March 2008
The sun is expected to outlive Egypt's finite oil and gas reserves by about 5 billion years. Yet for all its year-round sunshine, Egypt continues to rely heavily on fossil fuels to generate electricity. It's a dependency that baffles energy experts. "[Solar energy use] is not even a tiny fraction of where it should be given the solar resources that we have [and the number of] applications that are crying for the use of solar energy," says Amr Mohsen, chairman and CEO of Lotus Solar Technologies, an Egyptian firm specializing in renewable energy technologies.
While Egypt is already using photovoltaic (PV) solar technology on a small scale to convert solar energy into electricity for low-energy applications such as water pumps and illuminated roadside billboards, experts say the greatest potential use for solar energy in Egypt involves solar thermal technology. Solar thermal technology converts solar radiation to heat, which can then be used for a range of applications, from heating water in an apartment building to powering a steam turbine to generate electricity.
Mohsen says thermal solar technology is desperately needed for industrial process heating (IPH). An enormous volume of fuel is used to heat water to between 80 degrees and 150 degrees Celsius for industrial processes. "I see this as the beast that really needs to be tackled," he says.
The idea of building a large-scale solar energy project to generate electricity in Egypt was conceived about a decade ago. In the mid-1990s, the Global Environment Facility (GEF), a Washington-based organization that provides grants to developing countries for environmentally sustainable projects, and the World Bank, offered support to contribute to the construction of four solar thermal combined cycle plants around the world.
Egypt was selected as a candidate for one of these plants, and after studies it was agreed with local officials to establish an integrated solar combined cycle (ISCC) power plant at Kureimat, about 95 kilometers south of Cairo. The 140 MW power plant will use solar energy to supplement the output of a natural gas-powered generator to produce electricity.
According to Fathy Ameen Mohammad, vice chairman of R&D technical affairs at the New & Renewable Energy Authority (NREA), the government's intention is not to build a commercial power plant, but rather to introduce the technology in Egypt. "[From] our point of view, it's not a commercial project, but more or less experimental. Yes, we will have power and we will have energy from this plant. But our concern was to introduce solar technology in the first place," he says.
After nearly a decade of preparations, the Kureimat plant project was approved by the World Bank in December 2007 at a total cost of $328 million, of which the GEF would contribute $50 million to the solar portion of the project.
But a decade is a long time. The plan for the Kureimat plant today is very different from the project that was conceived so many years ago. While the government hoped the plant would be built and operated by the private sector as an independent power producer (IPP), a lack of investor interest and a change in government policy in 2002 heralded the move to a turnkey arrangement.
The solar fraction, the percentage of electricity generated annually from the solar portion of the plant, has changed as well. "When the project started in the nineties, the NREA people themselves said we will not accept any offer that shows a solar fraction that is lower than 10 percent," explains Mohsen. But under the current plan, the solar fraction will be about 4 percent.
Mohammad says rising construction costs made securing a bid from a private partner difficult, forcing the shift in plans. When NREA opened the bids to build the 30 MW solar field to generate a 6-percent solar share, prices were much higher than expected. The lowest bid received to build the solar field was $130 million. As a result, the solar field's size was reduced from the over 30 MW envisioned to 20 MW, resulting in a solar share of about 4 percent.
Mohsen is critical of the decision to scale back the solar field's size and accuses the government of dawdling too long before issuing the tender, which resulted in higher-priced bids. He says the low solar fraction "renders Kureimat almost a waste of resources" and undermines its ability to serve as a model for other commercial projects. "The idea of Kureimat is not to generate an electricity surplus, [but rather] to build something that becomes a showcase of technical and commercial efficiency."
But not everyone sees the project as a complete waste of time and money. "I think that the best benefit that you will get from such a plant is to build [up] your technical capacity," says Yasser Sherif, general manager of the environmental consultancy firm Environics. He argues that the increased technical capacity gained from completing the Kureimat project should be considered when weighing the project's value.
Because of the nature of ISCC plants [see sidebar], there are a number of different contracts involved in the construction and running of Kureimat. NREA had to find contractors for the solar field, the part of the plant that collects solar energy, and the combined cycle (CC) island, the more traditional aspect of the power plant. The authority signed a contract with Spanish corporation Iberdola for the engineering, procurement and construction (EPC) contract for the combined cycle island in September 2007. The following month, it contracted Orascom Construction Industries (OCI) for the solar field EPC contract, and to maintain and operate the island for two years. Construction will begin in 2009 and the plant is expected to be operational in 2010.
The troubles at Kureimat reflect the complexities of solar electricity generation. Financiers are reluctant to wade deep into the field of large-scale solar energy applications. Critics argue that the high cost of installation relative to electricity output capacity makes solar plants expensive when compared with building power plants that run on traditional energy sources such as fossil fuels. They say solar energy, while it sounds simple enough, is not yet commercially viable.
In fact, the government's electricity plan through 2020 all but ignores solar energy, preferring to stay the course with a heavy reliance on fossil fuels and a 20-percent allocation for renewable energy sources including hydroelectric and wind power.
Adel Beshai, an economics professor at the American University in Cairo (AUC), cannot see the logic in this plan. "If I were drawing the energy plan for Egypt... my number one item would be solar energy," he says. He points out that the price of solar energy has fallen sharply in recent years, and if fuel subsidies are removed "it will make solar energy more attractive."
Beshai uses a historical example to illustrate his point. "When the price of oil rose from $3 per barrel to $42... [in the 1970s] people began to really work on solar energy," he says. "When the price of oil fell again, they slept."
Record-high oil prices and the Nazif government's intention to phase out energy subsidies for industry over the next few years could reinvigorate interest in solar technology. The question then will be whether or not the Kureimat project can prove itself to be a commercially viable model worth replicating.
The sun is expected to outlive Egypt's finite oil and gas reserves by about 5 billion years. Yet for all its year-round sunshine, Egypt continues to rely heavily on fossil fuels to generate electricity. It's a dependency that baffles energy experts. "[Solar energy use] is not even a tiny fraction of where it should be given the solar resources that we have [and the number of] applications that are crying for the use of solar energy," says Amr Mohsen, chairman and CEO of Lotus Solar Technologies, an Egyptian firm specializing in renewable energy technologies.
While Egypt is already using photovoltaic (PV) solar technology on a small scale to convert solar energy into electricity for low-energy applications such as water pumps and illuminated roadside billboards, experts say the greatest potential use for solar energy in Egypt involves solar thermal technology. Solar thermal technology converts solar radiation to heat, which can then be used for a range of applications, from heating water in an apartment building to powering a steam turbine to generate electricity.
Mohsen says thermal solar technology is desperately needed for industrial process heating (IPH). An enormous volume of fuel is used to heat water to between 80 degrees and 150 degrees Celsius for industrial processes. "I see this as the beast that really needs to be tackled," he says.
The idea of building a large-scale solar energy project to generate electricity in Egypt was conceived about a decade ago. In the mid-1990s, the Global Environment Facility (GEF), a Washington-based organization that provides grants to developing countries for environmentally sustainable projects, and the World Bank, offered support to contribute to the construction of four solar thermal combined cycle plants around the world.
Egypt was selected as a candidate for one of these plants, and after studies it was agreed with local officials to establish an integrated solar combined cycle (ISCC) power plant at Kureimat, about 95 kilometers south of Cairo. The 140 MW power plant will use solar energy to supplement the output of a natural gas-powered generator to produce electricity.
According to Fathy Ameen Mohammad, vice chairman of R&D technical affairs at the New & Renewable Energy Authority (NREA), the government's intention is not to build a commercial power plant, but rather to introduce the technology in Egypt. "[From] our point of view, it's not a commercial project, but more or less experimental. Yes, we will have power and we will have energy from this plant. But our concern was to introduce solar technology in the first place," he says.
After nearly a decade of preparations, the Kureimat plant project was approved by the World Bank in December 2007 at a total cost of $328 million, of which the GEF would contribute $50 million to the solar portion of the project.
But a decade is a long time. The plan for the Kureimat plant today is very different from the project that was conceived so many years ago. While the government hoped the plant would be built and operated by the private sector as an independent power producer (IPP), a lack of investor interest and a change in government policy in 2002 heralded the move to a turnkey arrangement.
The solar fraction, the percentage of electricity generated annually from the solar portion of the plant, has changed as well. "When the project started in the nineties, the NREA people themselves said we will not accept any offer that shows a solar fraction that is lower than 10 percent," explains Mohsen. But under the current plan, the solar fraction will be about 4 percent.
Mohammad says rising construction costs made securing a bid from a private partner difficult, forcing the shift in plans. When NREA opened the bids to build the 30 MW solar field to generate a 6-percent solar share, prices were much higher than expected. The lowest bid received to build the solar field was $130 million. As a result, the solar field's size was reduced from the over 30 MW envisioned to 20 MW, resulting in a solar share of about 4 percent.
Mohsen is critical of the decision to scale back the solar field's size and accuses the government of dawdling too long before issuing the tender, which resulted in higher-priced bids. He says the low solar fraction "renders Kureimat almost a waste of resources" and undermines its ability to serve as a model for other commercial projects. "The idea of Kureimat is not to generate an electricity surplus, [but rather] to build something that becomes a showcase of technical and commercial efficiency."
But not everyone sees the project as a complete waste of time and money. "I think that the best benefit that you will get from such a plant is to build [up] your technical capacity," says Yasser Sherif, general manager of the environmental consultancy firm Environics. He argues that the increased technical capacity gained from completing the Kureimat project should be considered when weighing the project's value.
Because of the nature of ISCC plants [see sidebar], there are a number of different contracts involved in the construction and running of Kureimat. NREA had to find contractors for the solar field, the part of the plant that collects solar energy, and the combined cycle (CC) island, the more traditional aspect of the power plant. The authority signed a contract with Spanish corporation Iberdola for the engineering, procurement and construction (EPC) contract for the combined cycle island in September 2007. The following month, it contracted Orascom Construction Industries (OCI) for the solar field EPC contract, and to maintain and operate the island for two years. Construction will begin in 2009 and the plant is expected to be operational in 2010.
The troubles at Kureimat reflect the complexities of solar electricity generation. Financiers are reluctant to wade deep into the field of large-scale solar energy applications. Critics argue that the high cost of installation relative to electricity output capacity makes solar plants expensive when compared with building power plants that run on traditional energy sources such as fossil fuels. They say solar energy, while it sounds simple enough, is not yet commercially viable.
In fact, the government's electricity plan through 2020 all but ignores solar energy, preferring to stay the course with a heavy reliance on fossil fuels and a 20-percent allocation for renewable energy sources including hydroelectric and wind power.
Adel Beshai, an economics professor at the American University in Cairo (AUC), cannot see the logic in this plan. "If I were drawing the energy plan for Egypt... my number one item would be solar energy," he says. He points out that the price of solar energy has fallen sharply in recent years, and if fuel subsidies are removed "it will make solar energy more attractive."
Beshai uses a historical example to illustrate his point. "When the price of oil rose from $3 per barrel to $42... [in the 1970s] people began to really work on solar energy," he says. "When the price of oil fell again, they slept."
Record-high oil prices and the Nazif government's intention to phase out energy subsidies for industry over the next few years could reinvigorate interest in solar technology. The question then will be whether or not the Kureimat project can prove itself to be a commercially viable model worth replicating.
ISCC power plants
An integrated solar combined cycle (ISCC) power plant utilizes combined cycle electricity generation and a solar field to produce electricity.
The combined cycle (CC) aspect of the plant is composed of one gas turbine, which burns natural gas to produce electricity. The exhaust from the gas is channeled into a heat recovery steam generator (HRSG) that creates steam, which then feeds a steam turbine, also generating electricity. Exhaust from the steam then goes through a cooling system where it is condensed, de-aerated and sent to the HRSG.
The solar field aspect of the plant is integrated with the combined cycle. Simply put, parabolic troughs in parallel lines focus solar energy on a heat collection element on the troughs, while a heat transfer fluid (HTF) heats up from the sun's energy. The HTF then goes to a heat exchanger where it is used to produce steam that is then moved to the HRSG to be superheated, joining the steam produced by the CC aspect of the plant to generate electricity in the steam turbine.
By Louis Wasser
© Business Monthly 2008
