Tackling blackouts in Egypt is a government priority. The country needs to add 12,000MW to its grid over the next five years at a capital cost of around $12 billion. Beyond the need to increase power generation capacity, the country is also aiming to diversify its energy sources.
Oil and natural gas currently contribute to 95% of the total energy resources needed to generate electricity in Egypt. But, according to the Egyptian energy strategy for 2030 together with its update until 2035, Egypt is expected to become a net importer of oil and natural gas between 2030 and 2040. Reducing dependence on oil and natural gas via energy source diversification is viewed as a priority by the government.
Egyptian authorities see the procurement of solar photovoltaic and wind facilities as an effective way to quickly deploy extra power generation capacity since conventional facilities take more time to bring online. Also solar and wind will help the country reach its diversification goal.
Renewable energy hotspot
The good news is that investors from all over the world are rushing to get a piece of what is set to become a renewable energy hotspot.
One such company is Access Power MEA, a developer, owner and operator of power assets in the Middle East and Africa. The company has just become a part of Egypt’s ambitious programme to generate up to 4,300MW of clean energy. The company signed a Memorandum of Understanding (‘MoU’) with the Egyptian Ministry of Electricity and Renewable Energy (MERE) to develop 65MWp of renewable energy.
Under the agreement, Access will be developing a 65MWp PV solar plant in Aswan, while the company is also in discussions with MERE for a 50MW wind project in Zafarana. Once completed, the combined value of the projects will be $200 million . The projects are expected to be developed simultaneously, with construction expected to start in 2016.
Egypt’s Feed-In Tariff Programme
Access is one of the first participants of the 4,300MW Round One Feed-in-Tariff programme to reach this key milestone with the Government of Egypt.
Egypt’s feed-in tariff programme was approved by the Cabinet of Ministers on 17 September 2014 - weeks after the occurrence of the major blackouts. The deployment of the programme is phased out into “regulatory periods.” The first regulatory period runs from 2015 to 2017.
During the first regulatory period, Egypt aims to procure 4,300MW of solar photovoltaic and wind capacity (solar thermal technologies are currently excluded from the feed-in tariff programme).
The plan is to procure 300MW of small-scale facilities (i.e. below 500 kW) and 2,000MW of medium-scale facilities (i.e. between 500kW and 20MW) and large-scale facilities (i.e. between 20MW and 50MW). The wind target is 2,000MW with project sizes ranging from 20MW to 50MW.
Private investment helps energy sector grow
Egypt is determined to achieve this 4,300MW of renewable energy in the next three years and private sector investment and expertise will no doubt play a crucial role in creating additional energy capacity in the country.
Reda El Chaar, Chairman of Access Power MEA, Dr. Mohamed El Sobki, Executive Chairman of New and Renewable Energy Authority, says that private sector investments total approximately 500MW, equivalent to $750 million. This will certainly help Egypt reach a sustainable energy future.
Egypt’s electricity demand is growing at one of the fastest rates in the world but according to Vahid Fotuhi, President of MESIA, the government’s clear commitment to the development of renewable energy, through the creation of bankable policy frameworks, and the support of the MESIA Trade Mission has the potential to create one of the world’s largest renewable energy markets.