Mauritania inks $83m energy systems upgrade

From the newsletter

The northwest African nation is building its first large-scale battery storage system with a $83 million grant from the World Bank. The project, christened DREAM, furthermore includes an expansion of the country’s green-hydrogen development plans, aims to reform the mining sector and aligns with Mauritania’s goal for universal electrification by 2030.

• Mauritania's economy is dependent on the mining sector, which accounts for 45% of GDP. Mining operations require a constant and reliable source of power to function effectively. Battery storage facilities will help ensure a consistent power supply.

• The DREAM project also features one of Africa’s first hydrogen-specific regulations that provide tax incentives for electrolyser deployment while mandating 20% local content in hydrogen projects. The framework can serve as a blueprint for other African countries seeking to develop their green hydrogen potential.

More details

• Beyond infrastructure and regulatory improvements, the DREAM Project will strengthen institutional capacity, enhance technical education, and support workforce development. Special emphasis will be placed on increasing opportunities for women in the energy and mining industries. 

• The project aligns with the  World Bank Group's approach, working closely with the International Finance Corporation (IFC) to mobilise financing that will boost national mineral production and encourage private sector participation.

• Mauritania offers a mine of potential for renewables. Not only is the country sparsely populated it also has the potential to produce 10,000 MW of solar energy and 4,000 wind energy. Its green hydrogen potential is cemented by its proximity to Spain and positions it as a key exporter to Europe.

• Despite this potential, the country faces various challenges. Approximately 70% of its electricity is generated from price-sensitive fossil fuels, leading to fluctuating generation costs that are passed on to consumers. There is a disparity between urban and rural areas' connectivity, with rural electrification standing at just 14%.

• The country has weak policy frameworks and bureaucratic inefficiencies that deter private investors. The newly approved Green Hydrogen Law aims to address this, but it has not yet been implemented. Moreover, over 90% of Mauritania is desert, complicating infrastructure deployment. Extending grids across sparsely populated, remote areas is prohibitively expensive. Only 100 MW solar and 30 MW wind projects are operational. The country has a long way to go.

• That said, Mauritania has been making progress over the past few years. Just last year, it launched its first utility-scale wind project, the 30 MW Wind Farm in  Nouadhibou. The country recently signed a memorandum of understanding with Morocco, which aims to increase transmission capacity from 900 MW to 1,550 MW in renewables. OPEC funds a $120 m investment in prioritising renewable energy, clean water, food security, improved transport, and clean cooking solutions, among others.

Our take

• Mauritania's energy sector risks becoming a nightmare without robust grid investment. Investing in battery storage is futile if the transmission infrastructure remains inadequate. 

• The World Bank's funding is a starting point, not a finish line. $83 million is a drop in the bucket compared to the infrastructure overhaul needed. Continued international investment is essential, but Mauritania must also demonstrate fiscal responsibility and attract private sector participation.

• Lastly, green hydrogen hype masks the need for immediate local skill development. Tax incentives and local content mandates are meaningless without a workforce capable of capitalising on them. Mauritania must prioritise training programs that equip its citizens to participate in the hydrogen economy. Foreign investment will only be sustainable if local talent is developed.