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Libya Is Preparing for a Clean Energy Boom

Libya’s energy sector has had a turbulent few years, owing to political unrest and a significant shift in foreign investment in its oil and gas sector.

While its fossil fuel industry is struggling to rebound to its former glory, there is significant potential for the development of the North African country’s renewable energy sector. Its large desert terrain shows great potential for the development of solar and wind energy projects, and the government has shown greater commitment to decarbonization and a green transition in recent years, which higher levels of foreign investment could help Libya achieve.

Libya has long been known as a major oil and gas power, pumping almost 3.4 million bpd during its peak production period in the 1970s. However, its crude output has fallen significantly, to around 32 percent of its peak, placing it at around 18th in the world for production. The government now aims to produce 2 million bpd by 2030, after falling short of its ambitious target of 2.2 million bpd by 2023 largely due to several years of political unrest and poor governance.

Since the overthrow of Libya’s leader Qaddafi in 2011, several groups have vied for political power. Now, the Government of National Stability (GNS), which is backed by Egypt, Russia and the United Arab Emirates, holds sway over the eastern and southwestern regions, where most of Libya’s oil fields are located, and the Government of National Unity (GNU), supported by Turkey, several Western powers, and endorsed by the UN, controls the capital of Tripoli. The GNS, has control of key terminals, such as Es Sider and Ras Lanuf, accounting for 42 percent of Libya’s oil export capacity. Meanwhile, the GNU controls two export facilities, Zawiya and Mellitah, which contribute 28 percent of Libya’s oil exports. Both powers have staged blockades or production shutdowns, which have hindered oil output and discouraged foreign powers from investing in the country’s fossil fuel industry.

Despite Libya’s huge oil potential, the ongoing political conflict and the lack of interest from foreign investors have revealed the need to diversify the country’s energy mix. Oil continues to contribute around 98 percent of its government revenues and 60 percent of its GDP, showing that Libya has an overreliance on fossil fuels and could benefit from greater economic diversification. In addition, the development of a strong renewable energy sector could help the North African country to ensure its energy security in the future.

In 2013, the Libyan government announced its Renewable Energy Strategic 2013-2025 Plan, intending to achieve a 7 percent renewable energy contribution to the electric energy mix by 2020 and 10 percent by 2025. The plan focused on the development of the country’s wind and solar energy capacity. Around 88 percent of Libya’s terrain is desert, with significant potential for the development of solar power projects.

At present, the construction firm PowerChina is working with the French utility EDF to develop a 1,500 MW solar plant in the east of the country. Meanwhile, France’s TotalEnergies is constructing a 500 MW solar plant in Al-Sadada. In addition, GECOL and AG Energy are building a 200 MW solar plant in Ghadames, and the Libyan General Electric Company (GECOL) is also working with Alpha Dubai Holding to develop two more solar plants, with a combined capacity of 2 GW.

In January, Libya’s government signed a Memorandum of Understanding (MoU) with Turkey for cooperation in the field of renewable energy. Abdusselam Elansari, the head of the Renewable Energy Authority of Libya, stated, “We are cooperating with different Turkish companies in terms of electricity, power and renewable energy.” Elansari added, “We have started a capacity-building program to train our people with a Turkish company in the field of human resources, renewable energy, technical renewable energy, electricity connection, performance excellence and other sectors of cooperation”

Meanwhile, Osama El Durrat, advisor to the Libyan Prime Minister for electricity and renewable energy affairs, said that Libya is assessing the possibility of connecting its power grid with neighboring countries. El Durrat stated, “A committee is being formed to advance cross-border electricity interconnections. We have signed agreements with several southern European and Mediterranean countries. As for Turkey, we believe the connection could be facilitated through a neighboring country, enabling energy transfer between Libya and Turkey.”

Libya’s significant renewable energy potential could help garner more interest from international energy companies looking to invest in the region. In 2023, Italian firm Eni signed an MoU with Libya to identify opportunities to decrease greenhouse gas emissions and develop the country’s renewable energy capacity, to support the government’s decarbonization and green transition targets. As the government shows greater interest in the development of a green energy sector, higher levels of foreign investment could help Libya accelerate the expansion of its renewable energy sector, contributing to economic diversification and long-term energy security.

 

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