averages Labor market 1.00 Logistical infrastructure Material availability 0.80 0.60 Innovation capacity Relevant manufacturing ability 0.40 0.20 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Tunisia Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. 68 Provided there is enough market in the Region, the Receiver industry could be set up based on direct investment by one of the companies already manufacturing Receivers. However, even though Tunisia has some advantage, the industry could be set up in any of the other selected MENA countries as well. 88 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.20 | Normalized Attractiveness Indexes for CSP and PV Technologies in Tunisia Compared to MENA Average* 1.0 0.9 0.8 0.7 0.6 CSP Industries 0.5 0.4 0.3 0.2 0.1 - er or er ps Oil rro r mp s ive r sa lt bin e nk s ke r ns rat ng um al Mi ce ta rac de ne ha P r m Pu Re lar tu r e T Co n lg e xc F he So m g & ca te HT FT ea ora re tri Hea HT St St ctu c r u Ele St Tunisia Tunisia Average MENA Average Benchmark 1.0 0.9 0.8 0.7 0.6 0.5 PV Industries 0.4 0.3 0.2 0.1 - lls e -Si n ss ls les er s tur fer ico ia Ce ert gla c du ter uc Wa les il Inv lys Mo lar Str Ma du ots Po So TF ort Mo TF Ing pp Su Tunisia Average MENA Average Benchmark Source: STA/Accenture. Note: *The range covered by Benchmark countries is shaded. for PV TF (highlighted in yellow) may be of particular Conductive Oxide) and to adapt its chemical interest for development in Tunisia because it ranks industry for the development of TF Materials in the above the selected MENA Attractiveness index medium term. average. Figure 4.21 and Figure 4.22 show the normalized Tunisia’s chemical industry is dominated by Attractiveness index of Tunisia for the CSP and PV fertilizers, its second largest export earnings selected industries, compared to the selected MENA source. Tunisia has the potential to sign agreements countries’ average. with suppliers of silane gas and TCO (Transparent Chapter 4 | Attractiveness Assessment | 89 Table 4.17 | Tunisia’s Key Strengths and Competitive Gap Weaknesses Analysis Key Strengths Competitive Gap Weaknesses Production Labor market: Both wages and Material availability: Except for steel, Tunisia factors labor market efficiency fall in the does not have local access to the raw materials middle between those of MENA and components essential for the development and Benchmark countries. of solar industries. Fiscal and financing cost: Relevant manufacturing ability: With the According to the data extracted exception of the cement industry, Tunisia lacks from IFC-WB (International the presence of synergic industries. Finance Corporation-World Bank), Cost of energy: Energy cost is higher than the cost of taxes borne by a the selected MENA average but remains company and its administrative competitive in comparison with the Benchmark burden of tax compliance are countries. at similar level as in the United States. Lending interest rate is between those of the United States and China ([58]).* Demand factors CSP and PV component demand: CSP and PV component demand: Tunisia’s Tunisia is strategically located to potential CSP and PV domestic component distribute solar components to demand is not as high as that of other MENA Europe and other MENA countries, countries. so the external component demand is positive. Risk and Risk associated with doing Risk associated with demand: Tunisia is still stability factors business: Tunisia is well positioned going through a political transition, which in the Doing Business rankings at a should be consolidated in the short and level similar to Chile or Spain. medium terms to guarantee political stability. There is a de facto monopoly of power generation.** Financing risk: Tunisia’s access to financing rates shows that it has a possibility to finance industries that do not require capital over US$50 million. However, there may be a risk for medium-to-large investment projects. Business Innovation capacity: Tunisia has Industry structure: Although there is strong support factors levels of innovation similar to presence of large international industrial those of India,*** and could reach companies, no local cluster has been identified higher levels if appropriate efforts in the area of solar energy. were made. Logistical infrastructure: Tunisia is well positioned in infrastructure quality. However, improvements in infrastructure could strengthen its opportunity to become a solar component exporter. Note: * See Paying taxes rank and Lending interest rate for these countries. ** Société Tunisienne de l’Electricité et du Gaz (STEG) generates 70%–75% of Tunisia’s energy. Several cement industries produce power for their own needs and send the surplus to the grid. As of 2009, only 2 independent power producers (IPPs) were operating, generating less than 550 MW combined (approximately 12% of the available capacity). Renewable energy plants typically are small or medium sized, especially when PV technology is used. Their size enables SMEs to participate as IPPs, greatly increasing the development of the sector. A monopoly or oligopoly of power generators could thwart this development unless some kind of obligation to buy energy from IPPs was imposed on the companies belonging to the oligopoly. *** For details, see Benchmark analysis summary results, section 4.1. 90 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 4.21 | Normalized Attractiveness Indexes for CSP Target Industries in Tunisia Compared to MENA Average* 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - r r r s r er ge ive se rro ks lt mp ck sa en an an Mi ce Tra Pu lar nd ch et Re & So ex Co rag e at tur Sto He uc Str Tunisia Average MENA Average Benchmark Source: STA/Accenture. Note: * The range covered by Benchmark countries is shaded. Figure 4.22 | Normalized Attractiveness Indexes for PV Target Industries in Tunisia Compared to MENA Average* 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 - ss s les ter re ial ctu gla er du ter Inv tru Mo lar Ma tS So TF TF or pp Su Tunisia Average MENA Average Benchmark Source: STA/Accenture. Note: * The range covered by Benchmark countries is shaded. Based on the analysis in Figure 4.21 and Figure 4.22, market alone. However, Tunisia is still far from the both selected industries could become successful Benchmark countries’ attractiveness, so special if  carried out within a MENA Regional scenario incentives and a strong political will are required to rather than being focused on Tunisia’s domestic achieve its development. Chapter 4 | Attractiveness Assessment | 91 Table 4.18 | Impacts and Main Competitors: Tunisia Investment Typical Yearly Jobs per Industry (US$ mil) Production Factory Top Companies (Country) Receiver US$10 mil 70 MW 40–65 • Schott (Germany) • Siemens (Germany) TF Materials US$20 mil 60 MW Various* • 5N Plus Inc. (Canada) • Hitachi Metals (Japan) • Advanced Technology and Materials (US) Note: * Most TF Materials are byproducts of mineral ore processing and recovery industries. Thus, the number of jobs depends on the number of chemical products or components to be manufactured and the capacity of the whole chemical factory so cannot be divided exactly. 4.6.2.1 Potential Impact strong partnership with technology leaders or direct Choosing the right approach to enter new markets investment by them would be needed. Another requires knowing the potential impact associated with drawback is that Tunisia has a limited capacity to these industries. Table 4.18 depicts the investment, produce steel (only 285 kt per year) [73]. production, and jobs required in a typical factory for the selected industries to be developed in Tunisia. TF Materials are produced by chemical industries.97 Top companies in the corresponding markets also Setting up a chemical facility to produce only TF are shown. Materials, which are a small part of the industry portfolio, is not advisable. However, existing chemical There are technical barriers for Receiver industry, industries could be encouraged to diversify their namely, the specialized coating process needed production toward TF Materials, mainly if Regional that requires very high accuracy, and glass to demand and cooperation picks up due to local TF metal welding. Track record also is necessary, thus manufacturing.h 92 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 5 CHAPTER FIVE: Strategic Recommendations and Proposed Actions 5.1 Introduction This section presents country-level recommendations independent groups of CSP industries (Figure  3.4), for the development of specific solar industries and the Thin Film and shared PV industries (Figure 3.5). in the five selected MENA countries based on the result of the Benchmark analysis and the Figure 5.1 represents the main axes to be developed additional complementary analyses carried out on in an industrial development plan. They are similar the individual solar industries. A series of strategic for each country, and analogous to those followed recommendations for bridging gaps and overcoming for the Regional development plan recommended in barriers is presented for each country. chapter 5.7, Recommendations for MENA Regional cooperation. The industries recommended for development in the selected MENA countries are the conventional and 5.2 Algeria The high-level recommendations described above 5.2.1 GAPS ANALYSIS crystallize in a series of strategies that needs to be implemented to successfully develop Algeria’s Gaps were found when linking the Competitiveness different solar component industries. These strategies parameters to the five axes of the industrial plan in represent the main axes for the country’s industrial the current Algerian business environment. The most development plan (Figure 5.1). important gaps to be covered to bring the Algerian Attractiveness index for Solar glass industry closer to The following gaps analysis and derived that of the United States (the best-scored Benchmark recommendations have been focused on the Solar country) are depicted in Figure 5.2. glass industry because the pre-existing Float glass production provides a good starting point. However, The main gaps to develop the Solar glass industry in the overall attractiveness of Algeria remains low Algeria follow. compared to some of its neighbors, so special incentives and strong political will are required to Labor market: This Competitiveness parameter achieve its development. is linked to two factors: (1) labor cost - Algeria has the highest wages among MENA countries; and (2)  market efficiency and flexibility - Algeria still has the opportunity to improve performance. Chapter 5 | Strategic Recommendations and Proposed Actions | 93 Material availability: This Competitiveness Figure 5.1 | Key Axes in a Country’s Development Plan for Solar parameter is related to the resources that a country Component Industries has and trades with. Float glass is the main material necessary to manufacture glass for Thin Film PV technology, although Float glass comprises less than 1. Sectoral strategy and 40 percent of the total costs. Algeria, with Egypt, is policy one of the main Float glass producers of the MENA countries under study, although still far from the Benchmark countries’ average. 5. Capacity 2. Business development environment Country's Relevant manufacturing ability: Literacy rates, development quantity and quality of education, and on-the-job plan training are issues that Algeria has the potential to improve. Specific training and education related to the selected solar industry would help to close capacity 4. gaps. Signals to both the educational institutions 3. Access to Infrastructure finance and the future students or trainees to prepare and participate depend on the visibility of projects and pipeline and political will. Source: STA/Accenture. Figure 5.2 | Strengths and Weaknesses of Algeria vs. US in the Solar Glass Industry Labor market 1.000 Logistical infrastructure Material availability 0.800 0.600 Innovation capacity Relevant manufacturing ability 0.400 0.200 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Algeria -Solar glass Demand United States Risk and stability Business support Source: STA/Accenture. 94 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Cost of energy (industrial): The lower cost of Financial risk: The access to credit indicator energy is Algeria’s key strength, especially for the measures the legal rights of borrowers and lenders Solar glass industry, in which energy comprises with respect to secured transactions and the sharing approximately 35 percent of the total costs. A low of credit information. Strengthening these legal electricity cost is a competitive advantage for private rights to guarantee and protect the investment could investors in energy-intensive industries. However, reduce financial risk for investors. from the country’s point of view, subsidies to energy consumption introduce tensions in the system Industry structure: The presence of gas resources because they veil the true price signal to electricity in the country can attract international industrial consumers and could lead to adverse economic and players. However, Algeria also would benefit from environmental impacts. The sustainability of these the development of clusters that would drive the artificially low costs therefore can be perceived as an development of the country’s industrial network, investor risk because it is likely to change in the near incentivizing new industries such as those in the solar future to avoid said adverse impacts. sector. Fiscal and financial costs: The level of taxes borne Innovation capacity: To be competitive and by companies and lending interest rates influence sustainable in time, new Solar glass industry a country’s attractiveness to investors. Corporate developments require the development of specific taxes and borrowing costs are high in Algeria. Their techniques and innovation capabilities.69 These selective reduction could improve the country’s developments would pose both a risk and an competitiveness and attract investments in solar opportunity. technology components. Logistical infrastructure: The identification of CSP and PV Component demand: Compared to suitable sites and development of industrial estates in other selected MENA countries, Algeria has planned which to cluster manufacturing capability for the Solar ambitious solar targets. In addition, its solar resource glass industry could reduce this gap. As markets is among the best in the world. This strength will aid abroad will be targeted, logistics improvement is the performance of future solar plants. The possibility a must to increase competitiveness in exports, of increasing the country’s CSP and PV targets in the especially considering that transportation costs can medium and long terms is worth analyzing. burden the final price of Solar glass. Risk associated with demand: Ambitious domestic 5.2.2 RECOMMENDATIONS goals for solar installed capacity in PV (800 MW) and CSP (1,525 MW) to 2020 might suffice for certain Some strategies need to be implemented to solar industries to develop. However, because successfully develop solar industries in Algeria. Each Algeria also has domestic fossil fuel resources, giving action represented in Table 5.2 and Table 5.3 is visibility to the pipeline of solar energy projects would linked to one or more Competitiveness parameters, be an important step toward reducing the perceived and the impact on their improvement is shown with risk. The development of solar energy is very much a the symbols described in Table 5.1. political decision rather than one driven by the risk of security of supply issues. 69 Among others, (a) surface texturing techniques to increase light absorption and (b) glass composition optimization to improve transparency, conductivity, and/or ease of deposition for ulterior layers can be cited. Chapter 5 | Strategic Recommendations and Proposed Actions | 95 Table 5.1 | Associated Impact on and contributes to giving investors and financing Competitiveness Parameters Due to institutions the foresight and confidence required for Recommended Strategic Actions an associated local industry to develop. It would be an important step toward reducing the perceived risk ++ High impact because Algeria has domestic fossil fuel resources + Medium impact with enough gas reserves to be self-sufficient. − No impact Thus, the development of solar energy very much represents a political decision rather than one driven 1. Sectoral strategy and policy by a risk in security of supply. Action A: Create the policy and regulatory environment to advance solar investment Monitoring installed capacity is a tool both to evaluate the effectiveness of the system and its impact on Algeria has an ambitious target in place for installed society and on national budgets, and to give visibility solar capacity, both for CSP (1525 MW) and PV to potential investors. (800  MW). This target raises the likelihood of development for a local component industry in Action C: Develop appropriate fiscal incentives to Algeria, providing an important market signal. investors in the solar glass industry The immediate step is creating the policy mechanisms Fiscal policies can incentivize a particular industry to and incentives to ensure not only that the targets are attract private investment. Several approaches can achieved in the short and medium terms but also be considered, such as accelerated depreciation, tax that a long-term steady development is possible, credits, or direct exemptions either total or partial, meaning an effective change in Algeria’s energy temporary or permanent (for example, Morocco’s supply mix. These mechanisms and incentives can National Pact for Industrial Emergence 2009–2015 be created in different ways, such as a FIT system, includes an exemption from corporate tax for the green certificates, grants, subsidies, soft loans, tax first 5 years, followed by a tax rate capped at 8.75 exemptions, or other mechanisms to enable the percent for the following 20 years). A detailed analysis high growth-rates required to reach Algeria’s target. should be made considering not only a policy’s However, the government will need to take into effectiveness, but also its efficiency (for example, if account that the different mechanisms and incentives the social benefits obtained, both direct and indirect, have different advantages and disadvantages, are larger than its economic cost). and that the policies must be flexible enough to accommodate to the evolution of the solar market. Action D: Remove barriers to advance the integration of markets and facilitate the import of materials Special incentives and a strong political will and/or export of manufactured solar components shall be required to achieve the development of solar component industries because the overall This action may include the development of attractiveness of Algeria remains low compared to agreements to import raw and other materials some of its neighbors. necessary for solar industries, as well as to export manufactured components to other countries in Action B: Make the project pipeline visible to the Region and reduce export barriers. These goals investors and public may be achieved through bilateral or multilateral agreements, either specifically created or already Giving visibility to the pipeline of projects in different existing (such as the Arab Mediterranean Free Trade stages of development encourages transparency Agreement (AGADIR), or GAFTA). 96 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 5.2 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Algeria: Production Factors and Demand Factors Demand Production Factors Factors Relevant Cost of Fiscal and Labor Material Manufacturing Energy Financial Component GAPS Market Availability Ability (industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A. Create the policy and regulatory environment to advance solar investment in Algeria 1 Action B: Make the project pipeline visible 1 Action C: Develop appropriate fiscal incentives to investors in solar component industries 1 Action D: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action E: Develop a system to measure performance and achievements 1 Action F: Carry out a briefing and communication campaign 2_ Business environment 2 Action G: Simplify investment procedures 2 Action H: Put in place a plan to develop R&D capacity 2 Action I: Development of an information database of local manufacturers 3_ Access to finance 3 Action J: Consider concessional finance opportunities 3 Action K: Develop an investment plan 4_ Infrastructure 4 Action L: Consider necessary improvements to public infrastructure 4 Action M: Facilitate the purchase of rental of land and/or buildings 5_ Capacity development 5 Action N: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. Table 5.3 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Algeria, Risk and Stability Factors and Business Support Factors Demand Production Factors Factors Relevant Cost of Fiscal and Labor Material Manufacturing Energy Financial Component GAPS Market Availability Ability (industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A: Create the policy and regulatory environment to advance solar investment in Algeria 1 Action B: Make the project pipeline visible 1 Action C: Develop appropriate fiscal incentives to investors in solar component industries 1 Action D: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action E: Develop a system to measure performance and achievements 1 Action F: Carry out a briefing and communication campaign 2_ Business environment 2 Action G: Simplify investment procedures 2 Action H: Put in place a plan to develop R&D capacity 2 Action I: Development of an information database of local manufacturers 3_ Access to finance 3 Action J: Consider concessional finance opportunities 3 Action K: Develop an investment plan 4_ Infrastructure 4 Action L: Consider necessary improvements to public infrastructure 4 Action M: Facilitate the purchase of rental of land and/or buildings 5_ Capacity development 5 Action N: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. It is worth mentioning that a more integrated sector Action H: Put in place a plan to develop R&D results in synergistic effects in the Region, with the capacity result that Algeria, as other countries, also could benefit from industry developments elsewhere in the With the objective of increasing innovation capacity Region. in the Region, it is essential to put in place both R&D funding and partnerships to develop new processes Action E: Develop a system to measure industry that improve solar industries. These improvements performance and achievements will yield a competitive advantage in the medium and long terms. Develop a monitoring and evaluation (M&E) system and tools to monitor year-to-date expenditure and Action I: Development of a database of local achievements in the solar industries, using a series of manufacturers indicators to assess progress. This system is useful to ensure transparency and visibility of achievements Develop and maintain a database of local by the sector. manufacturers and possible counterparts, available to project developers to incentivize local supply Action F: Carry out a communication campaign share in projects. This database might be elaborated in collaboration with professional associations to The communication campaign publicizing the ensure it stays up to date. measures taken to drive the sector and their potential impact on investors needs to reach all stakeholders. 3. Access to finance Targeted workshops, both national and international, Action J: Consider concessional finance would have the multiple benefit of giving visibility opportunities to the sector, showing institutional commitment and promoting communication, clustering, and Concessional finance by the AfDB, IFC, World Bank, partnership among different companies. or other donors can mitigate the risk of private sector investors’ coming into solar industries. Depending on 2. Business environment the donors, different products and structures can be Action G: Simplify investment procedures considered, including risk-sharing products, lower- interest-rate products, and lower returns for equity The recommendation, which follows a strategic investments. These initial investments in the industry recommendation from Egypt’s Sixth Five-Year could pave the way for financing on fully commercial Plan, is to further simplify investment procedures terms.70 to facilitate creation of new business. Simplification could be achieved by creating a one-stop shop along Action K: Develop an investment plan the lines of what Morocco included in the National Pact for Industrial Emergence 2009–2015. In the Cost and duration of finance are key determinants for pact, a single administrative interface to facilitate the viability of manufacturing investments, particularly investment by new investors is proposed. As part of in the case of new sectors. The investment plan its functions, this interface may provide initial investor needs to involve all stakeholders to identify the best orientation, permitting, and licensing support, as well ways of extending credit for investments, taking into as other services aimed to simplify the investment account that smaller companies or new entrants may procedures. require long grace periods to generate the liquidity 70 As an example, AfDB is employing a model of concessional financing to finance early stages and high-risk activities required to fast- track the development of geothermal sources in East Africa. Chapter 5 | Strategic Recommendations and Proposed Actions | 99 to pay back. Action K targets the generation of Develop a framework to facilitate the acquisition, financing opportunities that encourage private sector either through purchase or rental, of land and/or investments. buildings by potential investors. At the same time, take the necessary measures to facilitate land 4. Identify infrastructure requirements allocations for public lands. Action L: Consider necessary improvements to public infrastructure 5. Capacity development Action N: Develop supply-side strategies to bring in Identify infrastructure requirements, including port skilled workers to the sector and road infrastructure, that could increase the opportunity to export the products to neighboring In preparation for developing the solar component countries. Improving road infrastructure will also industry, supply-side skills strategies based on lower internal transportation costs, thus increasing training and education should be put in place to competitiveness. The Solar glass industry is ensure alignment with the economic objectives and especially sensitive to this necessity, considering that future sector needs. Algeria’s Ministry of National transportation costs can be a significant burden in its Education and Ministry of Labour, Employment and final price. Social Security should coordinate their plans to include the development of specialized training and Action M: Facilitate the purchase or rental of land education. and/or buildings 5.3 Egypt The high-level recommendations described above industry closer to that of China and United States crystallize in a series of strategies that must be (the best-scored Benchmark countries) are depicted implemented to successfully develop the different in Figure 5.3. solar component industries in Egypt. These strategies represent the main axes for the country’s industrial The main gaps to develop the Mirror industry in Egypt development plan (Figure 5.1). are presented below: The following gaps analysis and derived Labor market: This Competitiveness parameter is recommendations focus on the Mirror industry, one linked to two factors: (1) labor cost, in which Egypt of the key solar industries that Egypt could develop is very competitive, and (2) market efficiency and in the short and medium terms and in which it has flexibility, in which Egypt still has the opportunity to a distinct competitive advantage due to an already improve performance. General recommendations to developed Float glass industry. address the issue of flexibility in the market for any type of industry are shown in Table 5.4. 5.3.1 GAPS ANALYSIS Material availability: This Competitiveness Some gaps were found when linking the parameter is related to the resources that a country Competitiveness parameters to the five axes of has and trades with. Float glass and silver coating are the industrial plan in the current Egyptian business the main materials necessary to manufacture Mirrors environment. The most important gaps to be covered for CSP plants. Their cost represents approximately to bring the Egyptian Attractiveness index for Mirror 70 percent of a Mirror manufacturing industry. Today, 100 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure 5.3 | Strengths and Weaknesses of Egypt vs. United States and China in the Mirror Industry Labor market 1,000 Logistical infrastructure Material availability 0,800 0,600 Innovation capacity Relevant manufacturing 0,400 ability 0,200 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated to demand Component demand Risk associated to doing business Production Egypt -Mirror Demand United States Risk and stability China Business support Source: STA/Accenture. Table 5.4 | General Recommendations to Improve the Flexibility of the Labor Market Price (Wage) Numerical Temporal Functional Location Flexibility Flexibility Flexibility Flexibility Flexibility Flexibility of wage Expansion of Flexible working Ability of Geographic determination flexible term hours labor force flexibility employment to use varied contracts technology Pay packages Growth of Increased use of part- Transferable reflecting skill working from time staff to meet skills within the differentials home changes in demand workplace Wider use of Core of full-time Flexibility to shift performance-related employees on to new activities pay as an incentive to contracts at low cost boost productivity Source: [74] there is Float glass production in Egypt, but it is However, Morocco is among the top 20 silver- producing glass with an iron content that would not producing countries. A trade agreement could be be compliant with the CSP requirement. Regarding considered as an option to reduce tax levies. the silver coating, Egypt is not a large silver producer. Chapter 5 | Strategic Recommendations and Proposed Actions | 101 Relevant manufacturing ability: Literacy rates, future solar plants. It is worth analyzing the possibility quantity and quality of education, and on-the-job of increasing CSP and PV targets in the medium training are issues that Egypt has an opportunity term, especially considering the expected electricity to improve. Specific training and education related demand growth and the abundant solar resource. to the selected solar industry would help to close capacity gaps. Egypt has universities and institutions Risk associated with demand: The earlier projected able to offer specialized training and the necessary solar capacity for CSP (100 MW) and PV (20 MW) in background to set up collaboration with international Egypt by 2020 has not sufficed to develop any solar institutions. Signals to both the educational institutions industry yet. However, the recently announced new and the future students or trainees to prepare and intermediate targets of the 2030 plan (1,100 MW for participate arise from the visibility of projects and CSP and 200 MW for PV by 2020) could cause a pipeline and from political will. positive change in this trend. Cost of energy (industrial): Low energy cost is Financial risk: The access to credit indicator one of Egypt’s strengths.71 It provides a competitive measures the legal rights of borrowers and lenders advantage to private investors in energy-intensive with respect to secured transactions and sharing industries. However, from the country’s point of credit information.72 Strengthening these legal rights view, subsidies to energy consumption introduce in Egypt to guarantee and protect the investment can tensions in the system because they veil the true reduce financing risk for investors. price signal to electricity consumers and may lead to adverse economic and environmental impacts. The Industry structure: No related local cluster has sustainability of artificially low costs therefore can be been identified in Egypt. A cluster could be useful perceived by an investor as a risk because the costs to export goods and import equipment and raw are likely to change in the near future to avoid the material needed for Mirror industry, especially silver adverse impacts. for coating. On the other hand, Egypt already hosts large international industrial companies––some of Fiscal and financial costs: A country’s level of them linked to CSP goods. taxes borne by companies and lending interest rates influence its attractiveness to investors. Company Innovation capacity: To be competitive and taxes and borrowing costs are high in Egypt, so sustainable in time, new Mirror industry developments their selective reduction could improve Egypt’s require the acquisition of specific techniques and competitiveness and attract investments in solar innovation capabilities, which poses both a risk and technology components. Egypt has experience an opportunity. For industries with lower innovation with fiscal incentives for other industries that could requirements, lack of innovation capabilities can be be replicated to drive the development of solar overcome partially through short-term collaborations component industries. with technological partners. Egypt hosts good universities and research centers that, with CSP and PV Component demand: Egypt has appropriate incentives, could lead the way for higher developed attractive solar targets in comparison level capacity building. to other selected MENA countries. In addition, its solar resource is one of the most abundant in the Logistical infrastructure: The identification of world. This availability will help the performance of suitable sites and development of industrial estates 71 Significantly, over the last quarter, Egypt’s energy cost subsidies have decreased––a trend expected to continue. 72 The higher the legal rights of borrowers and lenders in transactions, and the deeper and more easily available the credit information, the lower the perceived risk of lending, and the easier the perceived access to credit in the country. 102 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry to cluster manufacturing capability for the Mirror is possible, meaning an effective change in Egypt’s industry could reduce this gap. Because markets energy supply mix. This change can be accomplished abroad will be targeted, logistics improvement is a in different ways, some of which Egypt is already must to increase exports’ competitiveness. employing such as competitive bidding. The change also could lead to a future FIT (feed-in tariff) system 5.3.2 RECOMMENDATIONS or other mechanism to enable the high growth-rates required to reach Egypt’s target. A coherent policy The following strategic recommendations follow and regulatory environment is essential because the five axes described above. Their objective it creates the certainty and stability that the sector is to reduce the existing gaps with the selected requires to grow. Benchmark countries to deploy the recommended solar component industries in Egypt. The Egyptian government has already put in place the Renewable Development Fund.74 One of its Each action is linked to the Competitiveness objectives is to support research for project siting. parameter that would improve in the way described The latter could have an indirect impact on the solar in Table 5.5. component industry because it could highlight key areas in the country in which plants could develop. 1. Sectoral strategy and policy Careful consideration needs to be given to how the Action A: Create the policy and regulatory Fund could help support not only renewable energy environment to advance solar investment in Egypt but also the development of the solar component industry. Egypt recently increased its solar capacity target for 2020 from 120 MW, of which 100 MW CSP and Action B: Make the project pipeline visible to 20 MW PV, to 1,300 MW, of which 1,100 MW CSP investors and public and 200 MW PV.73 This significant increase over the earlier objective raises the likelihood of development Giving visibility to the pipeline of projects in different for a local component industry in Egypt, thus stages of development encourages transparency. providing an important market signal. A visible pipeline also contributes to giving investors and financing institutions the foresight and confidence The immediate step is to create the policy required for an associated local industry to develop. mechanisms and incentives to ensure not only that This visibility can be achieved through a public (1) the targets are achieved in the short and medium website and communicated in industry forums and terms but also (2) long-term, steady development events. Table 5.5 | Associated Impacts in To provide visibility for investors, the country will Competitiveness Parameters Due to need to monitor its installed electric power capacity Recommended Strategic Actions and  the progress of the pipeline and its impact on society and on future national budgets. ++ High impact + Medium impact - No impact 73 Intermediate objective of the Egyptian solar plan, as communicated by the Ministry of Electricity and Energy. The plan involves the installation of 3500 MW of solar energy by 2027, of which 2800 MW CSP and 700 MW PV. 74 The Renewable Development Fund has been established but is not yet operational. Chapter 5 | Strategic Recommendations and Proposed Actions | 103 Table 5.6 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Egypt, Production Factors and Demand Factors Demand Production Factors Factors Relevant Cost of Fiscal and Material Manufacturing Energy Financial Component GAPS Labor Market Availability Ability (Industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A: Create the policy and regulatory environment to advance solar investment in Egypt 1 Action B: Make the project pipeline visible 1 Action C: Develop an overarching strategy for the CSP-PV 1 Action D: Develop appropriate fiscal incentives to investors 1 Action E: Remove barriers in order to further the integration of markets and facilitate the import aterials and/or export manufactured solar components 1 Action F: Develop a system to measure performance and achievements 1 Action G: Carry out a briefing and communication campaign 2_ Business environment 2 Action H: Simplify investment procedures 2 Action I: Put in place a plan to develop R&D capacity 2 Action J: Development of an information database of local manufacturers 2 Action K: Development of standards for individual components 2 Action L: Encourage the development of a solar cluster 3_ Access to finance 3 Action M: Consider concessional finance opportunities 3 Action N: Develop an investment plan 3 Action O: Develop and implement a plan to bring in industrial investors and partners, including consideration of joint ventures 4_ Infrastructure 4 Action P: Identify the best locations for the manufacturing plants 4 Action Q: Consider necessary improvements to public infrastructure 4 Action R: Facilitate the purchase of rental of land and/or buildings 5_ Capacity development 5 Action S: Develop demand-side skills strategies to bring in skilled workers Source: STA/Accenture. Table 5.7 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Egypt, Risk and Stability Factors and Business Support Factors Risk and Stability Factors Business Support Factors Risk Associated Risk to doing Associated Industry Innovation Logistical GAPS Business to Demand Financial Risk Structure Capacity Infrastructur CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A: Create the policy and regulatory environment to advance solar investment in Egypt 1 Action B: Make the project pipeline visible 1 Action C: Develop an overarching strategy for the CSP-PV 1 Action D: Develop appropriate fiscal incentives to investors 1 Action E: Remove barriers in order to further the integration of markets and facilitate the import aterials and/or export manufactured solar components 1 Action F: Develop a system to measure performance and achievements 1 Action G: Carry out a briefing and communication campaign 2_ Business environment 2 Action H: Simplify investment procedures 2 Action I: Put in place a plan to develop R&D capacity 2 Action J: Development of an information database of local manufacturers 2 Action K: Development of standards for individual components 2 Action L: Encourage the development of a solar cluster 3_ Access to finance 3 Action M: Consider concessional finance opportunities 3 Action N: Develop an investment plan 3 Action O: Develop and implement a plan to bring in industrial investors and partners, including consideration of joint ventures 4_ Infrastructure 4 Action P: Identify the best locations for the manufacturing plants 4 Action Q: Consider necessary improvements to public infrastructure 4 Action R: Facilitate the purchase of rental of land and/or buildings 5_ Capacity development 5 Action S: Develop demand-side skills strategies to bring in skilled workers ` Source: STA/Accenture. Action C: Develop an overarching strategy for the or multilateral agreements, either specifically created CSP and PV industry or already existing, such as the Arab Mediterranean Free Trade Agreement (AGADIR, or GAFTA). This overarching strategy for the CSP and PV sector would link the national solar capacity target, the For example, Egypt needs silver coating to develop solar industrial plan, and the industry development the Mirror industry, and Morocco was one of the top objectives. This strategy could be accomplished 20 silver-producing countries in 2011 [75]. Morocco, through an interministerial committee involving in turns, needs to import Float glass, and Egypt is the Ministry of Planning, the Ministry of Electricity, one of the main Float glass manufacturers in the NREA (New and Renewable Energy Authority), the MENA Region [73]. These intersecting needs and Ministry of Industry, the Ministry of Finance, and supplies may prove to be a win-win situation in which think tanks. This committee would be responsible both countries profit from the integration of Regional for coordinating and merging knowledge to facilitate markets. private companies coming in while individual solar component industries were being developed. The A more integrated sector results in synergistic effects private sector also could be involved though a solar in the Region, with the result that Egypt, as well as cluster/association that could be created with initial other countries, also could benefit from industry public support but driven by industry. developments elsewhere in MENA. Action D: Develop appropriate fiscal incentives to Action F: Develop a system to measure industry investors in the solar Mirror industry performance and achievements Fiscal policies can incentivize a particular industry to A monitoring and evaluation (M&E) system and tools attract private investment. Several approaches can to track year-to-date expenditures and achievements be considered, such as accelerated depreciation, tax in the solar industries could be developed through credits, or direct exemptions either total or partial, using a series of key indicators to assess progress. temporary or permanent. For example, Morocco’s Such M&E would be useful to ensure transparency National Pact for Industrial Emergence 2009-2015 and visibility of achievements by the sector. includes an exemption from corporate tax for the first 5 years, followed by a tax rate capped at 8.75 percent Action G: Carry out a communication campaign for the following 20 years. A detailed analysis should be made considering not only a policy’s effectiveness The communication campaign to publicize the but also its efficiency. An example would be whether measures taken to drive the sector and their potential the social benefits obtained, both direct and indirect, impacts on investors in the sector needs to reach exceeded the policy’s economic cost. all stakeholders. targeted workshops, both national and international, could have the multiple benefits Action E: Remove barriers to advance the integration of giving visibility to the sector; demonstrating of markets and facilitate the import of materials institutional commitment; and promoting and/or export of manufactured solar components communication, clustering, and partnership among different companies. Action E could include the development of agreements to import raw and other materials 2. Business environment necessary to establish solar industries as well as to Action H: Simplify investment procedures export manufactured components to other countries in the Region and reduce barriers for doing so. As stated in Egypt’s Sixth Five-Year Plan, a goal is Facilitating trade could be achieved through bilateral to further simplify investment procedures to facilitate 106 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry the creation of new business. Simplification could manufacturing costs. The adaptation or adoption be achieved by creating a one-stop shop along the of international standards will facilitate exports by lines of what Morocco included in its National Pact avoiding compatibility and/or quality issues. for Industrial Emergence 2009–2015. The pact proposes a single administrative interface to facilitate Action L: Encourage the development of a solar investment by new investors. Among its functions, cluster such an interface could provide initial investor orientation, permitting and licensing support, and Encouraging the development of a cluster for other other services to simplify the investment procedures. solar component technologies, as Egypt is already attempting to do for glass manufacturing, would take Action I: Put in place a plan to develop R&D capacity advantage of synergies, such as logistical synergies for transport of the components to clients. This With the objective of increasing innovation capacity action can be started early, but it will gain relevance in the Region, it is essential to put in place both R&D only once the industry has begun developing. funding and partnerships to develop new processes that would improve solar industries. For example, 3. Access to finance Mirrors for use in the Region would benefit from new Action M: Consider concessional finance laminating and coating processes to protect them from opportunities harsh outdoor conditions such as sand storms, and new processes and packaging for transporting the Concessional finance, by the IFC, African Mirrors These improvements will yield a competitive Development Bank (AfDB), or other donors, could advantage in the medium and long terms. mitigate the risk for private sector investors to enter solar industries. Depending on the donor, different Action J: Development of a database of local products and structures could be considered, manufacturers including risk-sharing products, lower-interest-rate products, and lower returns for equity investments. To incentivize local supply share in projects, it is These initial investments in the industry could pave important for the country to develop and maintain the way for financing on fully commercial terms.75 a database of local manufacturers and possible counterparts and make it available to project Action N: Develop an investment plan developers. This database might be elaborated in collaboration with professional associations and the Cost and duration of financing are key determinants RCREEE (Regional Centre for Renewable Energy and for the viability of manufacturing investments, Energy Efficiency) to ensure that it stays up to date. particularly in the case of new sectors. The investment plan needs to involve all stakeholders to identify the Action K: Development of standards for individual best ways of extending credit for investments in Mirror components manufacturing capacity, taking into account that smaller companies or new entrants may require long Facilitating and encouraging the development of grace periods to generate the liquidity to pay back. standards for the local solar component industry will This action targets generating finance opportunities help prevent the entrance of low-quality products and encouraging private sector investments. in the market. Standardization will reduce overall 75 For example, AfDB is employing a model of concessional financing to finance the early stages and high-risk activities required to fast- track the development of geothermal sources in East Africa. Chapter 5 | Strategic Recommendations and Proposed Actions | 107 Action O: Develop and implement a plan to bring Action Q: Consider necessary improvements to in industrial investors and partners, including public infrastructure consideration of joint ventures Identifying infrastructure requirements, including for With a focus on raising funds and securing loans, the ports and roads, would increase the opportunity objective of the plan will be to secure the participation to export the products to neighboring countries. of key Regional players. The objective is to get key Improving road infrastructure will also lower internal Regional industrial players involved and interested in transportation costs, thus increasing competitiveness. participating. Action R: Facilitate the purchase or rental of land 4. Identify infrastructure requirements and/or buildings Action P: Identify the best locations for the manufacturing plants It is recommended to develop a framework to facilitate the acquisition, either through purchase or rental, of The recommendation is to prepare maps for land and/or buildings by potential investors. At the investment purposes and to identify key locations same time, the necessary measures to facilitate land for the installation of new manufacturing plants. allocations for public lands should be taken. Determining the best locations includes taking into account logistics and transportation of the products 5. Capacity development of the Mirror industry to local and Regional customers. Action S: Develop supply-side strategies to bring in These identifications could be made by the Ministry skilled workers to the sector of Industry in Egypt’s industrial development zones. In preparation for developing the solar component Solar Mirror manufacturing plants may be part of, or industry, supply-side skills strategies based on built close to, existing Float glass industries. For the training and education should be put in place to former to be developed from the ground up, the plan ensure alignment with the economic objectives and could take into account the objective of Egypt’s Sixth future sector needs. These strategies would involve Five-Year Plan (2007–2012). The objective is to intensify collaboration between Egypt’s Ministry of Education investment in Upper Egypt and the desert governorates and Ministry of Labor. They also could include the to achieve balanced spatial development[76]. development of specialized training and education in: In addition to identifying potentially interesting • Laminating and coating expertise locations for the plants, it could be advisable to • Mechanical expertise develop industrial estates that would facilitate the • Welding expertise clustering of manufacturing capability for the different • General maintenance expertise solar component industries. In addition, a framework • General business functions including, but not needs to be designed to aid investors to assess the limited to, logistics, human resources, quality viability of other potential locations. control, and purchasing. 5.4 Jordan The high-level recommendations described above solar component industries in Jordan. These crystallize in a series of strategies that need to be strategies represent the main axes for the country’s implemented to successfully develop the different industrial development plan (Figure 5.1). 108 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry The following gaps analyses and derived in the country and lending interest rates should not recommendations have been focused on the influence its business model. establishment of a certification and testing institute, as a prior step to focus innovation capabilities and CSP and PV Component demand: This to develop high value-added subcomponents or new Competitiveness parameter is not directly related technologies in both PV and CSP in the long term. to the attractiveness of a certification and testing institute. However, it increases the likelihood of 5.4.1 GAPS ANALYSIS component industries developing in Jordan or in neighboring countries, and so the demand for the A certification and testing institute is not one of the institute’s services. solar industries within the scope of this report, thus, it is not possible to identify quantitative gaps or Risk associated with demand: The success of a clearly link them to the Competitiveness parameters certification institute is based largely on the confidence defined. Nevertheless, the five axes of the industrial and trustworthiness that it generates. A healthy solar plan can be used as references. The most important sector in Jordan, with a stable regulatory environment qualitative gaps to be covered to boost Jordanian and appropriate policy mechanisms and incentives attractiveness have been described. for a long-term steady development, will create a perception of low country risk that will reflect positively The main gaps to develop a certification and testing on the institute’s reputation. At  the same time, a institute in Jordan are presented below: steady, known pipeline creates opportunities for the certification and testing institute to gain experience Labor market: Jordan is above the Benchmark and track record. countries’ average in this Competitiveness parameter thanks to two factors: labor cost, in which Jordan is Financial risk: Jordan’s certification and testing competitive; and market efficiency, in which Jordan institute will most likely be a public company so the still has the opportunity to improve performance, access to credit indicator should not influence its although it outranks most other MENA countries. business model. Material availability: This Competitiveness parameter Industry structure: No related local cluster has is not relevant to a certification and testing institute. been identified in Jordan. A certification and testing institute could act as a seed for a solar-related cluster, Relevant manufacturing ability: Jordan has good which could be useful to export goods and import literacy rates, and quantity and quality of education; equipment and raw material, as well as to start a it lacks synergic industries for on-the-job training. standardization process. Specific training and education related to the solar energy components industry would help to close Innovation capacity: Jordan outranks the other capacity gaps. MENA countries in this parameter. A certification and testing institute could act as a first step to focus Cost of energy (industrial): This Competitiveness innovation capabilities and to develop high value- parameter is not relevant to a certification and testing added subcomponents or new technologies in both institute. PV and CSP in the long term. Fiscal and financial costs: Jordan’s certification Logistical infrastructure: This Competitiveness and testing institute will most likely be a public parameter is not relevant to a certification and testing company, so the cost of taxes borne by companies institute. Chapter 5 | Strategic Recommendations and Proposed Actions | 109 Table 5.8 | Associated Impacts in 5.4.2 RECOMMENDATIONS Competitiveness Parameters Due to Recommended Strategic Actions The following strategic recommendations correlate with the five axes described above. The objectives of ++ High impact the former are to reduce the existing gaps to deploy + Medium impact the certification and testing institute in Jordan; and, − No impact in the medium term, where possible, make Jordan a more attractive country for the development of solar component industries. Each action is linked to the as a way of participating in developments elsewhere Competitiveness parameter that would improve in in the Region. the way described in Table 5.8. Action C: Carry out a communication campaign 1. Sectoral strategy and policy Action A: Create the policy and regulatory The communication campaign publicizing the environment to advance solar investment measures taken to drive the sector and their potential impact on investors needs to reach all stakeholders. The current projected solar capacity for CSP Targeted workshops, both national and international, (450  MW) and PV (150 MW) in Jordan by 2020 is would have the multiple benefits of giving visibility modest so it is not likely to suffice to develop any to the sector; showing institutional commitment; of the solar component industries studied. and promoting communication, clustering, and partnership among different companies. The solar industry in Jordan could be built only based on exports. Regional collaboration could be a way 2. Business environment to build the industry if enough political will exists to Action D: Put in place a plan to develop R&D develop it (Action B). capacity Action B: Remove barriers to help advance the With the objective of increasing innovation capacity integration of markets and facilitate the import in the Region, it is essential to put in place both R&D of materials and/or export of manufactured solar funding and partnerships to develop new processes components that improve solar industries. These improvements would yield a competitive advantage in the medium Action B could include the development of and long terms, and could take advantage of agreements to import raw and other materials synergies with the proposed certification and testing necessary to develop solar industries, as well as to institute. export manufactured components to other countries in the Region and reduce the barriers to do so. The Action E: Development of a database of local importing and exporting could be achieved through manufacturers bilateral or multilateral agreements, either specifically created or already existing ((such as the Arab Develop and maintain a database of local Mediterranean Free Trade Agreement (AGADIR) or manufacturers and possible counterparts available GAFTA)). to project developers to incentivize local supply share in projects. This database could be elaborated A more integrated sector results in synergistic effects in collaboration with professional associations to in the Region, which would be of interest to Jordan ensure it stays up to date. 110 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 5.9 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Jordan: Production Factors and Demand Factors Demand Production Factors Factors Relevant Cost of Fiscal and Labor Material Manufacturing Energy Financial Component GAPS Market Availability Ability (Industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A. Create the policy and regulatory environment to advance solar investment in Jordan 1 Action B: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action C: Carry out a briefing and communication campaign 2_ Business environment 2 Action D: Further strengthen R&D capacity 2 Action E: Development of an information database of local manufacturers 2 Action F: Development of standards for individual components 3_ Access to finance 3 Action G: Consider concessional finance opportunities 3 Action H: Develop an investment plan 4_ Infrastructure 4 Action I: Consider necessary improvements to public infrastructure 4 Action J: Facilitate the purchase or rental of land and/or buildings 5_ Capacity development 5 Action K: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. Chapter 5 | Strategic Recommendations and Proposed Actions | 111 Table 5.10 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Jordan: Risk and Stability Factors and Business Support Factors Risk and Stability Factors Business Support Factors Risk Associated Risk to doing Associated Industry Innovation Logistical GAPS Business to Demand Financial Risk Structure Capacity Infrastructure CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A. Create the policy and regulatory environment to advance solar investment in Jordan 1 Action B: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action C: Carry out a briefing and communication campaign 2_ Business environment 2 Action D: Further strengthen R&D capacity 2 Action E: Development of an information database of local manufacturers 2 Action F: Development of standards for individual components 3_ Access to finance 3 Action G: Consider concessional finance opportunities 112 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 3 Action H: Develop an investment plan 4_ Infrastructure 4 Action I: Consider necessary improvements to public infrastructure 4 Action J: Facilitate the purchase or rental of land and/or buildings 5_ Capacity development 5 Action K: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. Action F: Development of standards for individual 4. Identify infrastructure requirements components Action I: Consider necessary improvements to public infrastructure Facilitate and encourage the development of standards for the local solar component industry Identify infrastructure requirements, including port to avoid the entrance of low-quality products in and road infrastructure, that could increase the the market. Standardization would reduce overall opportunity to export the products to neighboring manufacturing costs. The adaptation or adoption of countries. Improving road infrastructure will also international standards also would facilitate exports, lower internal transportation costs, thus increasing avoiding compatibility and/or quality issues. competitiveness. The certification and testing institute would be the Action J: Facilitate the purchase of rental of land natural leader of the standardization process. and/or buildings 3. Access to finance Develop a framework to facilitate the acquisition, Action J: Consider concessional finance through either purchase or rental, of land and/or opportunities buildings by potential investors. At the same time, take the necessary measures to facilitate land Concessional finance by the IFC, WB, AfDB, or allocations for public lands. other donors could mitigate the risk of private sector investors coming into solar industries. Depending on 5. Capacity development the donors, different products and structures could Action K: Develop supply-side strategies to bring in be considered, including risk-sharing products, skilled workers to the sector lower-interest-rate products, and lower returns on equity investments. These initial investments in the In preparation for developing the solar component industry could pave the way for financing on fully industry, supply-side skills strategies, based on commercial terms.76 training and education, should be put in place to ensure alignment with the economic objectives Action K: Develop an investment plan and  future sector needs. Jordan’s Ministry of Higher  Education and Higher Research and the Cost and duration of finance are key determinants for Ministry of Labor should coordinate their plans to the viability of manufacturing investments, particularly include the development of specialized training in the case of new sectors. The investment plan needs and education. to involve all stakeholders to identify the best ways of extending credit for investments, taking into account that smaller companies or new entrants could require long grace periods to generate the liquidity to pay back. This action targets the generation of finance opportunities, which would encourage private sector investments. 76 As an example, AfDB is employing a model of concessional financing to finance early stages and high-risk activities required to fast- track the development of geothermal sources in East Africa. Chapter 5 | Strategic Recommendations and Proposed Actions | 113 5.5 Morocco The high-level recommendations described above a strategy that should take advantage of Regional crystallize in a series of strategies that need to be synergies. implemented to successfully develop the different solar component industries in Morocco. These Structures and trackers will be used as a reference strategies represent the main axes for the country’s to analyze the gaps and derived recommendations. industrial development plan (Figure 5.1). 5.5.1 GAPS ANALYSIS As described in section 4.5, Morocco has potential to develop the Structure & Tracker industry for CSP and Some gaps were found when linking the the Support Structure industry for PV, and to consider Competitiveness parameters to the five axes of the opportunities to improve some of the conventional industrial plan in the Moroccan business environment. CSP industries (Condenser, Pumps) in the short and The most important gaps to be covered to bring the medium terms. TF Modules development is another Moroccan Attractiveness index for Structure & Tracker opportunity to be implemented (if current world industry closer to that of China (the best scored overcapacity decreases) in the medium term, with Benchmark country) are depicted in Figure 5.4. Figure 5.4 | Strengths and Weaknesses of Morocco vs. China in the Structures & Tracker Industry Labor market 1.000 Logistical infrastructure Material availability 0.800 0.600 Innovation capacity Relevant manufact. ability 0.400 0.200 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated with Component demand demand Risk associated with doing business Production Morocco - Structure & tracker Demand Risk and stability China Business support Source: STA/Accenture. 114 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 5.11 | General Recommendations to Improve the Flexibility of the Labor Market Numerical Temporal Functional Price (Wage) Flexibility Flexibility Flexibility Flexibility Flexibility of wage Expansion of flexible Flexible working hours Ability of labor determination term employment force to use varied contracts technology Pay packages reflecting skill Growth of working Increased use of part- Transferable skills differentials from home time staff to meet within the workplace changes in demand Wider use of performance- Core of full-time Flexibility to shift to related pay as an incentive employees on new activities at low to boost productivity contracts cost Source: [74]. The main gaps to develop the Structure & Tracker Cost of energy (industrial): Despite being industry in Morocco are presented below: subsidized, the cost of electricity in Morocco is high when compared to the MENA average. Labor market: This Competitiveness parameter is This higher cost is largely due to the fact that, in linked to two factors: labor cost, in which Morocco is Morocco as well as in other countries such as Egypt very competitive; and market efficiency and flexibility, and Algeria, subsidies to energy consumption are in which Morocco still has the opportunity to improve introducing tensions in the system. Subsidies veil performance. General recommendations to address the true price signal to electricity consumers and the issue of flexibility in the market, for any type of could lead to adverse economic and environmental industry, are shown in Table 5.11. impacts. Morocco has the lowest subsidies among the studied MENA countries. On the other hand, Material availability: This Competitiveness policies aimed to encourage energy efficiency and parameter is related to the resources that a country self-supply (such as subsidies or tax exemptions for has and trades. Carbon steel beam and plate, and CHP linked to efficiency) for industries would help to electrodes are needed to set up a Structure & Tracker reduce this gap. industry. Trackers also need high precision gears and shafts for hydraulic actuators. Morocco is among the Fiscal and financial costs: The level of taxes borne main steel producers among MENA countries [73], by companies in the country and lending interest but its production is lower than the local demand. rates influence the attractiveness of a country for This gap should be overcome to avoid shortages. investors. Low company taxes and borrowing costs are one of the strengths in Morocco, which already Relevant manufacturing ability: Literacy rates, possesses interesting programs to reduce the fiscal years and quality of education, and on-the-job burden to new investors. training are issues that Morocco has an opportunity to improve. Specific training and education related CSP and PV Component demand: Comparatively, to the selected solar industry would help to close China is a huge market. The only possibility to capacity gaps. On the other hand, language skills reach a proportional demand is to increase the enable national workers to adapt easily to changes. market, for example by boosting intraregional Signals, both to the education institutions and to the trades in the MENA Region—which has over future students or trainees, to prepare and participate 400 million people—or by reaching other growing are related to visibility of projects and pipeline and CSP markets. A very positive attribute is Morocco’s political will. global horizontal irradiation, which is one of the Chapter 5 | Strategic Recommendations and Proposed Actions | 115 best in the world and will boost the performance of technology providers would speed up increasing future PV plants. innovation capacity. Risk associated with demand: Morocco has no Logistical infrastructure: The identification of clear incentives for CSP and the competitiveness suitable sites and development of industrial estates in the electricity sector. In it, the interconnection in which to cluster manufacturing capability could and supply of electricity must still be undertaken reduce this gap. Because markets abroad will be through the national electricity company, ONEE targeted, logistics improvement is a must to increase (Office National de l’Electricité et de l’Eau Potable). competitiveness in exports. However, in Morocco, Another important point is that the share between infrastructure appears to be less significant than CSP and PV for the 2,000 MW solar energy target other issues, such as constraints associated with by 2020 has not been fixed.77 However, a renewable trade processes [77][78]. regime for PV plants is in place, and plants smaller than 2 MW do not need approval from ADEREE 5.5.2 RECOMMENDATIONS (National Agency for the Development of Renewable Energy and Energy Efficiency). This exemption The following strategic recommendations follow makes it easier for a promoter to deploy a plant up to the five axes described above. Their objective this capacity. Thus, this exemption could provide an is to reduce the existing gaps with the selected additional market for the Structure & Tracker industry, Benchmark countries to develop the recommended which is easily adaptable for PV structures. solar component industries in Morocco. Financial risk: Borrowers and lenders have legal Each action is linked to the Competitiveness rights with respect to secured transactions. The parameter that would improve in the way described strength of the legal rights index, credit information, in Table 5.12. public credit registry coverage, and private credit bureau coverage must be improved to guarantee 1. Sectoral strategy and policy and protect the investment.78 Action A: Define clear targets for CSP and PV technologies Industry structure: No related local cluster has been identified in Morocco; but, due to the Morocco has an ambitious target for solar energy similarities, automotive industry cluster and past development (2,000 MW for 2020) that could attract support mechanisms could be taken as an example. foreign investors. However, the national target has Innovation capacity: Support structures and Table 5.12 | Associated Impacts in trackers are an application for which innovations Competitiveness Parameters Due to in design, manufacturing, erection, operation, Recommended Strategic Actions and maintenance are possible. Adaptation to the ++ High impact MENA and desert environments could be carried out. Improving engineering skills and possible joint + Medium impact ventures or technology transfer programs with − No impact 77 Although this flexible approach can be advantageous in energy cost (because it allows choosing the project that will offer the lowest price, regardless of the technology), it blocks the visibility of the pipeline, thus hampering the development of solar component industries. 78 The stronger the legal rights of borrowers and lenders in transactions, and the deeper and more easily available credit information is, the lower the perceived risk of lending and the easier the access to credit in the country. 116 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Box 5.1 | Success Story in PV Module Industry Development: China’s Development of the Crystalline Module Industry Today, China is the largest solar PV manufacturer in the world. China’s PV sector is unique in that it has sprung up due to the demand of foreign markets, rather than from domestic demand, as is more common. The Chinese government has identified new energies as a strategic emerging industrial sector, and has planned the investment of US$3 trillion in the next 10 years. The Chinese government also has decided to improve its solar PV tariff policy to standardize PV tariff management and promote the sustainable development of the PV sector. China has developed a unified national PV tariff for on-grid developments. The unified national tariff for non-bidding solar PV projects is formulated based on average investment and operation costs, PV plant bidding prices and solar resources in the country. The Chinese PV industry has learned much from Europe’s and the Unites States’ experience. Between 2003 and 2005, the US and European governments, industry associations and companies provided valuable suggestions to China as it developed its laws and programs to promote the development and use of renewable energy. Fiscal incentives were another important factor that encouraged PV development in China. In 2009 a national PV subsidy program was introduced to promote the use of BIPV (Building Integrated Photovoltaic) applications and rooftop systems. In the same year, a second national PV subsidy program was implemented. The Golden Sun Demonstration Program was designed to subsidize 600 MW of PV demonstration projects in the following 2–3 years. In 2009 China’s central government also introduced a FIT-style subsidy for a 10 MW PV project. Chinese PV companies have achieved their growth with both domestic and overseas encouragement. The Chinese PV sector is truly global in all aspects, sourcing inputs globally, using the most advanced technologies, and qualifying for financing on internationally recognized terms. In 2009, China’s solar sector employs an estimated 55,000 people in PV[79]. China’s experience provides an example of policy-led growth in renewable energy that has created jobs, income and revenue streams for nascent industries. Source: STA/Accenture. not been clearly divided between CSP and PV. The high as China’s. Increasing the target for PV and CSP main recommended policy action is to define targets deployed capacity from 2020 onward could reduce the for individual technologies (CSP and PV) to give gap with China. Although domestic demand is a key investors insight into the potential demand of the factor, another way to improve CSP and PV component industry. The existence of agencies such as ADEREE demand is through exports to other countries, (National Agency for the Development of Renewable something that could be promoted with specific actions Energy and Energy Efficiency) and MASEN (Moroccan regarding trade barriers, as proposed below. Agency for Solar Energy) also helps in providing visibility and transparency to the sector. Action C: Remove barriers to help advance the integration of markets and facilitate the import Action B: Increase the PV and CSP target from of materials and/or export of manufactured solar 2020 onwards components Morocco’s ambitious solar target is a key advantage, Action C could include the development of but the CSP and PV component demand is not as agreements to import raw and other materials Chapter 5 | Strategic Recommendations and Proposed Actions | 117 Table 5.13 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Morocco: Production Factors and Demand Factors Demand Production Factors Factors Relevant Cost of Fiscal and Labor Material Manufacturing Energy Financial Component GAPS Market Availability Ability (industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A. Define clearly targets for CSP and PV technologies 1 Action B: Increase the PV and CSP target to 2020 onwards 1 Action C: Remove barriers in order to further the integration of markets and facilitate import materials and/or export manufactured solar components 1 Action D: Develop a system to measure performance and achievements 2_ Business environment 2 Action E: Improve labor market flexibility 2 Action F: Stimulate trade with MENA region 2 Action G: Encourage the development of a solar cluster 3_ Access to finance 3 Action H: Analyze the fiscal and financial advantages by zones 3 Action I: Develop an investment plan 3 Action J: Develop and implement a plan to bring in industrial investors and partners, including consideration of joint ventures 4_ Infrastructure 4 Action K: Identify the best locations for the manufacturing plants 4 Action L: Consider necessary improvements to public infrastructure 5_ Capacity development 5 Action M: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. Table 5.14 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Morocco: Risk and Stability Factors and Business Support Factors Risk and Stability Factors Business Support Factors Risk Risk Associated to Associated Financial Industry Innovation Logistical GAPS doing Business to Demand Risk Structure Capacity Infrastructure CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A. Define clearly targets for CSP and PV technologies 1 Action B: Increase the PV and CSP target to 2020 onwards 1 Action C: Remove barriers in order to further the integration of markets and facilitate import materials and/or export manufactured solar components 1 Action D: Develop a system to measure performance and achievements 2_ Business environment 2 Action E: Improve labor market flexibility 2 Action F: Stimulate trade with MENA region 2 Action G: Encourage the development of a solar cluster 3_ Access to finance 3 Action H: Analyze the fiscal and financial advantages by zones 3 Action I: Develop an investment plan 3 Action J: Develop and implement a plan to bring in industrial investors and partners, including consideration of joint ventures 4_ Infrastructure 4 Action K: Identify the best locations for the manufacturing plants 4 Action L: Consider necessary improvements to public infrastructure 5_ Capacity development 5 Action M: Develop demand-side skills strategies to bring in skilled workers to the sector Chapter 5 | Strategic Recommendations and Proposed Actions | 119 Source: STA/Accenture. necessary to carry out solar industries, as well as to Action F: Encourage the development of a solar export manufactured components to other countries cluster in the Region and reduce barriers for doing so. Facilitating trade could be achieved through bilateral Encourage the development of a cluster for solar or multilateral agreements, either specifically created component technologies to take advantage of or already existing ((such as the Arab Mediterranean synergies, such as logistical synergies for transport Free Trade Agreement (AGADIR) or GAFTA)). of the components to clients. This action could be started early but will gain relevance only once the As in the example mentioned, Egypt needs silver industry has begun developing. coating to develop the Mirror industry, and Morocco was one of the top 20 silver-producing countries 3. Access to finance in 2011 [75]. Morocco, in turn, needs to import Action G: Develop an investment plan Float glass, and Egypt is one of the main Float glass manufacturers in MENA Region [73]. These Cost and duration of finance are key determinants for complementary needs and capacities could be a the viability of manufacturing investments, particularly win-win situation in which both countries profit from in the case of new sectors. The investment plan the integration of Regional markets. needs to involve all stakeholders to identify the best ways of extending credit for investments, taking into Action D: Develop a system to measure industry account that smaller companies or new entrants may performance and achievements require long  grace periods to generate the liquidity to pay back. This action targets the generation of Develop a monitoring and evaluation system and finance opportunities, thus encouraging private tools to monitor year-to-date expenditure and sector investments. achievements in the solar industries, using a series of key indicators to assess progress. This kind Action H: Develop and implement a plan to bring of monitoring system would be useful to ensure in industrial investors and partners, including transparency and visibility of achievements by the consideration of joint ventures sector. With a focus on raising funds and securing loans, the 2. Business environment objective of the plan will be to secure the participation Action E: Improve labor market flexibility of key Regional players. The objective is to get key Regional industrial players involved and interested in Labor market flexibility could be improved through participating. specific actions, which need to be defined in coordination with specific agencies and ministries. 4. Identify infrastructure requirements Assuming a manufacturing factory is being Action I: Identify the best locations for the considered, the following actions are highlighted: manufacturing plants • Put in place pay packages reflecting skill By selecting a suitable, logistically well-connected differentials industrial zone to deploy an industry, it is possible • Ensure a core of full-time employees to overcome the logistical infrastructure challenges • Develop transferable skills within the workplace. that may exist in other parts of the country. These locations, which may vary for different industries These actions must be implemented in coordination according to an industry’s specific requirements, with national institutes and authorities. 120 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Box 5.2 | Success Story: Reduction of Financial Risk in Morocco Morocco has established the Investment Promotion Fund (IPF). The fund manages operations relating to the State’s taking charge of the cost of some advantage granted to the projects that meet certain criteria. A project must fulfill at least one of the following criteria: • Invests an amount equal to or greater than MAD 200 million • Creates a number of stable jobs equal to or above 250 • Is executed in one of these provinces or prefectures: Al Hoceima, Berkane, Boujdour, Chefchaouen, Es-Smara, Guelmim, Laayoune, Larache, Nador, Oued Ed-Dahab, Oujda-Angad, Tangier-Asilah, Fahs-Bni-Makada, Tan-Tan, Taounate, Taourirt, Tata, Taza and Tetouan • Ensures transfer of technology • Contributes to environmental protection. For these projects, according to the Moroccan Investment Development Agency, the Investment Promotion Fund can support the following costs: • Land: pays 20% of the expenses of land acquisition • External infrastructure: pays up to 5% of the overall amount of the investment program • Training: pays up to 20% of the expense of vocational training provided as part of the investment program. These advantages are cumulative, provided that the State’s participation does not exceed 5% of the total investment program. However, if the investment project will take place in a suburban or rural area, the participation of the State is allowed to reach 10% of the total investment program. The costs supported by the IPF reduce the investment required to deploy a factory, thus reducing the financial risk of the activity because risk is correlated with the amount financed. Source: STA/Accenture. need to be made known to investors who potentially are generalist, while other are specialized in certain could develop particular industries. sectors (such as offshoring, food and processing of seafood products, automotive, or aerospace). In addition to identifying potentially attractive locations for the plants, the development of industrial Morocco might consider developing specialized estates in which to cluster manufacturing capability Investment Zones for solar industries. Doing so for the different solar component industries could would enable focusing on the specific needs of solar be advisable. In addition, a framework needs to component manufacturing industries, such as for be designed to support investors in assessing the specialized labor force, logistics, and networking with viability of other potential locations. Advancing in this suppliers. direction, Morocco has defined a series of Investment Zones (Figure 5.5). The development of specialized Investment Zones would also facilitate the appearing of a physical solar Within these zones, the investors are offered Real cluster, with all the benefits explained in Action F. Estate services (purchase or rental of land and/or buildings), general (security, telecommunications, Action J: Consider necessary improvements to banking) and advanced specific services (industrial public infrastructure maintenance, logistical areas), training services, a one-stop shop for administrative services (recruitment Identify infrastructure requirements, including port support, municipality services, National Social and road infrastructure, that could increase the Security Fund). Some of these investment zones opportunity to export the products to neighboring Chapter 5 | Strategic Recommendations and Proposed Actions | 121 Figure 5.5 | Investment Zones, Main Seaports and International Airports in Morocco Tanger Tetouan Berkane kenitra Rabet Fes Oujda Casablanca Meknes EI Jadida Settat Tadla Safi Marrakech Eassaouira Ouarzazate Laayoun Legend Investment Zones Offshoring Generalist P2I Food And Processing of Seafood Products Automotive Aerospace Dakhla Main seaports International Airports Highways Source: [80] Table 5.15 | Course on Hot-dip Galvanizing and Corrosion Protection Course Course on Hot-dip Galvanizing and Corrosion Protection Venue Climate Innovation Center Morocco Training Galvanizing process, theory, and practice;the most common inspections Duration 1,000 hours Cost US$1,000 Prerequisites for admission Applicant possesses Secondary Education Certificate Program Galvanizing process: • Surface preparation • Galvanizing • Time to first maintenance • Other corrosion protection systems International galvanizing standards Types of inspection Repairs Tests Source: STA/Accenture. 5. Capacity development countries. Improving road infrastructure will also lower internal transportation costs, thus increasing Action K: Develop supply-side strategies to bring in competitiveness. The Structure & Tracker industry is skilled workers to the sector especially sensitive to this necessity, considering that transportation costs can be a significant burden in its In preparation for developing the solar component final price. industry, supply-side skills strategies based on 122 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry training and education should be put in place daily operations of a TF Modules manufacturing to ensure alignment with the economic objectives line. and future sector needs. Training sessions to prepare workers for the new industry are advisable Although boosting economy-wide employment and because new jobs would involve primarily medium- growth is not enough to boost competitiveness in an level qualified staff. The following course is an innovation sector, such policies can make a critical example to make workers more familiar with the difference to a smaller region or a city[78]. 5.6 Tunisia The high-level recommendations described above well positioned among the selected MENA countries. crystallize in a series of strategies that need to be However, Tunisia still must improve performance. implemented to successfully develop the different General recommendations to address the issue of solar component industries in Tunisia. These flexibility in the market, for any type of industry, are strategies represent the main axes for the country’s shown in Table 5.16. industrial development plan (Figure 5.1). Material availability: This Competitiveness The following gaps analyses and derived parameter is correlated with the resources that a recommendations have been focused on the country possesses and trades. Stainless steel tubes; Receiver industry, because Tunisia’s Attractiveness borosilicate glass; coating; and other products index for this industry lies along the average of MENA such as collars, flanges, and bellows are needed to countries. For this reason, Tunisia is used here as an manufacture Receivers for CSP plants. Their costs example in which to deploy this industry. represent approximately 65 percent of the Receiver manufacturing industry. There are composite 5.6.1 GAPS ANALYSIS companies in Tunisia whose customers are mainly the shipyard and railway industries. These companies Some gaps were found when linking the can adapt their production to the necessities of the Competitiveness parameters to the five axes of Receiver industry. Tunisia has a limited capacity the industrial plan in the current Tunisian business to produce steel (only 285 kt per year) [73], which environment. The most important gaps to be should be increased to avoid shortages. covered to bring Tunisian Attractiveness index for Receiver industry closer to that of the United States Relevant manufacturing ability: Although Tunisia (the best scored Benchmark country) are depicted already has some qualified human capital, on-the- in Figure 5.6. job training must be improved in the short term due to the significant requirements of this industry The main gaps to develop the Receiver industry in for qualified people. Signals, both to the education Tunisia follow. institutions and to the future students or trainees, to prepare and participate are related to the visibility of Labor market: Market efficiency is critical to ensure projects and pipeline and to political will. that workers are allocated to their most efficient use in the economy. This Competitiveness parameter is Fiscal and financial costs: One of Tunisia’s linked to two factors: labor cost, for which Tunisia is strengths. It ranks best among the selected MENA average among the selected MENA countries; and countries and above the Benchmark countries’ market efficiency and flexibility, for which Tunisia is average. Chapter 5 | Strategic Recommendations and Proposed Actions | 123 Figure 5.6 | Strengths and Weaknesses of Tunisia vs. United States in the Receiver Industry Labor market 1.000 Logistical infrastructure Material availability 0.800 0.600 Innovation capacity Relevant manufact. ability 0.400 0.200 Industry structure - Cost of energy (industrial) Financial risk Fiscal and financial costs Risk associated with Component demand demand Risk associated with doing business Production Tunisia - Receiver Demand Risk and stability United States Business support Source: STA/Accenture. Table 5.16 | General Recommendations to Improve the Flexibility of the Labor Market Price (Wage) Numerical Temporal Functional Location Flexibility Flexibility Flexibility Flexibility Flexibility Flexibility of wage Expansion of flexible Flexible working Ability of labor Geographic determination term employment hours force to use flexibility contracts varied technology Pay packages Growth of working Increased use of Transferable reflecting skill from home part-time staff to skills within the differentials meet changes in workplace demand Wider use of Core of full-time Flexibility to shift performance-related employees on to new activities pay as an incentive to contracts at low cost boost productivity Source: [74]. 124 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry CSP and PV Component demand: On one hand, in which to cluster manufacturing capability for the Tunisia’s projected solar capacity for CSP (300 MW) Receiver industry could reduce this gap. Because and PV (50 MW) in Tunisia by 2020 is modest foreign markets will be targeted, to increase compared to other selected MENA countries. On competitiveness in exports, improving logistics is a the other hand, Tunisia’s Direct Normal Irradiation is must. among the best in the world, and this strength will boost the performance of future CSP plants. It is 5.6.2 RECOMMENDATIONS worth analyzing the possibility of increasing CSP and PV targets in the medium term, especially considering The following strategic recommendations follow the abundant solar resource. the five axes described above. Their objective is to reduce the existing gaps with the selected Risk associated with demand: Giving visibility to Benchmark countries to deploy the recommended the pipeline of energy projects would be an important solar component industries in Tunisia. Each action is step toward reducing the perceived risk because linked to the Competitiveness parameter that would Tunisia currently has the lowest CSP and PV target in improve in the way described in Table 5.17. the MENA Region. 1. Sectoral strategy and policy Financial risk: Although Tunisia ranks above the Action A: Create the policy and regulatory MENA average in this parameter, it is still far from environment to advance solar investment the Benchmark countries’ average. The strength of its legal rights index, credit information, public credit The current projected solar capacity for CSP registry coverage and private credit bureau coverage (300  MW) and PV (50 MW) in Tunisia by 2020 is must be improved to guarantee and protect modest, so the country is not likely to develop any investments. of the different solar component industries studied during this period. Industry structure: Large international industrial companies already are located in Tunisia. However, One option available to the government is to provide no local cluster for the Receiver industry has been an important market signal, increasing the solar identified there. Such a cluster could be useful to targets up to levels that can sustain a local component export goods and to import the equipment and industry.If the size of the domestic market alone does materials needed for the Receiver industry, especially not allow for this, another option is to consider ways steel and borosilicate glass for coating purposes. of encouraging Regional demand (Action C). Innovation capacity: Tunisia is among the best After setting the targets or objectives, the immediate of the selected MENA countries in this parameter. step is to create the policy mechanisms and incentives This high ranking is significant because Receiver to ensure not only that the targets are achieved in the is an emerging industry, in which the importance short and medium terms but also that a long-term of innovation is higher than for more mature technologies. For industries with lower innovation Table 5.17 | Associated Impacts in requirements, lack of innovation capabilities can Competitiveness Parameters Due to be partially overcome in the short term through Recommended Strategic Actions collaboration with technological partners. ++ High impact Logistical infrastructure: The identification of + Medium impact − No impact suitable sites and development of industrial estates Chapter 5 | Strategic Recommendations and Proposed Actions | 125 Table 5.18 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Tunisia: Production Factors and Demand Factors Demand Production Factors Factors Relevant Cost of Fiscal and Labor Material Manufacturing Energy Financial Component GAPS Market Availability Ability (Industrial) Costs Demand CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A: Create the policy and regulatory environment to advance solar investment in Tunisia 1 Action B: Make the project pipeline visible 1 Action C: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action D: Develop a system to measure performance and achievements 2_ Business environment 2 Action E: Put in place a plan to develop R&D capacity 2 Action F: Development of an information database of local manufacturers 2 Action G: Development of standards for individual components 2 Action H: Encourage the development of a solar cluster 3_ Access to finance 3 Action I: Consider concessional finance opportunities 3 Action J: Develop an investment plan 3 Action K: Spread investment procedure among potential investors 4_ Infrastructure 4 Action L: Identify the best locations for the manufacturing plants 4 Action M: Consider necessary improvements to public infrastructure 4 Action N: Facilitate the purchase or rental of land and/or buildings 5_ Capacity development 5 Action O: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. Table 5.19 | Gaps Addressed by Strategic Recommendations Relating to the Axes of the Industrial Development Plan in Tunisia: Risk and Stability Factors and Business Support Factors Risk and Stability Factors Business Support Factors Risk Risk Associated to Associated Financial Industry Innovation Logistical GAPS doing Business to Demand Risk Structure Capacity Infrastructure CSP INDUSTRIAL PLAN'S AXES ACTION PV 1_ Sectoral strategy and policy 1 Action A: Create the policy and regulatory environment to advance solar investment in Tunisia 1 Action B: Make the project pipeline visible 1 Action C: Remove barriers in order to further the integration of markets and facilitate the import materials and/or export manufactured solar components 1 Action D: Develop a system to measure performance and achievements 2_ Business environment 2 Action E: Put in place a plan to develop R&D capacity 2 Action F: Development of an information database of local manufacturers 2 Action G: Development of standards for individual components 2 Action H: Encourage the development of a solar cluster 3_ Access to finance 3 Action I: Consider concessional finance opportunities 3 Action J: Develop an investment plan 3 Action K: Spread investment procedure among potential investors 4_ Infrastructure 4 Action L: Identify the best locations for the manufacturing plants 4 Action M: Consider necessary improvements to public infrastructure 4 Action N: Facilitate the purchase or rental of land and/or buildings 5_ Capacity development 5 Action O: Develop demand-side skills strategies to bring in skilled workers to the sector Source: STA/Accenture. steady development is possible, meaning an effective to be imported. Tunisia can tap into its strengths by change in Tunisia’s energy supply mix. Changing the working with other MENA countries on a combined mix can be done in different ways, such as a FIT strategy to develop solar energy in the Region. The system, green certificates, grants, subsidies, soft result could be a win-win situation in which all countries loans, tax exemptions or other mechanisms to enable profit from the integration of Regional markets. the high growth-rates required to reach Tunisia’s target. However, it is necessary to take into account Action D: Develop a system to measure industry that the different mechanisms and incentives have performance and achievements different advantages and disadvantages and that the policies must be flexible enough to accommodate Develop a monitoring and evaluation system and the evolution of the solar market. tools to monitor year-to-date expenditure and achievements in the solar industries, using a series of Action B: Make the project pipeline visible to key indicators to assess progress. This M&E is useful investors and public to ensure transparency and visibility of achievements by the sector. Giving visibility to the pipeline of projects in different stages of development encourages transparency 2. Business environment and contributes to give investors and financing Action E: Put in place a plan to develop R&D institutions the foresight and confidence required for capacity an associated local industry to develop. With the objective of increasing innovation capacity Monitoring installed capacity is a tool both to evaluate in the Region, it is essential to put in place both R&D the effectiveness of the system and its impact on funding and partnerships to develop new processes society and on national budgets, and to give visibility that improve solar industries. These improvements to potential investors. will yield a competitive advantage in the medium and long terms. Tunisia has a good base of educated Action C: Remove barriers to help advance the engineers, technicians, and workers. To increase integration of markets and facilitate the import its competitive edge, the provision of additional of materials and/or export of manufactured solar training programs is encouraged. As an example, components some opportunities for technology transfer based on Receiver industry are detailed: Action C may include the development of agreements to import raw and other materials necessary to • Coatings and vacuum process establish solar industries, as well as to export • Glass to metal welding manufactured components to other countries in the • Glass to glass welding. Region and reduce barriers to doing so. Removing barriers may be achieved through bilateral or Action F: Development of a database of local multilateral agreements, either specifically created manufacturers or already existing ((such as the Arab Mediterranean Free Trade Agreement (AGADIR) or GAFTA)). Develop and maintain a database of local manufacturers and possible counterparts available As an example, Tunisia needs stainless tubes; to project developers to incentivize local supply borosilicate glass; coating; and other products share in projects. The database could be updated by such as collars, flanges, and bellows to develop the collaborating with professional associations. Receiver industry. Some of these materials will need 128 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Action G: Development of standards for individual ways of extending credit for investments in Receiver components manufacturing capacity, taking into account that smaller companies or new entrants may require long Facilitate and encourage the development of grace periods to generate the liquidity to pay back. standards for the local solar component industry, This action targets generating finance opportunities, to avoid the entrance of low-quality products in thus encouraging private sector investments. the market. Standardization would reduce overall manufacturing costs. The adaptation or adoption of Action K: Spread investment procedures among international standards would also facilitate exports potential investors. by avoiding compatibility and/or quality issues. An investor’s guide to set up and build a business Action H: Encourage the development of a solar in Tunisia has been created. The Ministry of Industry cluster and Technology has developed a website to clarify the procedures for setting up a company. The No local cluster has been identified in the country. maintenance and improvement of this website is The development of a cluster for solar component intended to attract investors and maintain a lasting technologies would help to take advantage of relationship with them, important for a country such synergies, such as logistical synergies for transport of as Tunisia, which already is well positioned in the the components to clients. This action can be started ease of doing business ranking. early but will gain relevance only once the industry has begun developing. 4. Identify infrastructure requirements Action L: Identify the best locations for the 3. Access to finance manufacturing plants Action I: Consider concessional finance opportunities By selecting a suitable, logistically well connected industrial zone to deploy an industry, it is possible Concessional finance by the IFC, AfDB, or other to overcome the logistical infrastructure challenges donors could mitigate the risk of private sector that may exist in other parts of the country. These investors coming into solar industries. Depending on locations, which may vary for different industries the donors, different products and structures could according to an industry’s specific requirements, be considered, including risk-sharing products, need to be made known to investors who could lower-interest-rate products, and lower returns for develop particular industries. equity investments. These initial investments in the industry could pave the way for financing on fully A Receiver manufacturing plant could be installed commercial terms.79 close to a railway station, seaport, or airport to facilitate the import of borosilicate glass and stainless Action J: Develop an investment plan steel. This proximity is important due to the fragility and weight of the materials. Another option could be Cost and duration of finance are key determinants for to install the plant near a stainless steel factory, or the viability of manufacturing investments, particularly a borosilicate glass manufacturing facility if it were in the case of new sectors. The investment plan developed, because there is no glass production in needs to involve all stakeholders to identify the best the country today. 79 As an example, AfDB is employing a model of concessional financing to finance early stages and high-risk activities required to fast- track the development of geothermal sources in East Africa. Chapter 5 | Strategic Recommendations and Proposed Actions | 129 In addition to identifying potentially attractive take the necessary measures to facilitate land locations for the plants, the development of industrial allocations for public lands. estates in which to cluster manufacturing capability for the different solar component industries could 5. Capacity development be advisable. In addition, a framework needs to Action O: Develop supply-side skills strategies to be designed to support investors in assessing the bring in skilled workers to the sector viability of other potential locations. In preparation for developing the solar component Action M: Consider necessary improvements to industry, supply-side skills strategies based on public infrastructure training and education should be put in place to ensure alignment with the economic objectives and Identify infrastructure requirements, including port future sector needs. These strategies would involve and road infrastructure, which could increase the collaboration between Tunisia’s Ministry of Higher opportunity to export the products to neighboring Education and Scientific Research and its Ministry of countries. Improving road infrastructure will also Labor. Collaboration could include the development of lower internal transportation costs, thus increasing specialized training and education in areas such as: competitiveness. • Laminating and coating expertise Action N: Facilitate the purchase of rental of land • Mechanical expertise and/or buildings • Welding expertise • General maintenance expertise Develop a framework to facilitate the acquisition, • General business functions, including but not either through purchase or rental, of land and/or limited to: logistics, human resources, quality buildings by potential investors. At the same time, control and purchasing. 5.7 Recommendations for MENA Regional Cooperation The existence of sufficient domestic demand is a key Table 5.20 demonstrates that, although some driver for the development of an industry because countries have ratios above 100 percent so could demand is perhaps the less adaptable factor. If there develop certain industries on the basis of domestic is no current or projected demand (internal or external) demand alone, the remaining countries lack the in a country, it is unlikely that the solar component critical mass to develop these industries. industry would develop, even if other conditions exist. The component supply needed to cover a country’s A Regional approach will enable an industry not annual solar target can be compared to typical annual only to have access to a critical market but also manufacturing capacity of a given industry. The ratio to leverage each country’s strengths and offset its between the typical output of a component factory80 relative weaknesses. and the domestic demand is a first high-level indicator of the attractiveness to an investor to set up a factory Beyond component demand, Figure 5.7 shows to supply the foreseen market. that, on average, Benchmark countries are more 80 Based on interviews with leading companies, the footnote table shows the average manufacturing capacity by solar industry: Solar Industry Receivers (MW/year) Mirror (MW/year) CSP & PV Structure (MW/year) TF Modules (MW/year) Average manufacturing capacity by solar industry 150 300 70 100 130 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 5.20 | Potential Autonomy of competitive than MENA countries in energy cost. Individual MENA Countries to Develop Nevertheless, the best-performing MENA country Various Industries based on Domestic for each factor surpasses the Benchmark countries’ Demand average in labor market, cost of industrial energy, Ratio of Yearly Forecasted Demand fiscal and financial costs, component demand, vs. Nominal Capacity of a Typical and industry structure. In other words, each MENA Production Factory, to 2020(%) country could build on its distinctive advantages and, CSP & PV TF as a group, on their complementary strengths. Country Receivers Mirror Structure Modules Algeria 125 110 415 100 Figure 5.7 represents a hypothetical MENA country Egypt 90 45 230 25 whose 12 Competitiveness parameters would be Jordan 40 20 110 20 equal to the best among the MENA countries. As can Morocco 133 67 360 50 be seen by comparing the yellow and purple lines, Tunisia 25 12 60 6 working together on a combined strategy, the MENA Regional 415 205 1175 200 Region could gain access to strengths that would Source: STA/Accenture. take it well beyond the average of the countries. Note: For Table 5.20, a preliminary, hypothetical linear distribution While Figure 5.8 is only a representation, it shows of the planned solar power capacity has been assumed to estimate an annual demand to be compared with the that MENA countries are complementary and that a average manufacturing capacity by solar industry. Figure 5.7 | Representation of the Combined MENA Advantages in the Competitiveness Analysis Compared to the Benchmark and MENA Country Averages Labor market (Egypt) (Tunisia) Logistical infrastructure 1.00 Material availability (Egypt) 0.80 0.60 (Jordan) Innovation capacity Relevant manufacturing ability (Egypt) 0.40 0.20 (Morocco) Industry structure - Cost of energy (industrial) (Algeria) (Egypt) Financial risk Fiscal and financial costs (Tunisia) (Morocco) Risk associated to demand Component demand (Morocco) Risk associated to doing business (Tunisia) Production Combined Maximum MENA Advantage Demand Benchmark Country Average Risk and stability MENA Country Average Business support Source: STA/Accenture. Chapter 5 | Strategic Recommendations and Proposed Actions | 131 To establish a framework of free commerce/free export Figure 5.8 | Key Axes in a Regional Development Plan for Solar in specific locations within the different countries Component Industries for the materials, products, and components to be included within the Regional plan, to stimulate the manufacturing and trade of these components within 1. Sectoral strategy and the Region, and to increase competitiveness and policy productivity. Action A may be achieved through bilateral 5. Capacity 2. Business agreements, a specific multilateral agreement, or development environment Country's within the Greater Arab Free Trade Area (GAFTA). development plan 2. Business environment Action B: Put in place a plan to develop R&D capacity 4. 3. Access to Accelerate research, development, and innovation Infrastructure finance in the Region by setting up science and technology agreements to identify common research priorities and areas of common interest among R&D centers, Source: STA/Accenture. universities, and industry. Then, to avoid duplicate efforts, prioritize transnational plan to develop the solar industries together would cooperation on R&D projects related to solar energy benefit all MENA countries. and solar industry components. The recommendation is for the different selected Action C: Develop a Regional Climate Innovation MENA countries to work together toward the Center development of a common transnational policy to design and develop different solar elements in Promote the development of a Regional Climate different countries, following their relative competitive Innovation Center, whose role will be to link all advantages. This Regional plan would focus on five the National Climate Innovation Centers, thus offering main axes (Figure 5.8): services to fill the existing gaps in financing, access to information, training, and networking facilitation. a. Sectoral strategy and policy b. Business environment Action D: Carry out a communication campaign c. Access to finance d. Infrastructure Communicate this Regional strategy at a national, e. Capacity development. Regional, and international level, because the Regional strategy represents the first step toward a The plan could include the following measures and more competitive industry that could satisfy needs actions. and requirements of the international market as well. 1. Sectoral strategy and policy Action E: Stimulate trade within MENA Region Action A: Remove barriers to facilitate the import of materials and export of manufactured solar A deeper integration to stimulate trade with other components regionally countries is recommended. The World Bank has 132 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry analyzed the current agreements [81] in the MENA 4. Infrastructure Region and found that none of them comes close Action G: Consider necessary improvements to to generating the sizable trade impact that the EU public infrastructure has had on its members. The following remarks are extracted from the Bank’s report: Large infrastructure works such as highways and high capacity train lines could improve logistical “Although the agreements have facilitated infrastructures and connections among the different trade, initial trade is very low as the countries countries, thus improving transnational trade. are not natural trade partners, so the gains Consider possible opportunities for coordination at from expanded trade are small. In addition, an the Regional level. important concern is that there are too many overlapping and partial agreements and that 5. Capacity development this ‘spaghetti bowl’ will serve as a distraction Action H: Develop supply-side strategies to bring of scarce trade negotiating resources. …In skilled workers to the sector sum, [R]egional integration can help the MENA countries stimulate trade and investment, but the Under the Regional Climate Innovation Center, largest gains are likely to come from domestic support the development of Regional training reforms. Given the relatively small effects of courses and seminars to satisfy future needs of existing [R]egional integration agreements in skilled workforce for the solar component industries. MENA, pursuing this route is unlikely to prove These courses, which would be attended by people successful unless agreements are much deeper from all MENA countries, will also represent an and domestic reforms are pursued.”(p.22) important networking opportunity for professionals in the sector. As an example, Morocco needs raw materials and composites to implement solar industries, so a solar trade agreement following the lines of the AGADIR or GAFTA with MENA countries must be developed. Morocco might import Float glass from Egypt and Algeria [73], and the latter two might import TF Modules to fulfill their solar target. 3. Access to finance Action F: Improve financing environment Develop a Regional capacity building program among financial institutions to improve local capacity to evaluate solar industry related projects, and share success stories among MENA countries and collaboration among the national development agencies on projects successfully financed. Both approaches are aimed to reduce the risk perceived by financial institutions, thus easing the access to finance for new projects. Chapter 5 | Strategic Recommendations and Proposed Actions | 133 6 CHAPTER SIX: National Climate Innovation Center The development of the solar industry represents an Specific functions and activities of the National important opportunity for MENA countries to drive Climate Innovation Center the different areas could the development of all associated industry in the include: Middle East and North Africa Region. The creation of a National Climate Innovation Center (CIC) in the five 1. Financing selected MENA countries, together with a Regional Climate Innovation Center, could be one of the key a) Climate technology subsidies: Subsidies elements to make this possible. (up to US$50K) granted by the National CIC to researchers, entrepreneurs, and The key role of the Climate Innovation Center should new branches of existing companies will be to support the development of renewable energy support the development of a local climate industries in MENA countries and—prioritized among technologies market. These subsidies should them, the solar energy industry—by offering services be used in the validation of new concepts, in to bridge the gap for renewable energies and the testing or demonstration phase, and/or to encourage investment in related industries. assure a technology’s market viability. Support must be maintained for at least 5 years to A National Climate Innovation Center can help guarantee the fulfillment of researchers’ work; fill the gaps in financing, access to information, b) Investment fund facilitation: Provide consulting and/or training, and networking facilitation access to investment funds for individual for the locally relevant climate and clean energy projects on the order of US$150K to technologies. In the case of solar, these technologies US$1.5M each to companies starting include both CSP and PV; and both large-scale activities that involve the development of projects, for national or international supply, and innovation solar technologies. All investment small-scale projects, for supplying energy to remote assigned to these companies must be areas in the less-developed agricultural regions of matched by an additional investment of the MENA countries. same value obtained by the promoter from a different source. For example, to obtain With this objective in mind, the purpose should be US$300K from the National CIC, a company not only to import foreign knowledge and technology. should spend at least another US$300K from The purpose should also be to develop the conditions a different source on the same project. so that MENA countries can learn all that has been c) If not already available in the country, support accomplished to date so it can advance to the the creation of an Investment Promotion forefront of solar energy development in aspects that Agency. The role of such an Agency, in are of particular interest to the MENA Region. accordance with an existing one (Moroccan 134 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Investment Development Agency), could for project developers. These markets, include: in turn, will increase the component demand for renewable (specifically solar) i. Image Building Activities: Creating the industries. perception of a country as an attractive site for international investment. d) Involvement of local banks in solar Activities commonly associated technology projects. Develop capacity with image building include focused building in local financing institutions, on advertising, public relations events, and lending to clean energy projects; develop the generation of favorable news stories support tools and incentives (risk guarantee (“buzz”) by cultivating journalists. programs). ii. Investor Facilitation and Investor e) Available Funds: Develop a database of Servicing: Providing the range of services available funds and grants, including both in a host country that can assist an national and international opportunities, for investor in analyzing investment decisions, different types of projects using innovative establishing a business, and maintaining climate technologies. it in good standing. Activities include information provision, “one-stop-shop” 2. Access to information service aimed at expediting approval process, and general assistance. a) Implementation and management of a iii. Investment Generation: Targeting National CIC website. The website should specific sectors and companies to include a presentation of the CIC: its goals, create investment leads. Activities may mission, and programs. The site may be include identification of potential sectors used to disseminate solar reports and to and investors, direct mail, telephone publicize upcoming and past events in the campaigns, investor fora and seminars, solar field, as well as to inform and raise and individual presentations to targeted awareness of the value and advantages of investors. climate technologies and the opportunities iv. Policy Advocacy: Supporting initiatives offered in the sector. Another function of the to improve the investment climate and website would be to encourage interaction identifying the views of the private sector with companies interested in supporting the on relevant matters. Activities may include CIC and partnering with it at the national surveys of the private sector, participation and international levels. Finally, the website in task forces, policy and legal proposals, could provide linkages to other CICs and to and lobbying.Support the development the solar value chain community, reinforcing of the institutional structure for the Clean Regional market integration. Development Mechanism (CDM) and for b) Climate technologies database. Set future Nationally Appropriate Mitigation up and maintain a database in one, Action (NAMA) policies that may comprehensive format about the different develop. Support given to these flexibility climate technologies, including, but not mechanisms implemented under Kyoto limited to, information on the technologies and to future NAMA agreements may themselves, national and Regional policies have a positive impact on renewable, and incentive measures, and other market specifically solar, energy development by information. The different National CICs could creating additional market opportunities collaborate to provide a rich source of data Chapter 6 | National Climate Innovation Center | 135 for investors, analysts, and policymakers, 3. Consulting/Training among others. c) International suppliers’ database for these a) Business and financial planning support. technologies and their components. Set Provide basic advice and support to up and maintain a database of local and interested individuals and companies on the international renewable energy companies, business and financial information required to products, and services that can help potential set up and grow a company in the climate investors and project developers identify technologies sector. A whole set of services suppliers for different components. Consider will be offered to eligible persons/companies. the inclusion of a web-based mechanism for These services including: registration of goods and services providers. d) Quarterly publication of an e-Bulletin i. Expert advice on and about the clean highlighting market trends in the RE sector technology sector and for specific technologies. Publish an ii. Customized assistance on the e-Bulletin with information and analysis development of a business plan about new trends for the different climate iii. Financial planning services to ensure technologies, highlighting the market that their business plans are ready for situation, and local and Regional market investment and support in applying for trends and opportunities. The bulletin will also available subsidies or grants provide statistics, data, and lessons learned iv. Advice on how to make the transition from the CIC’s beneficiaries to share their from an informal business to a formal knowledge and experiences in a wider scope. business (or from another industry to the e) Organization of an annual forum dedicated solar industry) to innovation in climate technologies. Under v. Assistance in commercialization of the auspices of the CIC, national and climate technologies both domestic and international stakeholders may gather every international (export policy) year to share achievements, trends, and vi. Assistance to business to be able to use developments in the sector worldwide and, ICT (information and communication more specifically, in the MENA Region. technology) f) Organization of a number of roundtables (to vii. Other business support solutions covering be defined) every year. The objective of the RTs such topics as regulation employment will be to bring together major stakeholders to matters and customer service issues. discuss topics of interest for the RE sector and for specific technologies, such as, for example, b) Industry-specific training courses. Provide global good practices in policy and regulation, industry-specific training courses to satisfy climate change risks and opportunities, future needs for skilled workforce, specifically national and Regional solar resource potential, in technical and specialized knowledge. The and energy security and innovation. The exact offering of training courses would have topics for discussion at each RT will be agreed to be developed and updated frequently beforehand with key stakeholders. according to industry and sector needs. For the g) Annual award for innovation in climate solar industry, training course topics could be: technologies. Award developers and companies who have integrated climate- i. Developing basic and applied knowledge friendly technologies successfully in their on processes and technologies related projects. to the use of solar radiation 136 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry ii. Sputtering and encapsulation processes vii. Master in carbon offsetting, Clean used in TF Modules industry Development Mechanism (CDM), and iii. Instrumentation and control carbon markets. iv. Coating process and welding required by the Receiver industry Example 1: Course on hot-dip galvanizing and v. Galvanization structure and corrosion corrosion protection. Table 6.1 is an example of the protection industries course’s program features and requirements. vi. Training course to raise awareness of climate change issues Table 6.1 | Course on Hot-Dip Galvanizing and Corrosion Protection Course Course on Hot-dip Galvanizing and Corrosion Protection Venue Climate Innovation Center (CIC), Morocco Training Galvanizing process theory and practice. Most common inspections. Duration 1000 hours Cost US$1000 Prerequisites for Possession of Secondary Education Certificate admission Program Galvanizing process: • Surface preparation • Galvanizing • Time to first maintenance • Other corrosion protection systems International galvanizing standards Types of inspection Repairs Tests Source: STA/Accenture. Chapter 6 | National Climate Innovation Center | 137 Example 2: Master’s Degreein Carbon Offsetting Clean Development Mechanism, and Carbon Markets. The following is an example of the Master’s program features and requirements: Table 6.2 | Master’s in Carbon Offsetting Clean Development Mechanism and Carbon Markets Master’s Degree in Carbon Offsetting Clean Development Mechanism Master’s Program and Carbon Markets Venue Climate Innovation Center (CIC), Morocco Training Implementation of training programs related to carbon-offsetting projects and the carbon market Duration 600 hours Cost US$2000 Prerequisites for Possession of a university Bachelor’s degree admission Program Improving the CDM process in the country and including solar projects in the portfolio The following actions have been identified as potential means to improvement of the CDM in the country: • Improvement of legislation on standards and norms in the mitigation areas. • Establishing incentives for the support of the energy saving projects and renewable sources of energy, particularly for solar projects. • Financial encouragement of mitigation measures. • New assessment of technological needs and analysis of the mitigation potential in the country. • Implementation of training programs related to CDM projects. Exploring opportunities in the “new mechanisms” framework, including: • Unilateral NAMAs, domestically funded and unilaterally implemented. • Supported NAMAs, implemented with support from developed countries (financial, technological, capacity building). • Credited NAMAs that would generate credits for the reductions achieved (This option is in a very preliminary stage of discussion and has not been formally agreed by all the parties.) Source: STA/Accenture. Note: * NAMA = nationally appropriate mitigation action. 138 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Example 3: Course on sputtering laser techniques and encapsulation. The following is an example of the course’s program features and requirements: Table 6.3 | Course on Sputtering Laser Techniques and Encapsulation Course Course on Sputtering Laser Techniques and Encapsulation Venue Climate Innovation Center (CIC), Morocco Training Improving the sputtering laser techniques and encapsulation process Duration 3 weeks Cost Borne by TF Modules industry promoters Prerequisites for Possession of Secondary Education Certificate admission Program Improving the sputtering and encapsulation process and laser techniques in the country This course is intended to make the worker more familiar with daily operations, proper routine maintenance procedures, emergency repairs, and basic calibration of the instrumentation. Course objectives: • Basic familiarity with sputtering and encapsulated processes • Basic understanding of calibration techniques • In-depth understanding of mechanical fluid flow systems • Ability to complete basic mechanical, electrical, and computer maintenance • Ability to conduct basic troubleshooting and repairs Source: STA/Accenture. c) Training Seminars: A number of formative but not limited to general management seminars to be organized every year with project development and marketing. different target groups in mind. These groups d) Develop a jobs listing board. Develop and would include but would not be limited to: maintain an active jobs listing board that lists abilities and competencies for employment i. University students interested in in climate technologies. Participants would developing careers in climate technologies include among others people who have ii. Entrepreneurs interested in starting benefitted from the training courses offered or redirecting their companies to use as well as students looking for internships in climate technologies or to integrate the sector. climate technologies in their current e) Annual scholarship awards. Under this manufacturing processes framework, the CIC would award a number iii. Unemployed people who are looking to of scholarships to embed promising research recycle their skills in a different industry students from top universities in climate iv. Investors and local bankers technology industries and encourage applied v. General public. research on related subjects. National CICs could collaborate to encourage student The seminars will cover a wide range of exchange among different countries in the commercial and technical aspects including Region as well. Chapter 6 | National Climate Innovation Center | 139 4. Networking facilitation d) Diaspora/investors network. Facilitate the creation of a diaspora/investors network The following activities can be envisioned with interested in the climate technologies sector. the objective of facilitating the framework for This network will provide secure counterpart expanded interaction and coordination among funds for companies supported by the CIC different agents in the sector: and provide a list of possible tutors from the mentoring program for early-stage a) Mentoring program. Establish an extensive companies. mentoring network for entrepreneurs, e) Support to professional institutions. technical advisors, and locally based Promote the development of climate professional services companies (accounting, technologies industries in several legal, and marketing). The objective of the socioeconomic sectors. The CIC will provide mentoring program will be to ensure that financial support to strengthen the capacity of each company sustained by the CIC’s grants the existing professional institutions already in will have access not only to the funds but the climate technologies sector or to create also to a tutor and additional support during new institutions. the entire financing cycle. The tutors will be f) Networking lunch. To facilitate partnership rewarded by the CIC for their involvement on opportunities, organize a monthly networking the program. lunch open to all companies and organizations b) Partnerships between the CIC and interested in learning more about the sector. Universities. The CIC will act as the focal g) International networking. To benefit national point for synergies and university-industry companies, build the relationship with partnerships in the climate technologies Regional and international organizations and sector. Select from among local universities promote initiatives for the global development and institutions appropriate partnerships of the climate technologies. The National CIC, to organize solar-oriented courses and together with the Regional CIC and other workshops on climate technologies and international centers, also could encourage entrepreneurship. exchanges of good South-South practices c) Relationships between government and to facilitate the access of national companies private sector. Set up a database of into foreign markets. companies interested in renewable energy and promote the dialogue between the The spectrum of actions described above in government and the private sector to develop financing, access to information, consulting, training, relationships and reinforce the political/ and networking facilitation are depicted in Table 6.4 legislative/fiscal framework around innovation and Table 6.7. for green growth using climate technologies. This database is essential to make sure the government is on board and informed of the newest developments in the sector because the government’s support in the development of new technologies is key. 140 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 6.4 | Financing Specific Actions to be Conducted by CIC Short-Term (< 1 year) Mid-Term (1–3 years) Long-Term (> 3 years) FINANCING Climate Technology subsidies to researchers to support the development and adaptation to local climate technologies market Provide basic advice on subsidies (Investment Fund Facilitation) to the Government for the existing steel industries to adapt their production to solar project requirements (galvanizing process) Provide basic advice on subsidies (Investment Fund Facilitation) to the Government to existing pressure and vessel tanks industries to adapt their production to pumps, heat exchanger, and condenser requirements for solar projects Raise funds (Investment Fund Facilitation) to train workers for new solar industries and processes Support the creation of an   Investment Promotion Agency if not already available in the country Provide basic advice on fiscal and financial incentives to attract FDI (foreign direct Investment) Carry out surveys in the private sector (such as steel glass pressure vessel and tanks and new solar industries) to get feedback about the progress made thanks to the subventions of the Government Support the Institutional Structure of Support the Institutional Structure for the Clean Development Mechanism (CDM) the Clean Development Mechanism and future CO2 offsetting and national appropriate mitigation action (NAMAs) (CDM) NAMA mechanisms that may develop Implement NAMAs agreements with Support NAMAs agreements with other other countries countries Facilitate the involvement of local banks in climate technologies projects Develop and maintain a database of available funds Source: STA/Accenture. Chapter 6 | National Climate Innovation Center | 141 Table 6.5 | Access to Information Actions to be Conducted by CIC Short-Term (< 1 year) Mid-Term (1–3 years) Long-Term (> 3 years) ACCESS TO Implementation and management of a National CIC website to disseminate information and events and inform the INFORMATION public about climate technologies Interact with companies and potential partners interested in supporting the CIC Develop the climate technologies database Develop the international supplier database Quarterly publication of an e-Bulletin with the climate technologies market trends in renewable energies sector Organize annual forum dedicated to the innovation in climate technologies to share achievements trends and developments in the sector Organize a number of roundtables every year to bring together major solar energy stakeholders to present national and Regional solar resource potential    Annual award for innovation in climate technologies Source: STA/Accenture. 142 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table 6.6 | Training: Specific Actions to be Conducted by CIC Short-Term (< 1 year) Mid-Term (1–3 years) Long-Term (> 3 years) CONSULTING/ Provide basic advice and support to interested individuals and companies on the business and financial TRAINING information required to set up and grow a company in the climate technologies sector Advice on how to make the transition from another industry to a solar industry Assistance on the development of a business plan for the development of a solar industry Financial planning services and support in applying for available subsidies or grants Training course to develop basic and applied knowledge on processes and technologies related with to use of solar radiation Training course to increase national competitive edge in sputtering and encapsulation processes (required by TF Modules industry) Training course in instrumentation and control Training course to increase national competitive edge in coating process and welding (required by Receivers industry) Training course to increase national competitive edge in galvanization structure and corrosion protection (required by Mirrors and structures industries) Master of Clean Development Mechanism and Carbon Trading Training seminars for entrepreneurs (and stakeholders) interested in starting or redirecting a company using climate technologies Job listing board for employment in climate technologies Annual scholarship awards. Source: STA/Accenture. Chapter 6 | National Climate Innovation Center | 143 Table 6.7 | Networking Facilitation Actions to be Conducted by CIC Short-Term (< 1 year) Mid-Term (1–3 years) Long-Term (> 3 years) NETWORKING Mentoring program to give support during the entire financing cycle FACILITATION Select the local universities Organize courses and workshops about renewable energy and institutions to establish partnerships Create a database of companies Promote annual meeting between CIC/Government and private sector to reinforce interested in renewable energy the political/legislative/fiscal framework Create a diaspora/investor network to invest in solar industries Provide a list of possible tutors from a mentoring program for early stage companies Make suggestions to strengthen the capacity of the existing professional institutions Advice and support to create new institutions to promote the development of climate technologies industries in several socioeconomic sectors Networking lunch aimed at facilitating partnership opportunities Build the relationship between Build the relationship between international organizations and promote initiatives to Regional organizations and facilitate the entry of national companies into foreign markets promote initiatives to facilitate 144 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry the entry of national companies into foreign markets Source: STA/Accenture. Annexes Annex 1 | Solar Technologies Value Chain Analysis CONCENTRATED SOLAR POWER way, as for any concentrating solar technology, (CSP) TECHNOLOGY only the beam (direct) component of the solar irradiation is used because the diffuse portion Strictly speaking, “Concentrated Solar Power” (CSP) does not follow the same optical path and will not also could apply to Low- and High-Concentration reach the focus. Photovoltaic Systems. However, CSP more • A power block (PB), in which the heat contained commonly describes technologies that use the in the HTF generates electricity. The most common thermal energy from solar radiation to generate approach is to produce high pressure steam electricity. These systems can be divided in three that then is channeled through a conventional main subsystems: steam turbine and generator in a Rankine cycle. However, the Dish/Engine systems use a Stirling • A solar field (SF), in which Mirrors (or, in some new engine. developments, lenses) are used to concentrate • A thermal energy storage (TES) system, in (focus) the sunlight energy and convert it to high- which the excess energy from the SF is stored temperature thermal energy (internal energy). for further use in the PB. The state of the art in This heat is transferred using a heat transfer fluid this field is to use molten salts stored in two tanks (HTF), which can be synthetic oil (the most widely (one “cold” and one “hot”) and a reversible heat used) molten salt, steam air, or other fluids. The exchanger. Additional approaches include steam point focus systems enable higher concentration storage, direct use of molten salt as HTF, and ratios and therefore higher temperatures and experimental prototypes. efficiencies, although they require highly precise two-axis tracking systems. Linear focus systems To sum up, actual CSP plants utilize four alternative are less demanding but less efficient as well. Either technological approaches: Parabolic Trough Systems Linear Fresnel Systems, Power Tower Systems, and Dish/Engine Systems. Table A1.1 | CSP Solar Fields Point Focus Linear Focus PARABOLIC TROUGH SYSTEMS Single focus Power Tower systems* The Parabolic Trough today is considered a Multiple Dish/Engine Parabolic commercially mature technology, with thousands of focus systems Trough systems megawatts already installed in commercial power Linear Fresnel systems plants, mainly in the US and Spain. In 2012 Parabolic Note: * Multitower solar fields are at a demonstration stage Trough comprised approximately 95 percent of total (a 5 MWe plant started operation in 2009). CSP installed capacity (Figure A1.12). Annexes | 145 Figure A1.1 | Parabolic Trough Collectors Installed at Plataforma Solar de Almería (Spain) Source: Photo courtesy of PSA-CIEMAT Parabolic Trough (as well as Linear Fresnel) is a 2D Trough CSP plants actually in operation. The concentrating system in which the incoming direct most commonly used oil is a eutectic mixture solar radiation is concentrated on a focal line by one- of biphenyl and diphenyl oxide. Additional fluids axis-tracking, parabola-shaped Mirrors. They are able (such as silicone-based) are under development to concentrate the solar radiation flux by 30–80 times, and testing. heating the HTF up to 393ºC. (A different approach • Mirror: It reflects the direct solar radiation incident using molten salts as HTF can reach up to 530ºC on it and concentrates it onto the Receiver but is not commercially proven yet.) The typical unit placed in the focal line of the Parabolic Trough size of these plants ranges from 30 MWe–80 MWe collector. The Mirrors are made with a thin silver or (megawatt-electric). Thus, they are well suited for aluminum reflective film deposited on a low-iron, central generation with a Rankine steam turbine/ highly transparent glass support to give them the generator cycle for dispatchable markets. necessary stiffness and parabolic shape. • Receiver or absorber tube: It consists of two A Parabolic Trough solar field comprises a variable concentric tubes. The inner tube is made of number of identical “solar loops” connected in stainless steel with a high-absorptivity, low- parallel. Each loop can raise the temperature of a emissivity coating, and channels the flow of the certain amount of HTF from the “cold” to the “high” HTF. The outer tube is made of low-iron, highly operation temperature (typically from 300ºC to transparent glass with an antireflective coating. 400ºC). The loops contain from 4 to 8 independently A vacuum is created in the annular space. This moving subunits called “collectors.” The main configuration reduces heat losses, thus increasing components of a Parabolic Trough collector are: overall collector performance. • Structure & Tracker: The solar tracking system • HTF Thermal Oil: A synthetic oil is used as changes the position of the collector following heat transfer fluid in all commercial Parabolic the apparent position of the sun during the day, 146 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry turbine manufacturer could try to limit the possible Figure A1.2 | Schematics of a Parabolic Trough Collector suppliers of condensers to give a performance guarantee, or even include the condenser in its own scope of supply. Sun rays • Electrical generator: Within the generator, the rotary movement from the turbine is transmitted to a series of coils inside a magnetic field, thus 02 producing electricity due to electromagnetic 03 induction. The design and manufacturing of a generator requires special materials and a highly specialized workforce, available to only a limited number of companies around the world. To manufacture generators, carbon steel, stainless steel, and special alloys are required, as well as copper and aluminum in smaller amounts. • Heat exchanger: Two different sets of heat 01 exchangers are required in the PB. First, HTF- 01 Solar Field Piping 02 Reflector 03 Absorber tube water heat exchangers (usually referred to as SGS, or steam generation system) are required Source: STA. to generate the high-pressure and -temperature steam that will drive the turbine. Second, water- water heat exchangers recover the heat from thus enabling concentrating the solar radiation turbine bleeds to preheat the condensate or feed onto the Receiver. The S&T system consists of water, thus increasing the Rankine cycle efficiency. a hydraulic drive unit that rotates the collector If a TES system is included, a reversible, molten around its axis, and a local control that governs salt-HTF heat exchanger also is necessary. To the drive unit. The structure, in turn, must keep manufacture exchangers, carbon steel and the shape and relative position of the elements, stainless steel are required, as well as copper and transmitting the driving force from the tracker aluminum in smaller amounts. and avoiding deformations caused by their own • HTF Pumps: The materials commonly used in weight or other external forces such as the wind. joints for the range of temperatures and pressures required for this application are not compatible The power block of a Parabolic Trough CSP plant with the chemical composition of the HTF oil. resembles a conventional Rankine-cycle power plant. Thus, specific designs and materials, derived The main difference is that, instead of combustion mostly from the petrochemical industry, are or a nuclear process, the heat used to generate necessary. superheated steam is collected in the solar field and • Pumps: Several sets of pumps are required within transferred using a HTF. The main components of the a Parabolic Trough CSP plant: feed water pumps; power block are: cooling water pumps; condensate pumps; and other minor pumps for dosing, sewage, raw • Condenser: Although it also is a heat exchanger, water, and water treatment purposes. If a TES the condenser’s design is more complex. The system is included, molten salt pumps also are condenser affects the overall performance of necessary. Carbon steel and stainless steel, as the plant more than the other heat exchangers well as copper, aluminum, and other materials in the plant because it modifies the discharge in smaller amounts, are required to manufacture pressure of the turbine. For this reason, the pumps. Annexes | 147 Figure A1.3 | General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage 01 10 09 08 07 04 02 03 05 06 01 Solar field 05 Condenser 08 Generator 02 Salt storage heat exchanger 06 Cooling tower 09 Steam turbine 03 Cold salt storage 07 Substation 10 Hot salt storage 04 Steam generator Source: STA. • Steam turbine: The expansion of the steam molten salt “hot” and “cold” storage tanks also inside the turbine will cause the motion of the rotor are necessary. Carbon steel and stainless steel blades, and this movement will be transmitted are required to manufacture tanks. to the Electrical generator to produce electricity. The design and manufacturing of a turbine The state of the art in the field of thermal energy requires special materials and a highly specialized storage (TES) is to use molten salts. The most common workforce, available to only a limited number mixture used for this purpose is referred to as “Solar of companies around the world. Carbon steel, salt” and is composed of sodium nitrate (NaNO3) and stainless steel, and special alloys are required for potassium nitrate (KNO3). As described above, this salt to manufacture steam turbines. is stored in two tanks (one “cold” and one “hot”), and • Storage tanks: A large number of tanks and a reversible heat exchanger is used to move energy pressure vessels are required in a Parabolic from the solar field and to the power block. Trough CSP plant. They include raw and treated water storage tanks; deaerator; steam drum; Other elements also are necessary such as piping and condensate tank for the Rankine cycle; HTF insulation and either flexible piping or rotating storage, expansion, andullage vessels, and other joints to connect adjacent collectors as well as minor tanks for sewage and water treatment electric switchgear and water treatment equipment. intermediate steps. If a TES system is included, However, these elements either are not specific to 148 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry CSP technology; or, in the case of flexible piping Mirrors that are close to the ground, Linear Fresnel or rotating joints,these elements comprise a minor collectors are less expensive to produce and less fraction of the investment costs and are a highly vulnerable to wind damage. On the other hand, specialized component and thus have been omitted efficiency is lower due to a lower concentration ratio, from this report. and the intra-day energy outflow variation is higher than in Parabolic Trough. LINEAR FRESNEL SYSTEM A Linear Fresnel solar field comprises a variable Linear Fresnel Systems are conceptually simple. number of identical “solar loops” connected in They  use inexpensive compact optics (flat Mirrors) parallel. Each loop can raise the enthalpy of a certain that can produce saturated steam at 150ºC– amount of HTF. Most[1] commercial applications use 360ºC with less than 1 ha/MW land use. As seen water as HTF in a Direct Steam Generation (DSG) in Figure  A1.12, Linear Fresnel systems comprise configuration and, instead of rising temperature, they 2  percent of total CSP installed capacity, although increase the vapor fraction of the fluid. The main this number is expected to increase in the near future components of a Linear Fresnel loop are: because its share in the pipeline is higher. • Mirror: Reflects the direct solar radiation incident Linear Fresnel Systems use flat or slightly curved on it and concentrates it onto the Receiver placed Mirrors to direct sunlight to a fixed absorber tube in the focal line of the Linear Fresnel loop. The positioned above the Mirrors, sometimes with a Mirrors are made with a thin silver or aluminum secondary reflector to improve efficiency. With flat reflective film deposited on a low-iron highly Figure A1.4 | Schematics of a Linear Fresnel Collector 03 01 Sun rays 02 01 Second stage reflector 02 Primary fresnel reflector 03 Absorber tube Source: STA. Annexes | 149 transparent glass support to give them the when compared to a Parabolic Trough plant. necessary stiffness. They are similar to the Mirrors The Solar Field will act as a Steam Generation for Parabolic Trough differing in size and shape. System (SGS) generating the high-pressure and Alternatively aluminum foils are being tested by temperature steam that will drive the turbine. On some leading companies (3 M). the other hand water-water heat exchangers are • Receiver or absorber tube: Made of stainless still necessary to recover the heat from turbine steel with a high-absorptivity and low-emissivity bleeds to preheat the condensate or feed water, coating; it channels the flow of the HTF. The tube thus increasing the Rankine cycle efficiency. is placed inside a secondary reflector with a flat Carbon steel and stainless steel are required for cover made of low-iron highly transparent glass their manufacture as well as copper and aluminum with an antireflective coating. This configuration in smaller amounts. reduces heat losses and increases the half- • Pumps: Several sets of pumps are required within acceptance angle81 thus increasing overall a Linear Fresnel CSP plant: feed water pumps; performance. cooling water pumps; condensate pumps; and • Structure & Tracker: Solar tracking system other minor pumps for dosing, sewage, raw water, changes the position of the Mirrors following the and water treatment purposes. Carbon steel and apparent position of the sun during the day thus stainless steel are required for their manufacture enabling concentrating the solar radiation onto as well as copper, aluminum, and other materials the Receiver. S&T consists of several drives that in smaller amounts. rotate the Mirrors and a local control that governs • Steam turbine: It is analogous to the equipment the drive unit. The structure, in turn, must keep described for Parabolic Trough plants. the shape and relative position of the elements • Storage tanks: A large number of tanks and transmitting the driving force from the tracker pressure vessels are required in a Linear Fresnel and avoiding deformations caused by their own CSP plant. These vessels include raw and weight or other external forces such as the wind. treated water storage tanks; the deaerator; the steam drum; and condensate tank for the The power block of a Linear Fresnel CSP plant Rankine cycle and other minor tanks for sewage resembles a conventional Rankine-cycle power and water treatment intermediate steps. plant. The main difference is that, instead of a Depending on the DSG configuration additional combustion or nuclear process, the heat used to steam drums might be required for the solar field. generate superheated steam is collected in the solar Carbon steel and stainless steel are required for field and transferred using a heat transfer fluid. The their manufacture. main components of the power block are: The state of the art in the field of thermal energy • Condenser: It is analogous to the equipment storage (TES) is to use molten salts. However, the described for Parabolic Trough plants. use of water (phase change) in Linear Fresnel plants • Electrical generator: It is analogous to the makes difficult to use actual molten salts. Short-term equipment described for Parabolic Trough plants. energy storage using steam is the usual approach in • Heat exchanger: Because most commercial these plants, if any[1]. Linear Fresnel applications use water as HTF in a Direct Steam Generation (DSG) configuration Other elements also are necessary, such as piping, the need for heat exchangers is largely reduced insulation, electric switchgear, and water treatment 81 The half-acceptance angle is the angle of the maximum cone of light that will reflect onto the focus; it is used to characterize non-ideal optic systems. 150 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry equipment. However these elements either are not are suitable for dispatchable markets. Integration in specific to CSP technology or pose a minor fraction advanced thermodynamic cycles also is feasible. of the investment costs and thus have been omitted from this report. Although less mature than the Parabolic Trough technology, after a proof-of-concept stage, the POWER TOWER SYSTEM Power Tower is taking its first steps into the market. Three commercial plants are in operation in southern The Power Tower systems, also known as Central Spain: PS10 and PS20 (11 MWe and 20 MWe, Receiver systems, have more complex optics than the using saturated steam as heat transfer fluid) and systems showed before as it is a 3-D concentration Gemasolar (17 MWe, using molten salts as HTF). concept. A single solar Receiver is mounted on Sierra SunTower, a 5-MWe plant using a multitower top of a tower and sunlight is concentrated by solar field,started operation in 2009 in Lancaster, means  of a large paraboloid that is discretized in a California (US). field of heliostats. Multitower systems also are under development. As seen in Figure A1.12, Power Tower To this day, more than 10 different experimental Power systems currently represent 3 percent of total CSP Tower plants have been tested worldwide, generally installed capacity although this number is expected small demonstration systems between 0.5 MWe and to increase in the near future as its share in the 10 MWe, most of them operated in the 1980s. pipeline is higher than that. A wide variety of heat transfer fluids including Concentration factors for this technology range saturated steam, superheated steam, molten salts, between 200 and 1000. Plant unit sizes could atmospheric air, or pressurized air can be used. range between 10 MW and 200 MW and therefore Temperatures vary between 200ºC and 1000ºC. Figure A1.5 | Functional Scheme of a Power Tower System using Molten Salt as HTF with TES 01 10 04 09 08 07 02 03 05 06 01 Solar field 05 Condenser 08 Generator 02 Receiver 06 Cooling tower 09 Steam turbine 03 Cold salt storage 07 Substation 10 Hot salt storage 04 Steam generator Source: STA. Annexes | 151 Falling particle Receiver and beam-down Receiver Figure A1.6 | Main Components are other promising technologies but farther from the of a Heliostat market. Facets A Power Tower solar field comprises a variable number Structure of identical heliostats that reflect the sunlight toward Elevation Azimuth the Receiver. The heat transfer fluid temperature Torque tube will reach 250ºC to 700ºC depending on whether the HTF used is air, steam, or molten salt. The main Drive mechanism components of a Power Tower solar field are: Pedestal tube • Mirror: Reflects the direct solar radiation incident on it and concentrates it onto the Receiver. The Local control Mirrors sometimes are referred to as “facets.” The Mirrors are made with a thin silver or aluminum Source: Photo courtesy of PSA-CIEMAT. reflective film deposited on a low-iron, highly transparent glass support to give them the necessary stiffness. They are almost identical to must keep the shape and relative position of the Mirrors for Parabolic Trough, differing only in the  elements transmitting the driving force from size and shape. Although small heliostats can be the tracker and avoiding deformations caused made of flat glass,for larger sizes,a slight curvature by their own weight or other external forces such is necessary.82 as the wind. • Receiver83: Collects the radiation reflected by the heliostats and transfers it to the HTF in the form The power block of a Power Tower CSP plant of heat. The receiver is the real core of a Power resembles that of a Rankine-cycle power plant. The Tower system and the most technically complex main difference is that, instead of a combustion component because it has to absorb the incident or nuclear process, the heat used to generate radiation under very demanding concentrated superheated steam is collected in the solar field and solar flux conditions and with the minimum heat transferred using a heat transfer fluid (HTF). The main loss. Receivers can be classified either by their components of the power block are: configuration as flat or cavity systems; or by their technology as tube, volumetric,panel/film,or direct • Condenser: It is analogous to the equipment absorption systems. Super alloys or ceramics are described for Parabolic Trough plants. the usual materials for Receivers. • Electrical generator: It is analogous to the • Structure & Tracker: S&T solar tracking system equipment described for Parabolic Trough plants. changes the position of the Mirrors on the • Heat exchanger: Two different sets of heat heliostats following the apparent position of the exchangers are required in the power block. First sun during the day and enabling concentrating HTF-water heat exchangers (usually referred to as the solar radiation onto the Receiver. Each SGS, or Steam Generation System) are required heliostat performs a two-axis tracking with a to generate the high-pressure and temperature drive that rotates the Mirrors and a local control steam that will drive the turbine. This set will not that governs the drive unit. The structure, in turn, be necessary if steam is used as HTF. Second 82 Due to non-ideal optics because the sun is not a point focus. 83 The Receiver has been included in the solar field to keep an analogous structure for all CSP technologies, although in Power Tower systems, the Receiver is physically within the power block. 152 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry water-water heat exchangers are used to recover ratios   (600–4000) and a Stirling engine or Brayton the heat from turbine bleeds to preheat the mini-turbine located at the focal point using hydrogen, condensate or feed water, thus increasing the helium, or air as working fluid. Current Dish/Engine Rankine cycle efficiency. If a molten salt thermal systems range from 3 kWe (Infinia) to 25 kWe (Tessera energy storage (TES) system is included, a Solar). Their market niche is in both distributed/ reversible molten salt-HTF heat exchanger also is on-grid and remote/off-grid power applications. necessary—unless the very molten salt is used as HTF. Carbon steel and stainless steel are required Because the design of Dish/Engine systems is for their manufacture as well as copper and modular, they can compete with PV to serve the same aluminum in smaller amounts. applications. Typically, stand-alone PV systems are • Pumps: They are analogous to the equipment being used for rural electrification or electricity supply described for Parabolic Trough plants. in remote water pumping stations. Power capacity in • Steam turbine: It is analogous to the equipment this kind of application ranges from a few tenths KW described for Parabolic Trough plants. to several hundred kilowatts. • Storage tanks: They are analogous to the equipment described for Parabolic Trough plants. However, besides the higher investment costs for Dish/Engine compared to photovoltaic systems, The state of the art in the field of thermal energy other concerns need further technical development; storage (TES) is to use molten salts. The most such as engine reliability. common mixture used is Solar salt and is composed by sodium nitrate (NaNO3) and potassium nitrate Two decades ago, Dish/Engine Stirling systems (KNO3). As described above, this salt is stored with concentration factors of more than 3000 suns in two tanks (one “cold” and one “hot”), and a and operating temperatures of 750ºC had already reversible heat exchanger is used to move energy demonstrated their high conversion efficiency at from the solar field and to the power block. This heat annual efficiencies of 23 percent and 29 percent exchanger is not necessary if the molten salt is used peak [2]. However, Dish/Engine systems have not directly as HTF. yet surpassed the pilot project plant operation phase. Other elements also are necessary including piping, insulation, electric switchgear, and water treatment A Dish/Engine solar field comprises a variable equipment. However, these elements either are not number, from one to dozens, of reflective elements or specific to CSP technology or pose a minor fraction “facets” in the shape of a paraboloid, or “dish. Each of the investment costs so have been omitted from dish can raise the temperature of a certain amount of this report. working fluid from the “cold” to the “high” operation temperature (up to 850ºC). The main components of DISH/ENGINE SYSTEM a Dish/Engine solar collector are: These systems are small modular units with • Mirror: Reflects the direct solar radiation incident autonomous generation of electricity. In other on it and concentrates it onto the Receiver placed words, each Dish/Engine set has its own solar field in the focal point of the dish. The Mirrors can be and power block, except for the power regulation made with a thin silver or aluminum reflective film switchgear. deposited on a low-iron, highly transparent glass support to give them the necessary stiffness and They are parabolic 3-D concentrators (thus parabolic shape. They are similar to the Mirrors for requiring two-axes tracking) with high concentration Parabolic Trough, differing only in size and shape. Annexes | 153 Figure A1.7 | Main Components of a Dish/Engine System Stirling engine Receiver Mirror Structure Local control Source: Photo courtesy of PSA-CIEMAT. Although small facets can be made of flat glass, tracker and avoiding deformations caused by their a slight curvature is necessary84 for larger sizes. own weight or other external forces such as the A different approach can use a reflective layer wind. The high precision required—together with coating a flexible film, which is given the parabolic the weight of the set Receiver plus engine, and shape through vacuum. the necessity to prevent the “arm” holding the • Receiver: Dish/Engine Receivers can be smaller Receiver from blocking too much light—makes versions of those used in Power Tower systems. this a demanding task. However, simpler versions adaptthe heater tubes of a Stirling engine, although, for these versions, The power block of a Dish/Engine CSP collector is it is hard to integrate multiple cylinder engines[3]. a compact set comprising the Receiver described Liquid-sodium heat-pipe solar Receivers solve this above plus either a Stirling engine, or a Brayton issue by vaporizing liquid sodium on the absorber turbine and a compressor. The main components of surface, condensing it on the engine’s heater the power block are: tubes. Thisvaporization-condensation system enables attaining more uniform temperatures on • Electrical generator: Induction generators are the Receiver’s surface, although complexity and used on Stirling engines tied to an electric utility costare higher as well. grid. They are off-the-shelf items and can provide • Structure & Tracker: The S&T solar tracking single or three-phase power with high efficiency. system changes the position of the collector to For turbines, a different approach might be follow the apparent position of the sun during the advisable. The high-speed output of the turbine day, thus enabling concentrating the solar radiation can be converted to high frequency alternate onto the Receiver. Each collector performs a two- current in a high-speed alternator converted to axes tracking with a drive that rotates both the direct current by a rectifier and then converted to dish and the Receiver and a local control that 50 Hz–60 Hz power by an inverter. governs the drive unit. The structure, in turn, • Heat exchanger: No heat exchanger per se is must keep the shape and relative position of the necessary because the heat transfer takes place elements, transmitting the driving force from the at the engine heater tubes. 84 Due to non-ideal optics because the sun is not a point focus. 154 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.8 | Schematic that Shows the Operation of a Heat-pipe Solar Receiver 06 07 08 09 05 04 CONCENTRATED IRRADIATION 03 02 01 01 Sodium pool 04 Heat engine 07 Sodium vapor 02 Condensing sodium 05 Generator 08 Sodium liquid in wick 03 Engine heater tubes 06 Engine working fluid 09 Absorber surface Source: adapted from [3]. • Turbine or engine: The design and manufacturing Other elements also are necessary such as wiring, of a turbine and compressor for a Brayton cycle insulation, and electric switchgear. However, these requires special materials and alloys and a elements are either not specific to CSP technology highly specialized workforce available to only or comprise a minor fraction of the investment costs a limited amount of companies around the so have been omitted from this report. world. On the other hand, the small size of the equipment required increases the range of ANALYSIS OF THE VALUE CHAIN possible manufacturers. Stirling engines are less FOR CSP demanding. The main issue expected (the high precision required in the piston fabrication) is A close examination of the value chain reveals three probably solvable if the country has motor vehicle clusters of industries with differing technological industries. Carbon steel, stainless steel, and complexity85 and investment requirements special alloys are required for its manufacture. (Figure A1.9). The three are a group of industries that can be independently developed (independent Dish/Engine systems have not been conceived with industries); a group of industries that are best thermal energy storage as a guiding principle although developed on the backing of existing conventional experimental approaches using thermochemical industries (conventional industries); and a group energy storage have been made [4]. of industries that, due to their complexity and The analysis of technological complexity is based on consulting and interviews with solar experts according to their internal 85 manufacturing processes. Annexes | 155 Figure A1.9 | Investment Requirements vs. Technology Complexity for CSP Technology Industries High Complexity and Investment Requirements Steam Turbine for the CSP Solar Industry HTF Thermal Oil Electrical Generator HTF Pumps Investment Requirements Mirror Heat exchanger Pumps Storage Tanks Condenser Receiver Structure & Tracker Low Solar Salt Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. required investment, are not likely to be developed are easier to develop in countries that already have based on the demand of solar applications alone conventional pressure vessel and tank and pump (difficult-to-reach industries). industries. The group of industries at the top right in Figure A1.9, The independent group of industries, highlighted in circled in green, are industries which, due to their blue in Figure A1.9, includes the Structure & Tracker technological complexity and large investment Solar salt blending, Mirror, and Receiver industries. requirements, are considered difficult to reach in These industries can be developed independently, as most parts of the world, including in the Benchmark part of solar industry development, so long as the countries that have successfully developed the solar conditions for solar industry development exist. industry. These industries include the Steam turbine, Electrical generator, HTF Thermal oil, and HTF Overall, and particularly in the short and medium Pumps. terms, MENA countries are better suited for the development of the conventional and independent The conventional group of industries (Condenser, groups of industries that therefore are considered Heat exchanger, Pumps, and Storage Tanks), circled as target industries. Figure A1.11 shows the overall in orange in Figure A1.9, refers to the industries industry score using the normalized Attractiveness that rely on existing industries and that, therefore, index by CSP solar industry and by country. 156 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.10 | CSP Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries* 1.0 Average MENA 0.9 Algeria 0.8 Egypt 0.7 Attractiveness index 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 benchmark r r r ps Oil r ps r lt ine s er ge se ive to rro nk sa ck um m era al rb en an Mi ce ta Tra lar Pu rm tu nd FP ch en Re ge So he & m ex Co lg ora HT ea re FT ica at St ctu St HT He ctr ru Ele St Source: STA/Accenture. Note: * The range covered by Benchmark countries is shaded. The four difficult-to-reach industries (Steam turbine industries (marked in yellow). The recommendation Electrical generator HTF Thermal Oil, and HTF is for MENA selected countries to focus on the Pumps, marked in green) are the least interesting conventional and independent groups of CSP CSP industries for selected MENA countries to focus industries,86 which, therefore, are considered as on in their current context. It would make sense for target industries. the MENA Region to focus on the independent CSP industries (marked in blue) and, according to their Some of the barriers to enter the difficult-to-reach relative industrial base, on the conventional CSP group of industries include: Table A1.2 | Main Entry Barriers for the Difficult-to-Reach CSP Industries HTF Thermal Oil HTF Pumps Steam Turbine Electrical Generator Entry Most sales are undertaken by a small number of companies: barriers BASF (Germany) GE Power (US) Alstom (France) GE Power (US) Dow Chemical (US) KSB (Germany) GE Power (US) MAN Turbo (Germany) Linde (Germany) MAN Turbo (Germany) Siemens (Germany) Solutia (US) Mitsubishi (Japan) Siemens (Germany) High capital requirements High technology and innovation requirements Skilled workers, technicians, engineers, and scientists requirements 86 The rest of the CSP industry analysis and recommendations in the report refers to these two groups of industries. Annexes | 157 Status power from renewable and from large solar in Since 2006, CSP has been a fast-developing process particular. correlated with a renaissance mainly in the United States and Spain; and today starting programs in “As of early 2010, the global stock of CSP Algeria, Australia, China, Egypt, India, Morocco, plants neared 1 GW capacity. Projects now in South Africa, and other countries. According to IEA development or under construction in more (International Energy Agency) as above: than a dozen countries (including China, India, Morocco, Spain, and the United States) are “CSP is a proven technology. The first expected to total 15 GW. commercial plants began operating in California in the period of 1984 to 1991 spurred by federal “Parabolic Troughs account for the largest and state tax incentives and mandatory long- share of the current CSP market but competing term power purchase contracts. A drop in technologies are emerging. Some plants now fossil fuel prices then led the federal and state incorporate thermal storage.” governments to dismantle the policy framework that had supported the advancement of CSP. —IEA (International Energy Agency) [5], p. 9. In 2006, the market resurged in Spain and the United States, again in response to government Concerning the path from theoretical design to measures such as feed in tariffs (Spain) and commercial exploitation, CSP is going through the policies obliging utilities to obtain some share of classic phases: Figure A1.11 | Developing Phases: From Design to Commercial Exploitation 3. Construction 4. Construction of a 1. Develop theoretical 2. Laboratory tests of a scale prototype commercial prototype design and field test and field test 5. Construction 6. Construction 7. Revision of technology of a pilot project of a commercial plant for optimization Source: STA/Accenture. If applied to the four CSP technologies, the status for • Power Tower: Stage 6 - Construction of each one would be: commercial plant • Linear Fresnel and Dish/Engine: Stage 5 - • Parabolic Trough: Stage 7 - Revision of technology Construction of pilot project. for optimization 158 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A1.3 | Characteristics of Concentrated Solar Power Systems Annual Solar- Possible to-Electricity Land Water Backup/ Efficiency Occupancy* Cooling Storage Hybrid Solar Outlook for Technology (%) ha/MWe (m3/MWh**) Possible Mode Fuels Improvements Parabolic 15 Large 3000 or dry Yes, but not Yes No Limited Trough 2.7 yet for DSG*** Linear 8–10 Medium 3000 or dry Yes, but not Yes No Significant Fresnel 1 yet for DSG Power 20–35◊ Medium 2000 or dry Depends Yes Yes Very Tower 1.6 on plant significant configuration Dish/Engine 25–30 Small None Depends Yes, but Yes Through mass on plant in limited production configuration cases Source: [5] Note: * Based on operating power plants data. ** Megawatt-hour. *** DSG = direct steam generation. ◊ Concepts to be proven with commercial power plants, this means plants in real operation, up to now the figures come from simulations Typical solar-to-electricity annual conversion All-aluminum and multilayer aluminum reflectors[6], efficiencies and other relevant factors for the four as well as reflective films ([7], [8]) are entering the technologies, as compiled by a group of experts, are market but, despite having advantages compared listed in Table A1.3. with conventional glass Mirrors (light weight, no thermal shock, lower expected price), they have The values of Parabolic Trough by far the most mature disadvantages as well (durability concerns) and technology have been demonstrated commercially. scant or no track record. Those of Linear Fresnel Dish/Engine, and Power Tower systems are, in general, projections based on New Power Tower projects seem to bet for bigger component and large-scale pilot plant test data, and sizes, on the order of 100 MWe, using superheated the assumption of mature development of current steam or molten salts as thermal fluids. technology. Major improvements can be achieved in the not-so-mature technologies. Activity in Dish/Engine systems focuses on small dishes with low-maintenance Stirling motors. Trends Parabolic Trough technology is leading the Linear Fresnel systems are on an earlier status of commercial deployment around the World but the deployment, and thus have a long way to go to model based on thermal oil must be improved. improve. However, the focus seems to be to optimize Actual efforts go on the way of developing larger them for steam augmentation in fossil power plants or collectors (current standard span: 5.76 m) optimizing to use them for air-conditioning or water desalination the design of the heat storage systems and, last but purposes. not least, rising the working temperature up to 500ºC by developing new absorber tubes and using new fluids as water/steam, molten salts, or inert gases. Annexes | 159 Figure A1.12 | Market Share of the Different CSP Technological Approaches Both Operating (Left) and Under Construction (Right) as of 2012 Fresnel Power 5% tower Fresnel Power 3% 2% tower 26% Parabolic Parabolic trough trough 95% 69% Parabolic trough Power tower Fresnel Source: NREL Database Source: STA/Accenture based on [9]. 160 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Industry Technical Worksheets – CSP Sector: Subsystem: Solar industry: CSP Power Block Condenser Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 – 1% 50MW parabolic with 7h TES Cost Structure breakdown Materials 45% Energy 25% Labor 15% O&M 15% Materials; 45% Energy 25% O&M 15% Labor 15% Component Market Price (Average Sales Price) 25 – 35 kUSD/MWth Typical demand from a reference customer 75 – 85 MWth, 1 piece Average production for a factory 200 – 300 MWth/yr Investment 10 – 20 kUSD/(MWth/yr) Production requirements Materials 100% Stainless steel, tube 80% Stainless steel, plate 15% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Foster Wheeler Switzerland GEA Germany HAMON Belgium Barriers to entry 1. Guarantees of turbine manufacturer 2. Technical barrier: complex design to achieve performance 3. Highly skilled workforce required Key Factors 1. Stainless steel market 2. High precision manufacturing under international standards Annexes | 161 Sector: Subsystem: Solar industry: CSP Power Block Electrical generator Value Unit Comments Weight in the value chain (as a % of total wealth) 1.5 – 2.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 65% Energy 10% Labor 20% O&M 5% Materials; 65% O&M 5% Labor Energy 20% 10% Component Market Price (Average Sales Price) 100 – 150 kUSD/MWe Typical demand from a reference customer 50 MWe, 1 piece Average production for a factory 2,000 – 3,000 MW/yr Investment 30 – 50 kUSD/MW/yr Production requirements Materials 100% Copper 50% Carbon steel, cast 35% Lubricant oil 5% CrMo steel 10% Energy 100% Electric 90% Thermal 10% Top Companies Origin ABB Switzerland GE Power US Mitsubishi Japan Siemens Germany Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Fluctuations in copper market 3. Highly skilled workforce Key Factors 1. Copper market 2. Power electronics 162 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: CSP Power Block Heat exchangers Value Unit Comments Weight in the value chain (as a % of total wealth) 2.5 – 4% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 45% Energy 25% Labor 15% O&M 15% Materials; 45% Energy 25% O&M 15% Labor 15% Component Market Price (Average Sales Price) 20 – 25 kUSD/MWth Typical demand from a reference customer 300 MWth, 1 set SGS + heat recovery + molten salt Average production for a factory 350 – 400 MWth/yr Investment 10 – 20 kUSD/(MWth/yr) Production requirements Materials 100% Carbon steel, plate 10% Stainless steel, tube 80% Electrodes 5% Stainless steel, plate 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Aalborg CSP Denmark Alfa Laval Sweden Foster Wheeler Switzerland GEA Germany HAMON Belgium Barriers to entry 1. Highly skilled workforce required Key Factors 1. Stainless steel marke 2. High precision manufacturing under international standards 3. Adapt existing industries Annexes | 163 Sector: Subsystem: Solar industry: CSP Power Block HTF Pumps Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 – 1% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 30% Labor 25% O&M 30% Energy 30% Materials; 15% Labor 25% O&M 30% Component Market Price (Average Sales Price) 45 – 55 kUSD/MW Typical demand from a reference customer 1 set of 3 to 5 main pumps, antifreeze, recirculation Average production for a factory 300 – 500 MW/yr Investment 35 – 45 kUSD/MW/yr Production requirements Materials 100% Carbon steel, cast 40% Stainless steel, cast 5% Copper 40% CrMo steel 10% Lubricant oil 5% Energy 100% Electric 75% Thermal 25% Top Companies Origin Flowserve US KSB Germany GE Oil & Gas US Sterling Fluid Germany Sulzer Switzerland Barriers to entry 1. Highly skilled workforce required Key Factors 1. High precision manufacturing under international standards 2. Motor and power electronics 164 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: csp Solar Field HTF Thermal Oil Value Unit Comments Weight in the value chain (as a % of total wealth) 3.5 – 4.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 15% Labor 10% O&M 5% Materials; 70% O&M 5% Labor 10% Energy 15% Component Market Price (Average Sales Price) 8 – 10 USD/kg Typical demand from a reference customer 16 – 20 10−3 kg/MW 50MW parabolic with 7h TES Average production for a factory 225 MW/yr Investment cost for a factory 30 – 50 million USD/(MW/yr) Production requirements Materials 100% Diphenyl oxide 73.5% Diphenyl 26.5% Energy 100% Electric 5% Thermal 95% Top Companies Origin Dow Chemical US Solutia (Monsanto) US Barriers to entry 1. Byproduct in chemical industry (phenol) with large productions (40 to 600 kt/year) 2. Market dominated by a small number of competitors 3. Low market opportunities to sell this product to other industries and sectors Key Factor 1. Adapt existing industries Annexes | 165 Sector: Subsystem: Solar industry: CSP Solar Field Mirror Value Unit Comments Weight in the value chain (as a % of total wealth) 5 – 6% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 20% Labor 3% O&M 7% Energy 20% Materials 70% Labor O&M 3% 7% Component Market Price (Average Sales Price) 25 – 35 USD/m2 Typical demand from a reference customer 8 – 12 10−3 m2/MW 50MW parabolic with 7h TES Average production for a factory 300 MW/y Investment 100 – 200 kUSD/(MW/yr) Production requirements Materials 100% Silver / copper coatings 0% Polimeric coatings 10% Float glass 90% Energy 100% Electric 10% Thermal 90% Top Companies Origin AGC Solar Belgium Flabeg Gmbh Germany Guardian Ind. US Rioglass Solar Spain Saint-Gobain France Barriers to entry 1. Technical barrier: complex manufacturing line 2. Highly skilled workforce required 3. Capital-intensive unless integrated in existing float glass Key Factors 1. Energy 2. Transport 3. Adapt existing industries 166 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: CSP Power Block Pumps Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 – 1% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 30% Labor 25% O&M 30% Energy 30% Materials; 15% Labor 25% O&M 30% Component Market Price (Average Sales Price) 20 – 25 kUSD/MW Typical demand from a reference customer 1 set circulation, condensate, main pressure, molten salts, other minor Average production for a factory 300 – 500 MW/yr Investment 35 – 45 kUSD/MW/yr Production requirements Materials 100% Carbon steel, plate 5% Carbon steel, cast 50% Stainless steel, cast 15% Copper 25% CrMo steel 5% Energy 100% Electric 55% Thermal 45% Top Companies Origin Ensival Moret France Flowserve US GE Power US KSB Germany Ruhrpumpen Germany Barriers to entry 1. Technical barrier: complex design for molten salt pumps 2. Highly skilled workforce required Key Factor 1. High precision manufacturing under international standards Annexes | 167 Sector: Subsystem: Solar industry: CSP Solar Field Receiver Value Unit Comments Weight in the value chain (as a % of total wealth) 6.5 – 7.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 15% Labor 20% O&M 10% Materials 55% Energy 15% O&M 10% Labor 20% Component Market Price (Average Sales Price) 800 – 1,000 USD/piece Typical demand from a reference customer 400 – 500 pieces/MWp 50MW parabolic with 7h TES Average production for a factory 100 – 200 MW/yr Investment 0.4 – 0.6 million USD /(MW/yr) Production requirements Materials 100% Stainless steel, tube 52% Borosilicate glass, tube 46% Collars,flanges and bellows 2% Absorbing coating - negligible weight Getters - negligible weight Anti reflective coating - negligible weight Energy 100% Electric 25% Thermal 75% Top Companies Origin SCHOTT Solar AG Germany Siemens (Solel Solar System) Germany Archimede Italy Barriers to entry 1. Technical barrier: highly specialized coating process with high accuracy 2. Technical barrier: vacuum-tight glass to metal welding process and materials 3. High specific investment for manufacturing process 4. Low market opportunities to sell this product to other industries and sectors 5. Highly skilled workforce required Key Factors 1. Transport 168 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: CSP Thermal Energy Storage Solar sale Value Unit Comments Weight in the value chain (as a % of total wealth) 8 – 10% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 40% Labor 20% O&M 25% Energy 40% Materials; 15% Labor O&M 20% 25% Component Market Price (Average Sales Price) 800 – 900 USD/t Typical demand from a reference customer 500 – 600 t/MWe 50MW parabolic with 7h TES Average production for a factory 300 MW/yr Investment n/a million USD/MW/yr Production requirements Materials 100% Sodium nitrate (NaNO3) 60% Potassium nitrate (KNO3) 40% Energy 100% Electric 40% Thermal 60% Top Companies Origin SQM Chile Haifa Israel Barriers to entry 1. A mineral vein must exist within the territory Key Factors 1. Purity of the vein, valorization of byproducts Annexes | 169 Sector: Subsystem: Solar industry: CSP Power Block Steam turbine Value Unit Comments Weight in the value chain (as a % of total wealth) 3.5 – 4.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 20% Labor 20% O&M 5% Materials; 55% O&M 5% Energy Labor 20% 20% Component Market Price (Average Sales Price) 200 – 250 kUSD/MWe Typical demand from a reference customer 50 MWe, 1 piece Average production for a factory 200 – 300 MW/yr Investment 60 – 100 kUSD /(MW/yr) Production requirements Materials 100% Carbon steel, plate 5% Carbon steel, beam 5% Carbon steel, cast 20% Stainless steel, cast 50% Special alloys 20% Energy 100% Electric 10% Thermal 90% Top Companies Origin Alstom France GE Power US Harbin China MAN Turbo Germany Mitsubishi Japan Siemens Germany Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Highly skilled workforce required 3. High specific investment for manufacturing process Key Factor 1. Long Term Service Agreements and performance guarantee 170 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: CSP Power Block Storage Tanks Value Unit Comments Weight in the value chain (as a % of total wealth) 3 – 5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 20% Labor 3% O&M 7% Materials; 70% O&M 7% Labor Energy 3% 20% Component Market Price (Average Sales Price) 150 – 200 kUSD/MW Typical demand from a reference customer 1 set incl. expansion vessel, overflow tanks, ullage vessels, molten salts, steam drum, deaerator, other Average production for a factory 300 MW/yr Investment 70 – 90 kUSD /(MW/yr) Production requirements Materials 100% Carbon steel, plate 80% Carbon steel, cast 5% Stainless steel, plate 15% Energy 100% Electric 100% Thermal 0% Top Companies Origin Caldwell Tanks US Duro Felguera Spain IMASA Spain Barriers to entry 1. Technical barrier: complex design of molten salt tanks and deaerator Key Factor 1. Manufacturing under international standards Annexes | 171 Sector: Subsystem: Solar industry: CSP Solar Field Structure & Tracker Value Unit Comments Weight in the value chain (as a % of total wealth) 15 – 17% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 5% Labor 1% O&M 39% Materials 55% Energy 5% Labor O&M 1% 39% Component Market Price (Average Sales Price) 2–3 USD/kg Typical demand from a reference customer 180 – 220 10−3 kg/MWp 50MW parabolic with 7h TES Average production for a factory 150 – 250 MW/yr Investment 75 – 85 kUSD /(MW/yr) Production requirements Materials 100% Carbon steel, beam 90% Carbon steel, plate 5% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Albiasa Solar Spain Asturfeito Spain Gossamer US Ideas en Metal Spain MADE Spain SBP Germany Sener Spain Siemens Germany Barriers to entry 1. Hot-dip galvanizing of large structures (>12 m) can be a bottleneck 2. Technical barrier: complex design to achieve stiffness 3. Technical barrier: complex design of hydraulic circuit and components Key Factors 1. Carbon steel market 2. Transport 3. Galvanizing 4. Adapt existing industries 172 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A1.4 | Conversion Efficiencies PHOTOVOLTAIC (PV) TECHNOLOGY of Different PV Commercial Modules This technology converts solar energy directly into Crystalline silicon Thin Film (TF) (c-Si) (%) (%) electricity using the photovoltaic effect. When solar a-Si/ CIS/ radiation reaches a semiconductor, the electrons sc-Si mc-Si mc-Si CdTe CIGS present in the valence band absorb energy and, 14–20 13–15 6–9 9–11 10–12 being excited, jump to the conduction band and Source: [10]. become free. These highly excited, non-thermal electrons diffuse, and some reach a junction at which they are accelerated into a different material • Thin Film (TF) Modules: by a built-in potential (Galvani potential). This potential generates an electromotive force, which ○ Amorphous (a-Si) and Micromorph (µc-Si) converts some of the light energy into electric silicon energy. Unlike CSP, solar PV can use all radiation ○ Cadmium-Telluride (CdTe) (direct and diffuse)reaching it. ○ Copper/Indium Sulfide (CIS) and Copper/ Indium/Gallium di-Selenide (CIGS). The basic building block of a PV system is the PV cell, which is a semiconductor layer that converts Conversion efficiency is defined as the ratio between solar energy into direct-current (DC) electricity. the produced electrical power and the amount of PV cells are interconnected to form a PV Module, incident solar energy per second. This efficiency typically up to 50 W–200 W. The PV Modules is one of the main performance indicators of PV combined with a set of additional application- cells and modules. Table A1.4 provides the current dependent system components (inverters, batteries, efficiencies of different PV commercial modules.87 electrical components, and mounting systems), form a PV system. PV systems are highly modular, that is, The large variety of PV applications enables a range modules can be linked to supply power ranging from of different technologies to be present in the market a few watts to tens of megawatts (MW). with a direct relation between cost and efficiency. Note that the lower cost (per watt) to manufacture R&D and industrialization have led to a portfolio of some of the module technologies, namely Thin Films, available PV technology options at different levels of is partially offset by the higher area-related system maturity. Commercial PV Modules may be divided costs (support structure, land required, wiring) due to into two broad categories: wafer-based Crystalline their lower conversion efficiency. silicon (c-Si) and Thin Films. Chips for electronic devices share many of their An overview of the main PV technologies follows: resources and manufacturing processes with PV elements, especially if silicon-based. However, the • Crystalline silicon (c-Si) Modules purity level required for solar cells is “five nines” (99.999 percent) whereas electronic-grade silicon ○ Single-Crystalline silicon (sc-Si) must be “nine nines.” ○ Multi-Crystallinesilicon (mc-Si) 87 Table A1.4 illustrates the range of optimum values. When selecting a technology, the influence of angle, temperature, and diffuse/ direct irradiation share must be compared. A one-year simulation of the system is recommended. Annexes | 173 Figure A1.13 | PV Solar Energy Value Chain Quartzite gravel or quartz (SiO2) Metallurgical Grade Si Silane (CH4) High purity Polysilicon Monocrystalline silicon ingot Multicrystalline silicon ingot Monocrystalline silicon wafers Multicrystallion silicon ribbons Multicrystalline silicon wafers Amorphous silicon deposition Solar cell CdTe/CIGS Soda Lime glass PV module Support structure TCO Installed PV system Electronic components TF technologies c-Si technologies Common technologies Source: STA. Crystalline (c-Si) technologies and silane (SiH4) also are used. When these The following components belong to the value chain gases are blown over silicon at high temperature, of Crystalline silicon PV and could be considered for they decompose to high-purity silicon. In the course local manufacturing in MENA countries. of converting MG-Si to TCS by dissolution with HCl, impurities such as Fe Al and B are removed. • Polysilicon: In the first step to make solar cells the This ultra-pure TCS is subsequently vaporized raw materials—silicon dioxide of either quartzite88 (distilling the TCS achieves an even higher level of gravel (the purest silica) or crushed quartz—are purity) and flowed into a deposition reactor, where first placed into an electric arc furnace, where a it is retransformed into elemental silicon. carbon arc is applied to release the oxygen. The As an example, in the Siemens process[11], products are carbon dioxide and molten silicon. high-purity silicon rods are exposed to trichlorosilane At this point, the silicon is still not pure enough at 900 to 1150ºC. The TCS gas decomposes and to be used for solar cells and requires further deposits additional silicon onto the rods enlarging purification. This simple process yields commercial them according to the chemical reaction 2 HSiCl3 brown Metallurgical Grade silicon (MG-Si) of 97  Si + 2 HCl + SiCl4. Electronic-grade purity silicon percent purity or better, useful in many industries can be obtained; however, an expensive reactor is but not the solar cell industry. required as well as a lot of energy. MG-Si is purified by converting it to a silicon In 2006 REC announced construction of a compound that can be more easily purified plant based on fluidized bed technology using by distillation than in its original state and then silane according to the chemical reactions: converting that silicon compound back into pure silicon. Trichlorosilane (TCS HSiCl3) is the 3 SiCl4 + Si + 2 H2  4 HSiCl3; silicon compound most commonly used as the 4 HSiCl3  3 SiCl4 + SiH4; intermediate, although silicon tetrachloride (SiCl4) SiH4  Si + 2 H2. 88 Quartzite, not to be confused with the mineral quartz, is a metamorphic rock formed from quartz-rich sandstone that has undergone metamorphism. 174 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.14 | Polysilicon Manufacturing Value Chain Hydrochloric acid HCl Hydrogen (H2) (HCl) Metallurgical High purity Grade silicon Trichlorisilane Quartzite gravel Coke Reduction (MG-Si) Dissolve in HCl (TCS) Siemens Electronic grade or quartz (SiO2) in Arc furnace + distillation process poly-silicon Coke (C) ˜1,800° C (9 nines) Modified Poly-silicon Various gases process (6–7 nines) REC/Tokuyama Chemical Upgraded MG-Si refinement (>5 nines) Source: STA. This process operates at lower temperature into a crucible of molten silicon. The seed crystal and does not generate by-products, and, unlike rotates as it is withdrawn, forming a cylindrical the Siemens Process, which is a batch process “ingot” or “boule” of very pure silicon with a singular uses fluid bed technology which can be run crystal orientation. However, single crystals grown continuously. The purity is lower, but still enough by the Czochralski process contain impurities for solar applications. Other similar processes exist because the crucible containing the melt often with different advantages and drawbacks such as dissolves[13], and this limits its usage.89 the Vapour-to-liquid Tokuyama deposition, or even The wafering process starts from the ingot, totally different, chemical refinement processes either single-crystal or poly-silicon. Wafers are starting with MG-Si, which blow different gases sliced one at a time using a circular saw whose through the silicon melt to remove the impurities. inner diameter cuts into the rod or many at once After either of these processes, polysilicon has with a multiwire saw. A diamond saw produces typical contamination levels in the range of ppb cuts that are as wide as the wafer—0.5 millimeter (parts per billion) and can be cast into square ingots thick. Approximately one-half of the silicon is lost90 and undergo the wafering process to produce mc- from the ingot to the finished circular wafer—more Si cells. For sc-Si cells manufacturing, the atomic if a single-crystal wafer is then cut to be rectangular structure of the silicon must be dealt with first. or hexagonal. Rectangular or hexagonal wafers • Ingots/Wafers: Solar-grade purified polysilicon are sometimes used in solar cells because they can be cast into square ingots and undergo the can be fitted together perfectly, thereby utilizing wafering process to produce mc-Si cells directly. all available space on the front surface of the solar For sc-Si cells manufacturing, the atomic structure cell. Polysilicon ingots can be directly cast in a of the silicon must be dealt with first. rectangular shape, thus avoiding silicon waste. In the more widely used[12] Czochralski An alternative method for mc-Si is the ribbon method, the pure polysilicon is melted again drawing: in a continuous process, a wafer-thin and then a silicon seed single-crystal is put into a ribbon or sheet of multi-crystalline silicon is drawn Czochralski growth apparatus where it is dipped from a polysilicon melt. The ribbon is then cut into 89 For some electronic applications, single-crystal wafers are required. Even if “nine nines” purity silicon (99.9999999%) is used, during the Czochralski crystal growth, the crucible slowly dissolves oxygen into the melt that is incorporated in the final crystal in typical concentrations of around 25ppma. To have even lower concentrations of impurity atoms (e.g. oxygen), Float Zone Crystal Growth is used. 90 Silicon waste from the sawing process can be recycled into polysilicon, but a greater part of the energy is not recovered. Annexes | 175 Figure A1.15 | Ingot/Wafer Manufacturing Value Chain High purity Polysilicon Crunching Melting Ribbon drawing Casting Czochralski Multicrystalline Multicrystalline Monocrystalline silicon ribbons silicon ingot silicon ingot Cutting Wafering Multicrystalline Monocrystalline silicon wafers silicon wafers Source: STA. wafers, avoiding most of the silicon loss caused to form polycrystalline silicon, an engineer can by sawing. control the size of the polycrystalline grains that will The wafers are then polished to remove saw vary the physical properties of the material. marks. It has been found that rougher cells • c-Si Cells: Single-crystal wafer cells tend to be absorb light more effectively; therefore, some expensive. Because they are cut from cylindrical manufacturers have chosen not to polish the ingots, they do not completely cover a square solar wafer. However, state-of-the-art manufacturing cell module without a substantial waste of refined processes try to optimize light absorption by silicon. On the other hand, multi-crystalline silicon surface micromachining of the polished wafer. or poly-crystalline silicon (mc-Si or poly-Si) is made Doping of the wafers is required for cell from cast square ingots—large blocks of molten manufacturing; however, certain doping techniques silicon carefully cooled and solidified. These cells must be undergone during ingot manufacturing. are less expensive to produce than single-crystal For crystalline silicon, some dopants can be added silicon cells but are less efficient as well. in the crucible during the Czochralski process. The single-crystal wafers are usually lightly Whereas the doping of poly-crystalline silicon p-type doped. To make a solar cell from the does have an effect on the resistivity, mobility, and wafer, a surface diffusion of n-type dopants free-carrier concentration, these properties strongly (boron and/or phosphorus) is performed on the depend on the polycrystalline grain size, which is a front side of the wafer. This diffusion forms a physical parameter that the material scientist can p–n junction a few hundred nanometers below manipulate. Through the methods of crystallization the surface. The traditional way91 of doping 91 A more recent way of doping silicon with phosphorus is to use a small particle accelerator to shoot phosphorus ions into the ingot (ion implantation). By controlling the speed of the ions, it is possible to control their depth of penetration. This new process, however, has not been accepted generally by commercial solar cell manufacturers because it is more expensive and complex, This process does have advantages for the manufacture of electronic devices such as metal–oxide–semiconductor (MOS) transistors. 176 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry (adding impurities to) silicon wafers with boron Figure A1.16 | c-Si Cell Structure and phosphorus is to introduce a small amount (1) Surface contact of boron in the crucible during the Czochralski process. The wafers are then sealed back to back (2) Antireflective coating and placed in a furnace to be heated to slightly (3) n type silicon below the melting point of silicon (2570 degrees Fahrenheit or 1410 degrees Celsius) in the (4) p type silicon presence of phosphorus gas. The phosphorus atoms “burrow” into the silicon, which is more (5) p+ type silicon porous because it is close to becoming a liquid. (6) Back contact The temperature and time given to the process Source: STA. are carefully controlled to ensure a uniform junction of proper depth. One of the key processes in silicon surface micromachining is the selective etching of a the silicon at the opposite electrode. Yet another sacrificial layer to release silicon microstructures. method is to allow the silicon itself to react with Improving the surface texturing is one of the oxygen- or nitrogen-containing gases to form important factors required to increase the solar silicon dioxide or silicon nitride. Some solar cells cell short-circuit current, hence the solar cell have textured front surfaces that, like antireflective conversion efficiency due to the enhanced coatings, serve to increase the amount of light absorption properties of the silicon surface [14]. coupled into the cell. Such surfaces can usually A  mask, inert to the etching agent, is deposited be formed only on single-crystal silicon although, and patterned on the wafers using lithography. in recent years, methods of forming them on Then, wet (liquid) or dry (vapor or plasma) mc-Si have been developed. techniques can be applied, and the result is an The wafer then has a full area metal contact increased absorption by trapping light in three- made on the back surface and a grid-like metal dimensional structures. contact made up of fine “fingers” and larger “bus Because pure silicon is shiny, it can reflect up to bars” are screen-printed onto the front surface 35 percent of the sunlight. To reduce the amount using a silver paste. The rear contact also is of sunlight lost, an antireflective coating is put formed by screen-printing a metal paste, typically on the silicon wafer. The most common coatings aluminum. Usually this contact covers the entire used to be titanium dioxide and silicon oxide, rear side of the cell, although, in some cell although silicon nitride is gradually replacing designs, it is printed in a grid pattern. The paste them as the antireflective coating because of its is then fired at several hundred degrees Celsius excellent surface passivation qualities. Actual to form metal electrodes in ohmic contact with commercial solar cell manufacturers use silicon the silicon. Some companies use an additional nitride because it prevents carrier recombination electroplating step to increase the cell efficiency. at the surface of the solar cell. It is typically applied After the metal contacts are made, the solar cells in a layer several hundred nanometers thick using are given connections such as flat wires or metal plasma-enhanced chemical vapor deposition ribbons and encapsulated, that is, sealed into (PECVD). The material used for coating is either silicone rubber or ethylene vinyl acetate (EVA). heated until its molecules boil off and travel to the • c-Si Modules: The encapsulated solar cells are silicon and condense, or the material undergoes interconnected and placed into an aluminum sputtering. In this process, a high voltage knocks frame that has a BoPET (biaxially oriented poly- molecules off the material and deposits them onto ethylene terephthalate) or PVF (poly-vinyl fluoride) Annexes | 177 back sheet and a glass or plastic cover. Front of the copper-indium-gallium precursor and and rear connections are channeled through the ulterior selenization. As in CdTe Modules junction box. a CdS layer is applied to act as the n-type semiconductor. Thin Film (TF) technologies A TCO layer (in fact, two layers, a regular The following components belong to the value chain tin or zinc oxide and an ITO or Al doped of Thin Film PV and could be considered for local oxide) closes the circuit, and the module is manufacturing in MENA countries. finally encapsulated with EVA or molybdenum sputtered over glass are commonly used. • TF Modules: Three main types of thin-film Modules can be described: thin-film silicon92 CIS/CIGS and, in some recent developments, (TF-Si), cadmium telluride (CdTe), and copper- TF-Si can be manufactured on a transparent indium-(gallium) amphid films (CIS/CIGS). conductive organic film instead of glass by Unlike Crystalline Modules, the manufacturing means of low-temperature deposition techniques process of Thin-Film Modules is a single process resulting in flexible modules especially useful for that cannot be split up. Two different manufacturing building-integrated applications (BIPV). approaches can be considered: • Solar glass: Solar glass can be defined depending on the final use (Figure A1.17). ○ The “superstrate” approach: For CdTe and General requirements can be defined for any of TF-Si Modules, the manufacturing process these applications such as: starts by depositing a transparent conductive oxide (TCO) such as zinc or tin oxide on the ○ Tight tolerances in overall dimensions, warp front glass superstrate. The thin (approximately ○ Surface quality smoothness and planarity to 1/100th times “thinner” than in crystalline cells) avoid coating problems photoactive films93 are deposited next, either ○ Edge shape and quality required for assembly by sputtering, PECVD or chemical deposition. ○ Durability and small loss of properties with Between each deposited layer, a laser or aging mechanical patterning is performed, to create ○ Reliability and repeatability. the conductive paths for electron evacuation. A final conductive layer or “back contact” For the substrate-manufactured modules connects the electric circuit; usually a carbon (CIS/CIGS) the back glass must endure high- paste doped with copper or lead and a final temperature processes such as molybdenum layer of silver paint are used. deposition. A certain amount of sodium is required ○ The “substrate” approach: For CIS/CIGS in the CIS/CIGS photoactive layers, and the usual Modules the manufacturing process starts by method to provide it is the thermal diffusion of sputtering a molybdenum (Mo) layer on the the existing sodium in soda lime glass. Although rear soda lime glass substrate. soda lime glass is not a high-tech material (it To apply the thin CIGS film industrial is commonly used in windows, for example), for manufacturers use either a single-step co- solar applications, a stable composition and higher evaporation or a two-step method: deposition quality of surface and edge treatments are required. 92 Three different technologies lie within this term: amorphous silicon (α-Si), micromorphous silicon (μc-Si), and tandem Thin Films (α-Si + μc-Si). The third is the most advanced development. 93 These films usually are cadmium sulfide/cadmium telluride (CdTe Modules); cadmium sulfide/various sulfides and/or selenides (in CIGS) of copper, indium, and gallium (CIS/CIGS Modules); and amorphous/microcrystalline silicon (tandem TF-Si). 178 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.17 | Types of Solar Glass Thin Film PV Substrate Superstrate Technology Technology (CIS/CIGS) (TF-Si, CdTe) Low-iron front glass Standard back soda- Low-iron front glass Standard back glass lime glass Anti-reflective Anti-reflective Sodium content coating Standard back glass coating Mo coating Front electrode (TCO – ITO) Source: STA. The front glass for substrate-manufactured outer side. However, the inner surface quality modules requires low absorption (thus low-iron must be as high as in the back glass for substrate- glass is required), mechanical resistance and manufactured modules. low reflection. To reduce reflective94 losses and The back glass for superstrate-manufactured increase absorption rates,95 referred to collectively modules is the less demanding, with only general as “light trapping effects,” a textured surface is requirements to comply. In some manufacturing convenient. In single-Crystalline Modules, the processes, this rear glass is replaced by a metallic photoactive surface is textured, so a flat glass or plastic cover. with antireflective coating is used. In Thin-Film • TF Materials: The main materials required for TF Modules, the photoactive surface is likely to be Modules are: flat, so a “thick” (larger than the coherence96 length of light) texture is commonly used, as ○ Transparent conductive oxides (TCO): opposed to the “thin” texture that can be used in The TCO layer is usually divided in two layers: the substrate. a highly conductive thick TCO layer and a In the superstrate-manufactured modules diffusion barrier. The main layer can consist of (TF-Si and CdTe), the front glass undergoes a tin and/or zinc oxides with dopants such as TCO deposition as a first step. A hazy finish is cadmium or aluminum. Indium tin oxide (ITO advantageous for TF-Si, smooth for CdTe. The or tin-doped indium oxide) is a solid solution requirements of low absorption, mechanical of indium (III) oxide and tin (IV) oxide typically resistance and textured surface still apply for the 90% In 2O3 10% SnO2 by weight and is one of 94 Primary reflection is reduced because the texture increases the chances of the reflected angle leading the light back onto the surface, rather than out to the surrounding air. Secondary reflection (on underlying surfaces) is reduced because the reflected beam will likely find different surface angles in the entrance and exit paths, thus increasing the chances of the reflected angle leading the light back onto the underlying surface. 95 By causing an oblique incident angle on the photoactive surface, texturizing increases the effective path of the light. 96 A thick texture has light-trapping properties due to ray optics, while thin textures show interference and polarization effects. Annexes | 179 the most widely used transparent conducting ○ Cadmium chloride (CdCl2): As above, oxides because of its two chief properties— cadmium chloride does not occur in nature. its electrical conductivity and optical Anhydrous cadmium chloride can be prepared transparency—as well as the ease with which by the action of anhydrous chlorine or it can be deposited as a thin film. However its hydrogen chloride gas on heated cadmium cost has increased over the last years due to metal. Hydrochloric acid may be used to low availability of Indium and alternative uses make hydrated CdCl2 from the metal or from in electronic devices such as liquid crystal cadmium oxide or cadmium carbonate. displays (LCDs). ○ Copper sulfide (CuS): Copper sulfides ○ Molybdenum: The main commercial source describe a family of chemical compounds and of molybdenum is molybdenite (MoS2) minerals with the formula CuxSy both minerals [15]. Molybdenum is mined as a principal and synthetic. Prominent copper sulfide ore and also is recovered as a byproduct of minerals include Cu2S (chalcocite) and CuS copper and tungsten mining. In molybdenite (covellite). In the mining industry, the minerals processing, the molybdenite is first heated to bornite or chalcopyrite, which consist of a temperature of 700 °C (1,292 °F) and the mixed copper-iron sulfides, are often referred sulfide is oxidized into molybdenum (VI) oxide to as “copper sulfides.” Whatever their source, by air. The oxidized ore is then either heated to copper sulfides vary widely in composition 1,100 °C (2,010 °F) to sublimate the oxide, or with 0.5 ≤ Cu/S ≤ 2 including numerous non- leached with ammonia, which reacts with the stoichiometric compounds. molybdenum (VI) oxide to form water-soluble ○ Selenium precursors: Selenium is found molybdates. Pure molybdenum is produced impurely in metal sulfide ores in which it partially by reduction of the oxide with hydrogen. replaces the sulfur. Commercially selenium is ○ Cadmium sulfide (CdS): Cadmium sulfide produced as a byproduct in the refining of these occurs in nature as rare minerals, but is ores, most often during copper production. more prevalent as an impurity substituent in Minerals that are pure selenide or selenate similarly structured zinc ores, which are the compounds are known but are rare. A usual major economic sources of cadmium. As a approach in TF Modules manufacturing is to compound that is easy to isolate and purify, produce the copper selenide directly on the it is the principal source of cadmium for all module by treating a CuS layer with vaporized commercial applications [16]. selenium or H2Se in a process referred to as ○ Cadmium telluride (CdTe): Cadmium “selenization.” telluride does not occur in nature and is ○ Indium precursors: Zinc ores are the primary obtained from its base elements cadmium source of indium [17] , in which it is found in and tellurium. Cadmium occurs as a minor compound form. Very rarely, the element can component in most zinc ores and therefore is be found as grains of native (free) metal, but a byproduct of zinc production. The principal these are not of commercial importance. The source of tellurium is from anode sludge indium is leached from slag and dust of zinc produced during the electrolytic refining of production. Further purification is done by blister copper. It is a component of dusts from electrolysis. The exact process varies with the blast furnace refining of lead as well. Only a exact composition of the slag and dust. small amount estimated to be approximately ○ Gallium precursors: Elemental gallium does 800 metric tons per year is available although not occur in nature but as the gallium  (III) it has had few uses during History so it has not compounds in trace amounts in bauxite and been the focus of geologic exploration yet. zinc ores. Gallium is then a byproduct of 180 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry the production of aluminum and zinc. The • Inverter: An electrical power converter changes sphalerite for zinc production is the minor direct current (DC) to alternating current (AC). source; most gallium is extracted from the The converted AC can be at any required voltage crude aluminum hydroxide solution of the and frequency with the use of appropriate Bayer process. A mercury cell electrolysis transformers and switching and control circuits. and hydrolysis of the amalgam with sodium Solid-state inverters have no moving parts. hydroxide leads to sodium gallate. Electrolysis These inverters are used in a wide range of then gives gallium metal. For semiconductor applications from small switching power supplies use, further purification is carried out using in computers to large electric utility high-voltage either zone melting or single crystal extraction direct current applications that transport bulk from a melt (Czochralski process). power. Grid-tied inverters used to supply AC power Shared technologies from DC sources such as solar panels are sine The following components belong to the value chain wave inverters designed to inject electricity into of both Crystalline silicon and Thin Film PV and could the electric power distribution system. Such be considered for local manufacturing in MENA inverters must synchronize with the frequency countries. of the grid. They usually contain one or more “maximum power point tracking” features to • Support structure: The structure must keep extract the maximum amount of power and the shape and relative position of the modules, include safety features such as anti-islanding avoiding deformations caused by their own protection. weight or other external forces such as the wind The manufacturing of the inverter is similar to and transmitting the driving force from the tracker any electronic device based on semiconductor if included. In building-integrated applications, the technologies. The main issues to solve are the structure also must distribute the loads toward manufacturing of Silicon Controlled Rectifiers the structural elements of the building. (SCR), or thyristors,97 and the design of a circuitry Although the sun tracking system is able to minimize the harmonic distortion. not indispensable, as it is in concentrating applications, it increases overall production and Analysis of the value chain for PV usually is profitable for most locations. Rack- or For PV industries, Crystalline and Thin Film value crown-and-pinion electric drives are the most chains have been selected as references to analyze commonly used to move the collector, following the potential to develop a solar industry in MENA the apparent position of the sun during the day, countries.98 Clustering PV related industries has been and rotating the collector around its axis or axes carried out (Figure A1.18) revealing three clusters of with a local control to govern it. industries with differing technological complexity and Welded hot-dip galvanized carbon steel investment requirements. frames are the usual choice although aluminum structures can be used in building-integrated The group of industries at the top right in Figure A1.18 applications where the weight is an issue. (circled in green) are industries that, due to their 97 Thyristor manufacturing processes are similar to those of multilayer thin-film solar cells. However, higher purity materials and restrictive quality controls must be applied. 98 Crystalline PV currently has 80–90% of market share, with Thin Film largely making up the remainder. Concentrated Photovoltaic has not been included directly in the study due to its lower penetration rate. However, CPV technology requirements are included in the CSP and PV technology because some of the components (trackers, optics, cells), are common to the other two solar technologies. CPV technology could be of interest to the MENA countries in the future. Annexes | 181 Figure A1.18 | Investment Requirements vs. Technology Complexity for PV Technology Industries Complexity and Investment Requirements Polysilicon High for the PV Solar Industry Ingots/Wafers Solar Glass Cells Investment Requirements TF Materials c-Si Modules TF Modules Inverters Support Structure Low Low Technology Complexity High Difficult to reach TF Shared PV - Crystalline PV - Thin Film PV - Shared Source: STA/Accenture. technological complexity and large investment Benchmark countries until a change in the supply or requirements, are considered difficult to reach demand paradigm drives a more attractive business in most parts of the world, including Benchmark case. Currently, barriers against any new production countries that have developed the solar industry facility for Crystalline and Thin Film technologies successfully. Most Crystalline industries, except for entering the market are too high. the module assembly, fall into this category. Another significant aspect that emerged in the analysis The group of industries related to Thin Film is the particular situation surrounding Crystalline components (TF) are in the middle quadrant (circled industries, a market with experienced actors in an in blue). The Crystalline Module assembly industry over-production-capacity situation that has caused has a similar range of technological complexity a downward pricing pressure along the value chain. and required investment. The shared component Using the first step in the production chain as an industries, Support Structure, and Inverters have example, global Polysilicon demand in 2011 could lower technological complexity and investment have been met by the top producers [18]. This high requirements. capacity makes it more difficult for new entrants to gain a foothold. For this reason, no new entrants For these reasons, and taking into account the worldwide are expected either from MENA or from current overcapacity, MENA selected countries are 182 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.19 | PV Industry Development Opportunities (Normalized Attractiveness Index) in MENA Countries Average 1.0 MENA 0.9 Algeria 0.8 Egypt Attractiveness index 0.7 0.6 Jordan 0.5 Morocco 0.4 0.3 Tunisia 0.2 Average 0.1 Benchmark lls rs -Si on ss ria ls les er re Ce afe sc ilic gla du ert uc tu W le ys r ate o nv r ots du Po l ola M FM I tS t Ing Mo S TF T or pp Su Source: STA/Accenture. Note: The range covered by Benchmark countries is shaded. better suited for the development of the Shared PV Solar Glass99 and Modules-related industries to industries (marked in yellow), which therefore are develop. considered target industries. In the medium term, if world overcapacity diminishes, there will be an Beyond the numerical analysis,certain entry barriers opportunity for Thin Film and Crystalline PV industries to the Crystalline industry make it difficult to get a to develop. share in some markets, namely, the Polysilicon Ingots/ Wafers and Cells industries. The main obstacles in Figure A1.19 describes the industry development these markets are shown in Table A1.5. opportunities for MENA countries (in terms of normalized Attractiveness index) for each PV technology taking the MENA average as the reference. Status Solar PV power is a commercially available and For these reasons, MENA countries are better reliable technology with a significant potential for suited to the development of the Shared industries, long-term growth in nearly all world regions. which therefore are considered target industries. The recommendation is for MENA countries to PV and CSP are complementary rather than directly focus on the development of Inverters and Support competitive, and developers should carefully assess Structures. In the medium term, if world overcapacity their needs and environment when choosing which diminishes, there will be an opportunity for Thin Film solar technology to use. 99 Solar Glass,especially if combined with LCD production. Annexes | 183 Table A1.5 | Main Entry Barriers for the Difficult-to-reach PV Industries Polysilicon Ingots/Wafers Cells Entry High capital requirements barriers The market remains The wafer industry is Most competitors are dominated by the well- dominated by 5 companies* vertically integrated so have established* polysilicon that share over 90% of the a better control over costs. producers. global market. Most customers have long- Companies which are on the A large number of skilled term contracts with existing backwards side of the value workers technicians suppliers making it difficult chain are well positioned to engineers and scientists on for new entrants. move into this segment. this field is required. Note: * As referred to in the corresponding technical worksheet PV technology is very versatile so it generally can • PV needs emergency systems in many be substituted for electrical supply systems of every applications in which 24/24h supply security is kind. PV has competitive advantages compared to required. conventional supply: • PV’s important value as a sustainable and renewable resource significantly decreases its environmental • Rural areas isolated from the distribution grids have impacts compared to other technologies. great advantages with respect to electrification of • PV requires generally fewer permits and other various applications. administrative processes than do other sources of • Street lighting systems, safety systems, and other energy, and the installation time for PV applications systems are not extensively distributed. is shorter. • Urban areas are interconnected with relatively • Installation is limited to a few devices, making dense distribution grids. O&M relatively simple. • Integration in buildings decreases solar impacts, • If the operation conditions are severe, life of the improves insulation, and provides for own- equipment will be reduced. consumption backed up with conventional grids. • Utility-scale electricity production in power plants PV is a commercially mature technology, and it is usually is interconnected with power outputs in expanding very rapidly due to effective supporting the MW range. policies and recent dramatic cost reductions. In addition to commercial PV Modules, a range of The development of solar PV intends to satisfy technologies are emerging, including concentrating different types of demands for electricity thanks to photovoltaic (CPV) and organic solar cells as its  characteristics of accessibility and equivalent well as novel concepts with significant potential costs compared to other possible resources. The for performance increase and cost reduction. In basic characteristics of solar PV are: accordance with IEA [10],Crystalline silicon (c-Si) Modules represent 85 percent-90 percent of • The resource is dispersed, limiting energy surface today’s global annual market. Thin Film accounts for intensity. 10  percent–15 percent of global PV Module sales. • The seasonal, daily, and hourly character of the Emerging technologies encompass advanced Thin power supply curve conditions the coupling of Films and organic cells. The latter are about to enter demand and supply. the market via niche applications. Concentrator • Off-grid systems need energy storage systems to technologies (CPV) use an optical concentrator effectively couple demand and supply. system that focuses solar radiation onto a small 184 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A1.20 | Global PV Module Pricing Learning Curve for C-Si and CdTe Modules, 1979–2015 100,00 Global Module Averange Selling Price (2010 USD/Wp) 1979 1979 2006 c-Si price increase due to polysilicon shortage 1992 1992 10,00 1998 1998 2002 2002 2004 2004 2011 2011 2010 2010 $1.3-1.5 $1.3–1.5 $1.52 $1.52 2015 2015 $1.08 1,00 $1.08 22%price 22% reductionfor pricereduction each foreach doublingof doubling ofcumulative cumulativevolume volume 2014 2014 $1.05 $1.05 0,10 1 10 100 1,000 10,000 100,000 1,00,000 Cumulative Production Volume (MW) c-Si CdTe Source: IRENA[19]. high-efficiency cell. CPV technology is being tested in Australia, China, France, Greece, India, Italy, South pilot applications. Novel PV concepts aim at achieving Korea and Portugal) are gaining momentum due ultra-high efficiency solar cells via advanced materials to new policy and economic support schemes. and new conversion concepts and processes. They Accelerated deployment and market growth will are the subject of basic research. in turn bring about further cost reductions from economies of scale significantly improving the Figure A1.20 gives an overview of the cost and relative competitiveness of PV by 2020 and spurring performance of different PV technologies. additional market growth. Trends Crystalline silicon (c-Si) cells and modules capacities The global PV market has experienced vibrant growth are now mainly located in Asia. Almost 50 percent of for more than a decade with an average annual this capacity is located in China. The rest is produced growth rate of 40 percent. The cumulative installed in Taiwan (over 15 percent) the EU (over 10 percent) PV power capacity has grown from 0.1 GW in 1992 Japan (slightly less than 10 percent) and the US (less to 14 GW in 2008. Annual worldwide installed new than 5 percent). While a large part of c-Si Modules capacity increased to almost 6 GW in 2008. are assembled in China, most of the Thin Film manufacturing plants are located in other parts of the Four countries have a cumulative installed PV world; the leaders being the US, the EU, Japan and capacity of one GW or above: Germany (5.3 GW), Malaysia [20]. Spain (3.4 GW), Japan (2.1 GW) and the US (1.2 GW). These countries account for almost 80 percent of the total global capacity. Other countries (including Annexes | 185 Figure A1.21 | Market Share of the Different PV Technological Approaches, 2011 sc-Si TF-Si 40% 3% CIS-CIGS 3% Thin film 14% mc-Si Other Cd-Te 45% 1% 8% Other mc-Si sc-Si Cd-Te TF-Si CIS-CIGS Source: STA/Accenture based on [21]. 186 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Industry Technical Worksheets – PV Sector: Subsystem: Solar industry: PV Crystalline silicon Cells Value Unit Comments Weight in the value chain (as a % of total wealth) 17% Cost Structure breakdown 100% Materials 70% Energy 10% Labor 15% O&M 5% Materials 70% Energy O&M Labor 10% 5% 15% Component Market Price (Average Sales Price) 85 – 95 kUSD/t Typical demand from a reference customer 6.5 – 7.5 t/MWp Average production for a factory 45 – 50 MWp/yr Investment 700 – 750 kUSD/(MWp/yr) Production requirements Materials 100% Wafers 90% Silver 1% Aluminum 4% Etching agents 5% Energy 100% Electric 10% Thermal 90% Top Companies Origin Canadian Solar Inc Canada Gintech Energy Corporation  Taiwan JA Solar Holdings Co China Kyocera Japan Hanwha (Q-Cells) South Korea Sharp Japan SolarWorld AG Germany Suntech Power China Yingli Green Energy China Barriers to entry 1. Technical barrier: highly specialized surface treatment (etching) 2. High specific investment for manufacturing process 3. Overcapacity in the sector, downward pricing pressure, vertical integration in most cells manufacturing companies 4. Highly skilled workforce required Key Factor 1. Vertical integration to achieve competitive costs Annexes | 187 Sector: Subsystem: Solar industry: PV Crystalline silicon Ingots / Wafers Value Unit Comments Weight in the value chain (as a % of total wealth) 15% Cost Structure breakdown 100% Materials 30% Energy 15% Labor 15% O&M 40% Energy 15% Labor Materials 15% 30% O&M 40% Component Market Price (Average Sales Price) 50 – 60 kUSD/t Typical demand from a reference customer 5.5 – 6.6 t/MWp Average production for a factory 150 t/yr Investment 600 kUSD /(t/yr) Production requirements Materials 100% Silicon, high purity 100% Dopants 0% negligible weight O&M Consumables 100% Carbon 50% cost fraction Steel wire 25% cost fraction Crucible 25% cost fraction Energy 100% Electric 15% Thermal 85% Top Companies Origin Canadian Solar Inc Canada LG-siltron South Korea MEMC US Shin-Etsu Japan Siltronic Germany SUMCO Japan Barriers to entry 1. High specific investment for manufacturing process 2. Overcapacity in the sector, downward pricing pressure, vertical integration in 75% of wafer manufacturing companies 3. Global demand in 2011 covered above 90% with already installed capacity of the five top suppliers Key Factors 1. Alternative market (electronics) requires higher purity than solar, additional purification process required 2. Vertical integration to achieve competitive costs 188 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: PV Crystalline silicon c-Si Modules Value Unit Comments Weight in the value chain (as a % of total wealth) 13% Cost Structure breakdown 100% Materials 80% Energy 5% Labor 10% O&M 5% Materials 80% O&M Labor 5% 10% Energy 5% Component Market Price (Average Sales Price) 0.9 – 1.4 USD/Wp Typical demand from a reference customer 1 – 100 MWp Average production for a factory 300 MWp/yr Investment 45 – 55 kUSD /(MWp/yr) Production requirements Materials 100% Cells 10% Glass 60% Aluminum 25% Encapsulant 5% Energy 100% Electric 80% Thermal 20% Top Companies Origin Kyocera Japan Motech Industries Taiwan Sanyo Component Europe GmbH Germany Schott Solar Germany Sharp Japan SolarWorld AG Germany Sunpower Corp USA Suntech Power China Trina Solar China Yingli Green Energy China Barriers to entry 1. Overcapacity in the sector, downward pricing pressure, vertical integration in most module manufacturing companies Key Factors 1. Distinguishing features, quality control 2. Vertical integration to achieve competitive costs and ensure cell supply and quality Annexes | 189 Sector: Subsystem: Solar industry: PV Crystalline silicon Polysilicon Value Unit Comments Weight in the value chain (as a % of total wealth) 15% Cost Structure breakdown 100% Materials 45% Energy 40% Labor 10% O&M 5% Materials 45% Energy 40% Labor O&M 10% 5% Component Market Price (Average Sales Price) 25 – 30 kUSD/t Typical demand from a reference customer 5.5 – 6.6 t/MWp Average production for a factory 16,000 t/yr Investment 30 – 60 kUSD/(t/yr) Production requirements Materials 100% Silicon, metallurgical grade 90% depends on process followed Hydrochloric acid 5% depends on process followed Hydrogen 5% depends on process followed Energy 100% Electric 20% Thermal 80% Top Companies Origin GCL-Poly China OCI South Korea Wacker Germany Hemlock US REC FBR Norway MEMC US Barriers to entry 1. Technical barrier: highly specialized deposition process with high purity 2. High specific investment for manufacturing process 3. Overcapacity in the sector, downward pricing pressure 4. Global demand in 2011 could have been covered with already installed capacity of the six top suppliers Key Factor 1. Alternative market (electronics) requires higher purity than solar. Capability to reach purity (Siemens, others in development) ) 190 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: PV Common systems Inverter Value Unit Comments Weight in the value chain (as a % of total wealth) 14% Cost Structure breakdown 100% Materials 60% Energy 13% Labor 25% O&M 2% Materials 60% Energy 13% O&M Labor 2% 25% Component Market Price (Average Sales Price) 150 – 200 kUSD/MWp Typical demand from a reference customer 1 – 100 MWp Average production for a factory 250 MWp/yr Investment 70 – 90 kUSD /(MWp/yr) Production requirements Materials 100% Silicon 30% Copper 20% Aluminum 50% Special alloys - negligible weight Energy 100% Electric 30% Thermal 70% Top Companies Origin Danfoss Denmark Fronius Austria GE Energy USA Ingeteam Spain Kaco New Energy Germany Siemens Germany SMA Solar Technologies Germany Solar Max Switzerland Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Most inverter manufacturers are large power electronics companies which diversified into the solar market Key Factors 1. Distinguishing features, quality control 2. Maximum power point tracking and anti-islanding protection Annexes | 191 Sector: Subsystem: Solar industry: PV Common systems Support Structure Value Unit Comments Weight in the value chain (as a % of total wealth) 13 – 17% Up to 30% if 2-axes tracking Cost Structure breakdown 100% Materials 52% Energy 5% Labor 3% O&M 40% Materials Energy 52% 5% O&M 40% Labor 3% Component Market Price (Average Sales Price) 2–3 USD/kg Fixed structure or 1-axis tracking Typical demand from a reference customer 60 – 100 t/MWp Average production for a factory 10 – 200 MWp/yr Investment 80 – 100 kUSD/(MWp/yr) Production requirements Materials 100% Carbon steel, beam 90% Carbon steel, plate 5% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Conergy Germany Hilti Spain Mecasolar Spain Sun Power USA Barriers to entry 1. Technical barrier: complex design to achieve reliability and low maintenance for tracker Key Factors 1. Carbon steel market 2. Transport 3. Galvanizing 4. Adapt existing industries 192 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar industry: PV Thin films TF Materials Value Unit Comments Weight in the value chain (as a % of total wealth) 35% Cost Structure breakdown 100% Materials 60% Energy 20% Labor 15% O&M 5% Materials 60% Energy 20% O&M Labor 5% 15% Component Market Price (Average Sales Price) 700 USD/kg Typical demand from a reference customer 220 kg/MWp Average production for a factory 60 MWp/yr Investment 300 – 350 kUSD/(MWp/yr) Production requirements E.g.: materials for CdTe cell Materials 100% Tellurium 50% Cadmium 45% Sulphur - negligible weight Indium 5% Tin - negligible weight Energy 100% Electric 30% Thermal 70% Top Companies Origin 5N Plus Inc Canada Advanced Technology and Materials USA Hitachi Metals Japan Barriers to entry 1. Raw material supply depends on existing zinc and copper industries Key Factors 1. Vertical integration or association with zinc and copper industries 2. Transport 3. Purity of final product 4. Valorization of byproducts 5. TCO: alternative markets (LCD displays, etc.) Annexes | 193 Sector: Subsystem: Solar industry: PV Thin films TF Modules Value Unit Comments Weight in the value chain (as a % of total wealth) 10% Including TF materials (35%), Solar glass (20%), total 65% Cost Structure breakdown 100% Materials 75% Energy 10% Labor 10% O&M 5% Materials 75% O&M Labor Energy 5% 10% 10% Component Market Price (Average Sales Price) 0.5 – 1 USD/Wp Typical demand from a reference customer 0.5 – 100 MWp Average production for a factory 100 – 1000 MWp/yr Investment 0.8 – 1.5 million USD /(MWp/yr) Production requirements Materials 100% Solar glass 99% Photoactive layer - negligible weight TCO - negligible weight Back contact - negligible weight Polymeric backsheet 1% Energy 100% Electric 30% Largely depending on deposition Thermal 70% technique Top Companies Origin First Solar (CdTe) US Best Solar (TF Si) China Moser Baer (TF SI) India Sharp (TF Si) Japan Barriers to entry 1. High specific investment for manufacturing process 2. Technical barrier: highly specialized deposition processes with high purity and thickness control 3. Overcapacity in the silicon sector has led prices below thin films, with higher performance Key Factors 1. Vertical integration or association with existing Solar glass line 2. R&D to improve performance 3. Niche market: weight-constrained applications 4. Niche market: flexible substrates 194 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Sector: Subsystem: Solar Industry: PV Thin Films Solar Glass Value Unit Comments Weight in the value chain (as a % of total wealth) 20% Cost Structure breakdown 100% Materials 6% Energy 62% Labor 2% O&M 30% Energy 62% Materials 6% Labor O&M 2% 30% Component Market Price (Average Sales Price) 1.5 – 2.5 USD/kg Typical demand from a reference customer 8 – 20 t/MWp One/two glass sheets Average production for a factory 200 MWp/yr Adaptation of an existing float glass line Investment 1–2 kUSD / (MWp/yr) Production requirements Note: composition of final product, some raw Materials 100% materials will lose volatile fraction Silica 72% Low iron content (impurities) Na2O 14% Sources: Na2CO3, trona CaO 10% Sources: CaCO3, (dolomite) MgO 2% Sources: dolomite Fining agents and additives 2% E.g. Sb2O3, Na2SO4, NaCl, TiO2 Energy 100% Electric 30% Thermal 70% Top Companies Origin AGC Solar Belgium Pilkington UK Saint Gobain solar Germany Guardian US Barriers to entry 1. High overall investment for manufacturing process due to scale 2. Solar glass is usually < 1% of total float glass. Alternative demandmust exist to achieve, at least, 70% cap. factor Key Factors 1. Vertical integration or association with existing float glass line 2. For CIS/CIGS: stable Na composition, integration of Mo coating 3. For CdTe and TF-Si: Integration of TCO deposition to access alternative markets (LCD displays, etc.) 4. Transport 5. Energy 6. Alternative markets: crystalline modules Annexes | 195 ANNEX 2 | Solar Energy Development Scenarios GLOBAL SOLAR INDUSTRY extension or strengthening of some policies already SCENARIOS in force and included under the Current Policies scenario. Access to international offset credits for The World Energy Outlook’s “Current Policies” countries participating in emissions-trading schemes scenario includes all policies in place and supported is assumed in both the New Policies and 450 through enacted measures as of mid-2010. The scenarios, although the timing, prices of CO2, and “New Policies” and “450” scenarios are based on the scale of trading differ. greenhouse-gas (GHG) emissionsr eductions and other commitments associated with the Copenhagen Global projected solar installed capacity (2008–35) in Accord, on other policies under discussion or the 3 different scenarios analyzed: announced but not yet implemented, and the Table A2.1 | Projected Global Solar Installed Capacity (GW), 2008–35 Solar Installed capacity (GW) 2008 2015 2020 2025 2030 2035 Current Policies Scenario PV 15 101 206 242 (conservative scenario) CSP 1 12 31 50 New Policies Scenario PV 15 57 110 197 294 406 (base case) CSP 1 10 17 30 52 91 450 Scenario PV 15 138 485 748 (optimistic scenario) CSP 1 42 141 221 Source: [65] Figure A2.1 | Projected Global CSP Installed Capacity, 2008–35 250 221 200 141 CSP Installed Capacity (GW) 150 100 91 42 52 50 50 17 31 1 12 0 2008 2020 2030 2035 Current Policies Scenario New policies Scenario 450 Scenario Source: STA/Accenture. 196 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A2.2 | Projected Global PV Installed Capacity, 2008–35 800 748 700 600 485 PV Installed Capacity (GW) 500 406 400 294 300 242 200 138 110 206 100 101 15 0 2008 2020 2030 2035 Current Policies Scenario New Policies Scenario 450 Scenario Source: STA/Accenture. MENA SOLAR INDUSTRY SCENARIOS The assessment was completed with information provided by the relevant stakeholders through MENA countries projected solar installed personal interviews, telephone conversations, and capacity (2020) email exchanges. For none of the listed projects The assessment included only RE projects to be was the relevant technical documentation (feasibility implemented from 2011 onward. Projects under studies, land property documentations, equipment construction or commissioned before the end of quotations) reviewed in detail. 2010  were not taken into account either in the assessment or in the modeling exercise. In addition, Figure A2.4 and Figure A2.5, highlighting current only projects identified by stakeholders interviewed at and future (short-term) development of CSP and PV, the time of the study were included in the assessment. show the main areas of interest. Figure A2.3 | MENA CSP (Left) and PV (Right) Installed Capacity to 2020 (MW) 2000 1000 1525 1600 800 1600 800 1100 1200 600 400 800 400 450 200 300 400 200 150 50 0 0 Algeria Egypt Jordan Morocco Tunisia MW MW Algeria Egypt Jordan Morocco Tunisia Source: [57]. Annexes | 197 Figure A2.4 | Global CSP Development: Current Capacity and Capacity under Construction (MW) CSP development intensity considering current and under construction MW New capcity under > 500 MW 200-500 MW 100-200 MW <100 MW MW Current capacity construction (end 2011) Source: Accenture. Figure A2.5 | Global PV Development: Current Capacity and Projected Future Capacity by 2014 (MW) PV development intensity considering current and expected new capacity to 2014 MW New future capacity by 2014 (BNEF > 10,000 MW 4,000-10,000 MW 2,000-4,000 MW < 2,000 MW MW Current capacity conservative scenario) Source: Accenture. 198 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry MENA MARKET POTENTIAL The basic scenario hypothesis was that a fraction of domestic, MENA Regional, European, and ROW To understand the MENA countries’ market potential, demand could be met from each MENA country if it is first necessary to forecast the installed capacity appropriate actions were taken. of each MENA country and then the solar component demand. After discussion with industry leaders, and taking into account the need to have a track record to supply For this purpose, an analysis calculated the possible components in the energy business, the following demand for solar component that could be satisfied hypotheses on demand growth were made. by the five MENA countries considered. The analysis divided the world into five separate regions: individual 1. The hypothesis of increase in market share is the countries, MENA neighboring countries, MENA same for both CSP and PV technologies. Region, EU, and rest of the world (ROW). 2. A domestic market share increase hypothesis for each MENA country was made to reach The methodology to define the component demand 80 percent in 2018 for target industries. is based on the forecasted installed capacity in each 3. Market share to be supplied by each MENA of these regions per: country in neighboring countries (the nearest 2 from those subject to this study) was estimated • Projections to 2020 for Europe and the rest of the to reach 5.0 percent of the demand for target world [65] industries in 2020. • Objectives and plans of each country to 2020 for 4. MENA Regional (non-neighboring countries) the MENA countries[57][66][67]. market share to be supplied by each MENA country was estimated to be 2.5 percent of the A linear hypothesis was used to determine annual demand for target industries in 2020. growth. 5. Market share was estimated for Europe (1.0 percent) and ROW (0.5 percent) in 2020. Component demand scenario 6. Actual market share was estimated to From these solar installed capacity forecasts, be 25  percent for domestic demand. No a component demand scenario was built for participation in foreign markets was estimated components considered feasible to be developed in as of today. each MENA country. 7. A linear increase from actual to forecasted market share has been assumed. Table A2.2 | Market Share Hypotheses for Each MENA Country to 2020 (%) CSP/PV Actual Market Share CSP/PV Forecasted Market Share Estimated in 2020 (%) Target (%)* Local 25.0 80.0 Neighboring countries 0.0 5.0 Other MENA countries 0.0 2.5 Europe 0.0 1.0 ROW 0.0 0.5 Note: * For target industries, the forecasted market share is estimated to be reached in 2018 and to stay flat from then on. Annexes | 199 Figure A2.6 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. CSP AND PV MENA MARKET POTENTIAL BY 2020 Algeria: Figure A2.7 | Algeria CSP Market Potential to 2020 Taking into Account Market Share Hypotheses MW Algeria CSP Market Potential 18 ,000 1,095 16,000 14,000 12,000 10,000 36 8,000 17,000 6,000 35 8,025 4,000 82 34 4,000 2,000 908 1,525 1,900 1,550 0 Algeria Neighboringc Rest of MENA Europe Rest of the Total ountries World Source: STA/Accenture. 200 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A2.8 | Algeria PV Market Potential to 2020 Taking into Account Market Share Hypotheses MW Algeria PV Market Potential 120,000 1,195 100,000 80,000 288 60,000 110,000 408 40,000 63,400 20,000 45,000 473 800 19 450 7 350 - Algeria Neighboring Rest of MENA Europe Rest of the Total countries World Source: STA/Accenture. Egypt: Figure A2.9 | Egypt CSP Market Potential to 2020 Taking into Account Market Share Hypotheses MW Egypt CSP Market Potential 18 ,000 824 16,000 14,000 12,000 10,000 36 8,000 17,000 6,000 35 8,025 4,000 68 653 4,000 2,000 32 1,100 750 3,125 0 Egypt Neighboringc Rest of MENA Europe Rest of the Total ountries World Source: STA/Accenture. Annexes | 201 Figure A2.10 | Egypt PV Market Potential to 2020 Taking into Account Market Share Hypotheses MW Egypt PV Market Potential 120,000 846 100,000 80,000 288 60,000 110,000 408 40,000 63,400 20,000 45,000 155 200 8 200 26 1,200 - Egypt Neighboring Rest of MENA Europe Rest of the Total countries World Source: STA/Accenture. Jordan: Figure A2.11 | Jordan CSP Market Potential to 2020 Taking into Account Market Share Hypotheses MW Jordan CSP Market Potential 18 ,000 463 16,000 14,000 12,000 10,000 36 8,000 17,000 6,000 35 8,025 4,000 68 60 4,000 2,000 263 450 750 3,125 0 Jordan Neighboringc Rest of MENA Europe Rest of the Total ountries World Source: STA/Accenture. 202 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A2.12 | Jordan PV Market Potential to 2020 Taking into Account Market Share Hypotheses MW Jordan PV Market Potential 120,000 818 100,000 80,000 288 60,000 110,000 408 40,000 63,400 20,000 45,000 86 150 10 250 26 1,200 - Jordan Neighboring Rest of MENA Europe Rest of the Total countries World Source: STA/Accenture. Morocco: Figure A2.13 | Morocco CSP Market Potential to 2020 Taking into Account Market Share Hypotheses MW Morocco CSP Market Potential 18 ,000 1,137 16,000 14,000 12,000 10,000 36 8,000 17,000 6,000 35 8,025 4,000 79 954 4,000 2,000 34 1,600 1,825 1,550 0 Morocco Neighboringc Rest of MENA Europe Rest of the Total ountries World Source: STA/Accenture. Annexes | 203 Figure A2.14 | Morocco PV Market Potential to 2020 Taking into Account Market Share Hypotheses MW Morocco PV Market Potential 120,000 974 100,000 80,000 288 60,000 110,000 408 40,000 63,400 20,000 45,000 234 400 36 850 7 350 - Morocco Neighboring Rest of MENA Europe Rest of the Total countries World Source: STA/Accenture. Tunisia: Figure A2.15 | Tunisia CSP Market Potential to 2020 Taking into Account Market Share Hypotheses MW Tunisia CSP Market Potential 18 ,000 416 16,000 14,000 12,000 10,000 36 8,000 17,000 6,000 35 8,025 4,000 173 4,000 2,000 34 174 300 3,125 1,550 0 Tunisia Neighboringc Rest of MENA Europe Rest of the Total ountries World Source: STA/Accenture. 204 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A2.16 | Tunisia PV Market Potential to 2020 Taking into Account Market Share Hypotheses MW Tunisia PV Market Potential 120,000 783 100,000 80,000 288 60,000 110,000 408 40,000 63,400 20,000 45,000 28 50 52 1,200 7 350 - Tunisia Neighboring Rest of MENA Europe Rest of the Total countries World Source: STA/Accenture. SCENARIOS SENSITIVITY ANALYSIS differences between conservative-moderate and optimistic-moderate scenarios as defined in the The moderate scenario was established by estimating World Energy Outlook were taken into account. the market potential by country defined above. To Algeria: set up conservative and optimistic scenarios, the Figure A2.17 | Scenarios in Algeria Figure A2.18 | Scenarios in Algeria for CSP Potential Market for PV Potential Market MW MW 3,000 2705 2,000 2,500 1,600 1494 2,000 1195 1,200 1099 1,500 1095 800 1,000 778 400 500 20 0 0 2010 2020 2010 2020 CSP Conservative scenario CSP Base case CSP Optimistic scenario PV Conservative scenario PV Base case PV Optimistic scenario Source: STA/Accenture. Source: STA/Accenture Annexes | 205 Egypt: Figure A2.19 | Scenarios in Egypt Figure A2.20 | Scenarios in Egypt for CSP Potential Market for PV Potential Market MW MW 3,000 2,000 2,500 1,600 2035 2,000 1057 1,200 1,500 846 778 824 800 1,000 585 500 400 20 0 0 2010 2020 2010 2020 CSP Conservative scenario CSP Base case CSP Optimistic scenario PV Conservative scenario PV Base case PV Optimistic scenario Source: STA/Accenture. Source: STA/Accenture. Jordan: Figure A2.21 | Scenarios in Jordan Figure A2.22 | Scenarios in Jordan for CSP Potential Market for PV Potential Market MW MW 3,000 2,000 2,500 1,600 2,000 1,200 1023 1,500 818 1144 753 800 1,000 463 500 329 400 20 0 0 2010 2020 2010 2020 CSP Conservative scenario CSP Base case CSP Optimistic scenario PV Conservative scenario PV Base case PV Optimistic scenario Source: STA/Accenture. Source: STA/Accenture. 206 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Morocco: Figure A2.23 | Scenarios in Figure A2.24 | Scenarios in Morocco for CSP Potential Market Morocco for PV Potential Market MW MW 3,000 2809 2,000 2,500 1,600 2,000 1217 1,200 974 1,500 896 1137 800 1,000 807 500 400 20 0 0 2010 2020 2010 2020 CSP Conservative scenario CSP Base case CSP Optimistic scenario PV Conservative scenario PV Base case PV Optimistic scenario Source: STA/Accenture. Source: STA/Accenture. Tunisia: Figure A2.25 | Scenarios in Tunisia Figure A2.26 | Scenarios in Tunisia for CSP Potential Market for PV Potential Market MW MW 3,000 2,000 2,500 1,600 2,000 1,200 979 1,500 783 1027 800 720 1,000 416 400 500 20 295 0 0 2010 2020 2010 2020 CSP Conservative scenario CSP Base case CSP Optimistic scenario PV Conservative scenario PV Base case PV Optimistic scenario Source: STA/Accenture. Source: STA/Accenture. Annexes | 207 ANNEX 3 | Benchmark Competitiveness Analysis Primary Data Definition The selection of raw data and ready-made indexes ○ Glass manufacturing [26] was an interactive process. Based on expert ○ Steel manufacturing [27][28] judgments, the project team identified categories and ○ Stainless steel manufacturing [29] subcategories that impacted attractiveness to the ○ Oil manufacturing ability [30][31] investor. A survey on available data that could be used ○ Copper manufacturing [32][33] in the analysis was done in parallel. Thus, the final ○ Silicon manufacturing [34] choice was driven by the relevance of information and ○ NaNO3/KNO3 availability [35]. its availability to the sample countries. The relevance of the data is based on their weighting and aggregation 3. Relevant manufacturing ability in the model. No individual parameter by itself defines the attractiveness of an individual country. ○ Existence of synergic industries: Existence of experienced workforce in industries connected The data were aggregated into 12 “Competitiveness with solar industry such as float glass, crude parameters” and further into 4 “Overarching steel, cement, aluminum, copper, micro- categories” (Annex 4). electronics, power electronics, and galvanization ○ Literacy rates [36] OVERARCHING CATEGORIES100: ○ Higher education and training: The 5th pillar of PRODUCTION FACTORS the Global Competitiveness Index, it measures human capital resources by using quantity and This category includes five Competitiveness quality of education and on-the-job training [25]. parameters101 related to production costs: 4. Cost of energy 1. Labor market based on the Primary data : 102 ○ Cost of energy (industrial): Price of industrial ○ Labor costs: Minimum monthly wage [24] electrical energy [37][38]. ○ Labor market efficiency: The 7th pillar of the Global Competitiveness Index, it measures 5. Fiscal and financial costs the efficiency and flexibility of the labor market. These characteristics are critical to ensure that ○ Paying taxes rank: Measures tax systems workers are allocated to their most efficient from the point of view of a domestic company use in the economy. The pillar is composed of complying with the different tax laws and flexibility and efficient use of talent [25]. regulations in each economy. Covers the cost of taxes borne by the case study company and 2. Material availability the administrative burden of tax compliance Resources that a country has and trades. The for the firm [41]. following parameters measure the annual ○ Lending interest rate: Serves as the floor for production of the following raw materials or bank loans and therefore is a cost for a solar composites in the country: industry when using loans as a mean to raise funds [42]. 100 Model notation: OCis ,c . 101 Model notation: CPjs ,c . c 102 Model notation: Pk . 208 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry OVERARCHING CATEGORIES: levels of public sector. The indicator includes DEMAND FACTORS questions relating to the bribery of public officials, kickbacks in public procurement, This category includes a single Competitiveness embezzlement of public funds, and questions parameter related to demand: that probe the strength and effectiveness of public-sector anticorruption efforts [51] 1. CSP PV Component demand ○ Ease of Doing Business Ranking 2012: Assesses regulations affecting domestic firms ○ CSP Growth Scenario to 2020: Objectives in 183 economies; ranks the economies in 10 and plans for CSP of each country to 2020 for areas of business regulation such as starting the MENA countries [43] a business, resolving insolvency and trading ○ PV Growth Scenario to 2020: Objectives and across borders [41] plans for PV of each country to 2020 for the ○ Ease of Doing Business 2007–2012 ranking MENA countries [43] change factor: Higher rankings indicate better, ○ Maximum yearly global horizontal irradiation usually simpler, regulations for businesses (GHI): Maximum value for this irradiation in and stronger protections of property rights. the country. It is used by PV solar plants to Empirical research funded by the World produce energy [44]. Bank to justify its work shows that the effect ○ Maximum yearly direct normal irradiation of improving these regulations on economic (DNI): Maximum value for this irradiation in growth is strong [41] the country. It is used by CSP solar plants to ○ Inflation rate: Consumer price using 2010 produce energy [44]. indicator [52] ○ Electricity demand growth (percent change ○ OECD Country risk: Country risk is composed from 2009 to 2010) [45] of transfer and convertibility risk, such as ○ Energy imports, net, as a percent of energy capital or exchange controls, that prevent use[10][46][47][48][49][50] an entity from converting local currency into ○ Cost of energy (residential): Price of residential foreign currency and/or transferring funds to energy [38][30] creditors located outside the country; and ○ CSP global potential market for components cases of force majeure (war, expropriation, to 2020: Based on projections to 2020 for revolution, civil disturbance, floods and Europe and the rest of the world for CSP [43] earthquakes) [53]. ○ PV global potential market for components to 2020: Based on projections to 2020 for 2. Risk associated with demand[54][55][56][57] Europe and ROW for PV [43]. ○ Existence of clear stable regulatory framework OVERARCHING CATEGORIES: RISK for RE AND STABILITY FACTORS ○ Existence of incentives for PV ○ Existence of incentives for CSP This category includes three Competitiveness ○ Existence of RE associations parameters related to risk both real and perceived: ○ Total solar PV capacity: PV capacity already installed 1. Risk associated with doing business ○ Total CSP capacity: CSP capacity already installed ○ Corruption index: Corruption perceptions index ○ Agency for the development of RE: Binary ranks countries according to their perceived indicator. (Existing = 1; not existing = 0) Annexes | 209 ○ Competition in the electricity sector: The 2. Innovation capacity analysis includes generation, transmission and distribution of electricity (liberalized market vs. ○ Patent filings per million population 2010: full monopoly). When a full monopoly exists in This parameter provides concrete information the country by which one vertically integrated about intellectual property: patents divided utility generates most of the power, this market per million populations [60][58]. structure could indicate a preference for large- ○ Innovation score: The 12th pillar of the Global centralized conventional production. This Competitiveness Index, it measures innovation preference could discourage new entrants scores using several indicators such as in the electricity sector (Full monopoly = 0; capacity for innovation, quality of scientific liberalized market = 1). research institutions, company spending on R&D, university-industry collaboration in 3. Financial risk R&D, Government procurement of advanced technology products, availability of scientists ○ Access to credit: It measures the legal rights of and engineers, and Utility patents [61]. borrowers and lenders with respect to secured ○ Technological readiness: The 9th pillar of transactions through a set of indicators and the the Global Competitiveness Index, it is sharing of credit information through another. composed of technological adoption (that Some of these indicators are strength of legal is, availability of latest technologies) and ICT rights index, credit information, public credit (information and communication technology) registry coverage and private credit bureau use [61]. coverage [58]. ○ Business sophistication: The 11th pillar of the Global Competitiveness Index, it is composed OVERARCHING CATEGORIES: of several indicators: local supplier quantity, BUSINESS SUPPORT control of international distribution, willingness to delegate authority, among others [25]. This category includes three Competitiveness parameters related to business support: 3. Logistical infrastructure 1. Industry structure ○ Quality of port infrastructure 2010: Measures the quality of port infrastructure. WEF: ○ Presence of large international industrial (1=extremely underdeveloped to 7=well companies: Measured as percent of developed and efficient by international international industrial companies—in the Top standards) [62] [25]. 100 Companies (by revenue)—that settle in ○ Infrastructure: The 2nd pillar of the Global MENA country [59]. Competitiveness Index, it is composed of ○ Percent industrial GDP: Comprises value transport, energy, and telephony infrastructure added in mining, manufacturing (also reported [61]. as a separate subgroup), construction, electricity, water, and gas. It is calculated Logistics performance index: Provides without deductions for depreciation of feedback on the logistics “friendliness” of the fabricated assets or depletion and degradation countries in which they operate and those with of natural resources [52]. which they trade [63]. ○ Local clustering: Measured as existing clustering in the country. 210 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry ANNEX 4 | Benchmarking Model and Index Weights PRIMARY DATA NORMALIZATION noncompensatory multicriteria analysis [84]—the additive and geometric methods were used and the For the primary data normalization, different strategies sensibility checked. Different aggregation coefficients exist ([82][83] and [84]). In this analysis, rescaling and were used for each solar industry. The aggregation Z-scores were considered. The rescaling method methodology follows: was chosen. 1. The aggregation impact of each normalized Each primary datum has been normalized through: datum within its Competitiveness parameter is modeled through a weighting factor s j ,k which Pkc − min (Pk ) fulfills the normalization condition.103 For a c pk = max (Pk ) − min (Pk ) given country and solar industry the score for a Competitiveness parameter is equal to Thus, each country normalized datum is measured from 0 to 1 where 1 would be associated with the CPjs ,c = ∑ k j ,k × pk s c highest value and 0 with the lowest one. Normalized data have been redefined to have a positive correlation For easier comparing, the Competitiveness with the Attractiveness index where necessary. parameters are normalized in tables Alternatively, Z-scores normalization (parameter minus average divided by standard deviation) could CPjs ,c cps ,c = have been used. Further discussion on advantages j ma CPjs max ( ) and disadvantages can be found in [85]. 2. The aggregation impact of each normalized Rescaling is vulnerable for extreme values or outliers, Competitiveness parameter within its Overarching which can distort the transformation. However, it category is modeled through a weighting factor  s i ,j widens the range of indicators lying within small which fulfills the normalization condition. For a intervals, thus increasing the spread among countries given country and solar industry, the score for an so enabling easier interpretations. Overarching category is equal to PARAMETER AGGREGATION OC s i ,c = ∑ j i , j × cp j s s ,c Two different aggregation strategies are used. For For easier comparing, the Overarching primary data that are part of the value chain with a categories are normalized in tables monetary value, their relative contribution (materials availability) has been used. Those that correlate OC is ,c ocis ,c = with the Competitiveness parameter but have no max OCs i ,c ( ) monetary value associated are equally weighted unless expert judgment dictates otherwise. 3. The aggregation impact of each Overarching category within the Attractiveness index is Among the different aggregation approaches— modeled through a weighting factor  s i which additive methods, geometric aggregation, and fulfills the normalization condition. For a given 103 ∑ k j ,k = 1, ∑ j β i , j = 1, ∑ i γ i = 1. αs s s Annexes | 211 country and solar industry, the Attractiveness 4. Where necessary, partial scores aggregating index is equal to Competitiveness parameters, Overarching categories, and Attractiveness indexes for AIs ,c = ∑ i i × OC i s s ,c groups of industries and/or countries also are shown. For easier comparing, the Attractiveness indexes are normalized in tables WEIGHTS DISTRIBUTION AIs ,c For each industry, primary data, Competitiveness ai s ,c = max AIs ( ) parameters, and Overarching categories are given a weight (s s j ,k ,  i , j and s i ) representing their relative importance for an investor. OVERARCHING CATEGORIES’ WEIGHTS Figure A4.1 | Investment Requirements vs. Technology Complexity for CSP Technology: Group Definition GROUP I High Complexity and Investment Requirements for the CSP Solar Industry Steam Turbine HTF Thermal Oil Electrical Generator Condenser Investment requirements Mirror GROUP II Heat exchanger Pumps Storage Tanks Condenser Condenser GROUP III GROUP IV Structure &Tracker Solar Salt Low Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. 212 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A4.2 | Investment Requirements vs. Technology Complexity for PV Technology: Group Definition High Complexity and Investment Requirements Polysilicon for the PV Solar Industry GROUP I Ingots/ Wafers Solar Glass Investment Requirements Cells GROUP III GROUP II TF Materials c-Si Modules TF Modules Inverters Support Structure GROUP IV Low Low High Difficult to reach TF PV -Crystalline PV -Thin Film PV -Shared Source: STA/Accenture. The global impact of each Overarching category weighting. Industries Group II comprises Cells is modeled through a factor  s i . The weight factors (PV), Mirror, HTF Pumps, and Receivers (CSP). used have been classified into four types according 3. All industries in Group III, namely, TF Materials to their technological complexity and investment (PV) and Pumps and Condenser (CSP), have the requirements from information gathered during the same weighting. research phase of the project and from interviews 4. Industries Group IV has the lowest capital with sectoral experts.104 requirements and lowest technology complexity and therefore have the same weighting as 1. Industries with the highest capital requirements Support structure (PV and CSP). have the same weighting as Polysilicon (PV) or Steam turbine (CSP). They have been gathered Table A4.1 to Table A4.7 show how the weights as Industries Group I. have been used to represent the relative importance 2. Industries with a combination of high capital of the Overarching categories for the CSP and PV requirement and an important technology industries. complexity or vice versa have the same 104 At least three experts have been consulted from each industry. The weights proposed by the experts were averaged, and the result was rounded so that the last significant number was 0 or 5. With this procedure, at least 90% of the weights proposed were within a ±5 range. The experts’ identities were not disclosed to protect confidentiality. Annexes | 213 Table A4.1 | Weight Factors for Overarching Categories in Industries within Group I: CSP Industries s Overarching Category (  i ) HTF Thermal Oil Steam Turbine Electrical Generator Production 0.20 0.20 0.20 Demand 0.10 0.10 0.10 Risk and stability 0.65 0.65 0.65 Business support 0.05 0.05 0.05 Table A4.2 | Weight Factors for Overarching Categories in Industries within Group II: CSP Industries Overarching category (  is) Receiver Mirror HTF Pumps Production 0.35 0.35 0.35 Demand 0.10 0.10 0.10 Risk and stability 0.50 0.50 0.50 Business environment 0.05 0.05 0.05 Table A4.3 | Weight Factors for Overarching Categories in Industries within Group III – CSP Industries s Overarching Category (  i ) Pumps Condenser Production 0.40 0.40 Demand 0.10 0.10 Risk and stability 0.45 0.45 Business environment 0.05 0.05 Table A4.4 | Weight Factors for Overarching Categories in Industries within Group IV: CSP Industries s Overarching Category (  i ) Structure & Tracker Heat Exchanger Solar Salt Storage Tanks Production 0.65 0.65 0.65 0.65 Demand 0.10 0.10 0.10 0.10 Risk and stability 0.20 0.20 0.20 0.20 Business environment 0.05 0.05 0.05 0.05 Table A4.5 | Weight Factors for Overarching Categories in Industries within Group I: PV Industries s Overarching category (  i ) Polysilicon Ingots/Wafers Solar Glass Production 0.20 0.20 0.20 Demand 0.10 0.10 0.10 Risk and stability 0.65 0.65 0.65 Business environment 0.05 0.05 0.05 214 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A4.6 | Weight Factors for Overarching Categories in Industries within Groups II and III: PV Industries Overarching Category (  is) Cells Materials Production 0.35 0.40 Demand 0.10 0.10 Risk and stability 0.50 0.45 Business environment 0.05 0.05 Table A4.7 | Weight Factors for Overarching Categories in Industries within Group IV: PV Industries Crystalline Support s Overarching Category (  i ) Modules TF Modules Inverters Structure Production 0.65 0.65 0.65 0.65 Demand 0.10 0.10 0.10 0.10 Risk and stability 0.20 0.20 0.20 0.20 Business environment 0.05 0.05 0.05 0.05 COMPETITIVENESS PARAMETERS’ representing Materials and O&M costs rescaled WEIGHTING FACTORS to include fiscal and financial costs. This weight is distributed among both Competitiveness The global impact of each Competitiveness parameters according to the solar industry’s parameter is modeled through a factor  s i , j. technological complexity. The higher the complexity in an industry, the higher the relevance Competitiveness parameters associated with of manufacturing ability vs. the ease of availability production factors (5) of materials (raw materials or composites). • Cost of energy Competitiveness parameter is Competitiveness parameters related to the weighted with the percent representing energy Production factors Overarching category have costs rescaled to include fiscal and financial been weighted according to the share of costs in costs. each manufacturing solar industry (Annex 1). This • Fiscal and Financial cost Competitiveness cost distribution includes Labor costs, Material parameter is assumed to be 5 percent of total costs, Energy costs, and O&M costs. The following cost. This value is used to rescale the percent hypotheses were made: costs in Annex 1 so that the weights fulfill the normalization condition.105 • Labor market Competitiveness parameter is weighted with the percent representing labor The production Competitiveness parameters are costs rescaled to include fiscal and financial costs. defined according to these hypotheses. Results for • Relevant manufacturing ability and Material CSP and PV industries are shown in Figure A4.5 and availability Competitiveness parameters are Figure A4.6. weighted so that they add up to the percent cost 105 ∑ k j ,k = 1, ∑ j β i , j = 1, ∑ i γ i = 1. αs s s Annexes | 215 Figure A4.3 | Investment Requirements vs. Technology Complexity for CSP Technology High Complexity and Investment Requirements Steam Turbine for the CSP Solar Industry HTF Thermal Oil Electrical Generator HTF Pumps Investment Requirements Mirror Heat exchanger Pumps Storage Tanks Condenser Receiver Structure & Tracker Low Solar Salt Low Technology Complexity High Difficult to reach Conventional Independent Source: STA/Accenture. Table A4.8 | Percentage Used to set up a Weight Factor for Relevant Manufacturing Ability and Material Availability According to Technological Complexity: CSP Industries Percentage According to Solar Industry’s Technological Complexity CSP Industries Relevant Manufacturing Ability Material Availability Structure & Tracker 20 80 Solar salt 20 80 Heat exchanger 40 60 Storage tanks 40 60 Mirror 50 50 Condenser 50 50 Pumps 50 50 Electrical generator 80 20 Receiver 90 10 HTF Thermal Oil 90 10 HTF Pumps 90 10 Steam turbine 90 10 216 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A4.4 | Investment Requirements vs. Technology Complexity for PV Technology High Complexity and Investment Requirements Polysilicon for the PV Solar Industry Ingots/ Wafers Solar Glass Cells Investment Requirements TF Materials c-Si Modules TF Modules Inverters Support Structure Low Low High Difficult to reach TF PV -Crystalline PV -Thin Film PV -Shared Source: STA/Accenture. Table A4.9 | Percentage Used to set up a Weight Factor for Relevant Manufacturing Ability and Material Availability According to Technological Complexity: PV Industries Percentage According to Solar Industry’s Technological Complexity PV Industries Relevant Manufacturing Ability Material Availability Inverters 20 80 Support structure 20 80 TF Modules 50 50 TF materials 50 50 Solar glass 50 50 c-Si Modules 50 50 Polysilicon 90 10 Ingots/Wafers 90 10 Cells 90 10 Annexes | 217 Figure A4.5 | Production Competitiveness Parameters for CSP Industries 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ver ror il ps er lt ks s e or ser ker al O mp bin sa rat ng um an Mir en rac cei lar tur Pu ha ne rm eT nd FP Re &T So exc l ge he rag am Co HT e FT Sto ica Ste at tur HT He ctr uc Ele Str 1.1. Labor market 1.2. Material availability 1.3. Relevant manufacturing ability 1.4. Cost of energy 1.5. Fiscal and Financial costs Source: STA/Accenture. Figure A4.6 | Production Competitiveness Parameters for PV Industries 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% e n s ls les s s es er tur fer las ial lico Cel ert dul odu ruc ter /Wa ar g ysi Inv Mo Ma t St iM ots Pol Sol TF c-S por Ing Sup 1.1. Labor market 1.2. Material availability 1.3. Relevant manufacturing ability 1.4. Cost of energy 1.5. Fiscal and Financial costs Source: STA/Accenture. 218 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A4.11 | Competitiveness Competitiveness parameters associated with Parameters Associated with Business demand factors (1) Support Factors CSP and PV Component demand is the only Industries Industries Competitiveness Groups I Groups III Competitiveness parameter associated with demand Parameters (  is, j ) and II and IV factors, and it fulfills the normalization condition Industry structure 0.15 0.33 ∑ j =i 1  si , j = 1 so  si , j = 1. n Innovation capacity 0.70 0.34 Competitiveness parameters associated with risk Logistical 0.15 0.33 infrastructure and stability factors (3) The impacts of Competitiveness parameters All the industries have the same weight except the associated with risk and stability factors are industries with the highest technological complexity— modeled though a weight factor  s i , j which fulfills the Group I and the Receiver industry—because the normalization condition ∑ j =1  i , j = 1. ni s relative importance of the innovation capacity within the business Competitiveness parameter category All the industries are allocated the same weight except is higher for these two exceptions. the industries that require the highest investment— industries within Group I and HTF pumps106— PRIMARY DATA’S WEIGHT FACTORS because the relative importance of the financing risk is higher for these exceptions. The global impact of each Primary datum is modeled through a factor . Competitiveness parameters associated with business support factors (3) Labor market (2) These two parameters are weighted equally for all The impacts of Competitiveness parameters industries except for those with the highest or lowest associated with business support factors are technology complexity. modeled though a weight factor  s i , j which fulfills the normalization condition ∑ j =1  i , j = 1. ni s Table A4.10 | Competitiveness Parameters Associated with Risk and Stability Factors Industries Industries Competitiveness Group I and Groups II, Parameters (  is, j ) HTF pumps III, and IV Risk associated 0.10 0.25 with doing business Risk associated 0.10 0.25 with demand Financing risk 0.80 0.50 106 HTF Pumps, similarly to industries within Group I, is considered difficult to reach and therefore to finance in most parts of the world. Annexes | 219 Table A4.12 | Weight Factors Applied to Primary Data within the Labor Market Competitiveness Parameter Highest/Lowest Tech. Complexity Highest/Lowest Tech. Complexity CSP Industries PV Industries General Group I and Structure & Groups I and II Inverter, Primary Data Weight II (Except Tracker, Solar (Except Solar Support s (  j ,k) Factors Mirror)* Salt Glass)** Structure Labor cost 0.50 0.25 0.75 0.25 0.75 Labor market efficiency 0.50 0.75 0.25 0.75 0.25 Note: * Regarding technological complexity, Mirror industry is considered at similar level as Condenser or Pump industries. ** Regarding technological complexity, the Solar glass industry is considered at similar level as Modules or TF Modules industries. Material availability (7) and training—which each have the same weight Several materials are required to develop solar factor s j ,k = 0.2. industries. Seven materials were detected as particularly important, and the weighting was Table A4.14 | Weight Factors Applied allocated by the relative importance of each material to Primary Data within the Relevant to each solar industry. As an example, the Receiver Manufacturing Ability Competitiveness industry requires glass and stainless steel in different Parameter proportions (in monetary terms), and this difference is CSP PV s Primary Data (  j , k ) Industries Industries taken into account when allocating the weights. Existence of synergic 0.60 0.60 industries Table A4.13 | Weight Factors Applied Literacy rates 0.20 0.20 to Primary Data within the Material Higher education and training 0.20 0.20 Availability Competitiveness Parameter; Example: Receiver Industry s Receive-r Cost of energy (1) Primary Data (  j , k ) Glass manufacturing in the country 0.30 Cost of energy (industrial) is the only Primary data Stainless steel manufacturing in the 0.70 associated with its Competitiveness parameter, and it fulfills the normalization condition ∑ j =1 s ni country j ,k = 1 so s Steel manufacturing in the country 0.00  j ,k = 1. Oil manufacturing ability in the country 0.00 Copper manufacturing in the country 0.00 Fiscal policy (2) Silicon manufacturing in the country 0.00 These two data have equal weight factors for all NaNO3/KNO3 availability in the country 0.00 industries, and they fulfill the normalization condition ∑ j =i 1 sj ,k = 1 so sj ,k = 0.5. n Relevant manufacturing ability (3) Table A4.15 | Weight Factors Applied The three parameters within this category have to Primary Data within the Fiscal Policy equal weight factors for all industries. The parameter Competitiveness Parameter Existence of synergic industries s j ,k = 0.6 requires prior training to prepare the workers for that specific CSP PV s Primary Data (  j , k ) Industries Industries manufacturing process. Thus, this parameter Paying taxes rank 0.50 0.50 is considered more important than the 2 other Lending interest rate 0.50 0.50 parameters—Literacy rates and Higher education 220 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Component demand (9) Risk associated with demand (8) The weight factors were allocated by distinguishing The weight factors were allocated by distinguishing CSP and PV industries, considering the relative CSP and PV industries, considering the relative importance107 of each datum, then rescaling to fulfill importance108 of each datum, then rescaling to fulfill the normalization condition ∑ j =1 s the normalization condition ∑ j =1 s ni ni j ,k = 1. j ,k = 1. Table A4.16 | Weight Factors Applied Table A4.18 | Weight Factors Applied to to Primary Data Within the Component Primary Data Within the Risk Associated Demand Competitiveness Parameter with Demand Competitiveness Parameter CSP PV CSP PV s Primary Data (  j , k ) Industries Industries Primary Data (  s j ,k) Industries Industries CSP growth scenario to 2020 0.20 0.00 Existence of clear stable 0.25 0.25 PV growth scenario to 2020 0.00 0.20 regulatory framework Maximum yearly global 0.00 0.15 for RE horizontal irradiation (GHI) Existence of incentives 0.00 0.15 Maximum yearly direct 0.20 0.00 for PV normal irradiation (DNI) Existence of incentives 0.15 0.00 Electricity demand growth 0.20 0.15 for CSP (Change 2010 over 2009) Existence of RE 0.15 0.15 Energy imports, net, as a % 0.20 0.15 associations of energy use Total solar PV capacity 0.00 0.15 Cost of energy (residential) 0.00 0.15 Total CSP capacity 0.15 0.00 CSP global potential market 0.20 0.00 Agency for the 0.15 0.15 for components to 2020 development of RE PV global potential market 0.00 0.20 Competition in the 0.15 0.15 for components to 2020 electricity sector Risk associated with doing business (5) Financing risk (1) These 4 data have equal weight factors for all Access to credit is the only Primary data associated industries, and they fulfill the normalization condition with its Competitiveness parameter, and it fulfills the ∑ j =i 1 sj ,k = 1 so sj ,k = 0.2. normalization condition ∑ j =1 s n ni j ,k = 1 so  j ,k = 1. s Table A4.17 | Weight Factors Applied to Industry structure (3) Primary Data Within the Risk Associated These 3 data have equal weight factors for all with Doing Business Competitiveness industries, and they fulfill the normalization condition Parameter ∑ j =i 1 sj ,k = 1 so sj ,k = 0.33109. n CSP PV s Primary Data (  j , k ) Industries Industries Corruption index 0.20 0.20 Ease of Doing Business ranking 0.20 0.20 Ease of Doing Business 0.20 0.20 2007–12 ranking change factor Inflation rate 0.20 0.20 OECD country risk 0.20 0.20 107 At least three experts from each industry were consulted. The weights proposed by the experts were averaged, and the results were rounded so that the last significant number was 0 or 5. With this procedure, at least 90% of the weights proposed were within a ±5 range. The experts’ identities were not disclosed to protect confidentiality. 108 At least three experts were consulted from each industry. The weights proposed by the experts were averaged, and the result was rounded so that the last significant number was 0 or 5. With this procedure, at least 90% of the weights proposed were within a ±5 range. The experts’ identities were not disclosed to protect confidentiality. Annexes | 221 Table A4.19 | Weight Factors Applied Table A4.21 | Weight Factors Applied to Primary Data within the Industry to Primary Data within the Logistical Structure Competitiveness Parameter Infrastructure Competitiveness CSP PV Parameter Primary Data (  s j ,k) Industries Industries CSP PV Presence of large 0.33 0.33 Primary Data (  s j ,k) Industries Industries international industrial Quality of port 0.33 0.33 companies infrastructure 2010 % industrial GDP 0.33 0.33 Global Competitiveness 0.34 0.34 Local clustering 0.34 0.34 Report 2011–12 Infrastructure Logistics Performance 0.33 0.33 Iinnovation capacity (4) Index These 4 data have equal weight factors for all industries, and they fulfill the normalization condition COMPARISON OF MENA AND ∑ j =i 1 sj ,k = 1, so sj ,k = 0.25. n BENCHMARK COUNTRIES AS STATISTICAL POPULATIONS Table A4.20 | Weight Factors Applied to Primary Data within the Innovation Figure A4.7 and Figure A4.8 show the global Capacity Competitiveness Parameter Attractiveness index by country for CSP and PV CSP PV technologies, respectively. These figures show that Primary Data (  s j ,k) Industries Industries MENA countries and Benchmark countries belong Patent filings per million 0.25 0.25 to two different statistical populations (samples). This population 2010 variance means that the two groups are at different Global Competitiveness 0.25 0.25 levels of attractiveness for developing solar industries. Report 2011–12 Innovation score The results are stable with a low sensitivity to the Global Competitiveness 0.25 0.25 aggregation model used. Report 2011–12 Technological readiness Business sophistication 0.25 0.25 Logistical infrastructure (3) These three data have equal weight factors for all industries, and they fulfill the normalization condition ∑ j =i 1 sj ,k = 1, so sj ,k = 0.33150. n 109 One of the parameters is weighted as 0.34 to fulfill the normalization condition. 222 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A4.7 | Global Attractiveness Index by Country for CSP: MENA and Benchmark 0.5 0.4 South Africa Tunisia Germany Spain Probability distribution, CSP Morocco Japan 0.3 China India Jordan Algeria 0.2 Egypt Chile United States 0.1 0 0.2 0.4 0.6 0.8 1 1.2 MENA countries Benchmark countries Source: STA/Accenture. Figure A4.8 | Global Attractiveness Index by Country for PV: MENA and Benchmark 0.5 Tunisia 0.4 Morocco China South Africa India 0.3 Probability distribution, PV Spain Germany Jordan Japan Algeria 0.2 United States Egypt 0.1 Chile 0 0 0.2 0.4 0.6 0.8 1 1.2 MENA countries Benchmark countries Source: STA/Accenture. Annexes | 223 MODEL ROBUSTNESS USING Table A4.22 | Calculation Methods Used DIFFERENT AGGREGATIONS for Parameter Aggregation and Normalization The Competiveness index was then calculated using Aggregation Weighting Normalization different normalization and aggregation techniques 1 Arithmetic Associated Max-Min to check whether relative ranking varied. The results with the of the following normalization and aggregation value chain techniques are shown in Table A4.23 and Table A4.24. 2 Arithmetic Equal Max-Min weights 1. Rescaling factor analysis, linear aggregation 3 Geometric Associated Max-Min with the (base case) value chain 2. Rescaling equal weights, linear aggregation 4 Geometric Equal Max-Min 3. Rescaling factor analysis, geometric aggregation weights 4. Rescaling equal weights, geometric aggregation 5 Arithmetic Equal Z-scores 5. Z-scores equal weights, linear aggregation. weights The Model aggregates the primary data (Annex 3 and fulfills the normalization condition.110 For a Annex 4) into different Competitiveness parameters given country and solar industry, the score for a that are further aggregated into Overarching Competitiveness parameter is equal to categories and finally into an Attractiveness index per industry and country. The weighting for each CPjs ,c = ∑ k j ,k × pk s c aggregation is related to the impact of the datum on the component’s value chain and on the decision CPjs ,c cps ,c = to invest. j ma CPjs max ( ) Each country’s normalized datum rages from 0 to 1 2. The aggregation impact of each Competitiveness where 1 would be associated with the highest value parameter within its Overarching category is and 0 with the lowest. Normalized data have been modeled through a weighting factor  s i , j which redefined to have a positive correlation with the fulfills the normalization condition. For a given Attractiveness indexes where necessary. country and solar industry, the score for an Overarching category is equal to Five calculation methods were used. They are presented in Table A4.22. OC s i ,c = ∑ j i , j × CPj s s ,c Two aggregation techniques were used: arithmetic OC s ,c ocis ,c = i and geometric. max OC s i ( ) The arithmetic model follows: 3. The aggregation impact of each Overarching category within the Attractiveness index is s 1. The aggregation impact of each normalized modeled through a weighting factor  i which datum within its Competitiveness parameter is fulfills the normalization condition. For a given modeled through a weighting factor sj ,k which 110 ∑ k j ,k = 1, ∑ j β i , j = 1, ∑ i γ i = 1. αs s s 224 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry country and solar industry, the Attractiveness fulfills the normalization condition. For a given index is equal to country and solar industry, the Attractiveness index is equal to AIs ,c = ∑ i i × OC i s s ,c s AIs ,c = Πi OC s i ,c γ i AIs ,c ai s ,c = max AIs ( ) ai s ,c = log(AIs ,c ) log( max (AIs )) 4. Partial scores aggregating Competitiveness parameters, Overarching categories, and 4. Partial scores aggregating Competitiveness Attractiveness indexes for groups of industries parameters, Overarching categories, and and/or countries provide valuable information. Attractiveness indexes for groups of industries and/or countries provide valuable information. The geometric model is explained next: Weighting is either: 1. The aggregation impact of each normalized datum within its Competitiveness parameter is 1. Equally weighted, or modeled through a weighting factor s j ,k which 2. Associated with the value chain: For each fulfills the normalization condition. 111 For a industry, primary data, Competitiveness given country and solar industry, the score for a parameters, and Overarching categories weight Competitiveness parameter is equal to ( s , s and  s j ,k  i , j i ) represent their relative importance to an investor. αs CPjs ,c = Π k 1 + pk c j ,k Primary data have been transformed into 0–1 results CPjs ,c through two normalization techniques: Max-Min cps ,c = j max CPjs ( ) and Z-scores. 2. The aggregation impact of each Competitiveness Max-Min normalization is based on the formula: parameter within its Overarching category is modeled through a weighting factor  s i , j which Pkc − min ( Pk ) c pk = fulfills the normalization condition. For a given max ( Pk ) − min ( Pk ) country and solar industry, the score for an Overarching category is equal to Z-scores normalization is based on the formula: βs OC s ,c = Πj CPjs ,c i ,j Pkc − µ i c pk = σ OC s ,c ocis ,c = i max OC s i ( ) µ and σ being the mean and the standard deviation of the datum, respectively. 3. The aggregation impact of each Overarching category within the Attractiveness index is modeled through a weighting factor  s i which 111 ∑ k j ,k = 1, ∑ j β i , j = 1, ∑ i γ i = 1. αs s s Annexes | 225 Table A4.23 | Rankings for CSP Technology Using Different Normalization and Aggregation Techniques Rescaling, Rescaling, Rescaling, Z-Scores, Equal Weights, Factor Analysis, Equal Weights, Equal Weights, Linear Geometric Geometric Linear Base case Aggregation Aggregation Aggregation Aggregation CSP Score Rank Score Rank Score Rank Score Rank Score Rank United States 1.00 1 1.00 1 1.00 1 0.98 2 1.00 1 China 0.91 2 0.98 3 0.94 2 1.00 1 0.90 3 Japan 0.88 3 0.91 4 0.75 3 0.91 4 0.69 4 Germany 0.86 4 0.99 2 0.57 7 0.87 5 0.95 2 South Africa 0.78 5 0.61 7 0.59 6 0.76 7 −0.15 7 Spain 0.77 6 0.89 5 0.61 5 0.92 3 0.60 5 India 0.72 7 0.55 8 0.66 4 0.78 6 −0.35 8 Chile 0.65 8 0.70 6 0.31 9 0.72 8 0.10 6 Egypt 0.52 9 0.42 11 0.35 8 0.60 11 −0.47 10 Morocco 0.43 10 0.51 9 0.29 10 0.67 9 −0.43 9 Tunisia 0.39 11 0.47 10 0.21 11 0.62 10 −0.49 11 Algeria 0.22 12 0.29 13 0.05 12 0.41 13 −1.00 13 Jordan 0.22 13 0.34 12 0.04 13 0.49 12 −0.85 12 Figure A4.9 | Rankings of Attractiveness Indexes per Country, Aggregated for CSP Technology, with Different Normalization and Aggregation Techniques 13 Base case 12 11 10 Rescaling, equal weights, Global CSP Attractiveness index ranking 9 linear aggregation 8 7 Rescaling, factor analysis, 6 geometric aggregation 5 4 3 Rescaling, equal weights, geometric aggregation 2 1 - Z-scores, equal weights, linear aggregation ile ain es ina n y ica ia pt co ia a n eri Ch an pa rda Ind nis y roc tat Afr Ch Sp Eg Alg Ja rm Jo Tu dS Mo uth Ge ite So Un Source: STA/Accenture. Note: Zone defined by the average plus/minus one standard deviation is shown. 226 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Table A4.24 | Rankings for PV Technology Using Different Normalization and Aggregation Techniques Rescaling, Rescaling, Rescaling, Equal Weights, Factor Analysis, Equal Weights, Z-scores, Equal Linear Geometric Geometric Weights, Linear Base Case Aggregation Aggregation Aggregation Aggregation PV Score Rank Score Rank Score Rank Score Rank Score Rank United States 1.00 1 1.00 1 0.87 2 0.98 2 1.00 1 China 0.98 2 0.98 3 1.00 1 1.00 1 0.90 3 Japan 0.97 3 0.91 4 0.87 3 0.91 4 0.69 4 Germany 0.96 4 0.99 2 0.75 5 0.88 5 0.95 2 India 0.79 5 0.55 8 0.80 4 0.78 6 −0.35 8 South Africa 0.76 6 0.61 7 0.75 6 0.77 7 −0.15 7 Spain 0.73 7 0.89 5 0.74 7 0.92 3 0.60 5 Chile 0.61 8 0.70 6 0.55 9 0.72 8 0.10 6 Egypt 0.58 9 0.42 11 0.59 8 0.60 11 −0.63 11 Morocco 0.43 10 0.51 9 0.54 10 0.68 9 −0.43 9 Tunisia 0.42 11 0.50 10 0.50 11 0.62 10 −0.49 10 Algeria 0.26 12 0.29 13 0.32 12 0.41 13 −1.00 13 Jordan 0.25 13 0.34 12 0.28 13 0.49 12 −0.85 12 Figure A4.10 | Rankings of Attractiveness Indexes per Country, Aggregated for PV Technology, with Different Normalization and Aggregation Techniques 13 Base case 12 11 10 Rescaling, equal weights, Global PV Attractiveness index ranking linear aggregation 9 8 7 Rescaling, factor analysis, geometric aggregation 6 5 4 Rescaling, equal weights, geometric aggregation 3 2 1 Z-scores, equal weights,l inear aggregation - es an ia ica ile co isia dan ain ina y pt eria an Ind roc tat Ch Jap Egy Afr Tun Ch Sp Jor Alg rm dS Mo th Ge ite Sou Un Source: STA/Accenture. Note: Zone defined by the average plus/minus one standard deviation is shown. Annexes | 227 PARAMETER AGGREGATION correlation of the items (for example, the mean of the CONSISTENCY non-diagonal terms of the correlation matrix). The coefficient increases with the number of parameters For non-value-chain-related parameters, consistency and with their correlation. Cronbach’s Alpha is equal is checked using Cronbach’s Alpha [64], which to zero if no correlation exists (the parameters are assesses how well a set of items is correlated. independent), and to one if the parameters are Cronbach’s Alpha is defined as: perfectly correlated. Hence, a high alpha indicates that the underlying items proxy well the desired ni,j R characteristic. Nunnaly[86] suggests a value of 0.7 = 1 + (ni,j − 1)R as an acceptable threshold. The results are shown in Table A4.25. Where ni,j is the number of the components of a – Competitiveness parameter, and R is the mean Table A4.25 | Cronbach’s Alpha (α) for Competitiveness Parameters Risk Risk Risk Associated Relevant Associated Associated with Competitiveness Manufacturing with Doing with Demand Demand Innovation Logistical Parameter Ability Business (PV) (CSP) Capacity Infrastructure  0.71 0.74 0.83 0.80 0.94 0.93 228 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry ANNEX 5 | Case Studies Annex 5 presents some case studies relating to solar whole, the European Union and the Rest of the World industries able to be developed in MENA countries. (ROW)—also has been forecasted. The cases are: The annual demand in m2 is shown in Figure A5.2. • Mirror industry in Egypt In the long run, the yearly installed capacity is the • Support structure in Egypt key number to determine whether a manufacturing • Support structure in Morocco industry will have a stable demand. • TF Modules in Morocco • Receiver in Tunisia. • Global and European forecasted component demand is based on their forecasted installed Although the cases were assessed in particular capacity. A linear hypothesis was used to countries, this fact should not prevent the other determine annual growth. A residual market share countries from seeking to develop these industries. has been assumed for Europe (1.0 percent) and The case countries were selected based on the ROW (0.5 percent) in 2020. results of the Benchmark analysis and the additional • For MENA countries, [57], [66], and [67] define complementary analysis carried out on the individual a similar scenario, called “moderate.” Market solar industries. share to be supplied by Egypt in its neighboring countries (Jordan and Tunisia) has been CASE STUDY: MIRROR INDUSTRY estimated to reach 5.0 percent of the demand IN EGYPT for target industries in 2020. MENA Regional (Algeria and Morocco) market share to be supplied Egypt recently increased its solar capacity target by each MENA country has been estimated to be for 2020 from 120 MW, of which 100 MW CSP and 2.5 percent of the demand for target industries 20 MW PV, to 1300 MW, of which 1100 MW CSP and in 2020. 200 MW PV.112 This target represents a significant • A domestic market share increase hypothesis increase over the earlier objective and raises the for each MENA country has been made to reach likelihood of development of a local component 80 percent in 2018 for target industries. industry in Egypt. • Actual market share has been estimated to be 25 percent for domestic demand. No participation The driving force for internal demand is the growth in foreign markets has been assumed. A linear of installed capacity of solar power plants in Egypt. increase from actual to forecasted market share Therefore, a forecast up to 2020 has been made to has been assumed. deduce the solar component demand for each of the five MENA countries. Figure A5.2 represents a comparison of annual demand of the Mirror industry following the Demand for solar components is not only domestic aforementioned hypotheses vs. maximum and but also can come from other countries and regions. minimum production of a typical Mirror factory. For this reason, demand from four separate regions— neighboring MENA countries, the MENA Region as a 112 Intermediate objective of the Egyptian solar plan, as communicated by the Ministry of Electricity and Energy. The plan involves the installation of 3500 MW of solar energy by 2027, of which 2800 MW CSP and 700 MW PV. Annexes | 229 Figure A5.1 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. Figure A5.2 | Comparison of Total Demand for Mirror Industry vs. Range of Production for a Mirror Factory in Egypt, 2014–20 (m2) 4 Millions 3 3 2 2 1 1 0 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Minimum production Maximum production Source: STA/Accenture. Note: See Annex 1. 230 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry IMPACTS OF MIRROR INDUSTRY The ratio used to calculate the number of jobs is 90– DEPLOYMENT 180 jobs per factory. If the factory runs at maximum production, it will employ 180–250 workers; if the The Mirror industry deployment impact is shown in factory runs at minimum production, 60–90 workers terms of cumulative cash flow and job creation. The will be employed. following data are based on information detailed in Annex 1. CASE STUDY: SUPPORT STRUCTURE INDUSTRY IN EGYPT The Mirror factory requirements are: Egypt recently increased its solar capacity target • Average investment: US$37.5 million +/- 10% to 2020 from 120 MW, of which 100 MW CSP and • Range of production 20 MW PV, to 1300 MW, of which 1100 MW CSP for a factory: 1.5–3 million m2/year and 200 MW PV. This target is a significant increase • Component over the earlier objective and raises the likelihood of production cost: 25 US$/m2 +/- 10% development of a local component industry in Egypt. • Component market The Support structure industry can be implemented price: 30 US$/m2 +/- 10% to develop both CSP and PV support structure • On-site labo 50–80 jobs components. Figure A5.3 shows the cumulative cash flow taking The driving force for internal demand is the growth into account the requirements cited above and the of installed capacity of solar power plants in Egypt. fact that the factory is able to adjust its production Therefore, a forecast to 2020 has been made to according to the demand from 2014 to 2020. Three deduce the solar component demand for each of the different cash flows are shown: investment and cash 5 MENA countries. Demand for solar components flow for only domestic demand, for Regional demand, is not only domestic but also can come from other and for Europe and ROW demand. countries and regions. Thus, demand from four Figure A5.3 | Cumulative Cash Flow for a Mirror Industry in Egypt, (US$ mil) 20 10 Cash flow (mllion US$) 0 −10 −20 −30 −40 2013 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Accumulated cash flow Source: STA/Accenture. Annexes | 231 Figure A5.4 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. separate regions—neighboring MENA countries, the (Algeria and Morocco) market share to be supplied MENA Region as a whole, the European Union, and by each MENA country has been estimated to be the ROW—also has been forecasted. 2.5 percent of the demand for target industries in 2020. The annual demand in m2 is shown in Figure A5.5. In • A domestic market share increase hypothesis the long run, the yearly installed capacity is the key for each MENA country has been made to reach number to determine if a manufacturing industry will 80 percent in 2018 for target industries. have a stable demand. • Actual market share has been estimated to be 25 percent for domestic demand. No participation • Global and European forecasted component in foreign markets has been assumed. A linear demand is based on the forecasted installed increase from actual to forecasted market share capacity in each of these regions. A linear has been assumed. hypothesis was used to determine annual growth. A residual market share has been assumed for Figure A5.5 represents a comparison of annual Europe (1.0 percent) and ROW (0.5 percent) in demand of Support structure industry following 2020. the aforementioned hypotheses vs. maximum and • For MENA countries[57], [66], and[67] define minimum production of a typical support structure a similar scenario, called “moderate.” Market factory. share to be supplied by Egypt in its neighboring countries (Jordan and Tunisia) has been estimated to reach 5.0 percent of the demand for target industries in 2020. MENA Regional 232 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A5.5 | Comparison of Total Demand for Support Structure Industry vs. Range of Production for a Support Structure Factory in Egypt, 2014–20 (tons) 45 Thousands 40 35 30 25 20 15 10 5 0 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Minimum production Maximum production Source: STA/Accenture. IMPACTS OF SUPPORT STRUCTURE Figure A5.6 shows the cumulative cash flow taking INDUSTRY DEPLOYMENT into account the requirements cited above and the fact that the factory is able to adjust its production The Support structure industry deployment impact is according to the demand from 2014 to 2020. Three shown in cumulative cash flow and job creation. The different cash flows are shown: investment and cash following data are based on information detailed in flow only for domestic demand, for Regional demand, Annex 1. and for Europe and ROW demand. The support structure factory requirements are: The number of jobs necessary to run a factory for a nominal production 5000–6000 ton of support • Average investment: US$16 million structure per year is 20 workers (for either PV or • Range of production CSP). for a factory: 5000 – 40000 tons/yr • Component The ratio used to calculate the number of jobs is production cost: 2100 US$/ton +/- 10% 20–50 jobs per factory. If the factory runs at maximum • Component market production, it will employ 50–65 workers; if the price: 2550 US$/ton +/- 10% factory runs at minimum production, 18–22 workers • On-site labor: 20–50 jobs. will be employed. Annexes | 233 Figure A5.6 | Cumulative Cash Flow for a Support Structure Industry in Egypt, 2013–20 (US$ mil) 80 70 60 50 Cash flow (million US$) 40 30 20 10 0 −10 −20 −30 2013 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Accumulated cash flow Source: STA/Accenture. CASE STUDY: SUPPORT STRUCTURE was used to determine annual growth. A residual INDUSTRY IN MOROCCO market share has been assumed for Europe (1.0 percent) and ROW (0.5 percent) in 2020. Morocco’s solar capacity target to 2020 is 2000 MW, • For MENA countries [57], [66], and[67] define a of which 1400 MW CSP and 600 MW PV. The Support similar scenario called “moderate.” Market share structure industry can be implemented to develop to be supplied by Morocco in its neighboring both CSP and PV support structure components. countries (Algeria and Tunisia) has been estimated to reach 5.0 percent of the demand The driving force for internal demand is the growth of for target industries in 2020. MENA Regional installed capacity of solar power plants in Morocco. (Egypt and Jordan) market share to be supplied Therefore, a forecast to 2020 has been made to by each MENA country has been estimated to be deduce the solar component demand for each of the 2.5 percent of the demand for target industries 5 MENA countries. Demand for solar components in 2020. is not only domestic but also can come from other • A domestic market share increase hypothesis countries and regions. Thus, demand from four for each MENA country has been made to reach separate regions—neighboring MENA countries, 80 percent in 2018 for target industries. MENA Region as a whole, the European Union, and • Actual market share has been estimated to be the ROW—also has been forecasted. 25 percent for domestic demand. No participation in foreign markets has been assumed. A linear The annual demand in m2 is shown in Figure A5.8. increase from actual to forecasted market share In the long run, the yearly installed capacity is the has been assumed. key number to determine whether a manufacturing industry will have a stable demand. Figure A5.8 represents a comparison of annual demand of  Support structure industry following • Global and European forecasted component the aforementioned hypotheses vs. maximum and demand is based on the forecasted installed minimum production of a typical support structure capacity in each of these regions. A linear hypothesis factory. 234 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A5.7 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. Figure A5.8 | Comparison of Total Demand for Support Structure Industry vs. Range of Production for a Support Structure Factory in Morocco, 2014–20 (tons) 60 Thousands 50 40 30 20 10 0 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Minimum production Maximum production Source: STA/Accenture. Annexes | 235 IMPACTS OF SUPPORT STRUCTURE different cash flows are shown: investment and cash INDUSTRY DEPLOYMENT flow only for domestic demand, for Regional demand, and for Europe and ROW demand. The Support structure industry deployment impact is shown in terms of cumulative cash flow and job The number of jobs necessary to run a factory for creation. The following data are based on information a nominal production 5000–6000 tons of support detailed in Annex 1. structure per year is 20 workers (for either PV or CSP). The support structure factory requirements are: The ratio used to calculate the number of jobs is 20–50 jobs per factory. If the factory runs at maximum • Average investment: US$16 million production, it will employ 50–65 workers; if the • Range of production factory runs at minimum production, 18–22 workers for a factory: 5000–40000 tons/yr will be employed • Component production cost: 2100 US$/ton +/− 10% CASE STUDY: THIN FILM MODULES • Component market INDUSTRY IN MOROCCO price: 2550 US$/ton +/− 10% • On-site labor: 20–50 jobs. The TF Modules industry is a dynamic segment with venture-funded upstart companies and has as its Figure A5.9 shows the cumulative cash flow main advantage its scalable production capacity. considering the requirements cited above and the For development and small-scale production, it has fact that the factory is able to adjust its production few barriers. However, when scale becomes greater, according to the demand from 2014 to 2020. Three access to capital could become an important factor. Figure A5.9 | Cumulative Cash Flow for a Support Structure Industry in Morocco, 2013–20 (US$ mil) 100 80 Cash flow (million USD) 60 40 20 0 −20 2013 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Accumulated cash flow Source: STA/Accenture. 236 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A5.10 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. The driving force for internal demand is the growth of • For MENA countries[57], [66], and[67] define a installed capacity of solar power plants in Morocco. similar scenario called “moderate.” Market share Therefore, a forecast to 2020 has been made to to be supplied by Morocco in its neighboring deduce the solar component demand for each of the countries (Algeria and Tunisia) has been five MENA countries. Demand for solar components estimated to reach 5.0 percent of the demand is not only domestic but also can come from other for target industries in 2020. MENA Regional countries and regions. Thus, demand from four (Egypt and Jordan) market share to be supplied separate regions has been forecasted: neighboring by each MENA country has been estimated to be MENA countries, the MENA Region as a whole, the 2.5 percent of the demand for target industries European Union, and ROW. in 2020. • A domestic market share increase hypothesis The annual demand in MW is shown in Figure A5.11. for each MENA country has been made to reach In the long run, the yearly installed capacity is the 80 percent in 2018 for target industries. key number to determine whether a manufacturing • Actual market share has been estimated to be 25 industry will have a stable demand. percent for domestic demand. No participation in foreign markets has been assumed. A linear • Global and European forecasted component increase from actual to forecasted market share demand is based on the forecasted installed capacity has been assumed. in each of these regions. A linear hypothesis was used to determine annual growth. A residual market Figure A5.11 represents a comparison of annual share has been assumed for Europe (1.0 percent) demand of Support structure industry following and ROW (0.5 percent) in 2020. the hypotheses aforementioned vs. maximum and Annexes | 237 Figure A5.11 | Comparison of Total Demand for TF Modules Industry vs. Range of Production for a TF Modules Factory in Morocco, 2014–20 (MW) 300 225 150 75 0 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Minimum production Maximum production Source: STA/Accenture. minimum production of a typical support structure to develop an international institute of TF Modules factory. certification. Figure A5.12 shows the cumulative cash flow CASE STUDY: RECEIVER INDUSTRY considering the requirements cited above and the IN TUNISIA fact that the factory is able to adjust its production according to the demand from 2014 to 2020. Three The main drawback for the deployment of a Receiver different cash flows are shown: investment and cash industry is the lack of internal and regional demand flow only for domestic demand, for Regional demand, and small share foreseen in the European and ROW and for Europe and ROW demand. market. CERTIFICATION AND TESTING In Tunisia, the driving force for internal demand is the PROCEDURES growth of installed capacity of solar power plants. Therefore, a forecast to 2020 has been made to Both Figure A5.11 and Figure A5.12 show that deduce the solar component demand for each of the exports would play a fundamental role in reaching a five MENA countries. threshold demand for the development of TF modules industry in Morocco. The module certification is an Demand for solar components is not only domestic essential step to enable exports. This certification and but also can come from other countries and regions. testing procedure is, in fact, a Regional opportunity For this reason, demand has been forecasted for 238 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Figure A5.12 | Cumulative Cash Flow for a TF Modules Industry in Morocco, 2013–20 (US$ mil) 100 50 0 Cash Flow (million US$) −50 −100 −150 −200 −250 2013 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Accumulated cash flow Source: STA/Accenture. four separate regions: neighboring MENA countries, • A domestic market share increase hypothesis the MENA Region as a whole, the European Union, for each MENA country has been made to reach and ROW. 80 percent in 2018 for target industries. • Actual market share has been estimated to be The annual demand in pieces is shown in Figure A5.14. 25 percent for domestic demand. No participation In the long run, the yearly installed capacity is the in foreign markets has been assumed. A linear key number to determine whether a manufacturing increase from actual to forecasted market share industry will have a stable demand. has been assumed. • Global and European forecasted component Figure A5.14 represents a comparison of annual demand is based on the forecasted installed demand of the Receiver industry following the capacity in each of these regions. A linear hypothesis aforementioned hypotheses vs. maximum and was used to determine annual growth. A residual minimum production of a typical Receiver factory. market share has been assumed for Europe (1.0 percent) and ROW (0.5 percent) in 2020. Despite Tunisia’s technical capabilities, expected • For MENA countries, [57], [66], and[67] define demand is not enough to justify venturing in a a  similar scenario called “moderate.” Market Receiver manufacturing project. This situation may share to be supplied by Tunisia in its neighboring change if an established manufacturer decided countries (Algeria and Morocco) has been to set up a facility in Tunisia (either by itself or estimated to reach 5.0 percent of the demand for through a partnership mechanisms such as joint target industries in 2020. MENA Regional (Egypt venture or similar). A manufacturer with a solid track and Jordan) market share to be supplied by each record would enable reaching a higher share in MENA country has been estimated to be 2.5 export markets, thus reaching a minimum demand percent of the demand for target industries in 2020. threshold. Annexes | 239 Figure A5.13 | Market Share Evolution for Target Industries Hypotheses, 2011–21 (%) 100.0% Local 10.0% Neighboring Countries 1.0% Other MENA 0.1% Europe Row 0.0% 2011 2013 2015 2017 2019 2021 Source: STA/Accenture. Figure A5.14 | Comparison of Total Demand for Receiver Industry vs. Range of Production for a Receiver Factory in Tunisia, 2014–20 (000 units) 80 Thousands 70 60 50 40 30 20 10 0 2013 2014 2015 2016 2017 2018 2019 2020 Local demand MENA countries demand Europe and ROW demand Maximum production Minimum production Source: STA/Accenture. Note: Figure A5.8 shows annual demand in pieces. Each receiver piece is a 4 m long steel and glass tube. 240 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry ANNEX 6 | Benchmarking Analysis Results PRIMARY DATA Table A6.1 | Primary Data Related to Production Factors: MENA Countries Overarching Competitiveness c Category OC is ,c Parameter CPjs ,c Primary Data Pk Algeria Egypt Jordan Morocco Tunisia −3 1. Production 1.1 Labor market 1.1.1 Labor costs (1/(US$/year) x 10 ) 0.234 0.712 0.407 0.371 0.338 factors 1.1.2 Labor market efficiency 3.41 3.19 3.97 3.52 3.97 1.2 Material 1.2.1 Glass manufacturing (103 t/year) 0.42 0.34 0.00 0.00 0.00 availability 1.2.2 Stainless steel manufacturing 0.00 0.10 0.00 0.00 0.00 1.2.3 Steel manufacturing 0.10 0.50 0.00 0.10 0.10 1.2.4 Oil manufacturing ability 0.00 0.15 0.02 0.00 0.00 1.2.5 Copper manufacturing 0.00 0.00 0.00 0.25 0.00 1.2.6 Silicon manufacturing 0.00 0.00 0.00 0.00 0.00 1.2.7 NaNO3/KNO3 availability 0.00 0.10 0.00 0.00 0.00 1.3 Relevant 1.3.1 Existence of synergic industries 0.50 0.75 0.25 0.50 0.25 manufacturing 1.3.2 Literacy rates (%) 75.0 66.4 91.0 56.1 78.0 ability 1.3.3 Higher education and training 3.51 3.44 4.33 3.62 4.67 1.4 Cost of energy 1.4.1 Cost of energy (industrial) 0.33 0.17 0.07 0.08 0.11 (1/(US$c/kWh)) 1.5 Fiscal and 1.5.1 Paying taxes rank 0.10 0.21 0.89 0.39 0.65 financial cost 1.5.2 Lending interestrate 0.92 0.89 0.91 0.97 0.96 Note: Units of measure are displayed where possible, but most data are composed indices so have no units. Annexes | 241 Table A6.2 | Primary Data Related to Production Factors: Benchmark Countries Overarching Competitiveness South United c Category OC is ,c Parameter CPjs ,c Primary Data Pk Chile China Germany India Japan Africa Spain States 1. Production 1.1. Labor market 1.1.1 Labor costs (1/ (US$/ 0.182 0.482 0.502 0.689 0.0889 0.405 0.0875 0.0663 factors year) x 10-3) 1.1.2 Labor market 4.64 4.68 4.41 4.2 5.04 4.06 3.84 5.57 efficiency 1.2 Material 1.2.1 Glass manufacturing 0.00 13.00 2.34 1.72 1.20 0.26 1.11 4.80 availability (103 t/year) 1.2.2 Stainless steel 0.00 1.00 0.00 0.25 0.50 0.00 0.00 0.50 manufacturing 1.2.3 Steel manufacturing 0.25 1.00 0.75 0.75 1.00 0.50 0.50 0.75 1.2.4 Oil manufacturing 0.00 0.94 0.00 0.44 1.00 0.10 0.27 0.76 ability 1.2.5 Copper 1.00 0.75 0.00 0.25 0.00 0.25 0.10 0.75 manufacturing 1.2.6 Silicon manufacturing 0.00 1.00 0.50 0.00 0.50 0.00 0.00 0.00 1.2.7 NaNO3/KNO3 1.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00 availability 1.3 Relevant 1.3.1 Existence of synergic 0.25 1.00 1.00 1.00 1.00 0.75 0.75 1.00 manufacturing industries ability 1.3.2 Literacy rates (%) 96.5 95.9 99.0 74.0 99.0 88.0 97.9 99.0 1.3.3 Higher education and 4.67 4.34 5.73 3.88 5.27 4.03 4.9 5.57 242 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry training 1.4 Cost of energy 1.4.1 Cost of energy 0.05 0.11 0.06 0.10 0.06 0.10 0.06 0.15 (industrial) (1/(US$c/kWh)) 1.5 Fiscal and 1.5.1 Paying taxes rank 0.75 0.33 0.51 0.20 0.34 0.76 0.74 0.61 financial cost 1.5.2 Lending interestrate 0.952 0.942 0.993 0.917 0.984 0.902 0.961 0.967 Table A6.3 | Primary Data Related to Demand Factors: MENA Countries Overarching Competitiveness c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Algeria Egypt Jordan Morocco Tunisia 2. Demand 2.1. CSP and PV 2.1.1 CSP growth scenario to 2020 (MW) 1525 1100 450 1600 300 factors Component 2.1.2 PV growth scenario to 2020 (MW) 800 200 150 400 50 demand 2 2.1.3 GHI yearly maximum (kWh/(m ·day)) 6.350 6.580 5.590 6.080 5.720 2.1.4 DNI yearly maximum (kWh/(m2·day)) 7.740 8.200 6.950 7.260 6.820 2.1.5 Electricity demand growth (%) 6 7.6 3.8 7.2 5.4 2.1.6 Energy imports net 0 312 430 429 349 2.1.7 Cost of energy (residential) 6.07 1.56 11.98 17.56 10.2 (US$c/kWh) 2.1.8 CSP global market 2020 (MW) 656 329 469 1016 496 2.1.9 PV global market 2020 (MW) 924 830 883 1004 864 Table A6.4 | Primary Data Related to Demand Factors: Benchmark Countries Overarching Competitiveness South United c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Chile China Germany India Japan Africa Spain States 2. Demand 2.1. CSP and PV 2.1.1 CSP growth scenario to 970 2000 0 1000 0 2000 2359 2000 factors Component 2020 (MW) demand 2.1.2 PV growth scenario to 0 13000 33000 6000 11000 800 8367 15000 2020 (MW) 2.1.3 GHI yearly maximum 6.870 5.890 3.150 5.400 3.700 5.860 4.870 4.820 (kWh/(m2·day)) 2.1.4 DNI yearly maximum 7.560 8.210 3.370 5.830 4.120 8.100 7.260 7.250 (kWh/(m2·day)) 2.1.5 Electricity demand 3.0 13.2 5.0 6.0 2.8 8.4 1.4 4.3 growth (%) 2.1.6 Energy imports net 402 342 394 360 414 322 411 356 2.1.7 Cost of energy 24.22 7.93 36.4 6.8 22 14.02 28.2 11.4 (residential) (US$c/kWh) 2.1.8 CSP global market 2020 565 1210 265 805 310 1197 1327 1214 (MW) 2.1.9 PV global market 2020 730 8020 17425 4375 7120 1090 6640 8345 (MW) Annexes | 243 Table A6.5 | Primary Data Related to Stability and Risk Factors: MENA Countries Overarching Competitiveness c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Algeria Egypt Jordan Morocco Tunisia 3. Risk and 3.1 Risk associated 3.1.1 Corruption index 2.90 3.10 4.70 3.40 4.30 stability with doing 3.1.2 Ease of Doing Business ranking 2012 0.19 0.40 0.48 0.49 0.75 factors business 3.1.3 Ease of Doing Business 2007–12 0.00 0.49 0.07 0.29 0.36 ranking change 3.1.4 Inflation rate 0.96 0.89 0.95 0.99 0.96 3.1.5 OECD country risk 0.33 0.20 0.20 0.33 0.33 3.2 Risk associated 3.2.1 Existence of clear stable regulatory 0.50 0.50 0.50 0.75 0.50 with demand framework for RE 3.2.2 Existence of incentives for PV 0.25 0.00 0.00 0.00 0.00 3.2.3 Existence of incentives for CSP 0.25 0.00 0.00 0.00 0.00 3.2.4 Existence of RE associations 0.50 1.00 0.50 1.00 1.00 3.2.5 Total solar PV capacity 0.00 1.00 0.28 16.38 0.60 3.2.6 Total CSP capacity 20 20 0 20 0 3.2.7 Agency for the development of RE 0.00 1.00 0.00 1.00 1.00 3.2.8 Competition in the electricity sector 0.25 0.25 0.10 0.25 0.00 244 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 3.3 Financial risk 3.3.1 Access to credit 0.18 0.57 0.18 0.46 0.46 Table A6.6 | Primary Data Related To Stability and Risk Factors: Benchmark Countries Overarching Competitiveness South United c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Chile China Germany India Japan Africa Spain States 3. Risk and 3.1 Risk associated 3.1.1 Corruption index 7.20 3.50 7.90 3.30 7.80 4.50 6.10 7.10 stability with Doing 3.1.2 Ease of Doing 0.79 0.50 0.90 0.28 0.89 0.81 0.76 0.98 factors Business Business ranking 2012 3.1.3 Ease of Doing 0.10 0.18 0.17 0.19 0.11 0.12 0.13 0.15 Business 2007–12 ranking change 3.1.4 Inflation rate 0.99 0.97 0.99 0.88 1.00 0.96 0.98 0.98 3.1.5 OECD country risk 0.50 0.50 1.00 0.33 1.00 0.33 1.00 1.00 3.2 Risk associated 3.2.1 Existence of clear 1.00 1.00 1.00 1.00 1.00 0.50 1.00 0.50 with demand stable regulatory framework for RE 3.2.2 Existence of 0.00 1.00 1.00 0.50 1.00 0.50 1.00 0.50 incentives for PV 3.2.3 Existence of 0.00 1.00 1.00 0.50 0.00 0.50 1.00 0.50 incentives for CSP 3.2.4 Existence of RE 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 associations 3.2.5 Total solar PV 1 2900 24700 450 4700 0 4200 4200 capacity 3.2.6 Total CSP capacity 0 3 0 6 0 0 905 541 3.2.7 Agency for the 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 development of RE 3.2.8 Competition in the 1.00 0.50 0.75 0.50 0.50 0.00 1.00 0.75 electricity sector 3.3 Financial risk 3.3.1 Access to credit 0.74 0.63 0.87 0.78 0.87 0.99 0.74 0.98 Annexes | 245 Table A6.7 | Primary Data Related to Business Support Factors: MENA Countries Overarching Competitiveness c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Algeria Egypt Jordan Morocco Tunisia 4. Business 4.1 Industry structure 4.1.1 Presence of large 11 6 1 8 8 support international factors industrial companies 4.1.2 Industrial GDP (%) 62 40 30 32 35 4.1.3 Local clustering 0 0 0 1 0 4.2. Innovation capacity 4.2.1 Patent filings per 2.14 7.46 7.44 4.76 5.58 million population 2010 4.2.2 GCR*2011–12 2.37 2.84 4.16 3.02 3.58 innovation score 4.2.3 GCR 2011–12 2.83 3.31 3.81 3.69 3.82 technological readiness 4.2.4 Business 2.93 3.82 3.88 3.78 4.16 sophistication 4.3 Logistical 4.3.1 Quality of port 3.20 4.20 4.40 4.40 5.00 infrastructure infrastructure 2010 4.3.2 GCR 2011–12 3.43 3.81 4.13 3.95 4.36 246 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry infrastructure 4.3.3 Logistics 2.36 2.61 2.74 2.38 2.84 performance index Note: * Global Competitiveness Report Table A6.8 | Primary Data Related to Business Support Factors: Benchmark Countries Overarching Competitiveness South United c Category OC is ,c Parameter CPjs ,c Primary Datum Pk Chile China Germany India Japan Africa Spain States 4. Business 4.1 Industry 4.1.1 Presence of large 4 8 21 3 17 7 15 25 support structure international industrial factors companies 4.1.2 Industrial GDP (%) 42 47 28 26 24 32 26 22 4.1.3 Local clustering 0 1 1 0 1 0 1 1 4.2. Innovation 4.2.1 Patent filings per million 19.2 219.0 575.8 6.3 2276.0 16.4 77.4 783.0 capacity population 2010 4.2.2 GCR* 2011–12 innovation 3.45 3.92 5.39 3.58 5.59 3.53 3.55 5.57 score 4.2.3 GCR 2011–12 4.26 3.57 5.61 3.36 5.06 3.6 4.95 5.23 technological readiness 4.2.4 Business sophistication 4.32 4.37 5.66 4.27 5.91 4.32 4.51 5.35 4.3 Logistical 4.3.1 Quality of port 5.50 4.30 6.40 3.90 5.20 4.70 5.60 5.50 infrastructure infrastructure 2010 4.3.2 GCR 2011–12 4.67 4.63 6.35 3.60 5.69 4.02 5.83 5.68 infrastructure 4.3.3 Logistics performance 3.09 3.49 4.11 3.12 3.97 3.46 3.63 3.86 index Note: * Global Competitiveness Report. Annexes | 247 WEIGHTS Table A6.9 | Weight Factor for an Industry Within an Attractiveness Index (s i ) – Weighting Overarching Categories: CSP Industries HTF Overarching Structure Thermal HTF Heat Solar Storage Steam Electrical Category (  is) Receiver Mirror & Tracker Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Production 0.35 0.35 0.65 0.2 0.35 0.65 0.4 0.2 0.2 0.4 0.35 0.35 Demand 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 Risk and stability 0.50 0.50 0.20 0.65 0.50 0.20 0.45 0.65 0.65 0.45 0.50 0.50 Business 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 environment Table A6.10 | Weight Factor for an Industry Within an Attractiveness Index (s i ) – Weighting Overarching Categories: PV Industries Overarching Category Ingots/ Crystalline TF Solar TF Support (  is) Polysilicon Wafers Cells Modules Materials Glass Modules Inverter Structure Production 0.20 0.20 0.35 0.65 0.40 0.20 0.65 0.65 0.65 Demand 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 248 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Risk and stability 0.65 0.65 0.50 0.20 0.45 0.65 0.20 0.20 0.20 Business environment 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 Table A6.11 | Weight Factor Within an Overarching Category ( s i,j ) – Weighting Competitiveness Parameters: CSP Industries Competitiveness Structure HTF HTF Heat Solar Storage Steam Electrical Parameters (  is, j ) Receiver Mirror & Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Labor market 0.22 0.09 0.38 0.06 0.07 0.07 0.19 0.19 0.07 0.07 0.22 0.09 Material 0.07 0.40 0.41 0.08 0.08 0.48 0.33 0.07 0.16 0.40 0.07 0.40 availability Relevant 0.63 0.40 0.10 0.74 0.72 0.32 0.33 0.60 0.64 0.40 0.63 0.40 manufacturing ability Energy 0.02 0.06 0.05 0.06 0.07 0.07 0.10 0.10 0.07 0.07 0.02 0.06 cheapness Fiscal and 0.06 0.06 0.06 0.06 0.07 0.07 0.05 0.05 0.07 0.07 0.06 0.06 financial cost CSP PV 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Component demand Risk associated 0.25 0.25 0.25 0.10 0.10 0.25 0.25 0.10 0.10 0.25 0.25 0.25 withDoing Business State 0.25 0.25 0.25 0.10 0.10 0.25 0.25 0.10 0.10 0.25 0.25 0.25 commitment and support Financial risk 0.50 0.50 0.50 0.80 0.80 0.50 0.50 0.80 0.80 0.50 0.50 0.50 Industry 0.15 0.15 0.33 0.15 0.15 0.33 0.33 0.15 0.15 0.33 0.15 0.15 structure Innovation 0.70 0.70 0.34 0.70 0.70 0.34 0.34 0.70 0.70 0.34 0.70 0.70 capacity Logistical 0.15 0.15 0.33 0.15 0.15 0.33 0.33 0.15 0.15 0.33 0.15 0.15 infrastructure Annexes | 249 Table A6.12 | Weight Factor Within an Overarching Category ( s i,j ) – Weighting Competitiveness Parameters: PV Industries Competitiveness Ingots/ Crystalline TF Solar TF Support Parameters (  is, j ) Polysilicon Wafers Cells Modules Materials Glass Modules Inverter Structure Labor market 0.11 0.21 0.11 0.11 0.17 0.13 0.12 0.27 0.38 Material availability 0.04 0.06 0.07 0.40 0.31 0.21 0.36 0.47 0.41 Relevant manufacturing 0.32 0.55 0.66 0.40 0.31 0.21 0.36 0.12 0.10 ability Energy cheapness 0.46 0.11 0.11 0.04 0.17 0.39 0.10 0.09 0.05 Fiscaland financial cost 0.08 0.07 0.05 0.05 0.06 0.06 0.05 0.05 0.06 CSP PV Component 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 demand Risk associated with 0.10 0.10 0.20 0.25 0.25 0.10 0.25 0.25 0.25 Doing Business State commitment 0.10 0.10 0.20 0.25 0.25 0.10 0.25 0.25 0.25 and support Financial risk 0.80 0.80 0.60 0.50 0.50 0.80 0.50 0.50 0.50 Industry structure 0.15 0.15 0.15 0.33 0.33 0.33 0.33 0.33 0.33 250 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Innovation capacity 0.70 0.70 0.70 0.34 0.34 0.34 0.34 0.34 0.34 Logistical infrastructure 0.15 0.15 0.15 0.33 0.33 0.33 0.33 0.33 0.33 Table A6.13 | Weight Factor Within a Competitiveness Parameter ( s j,k ) – Weighting Normalized Primary Data: CSP Industries Primary Data Structure & HTF HTF Heat Solar Storage St Steam Electrical ( s j ,k) Receiver Mirror Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Labor costs 0.25 0.50 0.75 0.25 0.25 0.50 0.75 0.50 0.50 0.25 0.25 0.50 Labor market 0.75 0.50 0.25 0.75 0.75 0.50 0.25 0.50 0.50 0.75 0.75 0.50 efficiency Glass 0.30 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing in the country Stainless steel 0.70 0.00 0.00 0.00 0.53 0.53 0.00 0.69 0.69 0.69 0.00 0.69 manufacturing in the country Steel 0.00 0.00 1.00 0.00 0.24 0.47 0.00 0.31 0.31 0.31 0.50 0.31 manufacturing in the country Oil 0.00 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing ability in the country Copper 0.00 0.00 0.00 0.00 0.24 0.00 0.00 0.00 0.00 0.00 0.50 0.00 manufacturing in the country Silicon 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing in the country NaNO3/KNO3 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00 availability in the country Existence 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 of synergic industries Literacy rates 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 (%) (Continued) Annexes | 251 Table A6.13 | Continued Primary Data Structure & HTF HTF Heat Solar Storage St Steam Electrical ( s j ,k) Receiver Mirror Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Higher 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 education and training Cost of energy 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 (industrial) Paying taxes 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 rank Lending 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 interest rate CSP growth 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 scenario to 2020 PV growth 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 scenario to 2020 Maximum 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 yearly global horizontal irradiation (GHI) Maximum 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 yearly direct normal irradiation 252 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry (DNI) Electricity 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 demand growth (change 2010 over 2009) Energy 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 imports net as % of energy use (Continued) Table A6.13 | Continued Primary Data Structure & HTF HTF Heat Solar Storage St Steam Electrical ( s j ,k) Receiver Mirror Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Cost of energy 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (residential)- PV CSP global 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 potential market for components to 2020 PV global 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 potential market for components to 2020 Corruption 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 index Ease of Doing 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 Business ranking 2012 Ease of Doing 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 Business 2007–2012 Inflation rate 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 OECD country 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 risk Existence of 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 clear stable regulatory framework for RE Existence of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 incentives for PV (Continued) Annexes | 253 Table A6.13 | Continued Primary Data Structure & HTF HTF Heat Solar Storage St Steam Electrical ( s j ,k) Receiver Mirror Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser Existence of 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 incentives for CSP Existence 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 of RE associations Total solar PV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 capacity Total CSP 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 capacity Agency 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 for the Development of RE Competition in 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 the electricity sector Access to 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 credit Presence 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 of large international industrial companies 254 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Industrial GDP 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 (%) Local 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 clustering Patent filings 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 per million population 2010 (Continued) Table A6.13 | Continued Primary Data Structure & HTF HTF Heat Solar Storage St Steam Electrical ( s j ,k) Receiver Mirror Tracker Thermal Oil Pumps Exchanger Salt Tanks Pumps Turbine Generator Condenser GCR* 2011–12 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Innovation score GCR 2011–12 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Technological readiness Business 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 sophistication Quality of port 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 infrastructure 2010 GCR 2011–12 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 Infrastructure Logistics 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 Performance Index Note: * Global Competitiveness Report. Annexes | 255 Table A6.14 | Weight Factor Within a Competitiveness Parameter ( s j,k ) – Weighting Normalized Primary Data: PV Industries Ingots/ Crystalline TF Solar TF Support Primary Data (  s j ,k) Polysilicon Wafers Cells Modules Materials Glass Modules Inverter Structure Labor costs 0.25 0.25 0.25 0.50 0.50 0.50 0.50 0.75 0.75 Labor market efficiency 0.75 0.75 0.75 0.50 0.50 0.50 0.50 0.25 0.25 Glass manufacturing in 0.00 0.00 0.00 0.44 0.00 1.00 0.64 0.00 0.00 the country Stainless steel 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 manufacturing in the country Steel manufacturing in 0.00 0.50 0.44 0.44 0.00 0.00 0.29 0.44 1.00 the country Oil manufacturing ability 0.00 0.00 0.11 0.00 0.00 0.00 0.00 0.44 0.00 in the country Copper manufacturing 0.00 0.00 0.00 0.11 0.00 0.00 0.07 0.11 0.00 in the country Silicon manufacturing in 1.00 0.50 0.44 0.00 1.00 0.00 0.00 0.00 0.00 the country NaNO3/KNO3 availability 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 in the country Existence of synergic 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 industries Literacy rates (%) 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 Higher education and 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 training 256 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry Cost of energy 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 (industrial) Paying taxes rank 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Lending interest rate 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 CSP growth scenario to 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2020 PV growth scenario to 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 2020 (Continued) Table A6.14 | Continued Ingots/ Crystalline TF Solar TF Support Primary Data (  s j ,k) Polysilicon Wafers Cells Modules Materials Glass Modules Inverter Structure Maximum yearly global 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 horizontal irradiation (GHI) Maximum yearly direct 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 normal irradiation (DNI) Electricity demand 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 growth (change 2010 over 2009) Energy imports net as % 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 of energy use Cost of energy 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 (residential)-PV CSP global potential 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 market for components to 2020 PV global potential 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 market for components to 2020 Corruption index 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 Ease of Doing Business 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 ranking 2012 Ease of Doing Business 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 2007–2012 Inflation rate 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 OECD country risk 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 Existence of clear stable 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 regulatory framework for RE Existence of incentives 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 for PV Existence of incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 for CSP Annexes | 257 (Continued) Table A6.14 | Continued Ingots/ Crystalline TF Solar TF Support Primary Data (  s j ,k) Polysilicon Wafers Cells Modules Materials Glass Modules Inverter Structure Existence of RE 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 associations Total solar PV capacity 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 Total CSP capacity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Agency for the development 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 of RE Competition in the electricity 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 sector Access to credit 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Presence of large 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 international industrial companies Industrial GDP (%) 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 Local clustering 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 Patent filings per million 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 population 2010 GCR 2011–12 Innovation 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 score GCR 2011–12 technological 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 readiness Business sophistication 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Quality of port infrastructure 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 258 | Competitiveness Assessment of MENA Countries to Develop a Local Solar Industry 2010 GCR 2011–12 Infrastructure 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 Logistics Performance Index 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 References [1] National Renewable Energy Laboratory (NREL), “Concentrating Solar Power Projects by Technology: Linear Fresnel Reflector Projects,” 2013. 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