Sunny prospects: A wealth of natural resources and a developed manufacturing sector make solar particularly promising

With its growing reputation as a renewable energy producer over recent years, Egypt has relied largely on its successful utilisation of its wind resource, the most celebrated example of which is the 545-MW wind farm at Zafarana. However, the nation’s arid climate also makes it suitable for large-scale solar projects, the potential of which has been noted by the Ministry of Electricity and Energy (MoEE) in its most recent published strategy. Many of the challenges that have hitherto slowed the development of the solar industry remain, but Egypt possesses a number of comparative advantages which back the case for solar expansion, and is embarking on its development alongside wider global growth: worldwide solar power generation grew by 86.3% in 2011 and by a further 58% in 2012, according to the BP Statistical Review of World Energy.

SOLAR TODAY: Solar power currently plays a limited role in the Egyptian energy sector. Off-grid data from the New and Renewable Energy Authority (NREA), a subdivision of the MoEE, shows that solar water heaters have made some headway in the market, and as of 2012 had reached an installed area of around 750,000 sq metres. The government is presently taking steps to increase this figure, and has joined forces with the United Nations Environment Programme and the government of Italy to establish a water heater project focused on the Red Sea and South Sinai tourism sectors. The $500,000 scheme envisages the financing and dissemination of solar water heaters to hotels and resorts in these areas, with a target of 5000 sq metres of installed capacity, 1130 sq metres of which had already been completed at the close of 2013. Should this goal be met, the project is expected to result in annual energy savings of around 4000 tonnes of oil equivalent, as well as a 1000-tonne reduction in carbon emissions.

SUBSIDY STRAIN: Despite the government support for the expansion of solar water heating, the business case for its future development is considerably undermined by Egypt’s highly subsidised electricity prices. This hindrance to growth will remain a key challenge until the government succeeds in addressing the bloated subsidy system – something that successive administrations have pledged to do without success.

In terms of grid-connected solar power, Egypt’s first project came on-line in July 2011. The 140-MW Kuraymat Power Plant is located around 100 km south of Cairo, and is one of three projects recently developed across North Africa which combines a solar field with a combined-cycle power plant. The solar component has been developed across a 644,000-sq-metre area, and utilises about 1920 solar collectors, which between them contain more than 53,000 mirrors. The project’s completion and subsequent contribution are the result of considerable investment, some $340m, and yet its significance as far as many industry observers are concerned in inconsiderable: just 20 MW of the project’s output is derived from its solar mechanism.

THE BUSINESS CASE: Despite the relatively modest uptake of solar energy in Egypt to date, the argument for its further development is a strong one. The country’s macro energy scenario is one of limited reserves of fossil fuels and increasing energy imports, while renewable energy currently represents a small fraction of the overall mix. Leveraging renewable energy resources would enable the nation to address the problem of rapidly increasing domestic electricity demand, as well as potentially boost energy exports and therefore enhance economic development.

Egypt is located on the “sunbelt” that extends across much of the equatorial latitude lines, and as far back as 1991 issued a solar atlas which indicated that the average direct normal solar radiation ranges between 2000 and 3200 KWh per sq metre per year from north to south, with a very limited number of cloudy days. Moreover, in developing its solar industry Egypt has a comparative advantage over other countries in the region due to its developed manufacturing sector, featuring automated production, quality certification and high-tech tools capable of providing technology to solar plants – including a glass and mirror industry.

THE STRATEGY: Egypt’s renewable energy policy is already at an advanced stage. In February 2008 the Supreme Council for Energy approved its strategy for electricity generation based on diversifying energy production sources, rationalising the use of energy and expanding the renewable component, and set a renewable target of 20% of total production by 2020. The solar element of this strategy was further defined in July 2012, when the cabinet approved the Egyptian Solar Plan, which established a target of 3500 MW of solar energy production by 2027, of which 2800 MW is to be derived from concentrated solar power (CSP) technology and 700 MW from photovoltaic (PV) means.

While a number of solar projects developed in accordance with the government’s strategy are already in development, more strategic input is expected to emerge as a result of its cooperation with the German government-owned development bank, KfW, which is supporting the preparation of the Combined Renewable Energy Master Plan for Egypt (CREMP). Financed by the European Commission, the plan will address the question of large-scale, grid-connected generation for a range of renewables, concentrating on wind and solar, and is due to be finalised in 2013.

THE PROJECTS: A number of solar projects are currently in the near-term development pipeline. The KfW planning project includes a feasibility study for a 100-MW CSP thermal plant at Kom Ombo, in the south of the country, and the development has already attracted financing from a number of international funding agencies, including the World Bank, African Development Bank, the German government, KfW and the European Commission. According to the NREA, the plant is scheduled to be operational by 2016.

PV PLANS: The PV solar input envisaged by the government’s strategy, meanwhile, is focused providing power to rural, off-grid areas with scattered load demand. Common applications for PV technology include lighting, water pumping, telecoms and cooling, and number of significant projects of this nature have already been undertaken. In 2010 the NREA completed a project developed with the Italian Ministry of Environment Land and Seat to electrify two settlement in the northern Matrouh Governorate by PV systems, and in March 2012 it signed a similar cooperation agreement with the Indian New and Renewable Energy Ministry to electrify another village in the area. The government has also worked with its Chinese counterparts in the PV arena, striking a deal to provide PV boundary lighting at the Kurimat solar thermal plant, which is expected to be in place by the end of 2013.

Egypt’s PV projects have been modest in size and limited to off-grid power production, but this is set to change with two planned projects in the near future. The feasibility study for a 20-MW PV power plant in the Red Sea resort of Hurghada was completed in 2012. Planned for completion in 2016 and developed in partnership with the Japan International Cooperation Agency (JICA), the plant’s significance lies in both its size and the fact that it will be connected to the national grid. A second PV project of similar scale is taking shape near the proposed CSP initiative at Kom Ombo. In May 2012 the Agence Française de Développement signed off on an €800,000 grant to conduct a feasibility study for a 20-MW PV power plant in the area, and a total of 34 companies responded to a subsequent call for pre-qualification in the tendering process for the role of consultant. Nine companies have been selected as a short list, with the successful consultant expected to be appointed in 2013. Operations at the plant, meanwhile, are due to commence in 2017.

Egypt has some way to go before solar energy is produced to a meaningful scale in relation to its power demand. In 2012 some 300,000 tonnes of oil equivalent (toe) of renewable energy was consumed in the country (which includes wind, geothermal, solar, biomass and waste), compared to 47.3m toe for natural gas and 35.2m tonnes of oil. However, with a comprehensive renewables strategy in place, a track record of successful project completion and a growing pipeline of CSP and PV initiatives, the contribution of solar energy to the nation’s power consumption will undoubtedly continue to expand throughout the coming years.

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The Report: Egypt 2013

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