IV Med Think 5+5 Forum Fostering Innovation Alliances in the Western Mediterranean: A basin of opportunities for a Sustainable Future Energy Efficiency and Transition in the West Mediterranean Dr. Emanuela Menichetti Director, Renewable Energy and Electricity Corinthia Palace Hotel Malta, 1-2 July 2019

The mediterranean IN A NUTSHELL North Croatia Cyprus France Greece Italy Malta Portugal Slovenia Spain Other North Albania Bosnia H. Macedonia Montenegro Serbia South East Israel Jordan Lebanon Palestine Syria Turkey South West Algeria Egypt Libya Morocco Tunisia The 5+5 countries: 280 million people – 4% 648 Mtoe primary energy demand – 5% 6.2 trillion USD – 5% 1.2 GtCO2 – 4%

ENERGY CONSUMPTION TRENDS – current policies By 2030, SEMed countries will take over as the largest energy consumers. Different energy demand trends in 5+5 countries : -30% in the North, +47% in the South

ENERGY DEMAND BY FUEL & REGION - current policies Strong decrease of all fossil energy technologies – and nuclear by 2040 in the North, with non-hydro renewables to account for 36% of TPES In the South, fossil fuels still dominating the energy mix, although non-hydro renewables experience a four times growth to 2040 to account for 10% of the supply mix.

ENERGY INTENSITY- current policies Increasing need to re-orientate energy policy to decouple energy consumption from economic and demographic dynamics in the South and East Mediterranean

CO2 EMISSION TRENDS CO2 emissions showing a clearer downward trend in the North By 2040, with current policies a -17% expected in the South and East Med, -24% in the North Significant efforts needed to decarbonize industry and transport sectors

GOOD PROGRESS IN THE POWER SECTOR In the North, generation to go green, with RE becoming the first generating source by 2040. In the South, gas will remain the primary fuel, under both scenarios, with relatively improved outlook under the PS.

RENEWABLE ENERGY CAPACITY Almost 200 GW of RETs in 2018 in the North Med Italy, France and Spain account for about 90% of total North capacity Hydro is still the dominant source, accounting for 43% of total RE installed capacity in 2018. In the last ten years, impressive growth in both wind and solar PV, accounting for 31% and 20%, respectively of total RE capacity. Market still concentrated in few countries - 90% of total RE capacity in the Mediterranean (5+5) exist in Italy, France and Spain. Total RE capacity in the SEMed reached 56 GW in 2018 The 5 South countries account for about 9% of SEMed capacity

trajectories towards RE targets The EU is moving towards achieving its collective RE target of 2020. In the South, with the exception of Algeria & Libya, other South MED countries are making a good progress in achieving their targets.

5th & 95th Percentiles Range, 2018 Increasing RE cost competitivEness in the South MED Record wind and solar PV based-electricity prices in the region. Technology 5th & 95th Percentiles Range, 2018 Wind (onshore) 44 – 100 PV 58 – 219 CSP 109 – 272 Source: IRENA The prices from IRENA against which the comparison is made refer to the Levelized Cost of Electricity (LCOE), whichi is not necessarilty comparable to announced bid prices: - LCOE (indicated by IRENA): refer to commissioning dates. The LCOE is calculated based on the following assumption; real weighted average cost of capital (WACC) is 7.5% for OECD countries and China and 10% for the rest of the world. In terms of financing, 7 Bid prices (SEMCs): refer to announced dates. It is very important to understand that the prices are country-specific and site specific…..The factors explaining LCOE in general and bid prices, in particular, are: Technology improvements – solar module efficiencies, larger wind turbines and blades, etc… Technology cost reductions due to economies of scale Resources availability - developed in best suitable sites Capacity factor – related to technology and resources availability Policy framework - especially vis-à-vis the country’s long-term commitments and transparency, and other fiscal incentives. Financing – low rates (due to either concessional loans or low risk markets). Lead-time – between the time of bidding and construction Auction design and PPA terms and conditions. Notes: Prices refer to auction awarding date. Tariffs for Midelt Phase I include both PV and CSP. Source: OME database

energy TRANSITION measures IN THE 5+5 Country Energy Efficiency Renewable Energy CO2 mitigation SOUTH Algeria -9% of energy consumption 27% of electricity generation Min of -7% (up to -22% if intern. financing) Libya - Mauritania 20% of the energy mix by 2020 -22.3% compared to BAU Morocco -15% of energy consumption 52% of electricity capacity (2030) Min. of -13% compared to BAU (up to -42%) Tunisia -30% of energy demand vs. BAU (2010) 30% of electricity generation (2030) Min of -13% compared to BAU (up to -28%) NORTH France Italy Malta Portugal Spain An EU collective target to reduce greenhouse gas (GHG) emissions by at least 40% by 2030 compared to 1990 level Under the Clean energy for all European package: At least 32% of RE in gross energy consumption by 2030, Member States are required to draft 10-year National Energy & Climate Plans (NECPs) by end of 2019. Objectif global d’atténuation en Tunisie : réduire l’intensité carbone de 41% en 2030 en comparaison avec l’année de base 2010 : -13% inconditionnel et -28% conditionné par l’appui international. Le sous-objectif d’atténuation pour le secteur Energie : réduire l’intensité carbone de 46% en 2030 en comparaison avec 2010 : -15% inconditionnel et -31% conditionnel. Mauritania – for GHG emissions, National efforts account for 12% only, whereas unconditional efforts should contribute with 88%. Source: Based on UNFCCC Nationally Determined Contributions to the 2030 horizon, and European Commission

Conclusions AND Recommendations The energy mix in the Mediterranean region is still heavily dominated by fossil fuels, and increased consumption in the SEMed Mixed energy transition trajectories across the region, with the North moving more steadily towards the targets Regional cooperation is a key driver to enable energy transition at regional level, and UfM platforms are an important tool to be used to exchange data and best practices Market experience shows that under certain conditions SEMed are capable to attract investments into RETs at record low prices Access to finance would undoubtedly unlock the region’s potential, and thereby contribute to the energy transition The South MED countries, in particular, need to speed up the implementation of their national plans The year 2020 will be a cornerstone and will set the tempo for the deep transformation required in the years to come -> important role to play by the 5+5 dialogue Progress towards several sustainability targets will be evaluated by that deadline at different levels, for instance: The 75th birthday of the UN COP26 Revision of some SDGs targets 2020 EU climate and energy package Several CSR targets set to 2020