THE MEDITERRANEAN SOLAR PLAN: A MAJOR EURO-MEDITERRANEAN ENERGY PARTNERSHIP FOR THE LARGE SCALE DEVELOPMENT OF RENEWABLE ENERGY AND ENERGY EFFICIENCY MARC STRAUSS SENIOR ADVISOR FOR ENERGY MENA-OECD Task Force Meeting Paris, 9 March

I. The Union for the Mediterranean A. The UfM B. The Secretariat of the UFM II. The Mediterranean Solar Plan A. A major UfM initiative B. The political context C. Towards a new euromed energy partnership III. Midterm strategy of the MSP A. The Master plan B. The pilot projects C. The financial tools IV. Conclusions 2

I. The Union for the Mediterranean A. The UfM B. The Secretariat of the UFM II. The Mediterranean Solar Plan III. Midterm strategy of the MSP IV. Conclusions 3

UfM was launched on the 13th July 2008 at the Paris Summit as a continuation of the Euro-Med Partnership (Barcelona process) It is a framework for political, economic and social cooperation between the EU and the SEMCs to develop concrete projects in six priority areas : 4

Based in Barcelona and operating since the end of 2010 A project coordination platform to enhance cooperation between the two shores of the Mediterranean through the implementation of concrete projects A work in synergy with the key stakeholders: Member States, EC, IFIs, the industry... Funded by the EU and UfM member States on a voluntary basis 5

I. The Union for the Mediterranean II. The Mediterranean Solar Plan I. A major UfM initiative II. The political context III. Towards a new euromed energy partnership IV. Methods III. The Three pillars of the MSP IV. Conclusions 6

Launch of the Mediterranean Solar Plan at the Union for the Mediterranean Summit in July 2008 Paris declaration dated 13/07/2008: The UfM Secretariat has the responsibility to explore the feasibility, the development and the creation of the Master Plan Developing renewable energies and improving the energy efficiency in the UfM member states: Build 20 GW of extra production capacities of RE between now and

Negotiations on climate change at the UNFCCC (Copenhagen, Cancun, Durban…) The objectives of the European Energy-Climate package for 2020: reduction of % of the CO2 emissions reaching 20 % of RE (specific mandatory objectives for every member state). Adoption of national development strategies for the RE in many of the UfM member states. Private sector initiatives (DESERTEC,MEDGRID...) Development of new financial tools by the international financial institutions 8

Following the European Commission communication on external energy policy, the Council of Energy Ministers adopted on 24 November 2011 conclusions on strengthening the EU energy policy and proposed, in this framework, to the Mediterranean countries a partnership initially focused on electricity and renewable energy, under the Union for the Mediterranean and building on the Mediterranean Solar Plan. A significant step: the EC proposed to use TEN-E budget to fund Trans- Mediterranean electrical interconnections. 9

Coordinate and maintain the process under the political control of the member states Create a neutral space to organize the dialog between the different partners Clear principles: transparency, efficiency, mobilization of the necessary expertise Involve all partners by implementing the necessary platforms with member states, the industry, the financial institutions and NGOs. 10

I. The Union for the Mediterranean II. The Mediterranean Solar Plan III. Midterm strategy of the MSP A. The Master plan for 2012 B. Identify and support pilot projects C. Development of financial tools IV. Conclusions 11

1/Create a consensus on an adequate framework for the large scale development of renewable energy and energy efficiency : identify main barriers and ways to overcome them. 2/ Five building blocks : 1. Policy and regulatory frameworks 2. Funding and support schemes 3. Physical infrastructures 4. Renewable energy as an industrial catalyst 5. Transfer of knowledge and capacity building 12

National RE and EE political commitments and policy targets Major legal-regulatory barriers and ways to overcome them : General regulatory framework linked to RE and EE projects (investment protection, tax, accounting, customs, land use, environmental protection issues, spatial planning,…) Energy, RE and EE regulatory framework (market and grid access- e.g. third party access, IPP, auto-producers…-, licencing, RE and EE specific framework,). Economic barriers: financial gap, domestic level and structure price of electricity Institutional and administrative barriers (policymaking, implementation, organizational issues…) 13

Bridge the transitory gap between the production costs of the electricity of renewable origin and that of the fossil one. Cost-effective support schemes. Combine different tools of different types to launch pilot projects: concessional financing, support mechanisms, carbon financing… An integrated and structured approach is necessary. Certain tools are not operational: art. 9 and Carbon Finance Allocation of risks and liabilities. The mobilization of private capital involves dealing with certain risks. 14

No Mediterranean Solar Plan without networks Agreement UFM/MEDGRID (27 January 2012) Double perspective: economical development of southern countries (meet local electricity demand) and exportation of RE. Working on four closely related issues : Connections between the two rims of the Mediterranean The Mediterranean ring Access to the European market Reinforcement of networks in the Southern countries. The Mediterranean projects in the context of the European policy : 3 other priority zones at the EU borders Infrastructure package, TEN-E and, more generally, the UE energy policy. 15

Analyse SEMCs capabilities and potential for RES technologies and manufacturing (value and supply chain for RES, identification of players, competitive advantages and structural weaknesses); Analyse Potential socio-economic benefits of developing RES based industries (impact on employment, foreign trade, and development, economic spillover); Enhancing SEMCs potential (support policies, education, training,R&D, technological cooperation). 16

Benchmarking and assessment of best practices Forms: structured dialogue, targeted training cooperation, formal cooperation, institutional twinning Actors: respective role of research institutions, public funded programs, technical international cooperation and of the industry in this process 17

Identify and support pilot projects able to serve as significant test cases and policy drivers; Indicative criterias: regional impact, reproducibility, know-how transfer, demonstration effects, scaling up of potentials, positive impact on host country economy and employment; UfM label: a political support from 43 UfM countries closely connected to major financial institutions. 18

Organize a structured pipeline of pilot projects benefiting from MSP specific tools A first tool: the MSP project preparation facility to be funded in the framework of the EU Neighbourhood Investment Facility (NIF), will become operational in the coming weeks. Other tools are being studied: MSP risk mitigation facility, MSP project bonds, an MSP electricity export platform…. If well-structured and carefully combined, these tools should allow for the realisation of a carefully chosen set of MSP pilot projects which will serve as test cases and policy drivers for the process at large. 19

We have now reached a key moment: Spread renewable energies on a large scale in the Mediterranean, create a sustainable economic based on market conditions; The actual conditions are favorable: High regional potential; Fighting against climate change; Political will to move onward, on both Mediterranean shores; Energy security; Post-Fukushima context. A great opportunity for the co-development of the two sides of the Mediterranean. 20

Marc Strauss Senior Adviser for the Energy Division ||