Within the framework of it’s agreement with the
Italian Ministry of Environment, Land, and Sea, and
in collaboration with the Moroccan Ministry in
charge of the Environment, ITPO Italy assisted two
agro-industrial enterprises in the vicinity of
Meknčs to analyse their preliminary project ideas
concerning the substitution of biomass for fossil
fuels to generate heat/steam needed in the
manufacturing process, and electricity, for own use
and for sale to the Moroccan grid or to other firms.
The institutional framework of the electricity
industry is undergoing reform and legislation over
private power generation and sale is in a state of
flux. Enterprises whose primary business is not
electricity generation can generate power for their
own use, but sales to the grid remain limited to
those enterprises buying power at high voltage. It
has been suggested that enterprises buying power at
other voltages can also sell to the grid, at 50% of
the tariff they themselves pay. Furthermore,
generation for own use can be interpreted liberally:
firms in some way “associated” to the generator can
be considered part of the “own user”.
The projects:
I- The first enterprise (located in a village
25 km from Meknčs, has large and growing orchards of
olives and other fruits which it processes) proposes
to install a 1 MW electricity generating plant to be
fired by “grignon”, its olive oil and orchard
residues/by-products. Preliminary calculations in
relation to their power and heat needs show that
they have the volume of biomass needed
(fuels/residues, pomace, from processing olive and
other fruits, olive seeds and other fruit seeds and
skins, and from tree pruning remains), that their
savings on electricity and Heavy Fuel Oil would be
substantial, but that they would only have a small
electricity surplus for sale.
COMFAR analysis performed with the data collected
and processed during the mission shows that given
the cost of investment and operations, and the
existing tariffs, the project, reflecting the
opportunity cost of capital in the electricity
business (a world-wide market) is marginally
negative. Two variants were computed for this firm,
one on the basis of a rather low bulk tariff (used
by the utility Office National de l’Energie, ONE, as
a transfer price to some distributors), the other
using a slightly more realistic tariff, namely 1
Dirham per kWh (€ 0.09). The addition of carbon
finance at a price perhaps slightly higher than
current accounting prices used by the World Bank,
(US$ 10 per ton of CO2
avoided) and Europe (€ 10 per ton), could make the
difference. If the projects were to use the price
trend expected in the EU Agreement carbon market
(prices to move from an expected € 18 in 2010, to
the € 25-35 bracket for 2020), it is more than
likely that the pricing of carbon could make both
projects feasible, even if CERs were to trade at a
discount from indicative EU prices.
II- The second enterprise (located in the
Meknčs industrial park, mainly buys olives for
processing, but intends to start its own orchards
too) has asked for advice/guidance from UNIDO ITPO
Italy on their idea which is to install a sufficient
capacity to generate steam and electricity from
their “grignon” (olive oil processing residues/pomace)
output, to substitute for the electric power they
currently purchase from ONE, the Moroccan power
utility, and to sell-off their excess to either the
grid or other plants. Given the generation capacity
they are considering, they would produce enough
power to cover all their needs and sell a small
amount to the grid even at peak production periods.
At slow production periods, they could sell
considerable amounts to the grid. Their project idea
is to install a 5MW plant to burn “grignon” which
they produce in abundance and which they have
already stocked in advance.
Preliminary runs on UNIDO’s COMFAR model show that
the project is basically not economic under
prevailing conditions. The main culprit is the high
(opportunity) cost of the fuel and the price at
which excess power can be sold. Under some
reasonable sets of assumptions, the project can be
shown to be marginally uneconomic (not viable).
Three variants were computed: the base case is very
negative; the second scenario, using the higher
tariff to value electricity sales, reduces losses
markedly; while the third case, using the higher
tariff AND € 10 per ton of avoided CO2
brings the project close to feasibility. In fact,
its high output of electricity would generate
sizeable CO2
emissions reduction (due to decline in grid
generation), and carbon finance could play a key
role in the viability or otherwise of this project.
The comments made above, on the prospects for the
price of Carbon, apply even more forcefully to this
one. One should, however, keep in mind that the
Carbon market is not unified and that different
prices rule in the different markets (and will
continue to do so, until full integration, with
arbitrage, is permitted).
Conclusions
The conclusion to this work is that the first firm
is going ahead with the project on it’s own, having
been reassured that its energy cost savings will be
important. It thus proceeds as a private project and
may or may not take advantage of the possibility of
earning and selling Certificates of Emissions
Reduction (CERs). The second firm has joined the
process conducted by the Italian and Moroccan
Ministries for Environment, and will probably obtain
funding for specialised studies leading to possible
project funding through a partnership with an
Italian firm, and the possible accrual of CERs
(Certificates of Emissions Reduction).
