UK: Renewables In Algeria: Entry Into Force Of The Certificate Of Guaranteed Origin

As expected, Algeria has stepped forward towards the consolidation of the renewable energy regulatory framework, by enacting and publishing the Executive Decree for the certificate of guaranteed origin.

This set out the administrative framework of the certificate of guaranteed origin as well as the rights and obligations of the independent power producers (IPPs) benefiting from the Algerian feed-in tariffs (FiT), notably in terms of technical and administrative inspections.

For your recall, the certificate of guaranteed origin is a pre-condition to benefit from the FiT under the power purchase agreements (PPA) (today, the only FiT in force is for solar PV and wind). As we discuss below, the Executive Decree still requires the issuance of several application texts to be in full force and effect (please refer to Annex 1 of this update for the main application texts to be issued).

It is worth noting that over the first months of 2015, the Government of Algeria has taken political steps in promoting renewable energy in the global context of falling oil prices: the elevation of the national objectives for renewable energy, the merge of the national fund for energy savings and the funds for renewable energy and cogeneration (and a subsequent increase of its financial capacities), a new Ministerial Order for the operation and maintenance of the Algerian transport electricity grid and a new Executive Decree for the instruction and granting of building permits.

Status of the Algerian regulatory framework for renewable energy

  1. Elevation of the national renewable energy objectives in light of the low oil prices

The Algerian national objectives for renewable energy have been updated and elevated. Although the global objective remains at 22 GW of installed power capacity for the period 2015 - 2030, the objectives have been elevated from 3 GW to 4.5 GW, expected to be achieved by 2020. This should provide 27% of Algeria's total electricity production1 instead of 20% as initially planned.

According to the public statement made by the Ministry of Energy, the updated renewable energy objectives are as follows:

Even if, from a general standpoint, low oil prices have a very limited impact on investments in proven renewable technologies in the MENA region (mainly solar PV and wind – please refer to the recent Clyde & Co article 'Impacts on the MENA renewable and petrochemical market' dated 31 March 2015), the impacts for Algeria deserve a specific analysis.

Oil revenues in Algeria contribute to an important social and political role, and their substantial fall since the end of 2014 (for Algerian oil outside revenues, from USD 62.95 billion in 2014 to an expected level of USD 48.9 billion for 2015) shall not call into question the implementation of the national renewable energy objectives by Algerian government, but shall rather delay the investments in the renewables energy field.

Additionally, one might explain that delays in the effectiveness of the Algerian renewable energy objectives seem also justified by the slow development and consolidation of the Algerian renewable energy industry, based on partnerships with foreign manufacturers (General Electric, Yingli Green Energy for example, etc.), who do not currently seem ready to massively contribute to the Algerian renewable energy objectives.

In order to compensate such delays, the CEO of Sonelgaz has recently called for an increase of the electricity retail price on consumers (radio statement on 21 April 2015). Nevertheless, such solutions remain very difficult to implement to date considering the current social tensions in Algeria and the buying power of the Algerian households.

  1. Application of the Executive Decree for the certificate of guaranteed origin

The Executive Decree for the certificate of guaranteed origin sets out both the administrative modalities for the application, instruction and granting of certificate, and the devices and inspection requirements to be borne by the IPP. The certificate of guaranteed origin can be modified, suspended and withdrawn by the CREG. As the certificate of guaranteed origin shall not be published, it shall not be challenged before the administrative court by a third-party.

The certificate of guaranteed origin is a key permit in renewable project development as it constitutes one of the first authorisations to be obtained in order to apply for the PPA to be implemented with existing FiTs.

(i) Application process and timeframe:

THE CREG IS YET TO PUBLISH THE APPLICATION FORM FOR THE CERTIFICATE.

(ii) Monitoring devices and inspections of the plant

The Executive Decree provides that the IPP will be (i) required to install several devices to count and monitor energy levels and (ii) subject to technical and administrative controls prior to commissioning the plant and during its operational life-time.

  1. Installation of devices: In order to benefit from the FiT, the certificate of guaranteed origin requires the installation of specific electrical equipment by the IPP:
  • The IPP will be required to install electricity counting devices in the plant. These systems shall comply with the CREG's requirements which are not yet available and those listed in Law No. 90-18 dated 31 July 1990 relating to the national system of metrology;
  • For power plants with an installed power capacity greater than 1MW, the IPP is required to install devices and software to measure the solar energy potential on-site during the operational life of the plant, at its own costs. These devices and software have to comply with the specifications to be provided by the CREG however these are not yet available. This data will be provided to the CREG on a regular basis.

Although these devices are not explicitly mentioned in the Executive Decree for the application of the certificate, these electrical devices will have to be selected and incorporated in the electrical diagram of the power plant, prior to the application for the certificate of guaranteed origin.

  1. Technical and administrative inspections: the Algerian administration imposes a thorough control of characteristics and specifications on the plant (i) prior to commissioning and (ii) during operation, in order to limit fraud and misleading declarations under the FiT program as they can have a great impact on FiT revenues.

Upon completion of the plant and prior to commissioning, the IPP will be required to obtain a compliance certificate from an accredited bureau of control. The bureau of control will be chosen by the IPP from a limited list published by the CREG, this is not yet available. Commissioning of the counting devices will be operated by the relevant grid operator.

After Commissioning, the plant will be subject to (i) bi-annual controls by the appointed bureau of control and (ii) random controls by the CREG. The IPP will be required to provide the CREG with any document or information that the CREG may request.

It is worth noting that the formation of the bureau of control and their accreditation will take months before they are certified. A transitory regime has been set up for the first five years in this respect. The accreditation process of the bureau of control is detailed between Article 17 and 21 of the Executive Decree.

(iii)Amendment, suspension, withdrawal and challenge of the certificate of guaranteed origin

  1. Amendment of the certificate of guaranteed origin: should the project's characteristics be modified, the Executive Decree does not provi de any clear process as to whether an amended certificate of guaranteed origin will be granted.

However, we can reasonably expect that any modification to the information provided under the original certificate of guaranteed origin will lead to the issuance of a modified certificate of guaranteed origin under the same conditions and timeframe as the initial certificate and in compliance with the applicable Algerian administrative law.

It is worth noting that the Executive Decree requires the IPP to inform the CREG of the expected modification prior to its implementation. Failing to do so, would expose the IPP to suspension and withdrawal of the certificate of guaranteed origin.

As a consequence, it is recommended that prior to the implementation of any modification of the plant, for example the installed power capacity or new electrical devices, the IPP should obtain formal validation from the CREG in order to avoid any risk of suspension or withdrawal. This shall constitute a heavy task for developers during development and construction phase of the project.

  1. Suspension and withdrawal of the certificate of guaranteed origin: the Executive Decree provides a special suspension and withdrawal regime in three cases:
  • If the plant no longer corresponds to the conditions posed for the granting of the certificate of guaranteed origin due to the modifications implemented;
  • If the IPP does not fulfil its information obligation towards the CREG;
  • If the IPP commissions the plant without having a compliance certificate.

From our point of view, this list shall not be considered as exhaustive and the CREG would have grounds to suspend or withdraw the certificate of guaranteed origin in the case of administrative general powers and any other substantial breach by the IPP.

  1. Challenge of the certificate of guaranteed origin: the Executive Decree does not provide any rule as to the publication of the certificate of guaranteed origin in public gazette. On this point, we have confirmed that there should be no publication requirement of the certificate of guaranteed origin. As a consequence, the certificate of guaranteed origin shall not be exposed to third-party challenges before an administrative court.

Finally, it is worth noting that the certificate of guaranteed origin does not pose any long-stop date on the IPP to develop, build and commission the plant. However, this is not the case for the other authorisations, such as the granting decision of the FiT (regulated by executive decree dated 26 June 2013) which poses a 12-month time-limit to start construction works of the plant as from its granting.

  1. Various improvements on renewable energy regulatory framework
  2. It is worth noting that, by law No. 14-10 dated 30 December 2014, the Algerian government has decided to merge the appropriation account No. 302-101 "the national fund for energy savings"2 with the existing appropriation account No. 302-131 "the national fund for renewable energy and cogeneration" also known as "FNERC".

The new merged appropriation account is now labelled as the "national fund for energy savings and for renewable energy and cogeneration" and benefits from greater financial capacities, mainly from (i) taxes on energy consumption and paid by energy users and (ii) tax levy of 1% of the oil revenues.

The purpose of the new "national fund for energy savings and for renewable energy and cogeneration" is not only dedicated to the financing of the FiT under the PPAs, but is also notably designed for the co-financing of (i) renewable energy project costs (according to the public statement from the Ministry of Energy and Mining, this shall encompass renewable energy projects other than wind and solar PV), (ii) electrical equipment of the renewable energy plants (such as solar panels or wind turbines), (iii) energy potential assessments and identification of the potential sites for renewable energy projects, etc.

  1. A new Executive Decree dated 25 January 2015 for the instruction and granting of building permits3 provides a new regime for these authorisations which supplements the existing Executive Decree dated 28 May 1991.

As a result, in order to be granted the required building permit, an IPP will be subject to the Executive Decree dated 28 May 1991, the Executive Decree dated 25 January 2015 and the specific Ministerial Order dated 6 February 2011 relating to the instruction and granting of building permits for power plants.

There is no doubt that this will not add brightness to the developers during the development and construction phases of the project.

  1. A Ministerial Order relating to the technical specifications for the operation and maintenance of the transport electricity grid was published on 12 February 2015. It sets up general principles for the maintenance of the transport electricity works and the power-up maintenance of the transport electricity works.

It is worth noting that this Ministerial Order is an application text of the Executive Decree dated 26 November 2006 relating to the technical rules for the conception, operation and maintenance of the transport electricity grid.  

1 OFFICIAL PUBLIC STATEMENT FROM THE MINISTRY IN CHARGE OF THE ENERGY, DATED 24 FEBRUARY 2015 AND DISCLOSED ON THE OFFICIAL WEBSITE OF THE MINISTRY IN CHARGE OF THE ENERGY (MEM-ALGERIA.ORG).

2 REGULATED BY THE EXECUTIVE DECREE NO. 2000-116 DATED 29 MAY 2000.

3 EXECUTIVE DECREE NO. 15-19 DATED 25 JANUARY 2015, PUBLISHED ON 12 FEBRUARY 2015 IN THE ALGERIAN PUBLIC GAZETTE, SETTING UP THE INSTRUCTION AND GRANTING MODALITIES FOR PUBLIC PERMITS.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.