Bright prospects for Egypt’s renewable energy production

Mohamed El Dahshan

Fri, 17/12/2010 - 13:23

Photographed by Staff

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Though hydropower is traditionally the nation's most prized renewable energy
source, Egypt’s immense potential in wind and solar power propelled it
to number 22 on the latest Renewable Energies Country Attractiveness Index (CAI).

The index, developed by professional services firm Ernst and Young, puts
Egypt as the top destination in the Middle East for projected
investments in renewable energy.

The ranking, which gives a weighted score for the untapped potential in 30
countries, gives more weight to long-term prospects over short term, and
to wind over solar power.

The international recognition coincides with large infrastructure
investments in the sector, which seems to have a bright future here.
By 2020, Egypt plans to generate 20 percent of energy production,
or about 35 gigawatts, from renewable sources; 12 percent from wind
power, and 8 percent from solar energy.

Shady Tarfa, of Ernst & Young’s Infrastructure and public-private
partnerships advisory, says 20 percent is a realistic target. "Egypt has
a great portfolio of renewable energy -- hydro, wind, and solar power.

Coupled with the government's appetite to position Egypt as a leader in
renewable energies, it is an achievable goal".

Egypt has huge wind power potential, particularly in the Gulf of Suez, but
also along the Nile, and with an average of nine to 11 hours of sunshine
each day, there is no shortage of solar energy.

Egypt is not a new entrant to the market.

It established the New and Renewable Energy Authority
in 1986 to focus development of sustainable energy sources and
implement energy conservation programs. The 20 percent renewable
energy by 2020 plan was introduced in early 2008.

Initial progress was slow, but this summer’s power outages and dwindling fossil fuel supply have spurred implementation.

To achieve its vision, Egypt has sought the support of various
international intergovernmental institutions and private investors.

During a speech in May to the "MENA Power 2010: A Middle East and North Africa
technology and projects forum", Electricity and Energy Minister Hassan
Younis said investment in alternative energy projects would reach $110 billion by 2027.

In late 2009, a 200 megawatt wind power plant opened in the Gulf of al-Zayt. One megawatt is enough to power 750 single-family homes, according to the California Energy Commission. In May, Egypt obtained
a $220 million loan from the World Bank to develop wind power
infrastructure and business models, including transmission
infrastructure development and support for the first 250 megawatt wind
project in the Gulf of Suez and Gabal al-Zeit. Another $270 million
World Bank loan in October funded the Kom Ombo solar power plant in
upper Egypt, which is expected produce 100 megawatts.

In addition to the loans, Tarfa says many investors are eager to enter the
alternative energy market here. The government is reviewing new
electricity legislation, which if adopted, is expected to boost private
participation in the sector. Ten local and foreign companies are already
shortlisted for a 2013 wind power plant project in the Gulf of Suez.

To those who worry that public-private partnerships entail foreign
investors taking control of national resources, Tarfa says the
government will take the lead. "In such agreements the government is the
only off-taker of the service: it purchases it from the private sector
and sells it to the public,” Tarfa said.

“The government is fully in control of the pricing, but also of the production.

That, and the asset is, and remains on Egyptian land. There really is no
risk." Properly managed by the government, these partnerships can propel
infrastructure investment in general as well as alternative energy to
stem the inevitable shortages facing the country.