Algeria is aiming to push through new renewable energy legislation to spur the push to green energy, Renewable Energy Minister Benattou Ziane announced in June. The announcement was made at a gathering of business associations, with an eye to spur private investment.

No draft of the bill, which is expected to become law by the end of 2022, has yet been released — so much of it remains unknown. Particularly on issues of private and foreign ownership limits and a legal framework for renewables. We spoke to Jean-Jérôme Khodara (LinkedIn), partner and head of law firm Matouk Bassiouny’s Algeria practice, and Nahla Djabi (LinkedIn), counsel at Matouk Bassiouny’s Algiers office, to understand what the private sector hopes to get out of it.

Algeria is targeting substantial growth in renewables: Algeria’s energy transition and renewable energies ministry — created in 2020 — is targeting a total installed renewable energy capacity of 4 GW by 2024 and 15 GW by 2035, and total generation capacity of 22 GW by 2030 — with 62% coming from solar PV and 23% from wind, say Khodara and Djabi. The ministry has set up a state-owned renewable energy company, Shaems. In May, the government issued a tender for the country’s most ambitious renewables project to date: a 1 GW solar project.

So far, the absence of a legal framework for renewables has led to very limited investment in this field. A law on the development of renewable energy was passed in 2004 but it was very rudimentary, say Khodara and Djabi. As of 2021, renewables made up only 2% of Algeria’s installed capacity through 448 MW of solar, they add.

Now the government is aiming to establish a comprehensive legal framework to spur renewable energy development in Algeria, says Khodara. “In the last couple of years, this has become a top government priority,” he adds.

It’s hoped the bill will offer more flexibility in terms of financing: Algeria has several restrictions around project financing, including a requirement that funding come from local financial institutions, says Khodara. “We expect the new framework to be more flexible on this point, allowing for foreign funding.”

And incentives to foreign investors — including tax breaks, and technical and legal support, Khodara and Djabi say.

By providing a framework, the new law will hopefully open the market up to SMEs, they add. “The reform of Algeria’s 2002 electricity and piped gas distribution law is meant to allow SMEs to inject any excess renewable energy into the grid. But due to the lack of a legal framework, the implementation has proven challenging.”

The tender for the 1 GW solar project could shed light on what to expect from the new law, says Djabi. It allows for international project financing and stipulates that foreign investors can own up to 66% of the project — contingent on approval by Shaems. “This may give us indications of what the new law will include in terms of ownership, financing and participation,” Djabi adds.

The tender also requires that 30% of the equipment and services used in project construction come from local producers. “In terms of public policy, we can see it’s a general top objective of the government to push for local production,” Khodara said.

The project has already spurred international investor interest: At least 80 foreign companies applied for the prequalification stage of the tender offer, says Djabi.

There’s also a push to build local solar manufacturing capacity… “We now have something like 10 or 11 plants for solar panel production,” says Khodara.

The current hope is to have a final law issued by the end of 2022: Ziane said that a draft of the bill would be issued in September, but nothing has been released so far, Khodara and Djabi say. Typically, drafts go through a four to eight week process of parliamentary review and discussions before a vote, and investors might also give feedback, Djabi notes. “I hope that by 4Q, the law will be issued,” says Khodara.