Swiss firm invests $1 billion in Morocco’s solar fuel plant

From the newsletter

Swiss cleantech firm Synhelion is investing $1 billion to construct a solar fuel plant in Morocco. This will be their second plant, and their first in Africa. The company supports the decarbonisation of transport, particularly in sectors like aviation and shipping, which are difficult to electrify.

• The use of solar fuel is not limited to the aviation and shipping industries. It will have a greater impact on the energy space, particularly for power generation.

• Morocco has plentiful solar energy resources, receiving 10 sun hours per day. This is a plus for production. But will this solar fuel be cheap enough to outcompete the old giants of oil and gas?

More details

• Solar fuels are synthetic fuels produced from solar energy. They offer a compelling solution for clean transportation, particularly for long-distance travel and applications where electrification is challenging. These fuels are chemically similar to fossil fuels, making them compatible with existing infrastructure, including engines, refineries, and distribution networks.

• The production of solar fuels involves capturing solar energy and converting it into usable forms. One approach is artificial photosynthesis, which mimics the process used by plants to convert sunlight, water, and carbon dioxide into energy. Another method is solar thermochemistry, where concentrated solar heat drives chemical reactions to produce fuels like hydrogen or sustainable aviation fuel.

• One of the key advantages of solar fuel is its versatility. Synhelion's technology allows for the production of various types of solar fuels, including kerosene, petrol, diesel, methanol, and hydrogen. This makes solar fuel suitable for a wide range of applications across different sectors, like transport and electricity generation.

• Synhelion's Morocco solar fuel plant will have an annual production capacity of 100,000 tonnes. Synhelion's previous projects include DAWN, the world's first industrial-scale solar fuel production plant, in Jülich, Germany. This plant has been operational since September 2024. It produces syncrude, an intermediate product that can be refined in existing refineries into renewable kerosene for planes, diesel for ships, and petrol for cars.

• Africa has immense potential for solar energy, with abundant sunshine and vast land areas suitable for solar installations. However, solar fuel consumption in Africa is currently lacking. Existing projects and initiatives mainly focus on solar electricity generation rather than solar fuel production.

• In Europe, the aviation sector was the first to adopt solar fuel. SWISS was the world's first airline to commit to using Synhelion's solar fuel. Other companies, such as AMAG Group and Zurich Airport, have also signed off-take agreements with Synhelion for solar petrol and fuel, respectively.

• Despite its adoption in the transportation sector, the power sector has yet to adopt it. But for its wider adoption across different sectors, cost will be key. Synhelion has set as its main objective to reduce the production cost of its solar fuels to about $1 per litre, to make it competitive with fossil fuels.

Our take

• Morocco spends over $5 billion annually to import fuels. Local production of solar fuel can help reduce its foreign expenditure. At the same time, solar fuel can be used to power Morocco’s grid which currently relies heavily on fossil fuels.

• While the target market for the Moroccan solar fuel plant is unclear, it is likely to be Europe, which has already embraced this fuel. However, if it were targeted at the African market, it could have far-reaching implications for other African countries, particularly those with high fuel consumption and limited access to electricity, such as Nigeria.  But its price will determine its market success.

• The technology still offers hope. While the cost of solar fuel is currently higher than fossil fuels, it is expected to decline with technological advancements and economies of scale. The cost of solar energy has already declined by 90% in the last decade, making solar fuel increasingly competitive. Solar fuel production is also highly scalable due to the abundance of solar energy.