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Innovation and Development Volume 5, 2015 - Issue 2: Low-Carbon Innovation and Development
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The emergence of a solar energy innovation system in Morocco: a governance perspective

Georgeta Vidican Sustainable Economic and Social Development Department, The German Development Institute/Deutsches Institut für Entwicklungspolitik (DIE), Bonn, Tulpenfeld 6, D-53113, Bonn, GermanyCorrespondencegeorgeta.vidican@die-gdi.de
Pages 225-240
Published online: 30 Jun 2015
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The emergence of a solar energy innovation system in Morocco: a governance perspective

Abstract

Taking the case of Morocco, this paper aims to explore the challenges to system-building initiatives for the development of the solar energy sector. Drawing on innovation systems (ISs) literature, I examine factors that contribute to the emergence of a solar energy sector and delve into how complex governance dynamics affect such developments in Morocco. Aside from low capabilities and knowledge on solar energy technologies, a key challenge to the development of an IS in Morocco is the lack of a strategic approach that not only engages all relevant stakeholders but also integrates diverse objectives. The role played by the state (and its supported institutions) in the society and its participation in the economy is likely to explain why these processes are slow to prevail.

1. Introduction

Developing and emerging countries are facing daunting challenges for sustaining growth, competing in the global economy, and improving the welfare of their population, while at the same time transitioning towards sustainable energy systems. Due to the scale and complexity of this process, decision-makers are entering uncharted territory. Actions are faced with high level of uncertainty, strong lock-in pressures, and need for concerted effort in spite of vested interests, all under a tight time frame and competing priorities.

Countries in the Middle East and North Africa (MENA) are increasingly engaging in this process of development. As the demand for energy is rising faster than ever before, the wide availability of renewable energy (RE) sources and high price volatility for conventional fuels suggest that the integration of RE in the energy mix becomes an absolute necessity. Yet, the challenge for policy-makers is to ensure that in this process, technological capabilities are enhanced, competitive advantages are identified and exploited along the value chain of RE technologies, and jobs are being created.

With increased global competition in the solar and wind energy sectors, this task is not trivial. As past experiences show, catching-up requires not only upgrading in the private sector, but also know-how transfer from developed to developing countries, enhancement of technological capabilities, and entry into new sectors. Such a multi-dimensional endeavour points to the relevance of building an innovation system (IS) to support and guide the development process. However, our understanding of how sustainable ISs emerge and develop in developing countries remains limited. Furthermore, in spite of the fact that behind institutions lie politics (Fritz, Levy, and Ort 2014, 2), especially when it comes to transitioning to sustainable energy systems (Altenburg and Pegels 2012; Lütkenhorst et al. 2014), a thorough assessment of governance dynamics in IS analyses is missing.

Taking the case of Morocco, this paper aims to explore the challenges to system-building initiatives for the development of the solar energy sector. Drawing on IS literature, I explore factors that contribute to the emergence of a solar energy IS in Morocco. The paper is specifically concerned with understanding how governance aspects play into the process of developing the IS, such as the role and participation of different actors in decision-making and policy implementation, the process of setting policy priorities and coordination, and the level of influence that different actors have on this process. As such, the paper aims towards an empirical contribution, offering only limited insights into how these aspects could be better integrated in IS conceptual frameworks.

Morocco offers an interesting case to explore these issues, as it is currently the focal point of large-scale investments in RE technologies. Located in the sun belt, south of the Mediterranean Sea, the country abounds in year-round sun and gusty coasts. Yet, Morocco depends heavily on energy imports, posing serious challenges for energy security, especially as energy demand is expected to double by 2020. Recognizing these challenges, the government has set ambitious targets for diversifying its energy mix with a goal of linking RE deployment to socio-economic development in the form of job creation, industrial development, and the expansion of technological capabilities. The realization of these goals strongly depends on the ability of policy-makers to address competing priorities and vested interests by building coalitions between diverse stakeholders, and on the state's commitment towards a development process based on systemic coordination across sectors. Therefore, it is necessary to get a grasp of the governance dynamics within the emerging solar energy sector. Governance can be defined as ‘the way in which power is exercised through the country's economic, social and political institutions’ (World Bank 2002, 271). As Morocco is a constitutional monarchy where decision-making is highly centralized, the monarchic institutions lack accountability (Colombo 2011) and the private sector is dominated by business elites, assessing governance aspects related to the emergence of a new sector can offer relevant insights with respect to the formation of an IS.

The paper starts with an overview of the IS analytical framework and the concept of governance in the emergence of RE sectors. It then offers a discussion of current efforts towards the development of the solar energy sector in Morocco, introducing the main stakeholders and key processes that influence the emergence of an IS. Before concluding, the paper delves deeper into challenges involved in the formation of an IS in Morocco and explores how governance aspects affect these developments.

2. Systems of innovation as a conceptual framework

The IS concept is based on the assumption of co-evolution of technologies and institutions, showing how specific technological trajectories are created. Lundvall (1992) refers to IS as those institutional and organizational structures that enable and support technological innovation. Metcalfe (1992, 462–463) defines the IS as:

that set of institutions 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. As such it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artefacts which define new technologies.

Initially, national-level IS analyses focused on assessing the presence and performance of key components of an IS (i.e. actors, institutions, and the interrelations between them referred to as networks). Later, the ‘functions of IS’ were introduced as an analytical supplement to assess the necessary dynamics/processes for a new IS to perform well.1 These functions refer to guidance of the search, creation of legitimacy, market formation, resource mobilization, knowledge development and diffusion, and entrepreneurial experimentation (Bergek et al. 2008; Hekkert et al. 2007; Suurs 2009). Such an approach to the analysis of IS allows not only to assess performance but also to identify key dynamics between processes that directly influence the development, diffusion, and use of new technologies.

In developing countries, IS differ substantially from those in developed countries (Altenburg 2009; Lundvall et al. 2009; Szogs et al. 2011). Typically, developing countries are characterized by insufficient socio-economic infrastructure, weak institutions, lower knowledge capabilities, and lower levels of interaction between system components. Therefore, in these ‘systems in construction’ (Muchie, Gammeltoft, and Lundvall 2003) or ‘learning systems’ (Viotti 2001), the challenges to the development of an IS are to set in place the necessary dynamics at different levels, to lay the foundations in terms of capabilities and knowledge, to strengthen linkages between various stakeholders and align conflicting interests. In essence, governance dynamics are at the core of an emerging IS.

In the context of IS, governance refers to ‘the systems and practices for setting priorities and agendas, designing and implementing policies, and obtaining knowledge about their impacts’ (OECD 2005, 23). As such, governance refers to an interactive process linked to the policy cycle involving different forms of collaboration, partnerships, competition, and negotiation (OECD 2005, 24), being highly influenced by power relations between stakeholders.

While the IS conceptual approach is well established, a focus on governance dynamics has been more limited. Yet, for the emergence of RE sectors, governance aspects are central because of the need to disrupt environmentally unsustainable technological pathways and encourage alternative technologies by choosing and subsidizing specific technologies in a highly uncertain context with respect to the evolution of prices and technologies (Altenburg and Pegels 2012). As seen in the context of more mature markets for RE technologies (e.g. Germany and Spain), pro-active and targeted policies to accelerate the development and deployment of these technologies are needed. Furthermore, given that RE developments are highly dependent on policy-makers’ assumptions about the future and on political settlements between groups with conflicting interests, coordinated government efforts are needed.

The shift to new technological paradigms (as defined by Dosi 1982) involves a process characterized by strong path dependencies and inertia, reinforced by cumulative processes of learning and specific patterns of interaction. Such path dependencies are even stronger in the case of energy technologies. To overcome the ‘carbon lock-in’ (Unruh 2000), deliberate action to promote alternatives is necessary. Yet, vested interests affect strongly the capacity of decision-makers to implement policies, which is certainly true for the energy sector (Moe 2010). However, only few studies have explicitly addressed the implications for governance, with respect to the role of the state and other actors in supporting an RE development process (e.g. Foxon, Koehler, and Oughton 2008; Hübner, Nill, and Rickert 2000; Jacobsson and Bergek 2004).

The systematic assessment of governance aspects in the IS analytical framework is not yet straightforward. This paper offers an empirical assessment of factors contributing to the development of solar energy IS in Morocco, with a particular focus on the process of decision-making, on how policy priorities are set and implemented, and how coordination mechanisms are enabled in light of power relations between stakeholders.

3. Data

Data for this paper were collected by semi-structured interviews and participant observation as part of a larger study funded by the German Ministry for Economic Cooperation and Development (Vidican et al. 2013). Between February and April 2013, more than 80 interviews were conducted in Morocco with various stakeholders involved in the development of the solar energy sector (government representatives, private sector, academia and research, financial organizations, and development cooperation). The sampling for the semi-structured interviews was done using non-probability methods. Data were analysed using qualitative research techniques: coding the transcribed interviews and using text analysis software to identify relevant themes and relationships. Information from qualitative interviews was supplemented with literature on RE developments and political environment in the MENA region. More details on the approach for data collection and analysis can be found in Vidican et al. (2013).

4. The emerging solar energy IS in Morocco

Morocco has been one of the most stable economies of the MENA region following the Arab Spring uprisings. This stability masks, however, deep challenges faced by the current regime to maintain its political supremacy and strong role in the economy, and to increase the distribution of benefits to the larger population (Vidican et al. 2013, 27). Proximity to Europe contributed to steady economy growth, especially due to the Advanced Status Agreement with the European Union (EU), which expanded trade links with EU countries. The abundance of phosphate reserves also contributed to economic growth since the 1970s, providing at least 3% of Gross Domestic Product (Catusse 2009). Yet, Morocco is facing low industrial competitiveness, high unemployment rates and a growing income gap.

Due to these developments, energy became a salient concern for Morocco. In 2011, Morocco imported 95% of its overall energy needs (World Bank 2012). Electricity demand increased by a yearly average of 6.8% between 2000 and 2011, and electricity consumption per capita increased by an average of 5.2% per year (ONEE 2012). As projections show that consumption will double by 2020 and quadruple by 2030 (MEMEE 2011), energy security will pose serious national concerns. The strong dependency on energy imports makes Morocco highly vulnerable to increases in international fuel prices, aggravating the fiscal burden on the national budget.

Despite its vast solar and wind energy resources, Morocco has so far only tentatively developed RE capacities. Fossil fuels currently dominate the electricity production mix; only 7% of electricity is from RE in the form of wind (1%) and hydropower (6%). A total of 291 MW of wind power capacity is currently installed, the largest in the region after Egypt (REN21 2013). Regarding solar, only 20 MW capacity of Concentrated Solar Power (CSP) has been installed and 160 MW are under construction. Small rooftop solar photovoltaics (PV) systems have been deployed in remote rural areas as part of Morocco's rural electrification programme, accounting for 15 MW of installed capacity in 2012 (PWMSP 2012; REN21 2013).

In the following, I provide an overview of the main structural components of the emerging IS and the power relations between main stakeholders, followed by mapping key actions and initiatives on the functions of the IS. By doing this, I aim to disentangle the pattern of relationships and interests between different actors, with the ultimate goal of realizing a more in-depth evaluation of factors that constrain the development of solar energy sector.

4.1. The IS structure

A variety of stakeholders are currently involved in the emerging solar energy sector. Table 1 lists these actors, the main institutions that shape the direction and speed of its development, and the networks that frame interactions between these elements. The structural components are further discussed in the functional analysis of the emerging IS in Section 4.2, with a specific focus on IS governance dimensions.

Table 1. The main structural elements of the emerging IS.

Even if the power of the state has been decentralized and delegated since the 1980s, the Moroccan public authorities, in particular King Mohammed VI and his advisors, remain central actors in economic and social policies (Catusse 2009). In fact, the King is ‘the supreme institutional power’ (Daadaoui 2011, 62), as Figure 1 2 also illustrates. The power of the Royal Palace is channelled through an ‘intricate web of influence and allegiances spun between the Palace, the Moroccan elite, and key institutions, the so-called Makhzen', which shape key national level decisions (Masbah 2014, 3). Hence, government officials need the consent of Royal advisors who act as ‘gate keepers of the Palace’ (Masbah 2014). As such, decisions will be taken as long as Makhzen's interests are not at stake (Masbah 2014). Recognizing these dynamics is essential for understanding opportunities for and hurdles to the solar energy sector development.

Figure 1. Tentative representation of the most prominent stakeholders and their relative position in terms of importance and influence on the solar energy sector development. Source: Own design based on interviews with relevant stakeholders in Morocco.

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The second most important actor in the emerging solar IS is the Moroccan Agency for Solar Energy (MASEN) set up in 2009 to implement the solar energy deployment targets. MASEN is a joint-stock company but highly supported and closely monitored by the Royal Palace. Hence, MASEN has a high level of importance and influence on how the solar energy sector evolves. MASEN collaborates closely with the Ministry of Energy, Mines, Water and Environment (MEMEE) on aspects related to energy policy, but the ministry merely provides technical input and executes higher-up decisions.

While MASEN's strong role can be to a certain extent problematic, as discussed later on, of more concern is the limited level of influence and engagement that other important actors in the IS have, such as the private sector, Ministry of Industry, public research organizations, and the Ministry of Education (Figure 1). This translates into limited access to resources, information, and inclusion in decision-making.

4.2. Functional analysis

Analysing the functional dynamics of the IS can be quite revealing regarding challenges to the process of developing the solar energy sector. The functions (or processes) of the IS have a direct and immediate impact on the development, diffusion, and use of new technologies (Bergek et al. 2008). In the following, I discuss each of these functions with reference to the main actors and their role in IS formation.

4.2.1. Guidance of the search

In response to pressing energy security concerns, in 2008, the Moroccan government elaborated the National Energy Strategy with the goal of exploiting RE sources (i.e. solar and wind energy) and reducing demand by promoting energy efficiency (MEMEE 2011). Interviewees in MEMEE recounted how the new energy strategy, pushed directly by the King, came as a surprise to the Ministry, which had only very limited expertise with these technologies. Such a top-down decision to reorient national energy policy meant that decisions were to be taken fast and laws were to be implemented swiftly, reducing space for debate and contestation.

RE targets were set by 2020: 2 GW of solar energy, 2 GW of wind energy and 2 GW of hydropower. According to the Plan Solaire, for which the Moroccan government committed US$ 9 billion, the 2 GW target is to be achieved mostly by large solar power plants. By 2015, 500 MW are to be installed in the Ouarzazate region. Ambitious targets, along with favourable environmental conditions, political stability, and the prospect of cross-European market integration (Dii 2013; UfM 2013) attracted large investments for the first 160 MW solar energy plant that broke ground in 2013.3

4.2.2. Creation of legitimacy

To support the roll-out of the Plan Solaire and to increase its legitimacy, the government took several steps aimed at increasing social acceptance and compliance with relevant institutions. First, it created three powerful organizations, one of which was to be directly accountable to King Mohammed VI. Second, it explicitly linked socio-economic development goals to the Plan Solaire, which aimed to contribute to ‘guiding the search’ for locally suitable technological solutions. Third, it actively engaged with development cooperation actors to secure funding and technical expertise for developing the first power plant and set up the institutional framework for market creation. However, only later, the government also sought to promote cross-cutting solutions to expand the range of applications for solar energy technologies.

4.2.2.1. New organizations

Three entities were created in 2010 to implement the Plan Solaire: MASEN, Agence pour le Développement des Énergies Renouvelables et de l'Efficacité Énergétique (ADEREE), and SIE (Société d'Investissement énergetique) (Table 1). MASEN became the most important actor for the solar energy sector, its director being directly appointed by the King. Created in 2010 by Law 57–09, MASEN is a joint-stock company, independent from MEMEE. While initially MASEN was meant to be responsible only for project development (from design to implementation, coordination of grants and loans by donors), over time, it came to be involved in all activities including financing and complementary measures such as research and development (R&D), human capital formation and private sector development.

Even if MASEN has proved to be a reliable agency with competent staff and a high level of professionalism, various concerns have been expressed by stakeholders regarding their increasing ‘monopoly’ over solar energy developments in Morocco. Yet, in spite of these allegations, it has been recognized that MASEN's high performance standards have facilitated engagement with international financiers and partners. At the same time, as some of the interviewees mentioned, the tight time frame for rolling out projects made it unfeasible for MASEN to coordinate closely with relevant organizations. This does not discount the fact that MASEN's increasingly dominant role is likely to make systemic interventions (across stakeholders) harder to achieve, leading to centralization of power. For these reasons, a more collaborative approach could be envisioned to ensure that long-term objectives can be achieved.

ADEREE has been created by reorganizing an older organization, the Centre for the Development of Renewable Energy established in 1982. ADEREE makes propositions for project sites and incentive frameworks, initiates pilot projects to increase awareness on RE technologies, performs equipment control checks and trains specialists. More recently, ADEREE has been fostering cooperation with the Ministry of Housing and Urban Development for integrating solar water heaters (SWHs) in the construction of new residential buildings (Vidican et al. 2013). Yet, as the solar energy market is currently focused on large-scale projects, ADEREE's activities remain limited.

SIE, created in 2010, is the main agency dedicated to financing RE in Morocco, endowed with 1 billion Moroccan Dirhams (about US$ 120 million) for capital participation in investment projects. SIE is currently taking a three-tier position as an anchor investor, co-developer, and fund-leveraging institution. The agency is seeking to establish an investment fund for small-scale projects up to 20 MW. The fund targets two types of PV deployments: solar plants for industrial zones and mini solar plants for zones not connected to the grid. A number of other domestic financial actors and instruments are already contributing to closing the financing gap (Vidican et al. 2013).

4.2.2.2. Socio-economic development goals

To explore the feasibility of achieving socio-economic objectives from large investments, several studies have been commissioned to assess gaps in skills (see MEMEE 2011) and to identify opportunities for local manufacturing of parts and components of solar energy technologies (see Dii 2013; Kost et al. 2012; Vidican et al. 2013; World Bank 2011). As a result, a strategy for skill development has been put in place which involves the creation of regional training centres with curriculum customized for different types of skills and professional levels. Opportunities for localizing manufacturing of solar energy parts and components appear limited, although several companies display capabilities for engaging in the sector.

To stimulate a stronger role for the domestic private sector, MASEN included a local content requirement of around 30% in the tendering process for the CSP power plants. Most of this share is expected to be achieved from civil works and power plant construction. Strategic measures to enhance domestic capabilities and foster technology transfer have been identified to enable job creation in more knowledge intensive activities along the value chain. Yet, results from such studies are not widely available to policy-makers, and strategic discussions on how to integrate recommendations into policy actions have not yet happened beyond MASEN (Vidican et al. 2013).

The Ministry of Industry, Commerce and New Technologies (MCINET) has introduced a set of incentives to support the RE sector development, such as benefits from free trade zone status, investment grants, support for training and hiring. However, these incentives have not been widely used. Small and medium enterprises (SMEs) have limited access to information on these incentives, while large companies prefer, for example, to organize training on their own, as procedures for recovering costs from government programmes are too lengthy.

Private sector involvement in strategic discussions about the development trajectory for the solar energy sector is critical. However, only tentative steps have been taken in this direction. The business association, Association of Solar Industries and Windmills (AMISOLE), has been promoting the interests of its members in various forums, advocating for the development of a decentralized solar energy market. As a result of earlier projects for rural electrification in the 1990s, a set of Moroccan companies acquired know-how to manufacture parts and components for PV systems and SWHs. Yet, their involvement in the sector is limited by lack of a market for small-scale solar PV systems.

In 2013, MASEN started an initiative to create a solar energy cluster that would trigger the development of the sector. With assistance from development cooperation agencies, MASEN explored how such a cluster could emerge. MCINET was only later involved in the discussions and private sector representatives were selected mainly from among the large Moroccan and foreign companies. Visibility as to specific objectives and decisions has been low.

To enable local companies to enter the value chain for solar energy technologies and to enhance their competitiveness, business linkages with foreign companies geared towards technology transfer are critical. Competitiveness depends to a great extent on the ability of firms to tap international sources of knowledge and to absorb and use that knowledge efficiency (Altenburg 2005). Programmes to facilitate business linkages in Morocco are almost non-existing. We found only a few examples of partnerships between foreign companies and local companies (Vidican et al. 2013). Government entities tasked with facilitating such linkages have been largely unknown to the private sector. The Moroccan Investment Development Agency has been engaged in attracting foreign investment in the sector and potentially linking foreign to local firms. However, without direct expertise on the solar energy sector, their effectiveness is limited.

To understand possibilities for industrial development, one has to examine the business–government relations and interactions that prevail in Morocco. Business elites are driving the economy not only in Morocco, but also in other MENA countries. Close links with the King's advisors enable such actors to benefit from certain trade privileges, to convey preferences and obtain special requests (Cammet 2007). In the solar energy sector, such local industrial elites are not yet present – this being a potential reason why large-scale deployment has not yet happened. As Figure 1 illustrates, AMISOLE, the solar energy business association, has relatively limited influence on the development pathway for the sector, although they act as a strong lobby group. Its members are mostly SMEs, with limited economic power. Therefore, given Moroccan political environment, it might be relevant to explore how to build interest coalitions with large economic elites that have capacity of investment and influence on high-level decision-making, while at the same time foster linkages with global lead companies.4

4.2.2.3. Cross-cutting initiatives

System-building initiatives require close cooperation between various stakeholders. In the emerging solar IS, we have seen close engagement between MASEN and MEMEE, especially with regard to setting the regulatory framework for enabling large-scale CSP investments. However, for wide deployment and integration of the technology in the economy at large, cross-sectoral initiatives are necessary (e.g. in agriculture or in construction).

Such initiatives are only now emerging in the form of agreements with various ministries. For example, in 2013, the Ministry of Agriculture and MEMEE have mobilized 400 million MAD (approximately 36 million Euro) for a new solar water pumping programme, aimed at reducing the use of butane in agriculture, which is currently highly subsidized. Indeed, fossil-fuel subsidies create a strong price disadvantage for small-scale solar energy applications. But, a reform of subsidies is highly discouraged by the Ministry of Interior, concerned with political stability and limiting social unrest (Vidican 2014). Another such initiative is between ADEREE and Ministry of Housing and Urban Development aimed at installing SWH on new buildings, described earlier.

4.2.3. Market formation

Setting up the institutional framework to support deployment of solar energy has been one of the first steps taken by the government. In particular, Law 13–09 allows solar energy producers (medium- and high-voltage projects) to access the electricity network. Although the national utility, the ONEE, owns the transmission and majority of the distribution grid (with a 45% stake in the domestic market), Law 13–09 permits power plants to be built and operated by Independent Power Producers (IPPs).5

Within the existing regulatory framework, the following types of projects can be developed (Vidican et al. 2013):

  • self-production by industrial investors for own consumption (GIZ 2012);

  • projects developed by private investors aimed at selling electricity to third parties with the possibility to export;

  • Engineering, Procurement and Construction contracts with ONEE; and

  • IPPs within a long-term Power Purchase Agreement with ONEE (PWMSP 2012).

The government also provides a subsidy that covers the difference between the price at which MASEN buys and sells power.

However, the main constraints to large-scale deployment of solar energy, as per our interview with AMISOLE, are: limited energy market liberalization, no net metering system, and no possibility to feed-in surplus electricity into the grid (Vidican et al. 2013). These factors prevent the creation of a market for small-scale solar power systems. Opening this market might significantly enhance opportunities for local companies to participate in the solar energy sector (Kost et al. 2012; Vidican et al. 2013).

Policy instruments such as a feed-in tariff (FIT)6 might contribute to creating a larger market for these technologies. But a FIT scheme is not preferred by Moroccan policy-makers, primarily out of concerns with potential inefficiencies if the fixed price is set too high or too low (OECD 2013). Furthermore, policy-makers in Morocco are wary of passing the FIT cost to consumers, as electricity prices are already high relative to other countries in the region; thus, additional costs would have to be covered from the (already overstretched) government budget.

An alternative policy instrument, gaining support among policy-makers in Morocco, is net metering, aimed to enable the development of a decentralized PV market. Net metering could encourage consumers to produce their own electricity from RE sources and sell surplus production at a certain tariff (OECD 2013, 59), leading to smoothing the demand curve. The main constraint of the net metering scheme is the limited investment capacity of Moroccan households.

High fossil-fuel subsidies also prevent the development of a market for smaller scale solar installations, reducing the likelihood of consumers switching to more expensive solutions. While steps towards increasing energy prices have been recently taken, gaining wide support for reform remains politically challenging (Vidican 2014). Earlier attempts to reform subsidies have been blocked by the Royal Palace presumably because reform could undermine Makhzen's economic interests, as many of the of Moroccan private sector elites are benefiting from subsidies, and out of concerns for social and political instability in case prices increase (Masbah 2014; Vidican 2014).

Another challenge for the expansion of decentralized solar energy generation relates to the governance structure of the electricity distribution. Currently, the distribution of electricity is divided among the ONEE, private distributers and municipal régies. There are 13 independent private distributers that buy electricity from ONEE and sell it to consumers at higher prices. Among these, three are fully responsible for the distribution of electricity in five largest cities (GIZ 2012): LYDEC in Casablanca; REDAL in Rabat and Salé; AMENDIS in Tanger; and Tétouana.

Private distributers (including régies) have a disincentive to support decentralized solar energy generation, because they would lose an important part of their customer base. As one interviewee mentioned:

[t]heir profit margin comes primarily from residential customers that consume higher level of energy: the higher income groups. These customers are also the ones that would afford to put PV panels on the roof. Therefore, they are not keen to lose this market segment.

From another perspective, ‘if private distributers companies and régies lose the medium voltage market segment (which represents 50% of their sales) prices will increase; this would automatically be vetoed by the Ministry of the Interior’ out of concern for major uprisings. As ONEE further argued, private distributers claim that ‘tariffs would increase by 50%, which means that they would have to sell at a negative margin’. Another problem related to private distributers is that because ‘they gain their profit margin by selling more electricity they are really not interested in energy efficiency either. Hence, there is a problematic relationship between ONEE and other distributers – they are not interested in optimizing their system’. One way to solve these problems is to have an independent regulator, who can decide what needs to be done and how to implement certain requirements. Only then could a regulatory framework for supporting the deployment of decentralized solar energy system be implemented.

Hence, while important steps towards setting the institutional framework have been taken, regulations are limited to supporting the roll-out of large-scale solar plants envisioned in the 2020 plan. Yet, to expand the market for solar energy and to enable value creation through the formation of a local industry, gaps still exist in the level of incentives for a decentralized solar market.

4.2.4. Resource mobilization

As an IS evolves, a range of resources need to be mobilized, such as competence/human capital and financing. Even before, but primarily after the announcement of Plan Solaire, universities searched for ways to expand their curriculum on RE (Vidican et al. 2013). As mentioned earlier, gaps in vocational training were also identified and financial resources were widely mobilized.

Several initiatives emerged to increase synergies in academic programmes and develop an engagement strategy for the academic sector, such as MANEREE and SMADER (Table 1). Yet, competing interests and limited coordination prevail among these networks, partly due to lack of transparency regarding the direction in which the solar energy sector is evolving, and, of course, the novelty of such initiatives. These efforts show that academia is searching for a more coherent and stronger participation in the evolving IS. Yet, the integration of universities and research institutes in the Moroccan solar energy IS remains limited. In a landscape dominated by a few powerful actors, there is currently limited space for such initiatives to be highly effective.

4.2.5. Knowledge development and diffusion

Universities and research institutes (jointly referred as public research organizations) are known to be the core of an IS. Close cooperation with the private sector and alignment of their activities to the national and regional development pathways are important for a well-functioning IS. In Morocco, as in other developing countries, disconnect between the private sector, academia, and research is large. While several universities have long been engaged in solar energy research, most of these projects are focused on basic research, occasionally with foreign partners, and rarely with enterprises. To bridge the gap, a new agency has been created, Institut de Recherche en Energie Solaire et en Energies Nouvelles (IRESEN). IRESEN seeks to act as a platform of cooperation between SMEs and public research organizations, by offering grants for collaborative projects on applied research. As such, IRESEN plays the role of an intermediate organization (Szogs et al. 2011) or ‘bridging organisation’ (Boon et al. 2011) building linkages between the private and knowledge creation sector, encouraging interactive learning to stimulate knowledge diffusion in embryonic systems. Such organizations are critical for upgrading firms’ technological capabilities and their ability to innovate, while enabling public research organizations to engage in applied research.

Another research institute became prominent in the energy field, the Moroccan Foundation for Advanced Sciences, Innovation and Research (MAScIR), created in 2009. MAScIR has been quite successful in attracting research funding from the private sector, nationally and internationally, and offers promising opportunities for strengthening such links in the emerging IS.

Yet, public investment in R&D in the energy sector is almost non-existing. Pilot projects on various solar energy technology applications have been initiated by large Moroccan companies (Vidican et al. 2013). However, without a national science, technology and innovation strategy, aligned with the industrial development plans, the activities of public research organizations remain insular in nature, reducing opportunities for creating new knowledge and diffusion in the private sector.

4.2.6. Entrepreneurial experimentation

An IS evolves under considerable uncertainty in terms of technologies, applications, and markets (Bergek et al. 2008). Entrepreneurial experimentation can reduce such uncertainty by probing into new technologies and applications. Entrepreneurial activities are currently limited in Morocco. We found only a couple of start-ups and almost non-existent support for such market entrants (Vidican et al. 2013). The main focus remains on mature technologies and a limited range of applications, as well as the import of existing technologies rather than fostering an environment where technological adaptation and innovation can flourish.

5. Governance challenges to system building

The development of a solar energy sector in countries highly dependent on fossil fuels is a challenging task. Vested interests, institutional path dependencies, and lack of sufficient knowledge prevail. Morocco is not a special case in this regard. Here, however, energy security constraints contribute to enabling high-level decisions on RE investments. The centralization of power within the Royal Palace, the Makhzen, and its supported organizations (i.e. MASEN) facilitates this process. Yet, such complex governance structure can also prevent the participation of other stakeholders and resources, the emergence of cross-sectoral initiatives, and ultimately, the formation of an IS.

‘Effective’ governance presumes an iterative process linked to the policy cycle, where vertical (across stakeholders) rather than horizontal (within a specific category of stakeholders, e.g. government, private sector) coordination prevails (OECD 2005). Such processes are critical for the emergence of an IS able to adapt to changing market conditions and uncertainties, especially when it comes to RE technologies.

In Morocco, the governance of the solar energy IS remains fragmented. Decision-making is concentrated in MASEN (closely overseen by the Royal Palace), while other stakeholders (e.g. the private sector, public research organizations) pursue their interests in a rather parallel fashion. Furthermore, major legislative changes that would enable a market beyond the projects coordinated by MASEN (e.g. rooftop solar PV applications) are likely to be approved only if the interests of the Makhzen are not affected.

While several elements of the IS are in place, an integrated strategy focused on system building is lacking. I argue that such a strategy should be the result of coordinated efforts between various actors, through a process of multi-actor engagement. In this process, forging coalitions between different actors is critical for aligning interests and speeding the shift towards the development of the IS. Such coalitions would have to reflect the business–state relations in Morocco and therefore include both large business elites and SMEs.

As Rodrik (2007, 112) argued, stakeholder coalitions are needed as ‘ … a more flexible form of strategic collaboration between public and private sectors, designed to elicit information about objectives, distributive responsibilities for solutions, and evaluate outcomes as they appear’. In the RE sector, the need for such collaboration is essential (OECD 2013). Only then would system-building efforts become successful. As per Djeflat (2008, 4), ‘the system thrives in the breakdown of the monopolistic culture of vested rent-seeking interests, and in the liquidation of the political culture of centralization of power underlying the state of institutional fragmentation observed in developing countries’.

The IS literature in developing countries does not yet actively engage with governance processes related to system formation. In countries such as Morocco, the political processes associated with IS formation differ from those to be found in democratic regimes. For this reason, more in-depth research into the political economy of development (i.e. how politics, political environment, and economic system interact with each other) is necessary for effective approaches to system formation, especially when it comes to RE development where the role of the state becomes much more prominent.

6. Conclusion

This paper aimed to assess challenges to system-building initiatives for the development of a solar energy sector, from a governance perspective. Morocco provides an interesting case to examine this topic, given the large national (and global) interest in solar energy investments and its complex political economy. The highly centralized decision-making process could potentially facilitate the development of a solar energy sector, when a shift to RE-based electricity generation requires strong state intervention. However, as the role of diverse actors is critical for low carbon development (Lütkenhorst et al. 2014), this raises the question of how to achieve effective governance and balance potentially conflicting interests.

Morocco has so far succeeded in attracting large investments in the solar energy sector. However, the evolution of the sector has been primarily characterized by top-down developments, driven by powerful actors. While the developments have been so far positive, a tendency towards concentration of activities and initiatives is likely to hinder system formation processes that have to emerge more organically.

To avoid insular large-scale solar energy projects, with limited socio-economic impact beyond diversification of the energy mix, close coordination and cooperation between stakeholders and integration of objectives (i.e. energy security with industrial development and capacity building) into a long-term development strategy are required. The challenge, then, is one of fostering support coalitions led by powerful actors and driven by a narrative that underlines the benefits that a collaborative, partnership-based approach offers.

Acknowledgements

The author wishes to thank reviewers for their useful feedback on earlier drafts.

Disclosure statement

No potential conflict of interest was reported by the author.

Funding

This article has been written in the context of the ‘Achieving inclusive competitiveness in the emerging solar energy sector in Morocco’ project, financially supported by the German Federal Ministry for Economic Cooperation and Development.

Notes

1. The IS functions were introduced as part of the Technological Innovation System (TIS) analytical framework. Carlsson and Stankiewick (1991, 94) define the TIS approach as ‘ … a dynamic network of agents interacting in a specific technology area under a particular institutional infrastructure and involved in the generation, diffusion and utilisation of technology’.

2. The relative ranking of key stakeholders based on influence and importance is done based on extensive qualitative interviews in Morocco. The relative position of each of the stakeholder was determined based on feedback from various stakeholders.

3. In September 2013, Morocco launched tenders for the construction of two additional solar power plants of 200 MW and 100 MW, respectively, in the Ouarzazate area.

4. The wind energy sector has seen a higher involvement of local industrial elites (e.g. SNI – Société Nationale d'Investissement, Nareva Holding) (Vidican et al. 2013).

5. Unlike many other developing countries, private producers already generate more than 50% of the country's total electricity needs (Falconer and Frisari 2012).

6. The FIT is a policy instrument offering cost-based compensation to RE producers, providing price certainty, and long-term contracts to finance RE investments. The FIT has been widely used by European countries.

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