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A recent analysis by GlobalData provides a comprehensive overview of Algeria's power landscape, forecasting that thermal energy will continue to be the primary source of electricity generation until at least 2035. This projection holds true despite the nation's stated commitment to expanding its renewable energy capacity. The report delves into various facets of the power sector, including historical and future installed capacities, generation volumes, technology adoption rates, and regulatory frameworks. It also scrutinizes the factors driving market evolution, inherent challenges, and potential investment opportunities, offering insights into key industry players.

Algeria's Enduring Reliance on Thermal Power Amidst Green Ambitions

In a detailed report released on February 27, 2026, GlobalData's energy division highlighted that Algeria is actively pursuing an energy transition, driven by governmental policies, abundant renewable resources, and ambitious sustainability objectives. However, the nation's energy mix is expected to be overwhelmingly dominated by thermal power, specifically gas-fired generation, reaching an estimated 85.2% of total power generation by 2035. This sustained reliance is attributed to Algeria's well-established infrastructure and significant natural gas reserves. As of 2025, thermal power already accounted for a substantial 97.5% of the country's total power capacity, a figure anticipated to slightly decrease to 72.4% by 2035, yet still maintaining a commanding presence.

Ensuring electricity supply security remains a critical concern for Algerian authorities and energy strategists, particularly as energy demand escalates in conjunction with the country's economic diversification and energy transition initiatives. Given Algeria's extensive gas reserves, immediate risks to supply security appear minimal. Nevertheless, a long-term perspective reveals vulnerabilities stemming from a heavy dependence on natural gas. These include potential pressures to export gas for foreign revenue, internal disruptions such as issues with pipelines or production, and the inherent risks associated with a lack of diversification in the energy matrix. Furthermore, public funding for energy projects, encompassing generation, storage, and renewable technologies, is largely contingent on oil and gas revenues, meaning that periods of low global energy prices can lead to delays or downsizing of crucial projects. The abundant Hassi R'Mel gas field is a cornerstone of Algeria's energy wealth, rendering electricity generation both economically viable and relatively stable compared to countries reliant on imported fuels. However, the absence of a competitive energy market and a transparent regulatory framework deters independent power producers from investing in renewable energy ventures. The complexities are further compounded by unclear power purchase agreements and mandates for local content in renewable projects, introducing additional risks for potential investors.

This ongoing reliance on thermal power presents both opportunities and challenges for Algeria. While it leverages existing strengths in gas production and infrastructure, it also underscores the need for strategic diversification to mitigate future risks and fully realize the nation's renewable energy potential. Developing clear regulatory frameworks and attractive investment conditions will be paramount to fostering a more balanced and sustainable energy future.