The emergence of an innovation system for the solar energy sector in Morocco - PEGNet Workshop "Green and social: managing synergies and trade-offs"

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The emergence of an innovation system for the solar energy sector in Morocco - PEGNet Workshop "Green and social: managing synergies and trade-offs"
The emergence of an innovation system for the
solar energy sector in Morocco

PEGNet Workshop “Green and social: managing synergies and trade-offs”

Georgeta Vidican
Bonn, 13 March 2013
The emergence of an innovation system for the solar energy sector in Morocco - PEGNet Workshop "Green and social: managing synergies and trade-offs"
 based on the DIE study
“Achieving inclusive
competitiveness in the
emerging solar energy sector
in Morocco”
(Vidican, Böhning, Burger, de Siqueira,
Müller, Wendt, 2013)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   2
The emergence of an innovation system for the solar energy sector in Morocco - PEGNet Workshop "Green and social: managing synergies and trade-offs"
Outline

 Overview of renewable
  energy (RE) developments
  in Morocco
 Innovation systems (IS) for
  sustainability
 The emerging solar energy
  sector in Morocco
 Governance challenges to
  IS building

  © German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   3
The emergence of an innovation system for the solar energy sector in Morocco - PEGNet Workshop "Green and social: managing synergies and trade-offs"
Renewable energy in Morocco

 95% of energy needs supplied by imports
 Rising electricity demand: quadruple by 2030
 Large solar (and wind) energy
resources
                                                                               Source: MASEN (http://www.pv-
                                                                               magazine.com/news/details/beitrag/morocco--acwa-selected-
                                                                               for-ouarzazate-_100008640/#axzz2ve2PO4fJ)

=> Interest in diversifying the energy mix
           RE targets set: 2GW solar + 2GW wind + 2GW hydro by 2020
           Attracted investment: private sector and concessional financing
           1st large-scale solar project broke ground – 160 MW
           Several wind energy projects are already developed

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)                                                          4
Renewable energy in Morocco

 But...unchartered territory:
     – high level of uncertainty (costs, technology, regional and global
       markets, etc.)
     – strong lock-in pressures (fossil-fuels, subsidies, etc.)
     – tight time frame (e.g. high budget deficit)
     – competing priorities (e.g., unemployment, competitiveness)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   5
Renewable energy in Morocco

 Key challenge: developing the RE sector such that
  technological capabilities are enhanced, competitive
  advantages are identified, jobs are created
      – Government’s goal: integrate green with social and economic
        objectives

 Integration of goals depends on:
      – dealing with competing priorities and trade-offs
      – building alliances with diverse stakeholders,
      – enabling systemic coordination across sectors

=> Politics at the core (addressing diverse interests, managing rents)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   6
Renewable energy in Morocco

 Addressing these joint goals requires a system level
  perspective

 Developing a dynamic innovation system (IS)

 Yet, low understanding of how sustainable IS emerge and
  evolve in developing countries
      - limited focus on governance dynamics in IS

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   7
Renewable energy in Morocco

Main questions:

 What are the challenges to system-building initiatives for the
  emerging solar energy sector in Morocco?

 How do dynamics between different stakeholders support or
  hinder the development of the sector?

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   8
Renewable energy in Morocco

 Results are part of a larger study funded by BMZ (Vidican et al.
    2013)

 Data:
      – 80 semi-structured interviews in Morocco (Feb – Apr 2013)
      – Secondary literature
                                                                                Ministries, state
                                                                                   agencies
                                                                                      (13)

                                                              Development
                                                                                                    Private sector
                                                              cooperation
                                                                                                         (39)
                                                                  (6)

                                                              Financing
                                                                                                     Business
                                                                 (8)                                associations
                                                                                                        (4)

                                                                                 Universities &
                                                                                  Research
                                                                                   Institutes
                                                                                      (9)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)                                    9
Innovation system framework

 Co-evolution of technologies and institutions
 Innovation system:
      – “That set of institutions [and organisations] which jointly and individually
        contributes to the development and diffusion of new technologies and which
        provides the framework within which governments form and implement policies to
        influence the innovation process” (Metcalfe 1992)
      – A useful way of analysing the development of a sector as it considers not simply
        economic perspectives but also permits a social and political view point.

                                                                      Institutions
                                                      Actors and
                                                      Knowledge

                                                                   Networks

                                                        Innovation System

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)    10
Innovation system framework

                                        Source: http://rogerseirug.blogspot.de

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   11
Innovation system framework

 IS in developing countries (Lundvall et al. 2009):                                                Institutions
                                                                                    Actors and

      – Lower knowledge capabilities
                                                                                    Knowledge

      – Missing actors and institutions                                                          Networks

      – Weak links between system components

 Hence, the challenge is to:                                                       Innovation System

      – Set in place necessary dynamics at different levels
      – Lay foundations in terms of knowledge and capabilities
      – Strengthen linkages between actors
      – Align conflicting interests

=> In developing countries “learning system” rather than “innovation system”
    (Viotti 2001)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)                                  12
Innovation system framework

 Low-carbon development places higher demands on governance–
  necessary to disrupt unsustainable pathways and encourage alternative
  technological pathways
      – Rationale (Stamm et al. 2009, Altenburg and Pegels 2012):
              • Overcome multiple market failures
              • Build consensus among stakeholders
              • Change triggered under time pressure
              • Harmonise national and international policy frameworks
      => Stronger role for the state

 If the state becomes more important, how should its role be best leveraged
  and its capacity strengthened? What implications this has for system
  dynamics and the engagement of other actors? How about in non-
  democratic political contexts?

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   13
Innovation system framework

 To assess the governance of the emerging IS in Morocco we focus on:
      – Government actions to develop the solar energy sector
      – Private sector involvement
      – Knowledge sector engagement
      – Cross-sectoral initiatives
      – Preliminary assessment of interests and power

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   14
Government actions

 In 2008 the National Energy Strategy
 Plan Solaire: US$ 9 billion => by 2015 500 MW of solar (mainly large CSP
  plants):
      – (a) Institutional level (legislative framework)
      – (b) operational level (new organisations)
      – (c) developmental level (jobs, industry, R&D)
 Large investments were attracted:
                     Table 1: New investment in RE, by country, 2009-2012 (million US$)
                                                    2009       2010      2011       2012
                           Algeria                     -          -        33           -
                           Egypt                       -        923         -           -
                           Iran                        -          -         -         136
                           Iraq                      103          -         -           -
                           Libya                       -        132         -           -
                           Saudi Arabia                -         15        47          22
                           UAE                        52         20       843           -
                           Israel                    263        355       830         814
                           Morocco                     -          8       309       1,898
                           Tunisia                    57          -         -           -
                          Source: REN21(2013)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)           15
Government actions

(a) Institutional framework
 Law 13-09 with focus on large scale electricity generation plants:
      – Self-production by industrial investors
      – Projects developed by private investors to sell electricity to third parties
      – EPC contracts with ONEE (public utility)
      – IPPs with long-term PPA with ONEE
 No market for small-scale solar installations
      – Opposition from private distributers
      – Fossil-fuel subsidies

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)      16
Government actions

(b) Operational structure
 Moroccan Agency for Solar Energy (MASEN)
      – Competent, powerful, but increasingly vertically integrated --- should seek
        cooperative approach
 National Agency for Renewable Energy and Energy Efficiency (ADEREE)
      – Seeking cross-stakeholder initiatives for market creation
 Energy Investments Agency (SIE)
      – A redefinition of its role has been made in light of MASEN’s vertical integration in
        finance. A better positioning of SIE is needed.

(c) Developmental level
 Commissioning of studies to assess socio-economic potential of RE – but
  results are not currently integrated in policy/strategy making
 Ministry of Industry plays only a marginal role in RE developments

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)        17
Private sector involvement

 Only tentative steps towards involving the private sector
 Market incentives and transparency are necessary to enable companies to
  engage
 Cluster initiatives have been created but with limited engagement from the
  private sector
 Programmes for facilitating business linkages are limited
 AMISOLE, the RE industry association, seeking to engage the private sector
  more actively

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   18
Knowledge creation

 Close cooperation between public research organisations and private sector
  is important for a well-functioning IS
 Yet, currently limited and fragmented engagement
 IRESEN (Research Institute for Solar Energy) has been created to bridge the
  gap between these two sectors (knowledge & business)
 MASCIR (Moroccan Foundations for Advanced Sciences, Innovation and
  Research) highly active in attracting funding from the private sector
 Several self-organising initiatives / forums / networks / associations
      – Academia is searching for a stronger and more coherent participation in the
        emerging IS

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)     19
Cross-cutting initiatives

 Limited cross-sectoral initiatives
      – MASEN & MEMEE: legislation
      – MEMEE & Ministry of Agriculture: solar water pumps
      – ADEREE & Ministry of Habitat: solar water heaters

 Ministry of Industry and public research organisations have been less
  engaged

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   20
Governance challenges

 Can RE targets be channelled into sustainable IS building,
  contributing to enhanced capabilities and economic
  competitiveness?
      – Need for coordination and cooperation between stakeholders and
        integration of objectives into long-term development strategy (Vidican et
        al. 2013)
 Current developments have been top-down, driven by powerful
  actors.

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   21
Governance challanges
  Figure 1: Tentative representation of the most prominent stakeholders and their relative position in
  terms of importance and influence

  Source: Own design based on interviews with relevant stakeholders in Morocco, between February-April 2013.

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)                              22
Governance challenges

 Can RE targets be channelled into sustainable IS building,
  contributing to enhanced capabilities and economic
  competitiveness?
      – Need for coordination and cooperation between stakeholders and
        integration of objectives into long-term development strategy (Vidican et
        al. 2013)
 Current developments have been top-down, driven by powerful
  actors.
 Tendency towards concentration of activities and initiatives likely to
  hinder IS formation.

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   23
Governance challenges

Figure 2: Three models for interaction between a leading firm and an underdeveloped innovation
system

Source: Barnard et al. (2009: 253)

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)                24
Governance challenges

 Can RE targets be channelled into sustainable IS building,
  contributing to enhanced capabilities and economic
  competitiveness?
      – Need for coordination and cooperation between stakeholders and
        integration of objectives into long-term development strategy (Vidican et
        al. 2013)
 Current developments have been top-down, driven by powerful
  actors.
 Tendency towards concentration of activities and initiatives likely to
  hinder IS formation.
 In spite of decentralisation, Moroccan state authorities remain central
  actors in economic and social policies.
 Low level of influence of important players translate in limited access
  to resources, information, and lack of transparency in decision-
  making.
© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   25
Concluding remarks

 Low-carbon development requires quick action in an environment defined by
  high uncertainty.
 While solar energy developments are supported by “the supreme institutional
  power” in Morocco, decisions can be taken faster.
 Yet, the challenge for IS building is to balance quick actions with
  coordination at national level and integration of goals.
 While several parts of the IS are in place, an integrated approach focused on
  system building is lacking.
 Forging coalitions between stakeholders is critical for addressing trade-offs
  and diverse interests – more research on political economy (e.g. mapping
  interests and power).
 The IS literature in developing countries needs to engage more actively with
  political processes associated with system formation, especially for low-
  carbon development where the state plays a prominent role.

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   26
Thank you for your attention!

Georgeta Vidican
German Development Institute /
Deutsches Institut für Entwicklungspolitik (DIE)
Tulpenfeld 6
D-53113 Bonn
Telephone: +49 (0)228-949 27-0
E-Mail: georgeta.vidican@die-gdi.de
www.die-gdi.de
www.facebook.com/DIE.Bonn
www.youtube.com/DIEnewsflash

© German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)   27
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