Egypt was one of the first African countries to develop large-scale renewable energy projects and had a wind power generation capacity of 555 MW in 2012. However, that was the result of donor support and not a push by the Egyptian government to tap into the country’s abundant renewable energy sources. energy sources. The three largest gas-fired power plants in the world were completed by Siemens in 2018 for Egyptian Electricity Holding Company (EEHC). They have a combined capacity of 14.4 GW, underscoring Cairo’s commitment to natural gas.
Russia’s invasion of Ukraine has pushed up gas prices and prompted European markets to replace Russian fuel with alternative sources. Egypt shipped 80% of its liquefied natural gas to Europe last year. The resulting revenues, combined with the falling costs of PV components, have changed the landscape of Egypt’s energy economy.
The latest figures published by Egypt’s New and Renewable Energy Authority (NREA) indicate that the country’s energy generation mix is currently 80% thermal, 12% wind, 6% hydro and 2% solar. The government aims to achieve 42% renewable energy sources in the mix by 2030, including 22% solar energy. It is estimated that this will require 31 GW of solar power, up from just 1.77 GW currently, which is an incredibly ambitious target. A target of 60% renewable energy by 2040 has also been set.
NREA figures show that at the end of 2023 there was 1.5 GW of solar capacity in Benban and 26 MW in Kom Ombo, both located near Aswan, plus 50 MW in the Belectric-CCC joint venture’s Zafarana project on the coast of the Red Sea. There was also 97 MW of rooftop and 30 MW of stand-alone solar capacity and the remaining 102 MW of solar panels included commercial and industrial (C&I) installations and other smaller solar panels.
Benban Project
Utility-scale PV development has so far focused around Aswan in the south of the country, where solar resources are strongest and there is ample land for development.
The majority of Egypt’s solar capacity is provided by the Benban project, which is located 50 km from Aswan and is one of the world’s largest PV sites. Official capacity figures range from 1.4 GW to 1.8 GW, with the confusion apparently centered on the expandability of some individual elements.
It is actually a complex of 41 separate projects covering 37 km², with operators such as Voltalia, Infinity Solar, SP Energy, Acciona Energía, Horus Solar Energy and Scatec Solar. The development cost a total of $4 billion, part of which was financed by the International Finance Corp. (IFC) of the World Bank, the African Development Bank (AfDB) and the European Bank for Reconstruction and Development (EBRD). completed in 2018-2019.
Feed-in tariffs (FITs) give operators guaranteed prices for 25 years and are the only privately owned FITs in the country, a Voltalia spokesperson said. pv magazine. Sources in the country suggest that 6,000 management and maintenance jobs have been created at Benban, which will provide a pool of skilled workers and expertise that can be tapped for future projects.
Voltalia developed its 32 MW RA project in Benban using Suntech 330 W panels, with all power generated sold under a 25-year power purchase agreement (PPA) with Egyptian Electricity Transmission Co. (EETC) at a rate of $0.084/kWh under Egyptian law. feed-in tariff program. However, the incentives are actually paid in Egyptian pounds.
Saudi Arabia’s ACWA Power expects to complete its 200 MW Kom Ombo plant, just 20 km from Benban, in April 2024. Part of the financing for the $182 million project was provided by the EBRD, the OPEC Fund for International Development and the AfDB.
Other installations
In December 2023, ACWA Power signed a framework agreement with Egyptian partners to develop a $4 billion green hydrogen project – likely in the Suez Canal Economic Zone – with an annual production capacity of 600,000 tons, from phase one, increasing to 2 million tons per year . That will be powered by PV and wind energy and ACWA Power said it already has a 1.4 GW Egyptian PV and wind development pipeline. The hydrogen plant will be connected to the grid via the same 220 kV transmission line as Benban, with all power sold to the EEHC under a 25-year PPA. Globeleq and Masdar also both signed framework agreements at the end of 2022 to develop green hydrogen facilities in the Suez Canal Economic Zone. Empower New Energy already operates five 500 kW C&I projects in Egypt for buyers InterCairo Aluminum, related company InterCairo Extrusion, Cairo Metals, Smart Paper and medical supplies company AMECO. Empower is currently preparing three solar energy investments with multinationals operating in Egypt “seeking to decarbonize their operations while securing a competitive electricity tariff,” said Terje Osmundsen, CEO of Empower. Other C&I projects in the country include 467 kW and 374 kW arrays in Sharm El Sheikh to supply the tourism sector, a 450 kW rooftop project on a hospital in Luxor and a 500 kW rooftop installation on an industrial factory in Giza.
Figures from the NREA show that there is currently 700 MW of solar capacity under construction: the 500 MW Abydos project and a further 200 MW at Kom Ombo. AMEA Power in Dubai expects to complete Abydos, again located near Aswan, by the end of March 2025, with financing from an IFC-led consortium and a PPA with the EETC.
In December 2023, Scatec – which already operates 380 MW in Benban – signed a partnership agreement with the EEHC to develop a 1 GW solar and 200 MWh battery project, which will be the first utility-scale hybrid project in the country. A preliminary financing agreement has already been concluded with the AfDB. According to a spokesperson for Scatec, the company is now working with the government on the details of the agreement.
Challenges remain
Osmundsen said that Egypt is essentially an attractive PV market, but the country’s current economic crisis, including a severe currency devaluation, makes foreign investment difficult. The dramatic depreciation of the Egyptian pound makes the electricity grid tariff paid by electricity consumers “artificially low and heavily subsidized,” he said, while currency conversion difficulties have curbed investment in the C&I sector.
Egypt has a lot of land and high solar energy yields, “making renewable energy sources very competitive with other energy sources,” the Scatec spokesperson said. But the main limiting factor is high financing costs due to rising global interest rates, she added.
Moreover, while the government has pledged to phase out fossil fuel subsidies, it continues to encourage thermal energy generation. The key to increasing renewable energy installation rates is ending energy subsidies, a Voltalia spokesperson said. However, Voltalia expects the Egyptian PV market to open very soon, as there was power rationing for two hours a day in winter, due to a lack of natural gas as a raw material for thermal power plants and a lack of foreign currency to buy gas. said the Scatec representative.
The outlook for the sector is positive, especially as annual population growth of 1.7% increases demand for electricity. Most renewable energy capacity will be provided by PV and wind energy, supplemented by a limited amount of battery storage, the Voltalia spokesperson said. Concentrated solar energy “is not expected to represent a significant part of future renewable capacity,” the Scatec spokesperson said. In the longer term, developers may also have the opportunity to export solar energy from Egypt to European markets via planned interconnectors between the country and Crete, and then to mainland Greece.
By Neil Ford
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