In Egypt energy plays a substantial role in the country’s economic development, contributing to macroeconomic variables as gross domestic product (GDP), commodity exports and investments. On the other hand, Egypt as a developing fast growing country suffers from rapid annual population growth currently at a rate of approximately 1.68% yearly. Such fast population growth along with other environmental challenges is overstraining the limited energy resources of the country.
The Egyptian government has therefore recognized the need to reform the energy sector in order to attract private sector investment in power generation, since this will be instrumental to Egypt’s ability to deliver its renewable energy targets. To do this, the government has implemented the competitive bidding approach whereby the Egyptian Electricity Transmission Company will issue tenders requesting the supply of power from large-scale renewable energy resources for pre-determined sites on a build, own, operate (BOO) basis.
Overall, the country is set to supply 20 percent of generated electricity from renewable sources by 2022 (20 by 2022 plan), with wind providing 12 %, hydro power 5.8 %, and Solar 2.2 %. The solar energy plan aims to install 3.5 GW by 2027; including 2.8 GW of PV (photovoltaic) and 700 MW of
concentrated solar power. The strategy is also aimed at generating 7.2 GW (12 % of generated electricity) from wind by 2022. To do this, private sector involvement must equate to around 67 % of the overall plan. Over the next three to five years, the Ministry of Electricity and Renewable Energy plans to add 51.3 GW to the current installed capacity.
The New & Renewable Energy Authority (NREA) plays a strategic role in the government’s renewable energy plans. It currently has around 500 MW of wind power plants in operation and 1340 MW under implementation and development, and is expected to contribute substantially to the rapid expansion of wind power capacity. There are also three privately owned independent power producers (IPPs) which began operations in 2002-2003 under 20-year long power purchase agreements with EEHC, and currently have a total generation capacity of about 2.5 GW.
The Egyptian government’s renewable energy plans for 2015-2023 include 3.2 GW from government projects; 1.25 GW generate through BOO mechanisms, and 920 MW from IPPs. In January 2017, Egypt selected 67 companies to take part in developing 4.3 GW of renewable energy projects, and the pre-qualifying companies are currently in the land-allocation process.
Egypt is located in the “sunbelt” area of the world, meaning geographically, Egypt is endowed with high intensity solar radiation ranging between 2000 and 2600 kwh/m2 per annum, with a daily sunshine duration of 9-11 hours.
The potential for solar energy is further increased given the country’s vast deserts, rendering it well suited for the generation of concentrated solar power.
The first solar thermal power plant was constructed 90 km south of Cairo at Kuraymat. This location in the desert makes use of the extended unified power grid, expanded natural gas pipelines, and close proximity to a substantial source of water namely, the River Nile. The power plant, which is financed from the Global Environmental Facility (GEF) and the Japan Bank for International Development, is able to contribute 140MW to renewable energy generation.
Based on the above, the Egyptian government has been working to expand solar energy usage within the country and to stimulate investments in solar energy by offering free land to potential investors in both the Eastern and Western deserts. Egypt is now recognized as having vast potential for solar energy application in the near future.
In addition to the 20 by 2022 plan initiated by the government, a separate proposal was also approved named the ‘Egyptian Solar Plan’. This plan involves adding 3.5 GW of solar energy to Egyptian electricity generation by 2027. To begin realizing this plan, The Ministry of Electricity and renewable energy signed seven memorandums of understanding worth $500 million for solar and wind projects in Egypt. The target for the first regulatory period (2015-2017) was to contract 4,300 MW of both solar and wind energy, and the ministry has confirmed that this target was reached earlier
The government is also considering financing options to conduct feasibility studies for the following projects, which are also considered pivotal for the renewable energy sector in the country:
– Solar-thermal power plant using CSP technology for both electricity generation and water desalination.
– Designing a technical-financial mechanism to promote the use of solar water heaters in Egypt’s residential sector.