Egypt's transition towards energy generation from renewable sources is being supported by several arms of the government on multiple levels. The government's energy strategy is to provide 20 percent of Egypt's total electricity from renewable sources by 2020, says Laila Georgy, vice chairman for studies, research and technical affairs at the New & Renewable Energy Authority (NREA). Created in 1986, the NREA, under the umbrella of the Ministry of Electricity & Energy, is currently active in several projects designed to develop Egypt's renewable energy sources. Georgy explains that the NREA has focused its efforts primarily on harnessing and capitalizing on Egypt's wind, solar and hydro capabilities, which are renewable, clean and bountiful forms of energy in a country that lies directly on the planet's sunbelt and hosts vast expanses of land whose climate and geographic conditions make for powerful wind currents.
As it stands, the NREA has successfully capitalized upon its wind and solar capabilities through wind farms and solar stations. Previous government projects have resulted in the utilization of hydro power, such as through the Aswan High Dam. According to Georgy, through the creation of wind farms in Zaafarana, the government in cooperation with the private sector and other countries has successfully connected and continues to supply 375 megawatts to the Zaafarana grid. "Previous agreements signed between Egypt's government and Japan, Germany, Denmark and Spain will eventually result in 545 megawatts of energy generated and connected into Zaafarana's grid once all projects led by these countries are finished," says Georgy. She also notes that three pipeline projects in the Gulf of Zayt will produce 720 megawatts of power.
Similarily, the NREA has concentrated its efforts on harvesting sunlight for energy. Georgy explains that the world's first solar-thermal combined-cycle power plant is being built in Kureimat, and will generate 140 megawatts of power from both solar and thermal energy combined. Aswan's High Dam is another successful example of Egypt's utilization of hydro power. "The High Dam is producing close to three gigawatts of electricity," states Hany Loka, president of industry automation and drive technologies at Siemens, Ltd. and a board member of Egypt's Energy Saving Council for Industry (ESCI), formed in November 2008.
The Ministry of Trade & Industry is also a component of the government effort to direct Egypt's energy production from conventional to renewable sources. This effort is implemented at the market level through the Industrial Modernization Center (IMC) and the ESCI. The IMC has sought to spur the renewable energy market and respective projects through incentive programs. According to Loka, the IMC provides financial incentives to businesses. "If I have a factory and I decide I'm going to change from using the [electricity] grid to using or having my own wind power station, they will provide or support me with 15 percent of the cost," he says. Thus private sector businesses are encouraged to invest in renewable energy projects. While these initial investments in renewable energy technologies and products are somewhat costly, Loka maintains that in the long term they will result in significant financial gains and environmental safeguarding.
The ESCI, still finalizing its strategy, will further contribute to the increased production of energy from renewable and alternative sources. The council has two main aims. "One, and it's the main [purpose], is to save energy - energy-saving by putting the right standards for different industries; [setting] how much energy should be used per ton of production," says Loka. "Two is financing the upgrade of these industries to reach these standards." In this way, the institutionalization of energy standards in combination with financial incentives can propel a shift towards the generation of power from renewable energy sources, and decreased energy consumption, especially from fossil fuels. Loka reiterates that the ESCI seeks to "incentivize energy-saving in different industries to help them work on improving their energy consumption."
According to Loka, the Ministry of Higher Education is one of the other key players emphasizing the value and importance of renewable energy as the future primary source of energy for Egypt, and is promoting energy-optimizing activities. "The Ministry of Higher Education is... working or encouraging R&D in the area of renewable energy and energy-saving, and there are different funds being used in this direction," says Loka, whose company spearheaded an energy awareness campaign last year in collaboration with several stakeholders, among them the Ministry of Higher Education. "I think this is an important part of the complete picture that we have to work [on]; changing the culture of energy consumption in Egypt." Energy-saving appliances and equipment, such as lead lamps, which reduce energy consumption and last 50 percent longer than normal bulbs, and production line motors that reduce energy consumption by 60 percent, are almost non-existent in Egypt. Loka points out that other players are concerned with optimization of energy use by renewable sources. The University of Alexandria, for example, is looking into solar energy sources to power its water desalination activities, according to Loka.
The government is also promoting Egypt's transition to renewable energy at the policy level through new energy laws and decreased energy subsidies. Georgy explains that the NREA recently drafted a new electricity law, currently under review by parliament, which contains a chapter to support the use of renewable energy sources through subsidies that mitigate the price gap between conventional energy technologies and those needed to capture and develop renewable energy sources. Additionally, she states that import duties on technologies needed to harvest renewable energy sources, such as wind turbines manufactured abroad, have decreased from 60 percent to 40 percent. According to Georgy, high energy subsidies are being reduced gradually, first in energy-intensive industries, and second in the tourism sector, though energy subsidies for the average consumer should not change significantly.
Egypt stands to gain financially by decreasing domestic consumption of its fossil fuels. "Instead of domestic consumption [of fossil fuels], we can export them," says Tarek Selim, an associate professor of economics at the American University in Cairo. Georgy notes that Egypt, which produces approximately 23,000 megawatts of power annually, often generates a surplus, which is sold to neighboring countries including Lebanon, Turkey, Libya, Morocco and Spain. If the NREA's operating renewable energy projects continue to supply power, and new ones are added in the future, Egypt stands to gain financially by exporting its reserves of oil and gas, all the while satisfying domestic energy needs. This is especially profitable when one considers the European Union's energy strategy for 2030, explains Georgy, which includes importing 20 percent of its energy from renewable sources. The EU is also requiring its domestic energy producers to push production of energy from renewable sources to between 15 and 20 percent, remarks Loka, and many of these producers are realizing that they can do so elsewhere. "This will provide [a] good opportunity for Egypt to work in close collaboration with European countries... We have a strategic location. We could be the heart of this grid that's going to be connected to Europe," says Loka.
The use of clean and renewable energy is also profitable. According to Loka, "everybody is forced to go for reducing CO2 [emissions]." There is room for profit if clean renewable energy is used because, as both Georgy and Loka remark, companies can sell, at a lucrative price, unused carbon dioxide credit to industries that emit more than is permitted.
Transitioning to increased reliance on alternative or renewable energy is a necessity according to experts. "The growth of the economy and population growth are exceeding the current supply of traditional resources, like oil," explains Selim. It is commonly accepted that fossil fuels and conventional energy sources such as oil and gas are finite globally. "If you look into the oil sector, oil consumption is growing by about 1.8 percent a year," says Selim. This poses a significant economic burden to Egypt, which became a net importer of oil last year according to Selim. Loka says that Egypt's "fossil energy is going to be gone in 30-50 years." Consequently, Egypt's move towards generation of power from free, abundant, clean and renewable energy sources simply makes financial sense.
By Sarah Marquer
© Business Monthly 2009
