Measures to promote renewable energy for electricity generation in Algeria

sustainability Article Measures to Promote Renewable Energy for Electricity Generation in Algeria Mohammed Bouznit 1, María del P. Pablo-Romero 2,* and Antonio Sánchez-Braza 2 1 Laboratoire Economie et D é veloppement, Facult é des Sciences Economiques, Commerciales et des Sciences de Gestion, Universitéde Bejaia, 06000 Bejaia, Algeria; [email protected] 2Department of Economic Analysis and Political Economy, Faculty of Economics and Business Sciences, University of Seville (Universidad de Sevilla), Ramón y Cajal 1, 41018 Seville, Spain; [email protected] *Correspondence: mpablor[email protected] Received: 15 January 2020; Accepted: 14 February 2020; Published: 16 February 2020   Abstract: Algeria has enormous renewable energy potential. However, fossil fuels remain the main electricity generation source, and the country is the third largest CO 2 emitter in Africa. Algeria is also particularly vulnerable to climate change. Therefore, a set of actions related to energy, forests, industry and waste sectors have been programmed, over the period 2015–2030, and the government action program has given priority to promote renewable energy. In this sense, Algeria is committed to significantly promote investment in renewable energy, during the period 2020–2030. Thus by 2030, renewable electricity production capacity will achieve 22,000 MW, representing 27% of total electricity generation. This paper analyzes the electricity generation measures implemented in Algeria to reach the required energy mix, the legislative framework, financial aid, the feed-in tariffsystem, the tax incentives, and the tender and auctions undertaken. The analyses reveal that, although the electricity price premium policy has not been revoked, the newly enacted tender scheme is designed to become the standard procedure for launching renewable energy projects in Algeria in the coming years. Keywords: renewable energy; electricity generation; Algeria; renewable energy action programs; financial aid; tax incentives; feed-in tariffsystem; energy mix 1. Introduction Algeria has enormous renewable energy (RE) potential. It possesses high solar potential, with more than 3000 hours of sunshine per year [ 1 , 2 ]. However, fossil fuels remain the main source of electricity generation in Algeria. In fact, Algeria is considered to be one of the most energy-consuming countries, with the contribution of fossil fuels in electricity generation at more than 98.75% in 2016. Moreover, energy consumption and its evolution over time are the principal factors explaining the global CO 2 emission growth [ 3 – 6 ]. The use of gas and fossil fuels in economic activities leads to the emission of an important amount of CO 2 (carbon dioxide) into the air, which contributes to the greenhouse effect [ 7 ]. Consequently, Algeria is the third highest CO 2 emitter country in Africa, and one of the most important among developing countries. It emitted 147 MtCO 2 in 2014, and was 34th in the list of countries with fossil fuel emissions from gas flaring [8]. Furthermore, Algeria is particularly vulnerable to climate change. On the one hand, Algeria has low—and decreasing—yearly average rainfall (having declined 30% over the past decades). On the other, its land characteristics reduce the carbon capture possibilities [ 1 ]. For those reasons, Algeria is interested in developing the COP21 (Conference of the Parties) agreement. In fact, it was one of the developing countries which first submitted the Intended Nationally Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change. Sustainability 2020,12, 1468; doi:10.3390/su12041468 www.mdpi.com/journal/sustainability Sustainability 2020,12, 1468 2 of 17 In that context, the Algerian strategy to mitigate global climate change was built on the balance between sustainable development and international climate commitments. The government action program has given priority to promote RE in the electricity sector, with a view of reaching an adequate energy mix. The aim of this paper is to present and analyze the measures which have been implemented, with a view to reaching the required energy mix, and achieving sustainable development in Algeria. Some previous research has focused on the energy situation in Algeria. Some of them refer to specific technologies, such as the studies by Kaid et al. [ 9 ] and Sahouane et al. [ 10 ] related to photovoltaic, Nacer et al. [ 11 ] related to wind energy, and Akbi et al. [ 12 ] referring to bioenergy. Some others analyze the Algerian RE development or its potential. In this respect, it is worth noting the studies by Himri et al. [ 13 ], Stambouli et al. [ 14 ] and Bouraiou et al. [ 15 ]. Others, such as Mourad and Avery [ 16 ], focused on the sustainability situation from an historical point of view. Finally, others have also analyzed energy policy and the promotion of RE. Among these could be mentioned the studies by Stambouli [ 17 ], Ghezloun et al. [ 18 ], and Sahnoune et al. [ 19 ]. However, these papers are outdated and do not include the policies and data of recent years, when the most important RE increases have occurred. Finally, it is also worth noting the recent study by Haddoum et al. [ 20 ] which includes energy policy questions, but does not review the RE policy measures adopted in the country. Based on previous research, the present study focuses on giving a detailed review of the measures applied in Algeria, to promote the use of RE in the electricity sector, and on assessing the extent to which the objectives set in the programs, approved by the government, are being met. This paper is structured as follows. After the introduction, Section 2gives an overview of the RE targets established in the INDC of Algeria and the Algerian national program to develop REs and energy efficiency. Section 3analyzes the measures to promote RE use for electricity generation in Algeria. An analysis and discussion of the effectiveness of the measures adopted are presented in Section 4. Finally, Section 5concludes. 2. Electricity Targets in the Algerian INDC and National Program to Develop REs and Energy Efficiency Before starting to report the main targets related to the electricity sector in Algeria, it seems important to give an idea on the structure of the Algerian electricity market. Despite the suitable legislative framework, and the incentive measures granted to the private sector, electricity generation and distribution are guaranteed completely by the government company, Sonelgaz. According to the legislation in force, the Algerian electricity market is divided into four segments (see Figure 1). Electricity production is open to private and government companies. However, the private power producers are subject to the feed-in tariffagreement. Transmission and distribution are controlled completely by the subsidiaries of the government company, Sonelgaz. Sustainability 2020, 12, 1468 2 of 17 In that context, the Algerian strategy to mitigate global climate change was built on the balance between sustainable development and international climate commitments. The government action program has given priority to promote RE in the electricity sector, with a view of reaching an adequate energy mix. The aim of this paper is to present and analyze the measures which have been implemented, with a view to reaching the required energy mix, and achieving sustainable development in Algeria. Some previous research has focused on the energy situation in Algeria. Some of them refer to specific technologies, such as the studies by Kaid et al. [9] and Sahouane et al. [10] related to photovoltaic, Nacer et al. [11] related to wind energy, and Akbi et al. [12] referring to bioenergy. Some others analyze the Algerian RE development or its potential. In this respect, it is worth noting the studies by Himri et al. [13], Stambouli et al. [14] and Bouraiou et al. [15]. Others, such as Mourad and Avery [16], focused on the sustainability situation from an historical point of view. Finally, others have also analyzed energy policy and the promotion of RE. Among these could be mentioned the studies by Stambouli [17], Ghezloun et al. [18], and Sahnoune et al. [19]. However, these papers are outdated and do not include the policies and data of recent years, when the most important RE increases have occurred. Finally, it is also worth noting the recent study by Haddoum et al. [20] which includes energy policy questions, but does not review the RE policy measures adopted in the country. Based on previous research, the present study focuses on giving a detailed review of the measures applied in Algeria, to promote the use of RE in the electricity sector, and on assessing the extent to which the objectives set in the programs, approved by the government, are being met. This paper is structured as follows. After the introduction, Section 2 gives an overview of the RE targets established in the INDC of Algeria and the Algerian national program to develop REs and energy efficiency. Section 3 analyzes the measures to promote RE use for electricity generation in Algeria. An analysis and discussion of the effectiveness of the measures adopted are presented in Section 4. Finally, Section 5 concludes. 2. Electricity Targets in the Algerian INDC and National Program to Develop REs and Energy Efficiency Before starting to report the main targets related to the electricity sector in Algeria, it seems important to give an idea on the structure of the Algerian electricity market. Despite the suitable legislative framework, and the incentive measures granted to the private sector, electricity generation and distribution are guaranteed completely by the government company, Sonelgaz. According to the legislation in force, the Algerian electricity market is divided into four segments (see Figure 1). Electricity production is open to private and government companies. However, the private power producers are subject to the feed-in tariff agreement. Transmission and distribution are controlled completely by the subsidiaries of the government company, Sonelgaz. Figure 1. Structure of the Algerian electricity market. Source: Enerray [21]. 2.1. The Intended Nationally Determined Contribution of Algeria After a wide consultation, Algeria adopted a reviewed version of its INDC in 2015. As the fossil fuels are the main sources of electricity generation, Algeria has not hesitated to adopt a global Figure 1. Structure of the Algerian electricity market. Source: Enerray [21]. 2.1. The Intended Nationally Determined Contribution of Algeria After a wide consultation, Algeria adopted a reviewed version of its INDC in 2015. As the fossil fuels are the main sources of electricity generation, Algeria has not hesitated to adopt a global strategy Sustainability 2020,12, 1468 3 of 17 to mitigate climate change, with a view to achieving sustainable development. In that context, Algeria’s INDC reports the regulatory framework, government actions and incentive measures that should be implemented over the period 2021–2030, to fight against climate warming. Indeed, the proposed strategy is ambitious and aimed at significantly reducing greenhouse gas (GHG) emissions. Algeria’s INDC concerns itself with three kinds of GHG emissions: CO 2 , Methane (CH 2 ), and Nitrous dioxide (N 2 O). To approach the strategy, a set of investment projects will be reached in several activity sectors, such as energy, industry, agriculture and forestry, transport, construction and the environment. In fact, the cornerstone of this strategy is the energy sector, by adopting the program to promote RE and energy efficiency, in 2011. Using endogenous efforts, Algeria has pledged to reduce GHG emissions by 7%, by 2030. However, with international support, especially financial aid in terms of technology and capacity building, the reduction of GHG emissions can increase from 7% to 22%, by 2030 [ 1 ]. The targets of Algeria’s INDC, and the main actions which should be implemented in the different sectors, are summarized in Table 1. Table 1. Targets of Algeria’s Intended Nationally Determined Contribution (INDC) and the main intended actions (2021–2030). Targets Main Intended Actions (2021–2030) Unconditional goal: • With national efforts, the greenhouse gas (GHG) will be reduced by 7% by 2030. Conditional goal: •With international support in terms of financial aid, high technology transfer, and capacity building, the amount of GHG should be reduced from 7% to 22%, by 2030. Energy sector: •Electricity generated from renewable sources reaching 27% by 2030. •Generalize high-performance lighting. •Thermal insulation of buildings between 2021 and 2030. •Increasing the share of liquefied petroleum and natural gas in the total energy consumption, between 2021 and 2030. •Reducing the volume of gas flaring to less than 1%, by 2030. Waste: •Waste valorization. •Organic and green waste. •Energy from landfill sites and waste water treatment plants. Forestry sector: •Forestation, reforestation and forest fires prevention. •Improving means and provide equipment to fight forest fires. Source: Own elaboration from Algeria’s INDC submitted to United Nations Framework Convention on Climate Change (UNFCCC) [1]. 2.2. The National Program to Develop Renewable Energies and Energy Efficiency In 2011, Algeria adopted the Algerian Renewable Energy and Energy Efficiency Development Plan. The main objective of this national plan was to expand the usage of REs and to diversify the energy sources in the country. Initially, the plan was going to be developed in three stages. The deployment of the renewable electricity production program (12,000 MW), dedicated to the national market, was also going to be conducted in three stages. During 2011–2013, several pilot projects were to be undertaken in order to test different technologies. During 2014 to 2015, the program development was to begin. Finally, from 2016 to 2020, the large-scale deployment was to be developed. Nevertheless, in 2015, the Algerian government updated the 2011–2020 program, envisioning the installation of 22,000 MW of RE by 2030. In this program, two sets of objectives were established. The first is related to RE promotion, and the second to energy efficiency [ 22 , 23 ]. The main aim of the RE program is to reach a share of about 27% RE in total electricity production by 2030. Sustainability 2020,12, 1468 4 of 17 The established RE targets are programmed to be achieved in two periods (2015–20 and 2021–30), by significantly promoting investment in all RE sources (photovoltaic, concentrated solar power (CSP), geothermal, wind, biomass and cogeneration). Table 2shows the main RE targets for the electricity production in both periods. By 2030, it is expected to produce a total of 22,000 MW by using RE, with 12,000 MW devoted to the national market, and 10,000 MW to exports [ 22 , 24 ]. The production of this amount of RE implies that more than 300 billion m 3 of natural gas will be saved (this quantity represents eight times the national consumption of 2014) [ 25 ]. Additionally, this implies that 348 MtCO 2 equivalents of CO2emission could be reduced [26]. Table 2. RE targets for the electricity production of the Algerian national program of RE and energy efficiency (2015–30). Electric Power 1st Period (2015–20) 2nd Period (2021–30) Energy Source MW % MW % Total (MW) % Photovoltaic 3000 66.3 10,575 60.52 13,575 61.70 Wind power 1010 22.32 4000 22.89 5010 22.77 Concentrated solar power 2000 11.44 2000 9.09 Biomass 360 7.95 640 3.66 1000 4.55 Cogeneration 150 3.31 250 1.43 400 1.82 Geothermal 5 0.11 10 0.06 15 0.07 Total 4525 17,475 22,000 Source: Algerian Ministry of Energy-Program of renewable energy and energy efficiency and cogeneration [22]. To achieve the first stage targets, the Algerian government has already established a list of power plant projects, which should be built during the period 2011 to 2020. In total, 60 power plant projects were programmed, including 27 photovoltaic, to connect the north network, six solar thermal and seven wind generation plants [ 24 , 27 ]. In addition to these plants, Algeria has also included targets related to CSP, for the second period. In addition to these RE targets, some energy efficiency targets are also included in the National Program in order to reduce GHG emission and energy consumption by 7% and 9%, respectively. These targets mainly refer to three sectors: the building, transport and industry sectors. In the building sector, more than 30 Mtoe are supposed to be saved by 2030. This will be achieved through innovative technologies and thermal insulation of constructions. The thermal insulation of 100,000 homes per year, and the development of solar water heating, are programmed. In addition, the distribution of 10 million energy efficiency lamps and switching to light-emitting diodes (LEDs) will lead to savings of 7.2 and 20 Mtoe, respectively. Finally, the industry sector is meant to contribute to saving 34 Mtoe by 2030. Basically, the industry sector will benefit from helping to realize the energy audits, which help organizations better manage their energy use, leading to improved productivity and therefore to achieving the energy management system (ISO 50001). Likewise, it is worth noting that the national RE program also aims to promote technology and to adopt measures to help rationalize the endogenous consumption of electricity, increase the energy savings, and consequently decrease the energy losses, because the latter are estimated at 20% [28]. 3. Measures to Promote Renewable Energy Use for Electricity in Algeria It should be noted that promoting the investment in RE electricity generation requires a favorable legislative framework and attractive incentive measures. In that sense, Algeria has adopted a set of Sustainability 2020,12, 1468 5 of 17 laws which clearly define the guarantees, financial aid and tax incentives, granted to both public and private enterprises, to raise interest in investing in the RE sector. 3.1. Regulation (Legislative Framework) The legislative framework is designed to encourage investment in RE and energy efficiency, and to protect the environment. Law No. 99-09 of 2009, still in force, was the first to define the regulatory framework and the mean objectives of energy management policy. This Law aims to rationalize endogenous energy consumption, promote electricity generation from RE sources (solar energy, geothermal and wind energy, and hydroelectricity), and fight against greenhouse gas emission in residential areas, with a view to preserving the environment and public health. Indeed, it is the first time Algeria has clearly defined the outlines of the new energy consumption model, within the framework of sustainable development, by giving priority, especially in the electricity generating sector, to the use of clean energy sources (natural gas and liquefied petroleum gas). Additionally, two years later, the National Fund for Energy Management was funded, to promote the RE sector, either by granting financial aid or interest-free credits, to all actions and investment projects recorded in that strategic sector (Law No. 99-11). For Algeria, promoting RE is the key factor to achieving sustainable development. In that context, Law No. 04-09 clearly defined the objectives which should be reached, to adopt the overall strategy to promote RE and energy efficiency. To achieve this, a set of practical measures was established in Law No. 09-09 of 2009, such as the creation of the National Fund for Renewable Energy (NFRE), and devoting 0.5% of oil royalties to its funding. Therefore, the investors engaged in all actions and projects, included in the government RE program, will benefit from different financial aid. Furthermore, Law No. 11-11 of 2011 has extended the NFRE to cover cogeneration activities, which will lead to the creation of the National Fund for Renewable Energies and Cogeneration (NFREC). The government increased its financial participation to 1% of oil royalties. Likewise, Law No. 14-10 announced closure of the National Fund for Energy Management, with the transfer of its functions to the NFREC. Later, the adopted Executive Decree No. 13-218 of 2013 identified the incentive measures to be taken to boost the production of renewable electricity generation. Thereby, the government had committed to grant bonuses for the costs of diversification of electricity production from RE sources on the one hand, and, on the other, to buy all renewable electricity, produced by both public and private enterprises, at a price above the whole production cost. Finally, in 2017, Executive Decree No. 17-98 and Executive Decree No. 17-204 were approved. Consequently, all new investment projects in renewable electricity generation have to be allocated through tenders, or auctions. Table 3summarizes the main regulatory laws adopted by Algeria to promote RE. Table 3. Legislative framework to promote renewable energy (RE) in Algeria. Law References In Force Main Objectives Law No. 99-09 (28-6-1999) Yes •Define the contours of energy management policy, namely: •Rationalizing the endogenous use of energy. •Developing RE (solar energy, geothermal, biomass, hydroelectricity and wind energy). •Reducing the impact of the energy system on the environment (reduction of greenhouse gas and urban exhaust gas). Law No. 99-11 (2000 Finance Bill) No •Creating the National Fund for Energy Management (NFEM) and determining its functions (finance actions and projects included in the energy management and energy efficiency program). Sustainability 2020,12, 1468 6 of 17 Table 3. Cont. Law References In Force Main Objectives Executive Decree No. 2000-116 (29-5-2000) No • Official implementation of the National Fund for Energy Management (NFEM). Law No. 02-01 (5-2-2002) Yes •Provides the legal basis which organizes electricity activities and gas by pipeline (production, transport, distribution and marketing). Law No. 04-09 (14-8-2004) Yes •Defines the regulatory framework to: •Promote RE and generalize its uses. •Protect the environment. •Fight against climate warming by limiting greenhouse gas emissions. •Preserve and conserve fossil fuels. Law No. 09-09 on the Finance Bill 2010 No • Provides the regulatory basis to create the National Fund for Renewable Energy and its functions. •Determines financial resources (0.5% of oil royalties). Law No. 11-11 on the complementary Finance Bill 2011 Yes • Provides the regulatory basis to create the National Fund for Renewable Energies and Cogeneration and its functions. •Determines financial resources (1% of oil royalties). Executive Decree No. 11-423 (8–12 December 2011) Yes •Official implementation of establishing the operational modalities related to the National Fund for Renewable Energies and Cogeneration. Executive Decree No. 13-218 (18-6-2013) & Executive Decree No. 17-166 (22-5-2017) Yes • Determine the incentive measures to promote investment in RE (premiums for the costs of diversification of electricity production from RE). Law No. 14-10 2015 Finance Bill Yes •Closing the National Fund for Energy Management and transferring of its operations to the National Fund for Renewable Energies and Cogeneration. Ministerial decision (2-2-2014) Yes •Determines the guaranteed purchase rates related to electricity generation from solar photovoltaic. Executive Decree No. 17-98 (26-2-2017) & Executive Decree No. 17-204 (22-6-2017) Yes •Define the legal procedures for tendering to produce RE and cogeneration, and their integration into the national electricity system. Source: Official Journal of Algeria [29]. 3.2. Financial Aid The Algerian government contributes to the development of new capacities through the NFREC. By suppressing the National Fund for Energy Management (Special Account No. 302-101), the Finance Bill of 2015 had created the NFREC, defined as Special Account No. 302-131, which is funded by the public purse, and authorized by the Energy Minister. The NFREC aims to promote electricity generation from RE and cogeneration systems, and also to improve energy management. This fund provides greater financial capacities, mainly from a tax levy of 1% on oil revenues, and taxes on energy consumption, paid by energy users. Its purpose is not only dedicated to financing the feed-in tariffunder the Power Purchase Agreements (PPAs), but is Sustainability 2020,12, 1468 7 of 17 also notably designed for financing different RE project costs. Thus, the government aid takes several forms and should be used, either to realize power station projects, purchase of production equipment, financing additional production costs and the maintenance of production installations, or, to finance training and research and development (R&D). Executive Decree No. 17-168 (22 May 2017), amending and supplementing the Executive Decree No. 15-319 (13 December 2015), set the financial resources allocated to the NFREC and their uses to finance RE activities, which are summarized in Table 4. Table 4. The National Fund for Renewable Energy and Cogeneration (financial resources and aid). The National Fund for Renewable Energies and Cogeneration Financial resources •1% of oil royalties each year. •The balance of the Account related to the National Fund for Energy Management. •Government subsidies. •Tax revenues from energy consumption. •Revenues from taxes on energy inefficient appliances. •The proceeds from fines provided in the Energy Efficiency Law. •The repayment proceeds related to unpaid interest-free credits. •Any other resources or contributions. Kinds of aid to finance RE related activities 1st set of financial aid: REs and cogeneration •Financing actions and projects included in the promotion of REs and cogeneration program: •Electricity generation projects from RE sources and/or cogeneration. •Purchase of equipment for electricity production from RE sources and/or cogeneration. • Over-costs compensation, arising from electricity generation from RE sources, and/or the cogeneration systems. •Pilot projects and demonstration operations relating to REs and/or cogeneration. •Actions to upgrade/maintain RE electricity installations generation. •Training actions related to REs and/or cogeneration systems. •The allocations for the pre-financing of actions related to the promotion of REs and cogeneration. 2nd set of financial aid: Energy management •Financing actions and projects included in the energy management program. Actions included in the Energy management program: •Requirements conformity, norms and energy efficiency labels. • Awareness, communication, information, education, promotion, co-ordination and training in the field of energy management. •R&D in the field of energy management. •Accompaniment of industrialists in order to improve the energy efficiency of equipment. •Actions and works to evaluate energy efficiency potentials in the different activity sectors. •Animation and co-ordination of energy management. •Production and monitoring of the energy management program. •Management and monitoring of energy audits. • Instruction, monitoring and control of projects financed by the resources of the National Fund for Energy Efficiency. •Evaluating the impact of projects on energy consumption. •Production, publication and diffusion of the energy efficiency indicators. Projects included in the Energy management program: •Thermal insulation of buildings. •Use and diffusion of high-performance lamps. •Efficient public lighting. •Diffusion of individual and collective solar water heating. •Conversion of vehicles to Liquefied Petroleum Gas and Natural Gas. •Acquisition and conversion of buses to Natural Gas. • Introduction of efficient equipment in all activity sectors. Assistance for the decision on energy audits and project feasibility. •Pilot operations and demonstrations. • The Banks grant interest-free credits to investors in energy efficiency, which are not included in the energy management program. •The government is the guarantor of Bank credits. Source: Official Journal of Algeria [29] (O.J. No. 69, 27 December 2015; and O.J. No. 31, 28 May 2017). Sustainability 2020,12, 1468 8 of 17 3.3. Feed-In Tariff In 2004, the Algerian government introduced a feed-in tariffmechanism to speed up RE development, in order to diversify its national energy mix, and achieve established RE targets. This was created on the basis of setting up a legal framework for a feed-in tariffscheme, incorporating elevated tariffs for renewable power production, in order to promote the production of solar electricity in integrated solar combined cycles. The Executive Decree No. 13-218 of 2013 specified the administrative process and conditions for benefiting from the feed-in tariffmechanism. Likewise, it established the technologies eligible to receive these benefits: photovoltaic, CSP, solar thermal, hydropower, wind, cogeneration and waste to energy and hybrid plants. These government financial aids are used to cover the additional costs arising from the production of electricity, produced from REs, and from the costs of diversification. In this sense, this feed-in tariff scheme is designed as a premium paid per kWh above a base tariff(average annual electricity price in Algeria), expressed as a percentage of the base electricity tariff. Therefore, the producer of REs benefits from a bonus for each kWh produced, marketed, or consumed. The bonus value is related to the type and the percentage of the RE sources used in the electricity generation [ 30 ]. Therefore, feed-in tariff levels vary between technologies. According to Executive Decree No. 13-218 of 2013, the government bonuses are in the percentage range of 100%, 200% and 300% of price per kWh, if the electricity is produced from hydroelectricity, biomass, and waste and wind, respectively. Moreover, the government bonus reaches 300% of price per kWh, when the electricity is produced exclusively from radiant or thermal solar energy. However, the government bonuses linked to the REs generated from solar thermal energy with the solar-gas hybrid system, are presented below in Table 5. Table 5. Financial aid granted to producers of solar thermal energy. with the solar-gas hybrid system. Contribution of Solar Energies Granted Bonus (% of price per kWh) 25% and more 200% 20–25% 180% 15–20% 160% 10–15% 140% 5–10% 100% 0–5% 0% Source: Official Journal of Algeria [20] (O.J. No. 33, 23 June 2013). Regarding the electricity produced from the cogeneration of steam and/or hot water, the government bonuses will be calculated proportionally to the usable energy. In that field, producers could benefit from a government bonus of 160% of price per kWh, if their production capacity does not exceed 50 MW, where at least 20% is usable energy. However, the government bonus will be 120%, 80% and 0%, if the usable energy is 15–19%, 10–15% and less than 10%, respectively. Finally, concerning the feed-in tariffscheme, the Algerian government committed to buying all quantities of renewable electricity generated from photovoltaic and wind, for 20 years, at a price above the whole production costs. In that sense, Algeria established an appropriate scale of purchase prices for electricity generated from RE sources. This scale is based on the electricity power and the duration of investment exploitation (the first 5 years and the remaining 15 years). Table 6summarizes the feed-in tariffassociated with the different duration of exploitation and amount of electricity production. Sustainability 2020,12, 1468 9 of 17 Table 6. Feed-in tariffassociated with renewable electricity generation in Algeria. Power Feed-In Tariff(DZD/kWh) 5 Initial Years 15 Remaining Years Wind 1 to 5 MW 13.10 9.55–16.66 More than 5 MW 10.48 7.64–13.33 Solar PV 1 to 5 MW 15.94 11.80–20.08 More than 5 MW 12.75 9.44–16.06 Source: MEDENER/OME [31]. 3.4. Tax Incentives It should be noted that the investment code of Algeria is based on three pillars: the freedom of investment, equity, and the protection of existing rights. Thereby, Algerians and foreigners could invest freely in any field, and they can benefit from the same treatment, in terms of incentive supports. In fact, like several other countries in the world, Algeria established specific varieties of support measures to promote renewable electricity generation. According to Ordinance No. 01-03 of 20-8-2001 (modified and completed by Ordinance No. 06-08 of 15-7-2006), the main incentive supports to promote national and foreign investment in renewable electricity generation are defined below: • Investment projects at the achievement phase (incentive supports are granted for 5 years at most): • The equipment, machinery, materials and services imported, or purchased from the local market, are exempt from customs duties and Value Added Tax (VAT). • Exemption from all fees due for the registration and transfer of real estate property necessary to achieve the investment project. • For 10 years, the investors are exempt from the land tax related to the real estate used in the production process. • The investors do not pay any fees on the registration of the Articles of Incorporation and the increase of capital. •Investment exploitation phase (the incentive supports are granted for 10 years): •Exemption from tax on company profits (IBS) and the tax on turnover (TAP). • The investors could benefit from other sets of advantages granted by the National Investment Council (CNI). • The investors benefit from a reduction of 50% on the annual rental fee set by the state property department. • Goods and equipment included in the production process are exempt from customs tax and VAT. 3.5. Tender and Auctions The implementation of the solar program was clarified through Executive Decree No. 17-98 of 26 February 2017. This Executive Decree provides the legal basis for tendering of renewable and cogeneration energies, and their integration into the national electricity supply system. It is worth noting that, although the electricity price premium policy has not been revoked, the newly enacted tender scheme is designed to become the standard procedure for launching RE projects in Algeria in the coming years. The Decree sets out two types of requests for proposals for the development of renewable photovoltaic energy projects: requests for proposals to investors (appels d’offres à investisseurs) and requests for proposals by auction (appels d’offres aux enchères). Sustainability 2020,12, 1468 16 of 17 21. Enerray. 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