08 May 2012 (46 Pages)
Includes 3 FREE Quarterly Updates.
BMI View: In spite of substantial renewables potential, particularly in solar and wind sectors, Egypt looks set to remain over-dependent on gas- and oil-fired generation until it can proceed with plans for a nuclear reactor. Greater domestic and regional political stability makes the nuclear option more realistic. In the meantime, we can expect to see steady but unspectacular progress in developing renewables-based electricity supply.
Government policy in relation to the energy sector may change in the wake of the political upheaval which swept the country in 2011, meaning that plans for nuclear and renewables schemes may be modified or even abandoned. Given the need to reduce dependence on gas, it is hoped that Egypt will place greater emphasis on its considerable solar and wind potential.
Key trends and recent developments in the Egyptian electricity market include:
- During the period 2012-2021, Egypt’s power generation is expected to increase by an annual average of 4.49%, reaching 221.9 terawatt hours (TWh). Driving this growth is an annual 5.38% gain in gas-fired generation and a 2.77% rise in hydropower generation, accompanied by annual increases in excess of 9.6% for renewables-based electricity supply.
- Egypt has set a target of producing 12% of its power from wind and a total of 20% from renewables by 2020. It is also looking to attract US$110bn of investment into its power sector by 2027. Egypt plans to boost the portion of energy coming from renewable sources dramatically, drawing 20% of the projected 60 gigawatts (GW) of demand in 2020 from renewables. Wind would provide around 7.2GW of that total.
- Following an assumed 1.8% increase in real GDP in 2011, BMI forecasts average annual growth of 5.5% between 2012 and 2021. The population is expected to rise from 82.5mn to 96.1mn during the period 2012-2021, and net power consumption looks set to increase from an estimated 125.6TWh in 2011 to 196.2TWh by 2021. During the period 2012-2021, the average annual growth rate for electricity demand is forecast at 4.56%.
- Thanks partly to the projected rise in net generation, which matches the underlying demand trend, Egypt’s power supply surplus is likely to grow over the near-term, but then decline towards the end of the forecast period unless extra capacity is added. A modest decline in the percentage of transmission and distribution (T&D) losses from an estimated 11.1% in 2011 will help support the market. The theoretical net export capability by 2016 is put at 2.21TWh, which could shrink to 1.69TWh by 2021.