Egypt Energy Situation

Overview

Arab Republic of Egypt
Capital	Cairo (30°2′N 31°13′E)
Official language(s)	Arabic
Government	-
President	-
Prime Minister	Ahmed Shafik
Total area	1,002,450 km2
Population	79,089,650 (2010 estimate)
GDP (nominal)	$215.845 billion
GDP Per capita (nominal)	$2,758
Currency	Egyptian pound (EGP)
Time zone	EET (UTC+2)
Calling code	+20

Energy Market

Overview Energy Market

The primary energy production in Egypt has been steadily rising and in 2006 reached 62 501 ktoe which translates to 2 617 PJ or 726 887 GWh. While natural gas production is rising steadily and export capacities increase, the production of petroleum products is declining. At the same time, demand for petroleum is further increasing, partly caused by high domestic subsidies. Recently, major natural gas resources have been discovered. For the foreseeable future, natural gas is likely to be the primary growth engine of Egypt’s energy sector.

The primary energy production has developed fast in the past; starting from around 8 000 ktoe in 1971, it developed quite linear to the current level. Main growth has been seen in the oil and gas sectors, whereas coal and peat show a more static development on a low level. Shares of renewable energies have not increased to a significant extent and continue to play a minor role in the energy supply structure. Owing to the vast resource base, the energy sector is important for Egypt’s economy and will continue to play a major role in coming years. Egypt is a net exporter of crude oil and natural gas. In addition, it has a strategic position in oil transfer because of its operation of the Suez Canal and Sumed (Suez-Mediterranean) Pipeline, two major routes for the transfer of Persian Gulf oil. In terms of coal and peat, Egypt is a net importer.

Final energy consumption in 2006 added up to 43 072 ktoe (equal to 500 927 GWh or 1 803 PJ).

FINAL ENERGY CONSUMPTION IN EGYPT, 2006, IN PJ

Total Final Energy Consumption
		PJ	%
Industry sector		603	33
Transport sector		488	27
Other sectors		531	29
of which	Residential	358	20
	Commercial and public services	42	2
	Agriculture/ Forestry	89	5
	Non-Specified	42	2
Total		1622	100

Source: IEA 2008

The Electricity Grid

In 2007 / 2008, the state-owned carrier grid consisted of 39 552 km. The grid is subdivided into six geographical zones, namely Cairo, Canal, Delta, Alexandria and West Delta, Middle Egypt and Upper Egypt. The country’s entire territory is covered.

Medium and low voltage as well as isolated grids are owned and operated by the respective distribution companies. In June 2008, the distribution grid consisted of 142 983 km of medium voltage and 230 187 km of low voltage lines (not including non-energy use).

Since 1998, efforts have been made to interconnect the Egyptian electricity grid internationally. As a result, the five-country interconnection of Egypt’s system with those of Jordan, Syria, Lybia and Turkey has been completed in 2002. Links to the European electricity market have been established through the sub-marine connection between Morocco and Spain (400 KV) and over the connection Syria –Turkey.

In April 2004, the Arab Maghreb countries agreed to repower the national grids of Egypt and Libya in order to upgrade the interconnection.In the fiscal year 2007 / 2008, the Egyptian Electricity Holding Company (EEHC) faced a challenge meeting the unexpectedly high peak demand, reaching 19 738 MW

THE EGYPTIAN TRANSMISSION GRID, KEY FIGURES 2008

	500 kV	400 kV	220 kV	132 kV	66 kV	33kv
Transformer capacity (MVA)	7765	n.s.	28850	3427	35223	1769
Total length of transmission lines	2478	33	14912	2429	16986	2713

Source: EEHC 2008

PEAK LOADS IN THE INTERCONNECTED ELECTRICITY GRID; 2003 – 2008

	03/04	04/05	05/06	06/07	07/08
Peak load (MW)	14735	15678	17300	18500	19728

Source: EEHC 2008

Installed Capacity

Between 2003 and 2008, the total installed capacity increased about 24 %, mainly through the added combined cycle and wind power installed capacity.

In June 2008, the total installed capacity reached 22 583 MW, equivalent to a 2.9 % increase compared to the previous year. Of this, conventional steam power stations accounted for 11 571 MW (51.9 %), combined cycle power plants for 6 449 MW (28.9 %), and hydropower stations for 2 842 MW (12.8 %). Wind power plants provide the remaining 305 MW (1.3 %). Since 2002 / 2003, three private-sector electricity utilities have been contributing 2 048 MW of generating capacity (9 % of overall countrywide capacity in 2008) from three gas-fired steam power plants. According to the Ministry of Energy and Electricity’s five year plan from 2005, the installed capacity is to increase to a total of 32 GW by 2010.

Egypt has 35 decentralised power plants (mostly diesel units) that are not connected to the national grid. The combined installed capacities of these plants added up to 258 84 MW in 2007/2008. Approximately, 350 GWh of electricity were supplied to local users including tourist resorts.

HISTORIC DEVELOPMENTS INSTALLED CAPACITY BY ENERGY SOURCE 2003-2008

	2003-2004	2004-2005	2005-2006	2006-2007	2007-2008
MW
Wind	140	140	183	225	305
Gas	1019	1537	1966	2416	1416
Combined Cycle	2605	2699	3949	4949	6449
Hydro	2749	2783	2783	2783	2842
Steam	11610	11616	11571	11571	11571
Total	18123	18775	20452	21944	22583

Source: EEHC 2008

Electricity Generation

ELECTRICITY CONSUMPTION BY SOURCE IN 2006

Economic Sector	GWh
Industry	34569
Residential	34596
Commercial and Public Service	11541
Agriculture and Forestry	3697
Other	12040
Total	99443

Egypt is a net exporter of electricity, importing 208 GWh of electricity in 2006, while exporting 557 GWh. Transmission and distribution losses account for approximately 10 % (12 583 GWh) of total electricity produced.

In 2005, losses added up to 16 % of total electricity supply. The main consumer of electricity in Egypt is the residential sector which accounts for 37 % of the total consumption, followed close by the industrial sector (35 %). A future average annual growth in electricity demand of 6.35 % is expected, partly due to rising living standards and very low electricity prices. In order to meet the expected growth in demand, EEHC prepared the 6th five year plan (2008 – 2012). The plan entails adding electricity production capacity of 7 750 MW, while at the same time maximizing the use of combined cycle installations to reach a 37 % share of the total installed capacity in 2011/2012. On 31 January 2009, the government has finalized the follow-up five-year plan from 2012 – 2017 which aims at adding further 10 450 MW generation capacity.

GROSS ELECTRICITY PRODUCTION BY ENERGY SOURCE; EGYPT; 2000–2008

	07/08	06/07	%-change
GWh
Steam	53076	52082	1.9
Gas	9361	6888	35.9
Combined Cycle	33345	29892	11.6
Total Thermal	95782	88862	7.8
Hydro	15510	12925	20
Wind (Zafrana)	831	616	34.9
Total grid	112123	102403	9.5
Isolated plants	350	347	0.86
Purchased from IPPs	14	32.2	(56.5)

Source: EEHC 2008

Renewable Energies

In 2006, renewable energy sources reached a share of 12.5 % of total grid-connected electricity production. While 12 925 GWh (12 %) were produced by hydropower installations, wind power contributed another 616 GWh (0.5 %).

Electricity Prices

The prices of electricity in Egypt range among the lowest in the world. The prices are fixed by the Egyptian government in a non-transparent manner and apply in equal manner to all regions. Electricity is highly subsidized. Since October 2004, several electricity tariffs were raised, by an average of 8.6 %, for the first time since 1992 and further 5 % increases were set for all electricity customers for each of the following five years. The last increase took place in November 2008. In 2008, the rise summed up to 7.5 %, including an additional 2.5 %-increase caused by high oil prices. While the increase in some segments exceeded 18 %, prices of the first segment of domestic consumption – less than 50 kWh per month, mainly composed of low income families –remained unchanged at 5 Pt (approximately 0.62 €-ct). The highest increase was seen for the residential consumers with a demand of >1000 kWh/ month. The governmental plan was intended to gradually accommodate the electricity prices to the actual cost of the electricity system. However, taking into consideration annual inflation rates exceeding 5 %, these increases may not suffice. The new electricity law is supposed to specify the main principles of price regulation such as the ones mentioned above.

Rural Electrification

Under the Egyptian government rural electrification programme, a countrywide electrification rate of 99 % was achieved through grid extension projects. As assessed in a study by MEDREC in 2004, there have been approximately 121 remote villages and communities which still do not have access to electricity. The Rural Electrification Authority’s target for 2008 was to electrify 327 little settlements, the strengthening of 31 village grids and the refurbishment of 41 further grids.
For the few remaining remote settlements, the decentralized use of renewable energy resources is under consideration as an alternative to actual grid access. Due to the dispersed nature of both houses and rural communities, in addition to their low demand, the extension of the grid is economically unfeasible. The project MEDREP, a joint project being conducted by NREA, the governorate of North Sinai, the Egyptian environmental authorities, the Rural Electrification Agency (REA) and initiated by the Italian Ministry of Environment in 2004, aims at supplying electricity through photovoltaic to these remote rural communities as well as the utilization of solar thermal energy for heating and cooling purposes in tourist resorts and new villages.

Market potential for renewable energies

Wind Energy

The current installed wind capacity accounts for 305 MW. Egypt is endowed with abundant wind energy resources, especially in the Suez Gulf zone. After the implementation of several experimental wind farm projects, the Ministry of Electricity and Energy set up an ambitious plan for wind farm development aiming at a total installed capacity of 965 MW in 2011/2012.

Egypt has outstanding wind energy conditions. Particularly in the coastal regions, high and stable wind speeds are frequent (up to an average of 10.5 m/s in the Gulf of Suez). Furthermore, the country’s large deserts and abundant thinly populated areas are well suited for the construction of large wind farms.

A detailed wind atlas has been compiled between 1998 and 2005 in a joint effort by NREA, the Egyptian Meteorological Authority (EMA) and the Danish UNEP research centre Risø. The purpose of the project was to establish a solid meteorological basis for evaluating the country’s wind resources. In addition to data records, the atlas also surveys the Egyptian wind conditions on the basis of wind models and offers detailed, meteorologically based information on site requirements for mediumsized and large wind farms. The Wind Atlas covers the entire country. However, particular attention was given to six promising areas: the Northwest Coast, the Northeast Coast, the Gulf of Aqaba, the Gulf of Suez, the Red Sea and the Western Desert. It is considered a reliable source of information and is used as the basis for all governmental
decisions related to wind energy project planning and feasibility studies.
A map of average wind speeds can be found in a study by Mortensen et al. For further information a wind atlas has been published by members of the Wind Energy Division at Risø DTU in Roskilde. ( www.windatlas.dk/Egypt/Index.htm)

A special wind atlas36 for the Gulf of Suez was completed in 2003. The assessment determined an overall potential capacity of 20 000 MW for wind power projects in the uninhabited desert regions to the west of the Gulf. A further brief study evaluated the meteorological data gathered from ten weather stations situated along the Mediterranean coast. Three locations – Sidi Barrani, Mersa Matruh and El Dabaa – were founded to also exhibit suitable characteristics for the installation of wind turbines. The atlas further indicates that large regions of the eastern and western deserts of the Nile River and parts of Sinai are much higher then hitherto assumed.

Framework Conditions for Wind Energy

Within the scope of the Renewable Energy Strategy, 12 % of total electricity supply by 2020 are to be generated by wind power, translating into more than 7 200 MW of gridconnected wind farms. In order to reach these targets, in February 2008 the Egyptian Supreme Council of Energy approved a plan to build 600 MW installed wind capacity per year during the next 12 years, totalling 7 200 MW in 2020. The private sector is targeted to play a key role in achieving the 2020 goal. The government anticipates that
about 400 MW/year will be developed by the private sector, while the NREA will carry out about 200 MW/year. Energy intensive industries are especially encouraged to build and invest in wind warms in order to satisfy their own electricity needs or to sell electricity to consumers via the national grid. The NREA made its first call for proposals in June 2009 (prequalification round). In order to meet the target laid down in the strategy, the government called for 250 MW of wind power this year, to be build on a build-own-operate basis (BOOT) by private actors.

Licensing Procedures

The Egyptian Electric Utility and Consumer Protection Regulatory Agency has prepared rules and procedures for obtaining generation, transmission and distribution licenses. Approval requires a technical and economic feasibility study. The license is valid for a duration of five years and is to be renewed after that. At the end of each year, the license has to be verified. In case of non-compliance with the terms of the license, a penalty procedure was established. The licensee has the right to access the transmission or distribution grids in accordance with a contractual agreement between him and the transmission or distribution company. The Agreement has to be approved by the Agency. The licensee is further obliged to provide an annual report on the licensed activities. The requests for licenses with detailed information on the licensing procedures as well as model framework contracts with distributers and ransmission companies can be downloaded from the Agency’s omepage. The conditions for issuing, amending, suspending, terminating and withdrawal of permits, however, are not sufficiently specified. The transmission and distribution codes lay down the standard specifications for design, construction, modification, operation and maintenance for all generation and distribution assets associated with the transmission grid. The transmission companies have to comply with the transmission code, as well as with performance standards acceptable to the agency, in order to verify the quality of electrical supply and the degree of reliability.

Business Climate

In general, the present conditions for the wind energy sector in Egypt are favourable. Recent analysis from the World Economic Forum and the World Bank indicates that in spite of the global economic crisis, the country competitiveness is increasing and provides favourable conditions for private companies to set up business operations. Measures to remove existing barriers in the electricity sector are being implemented. However, a number of barriers associated to electricity prices and the availability of skilled personnel still remain.
The impact of the global economic crisis on the Egyptian economy has been relative low and in spite of the low growth dynamic, there are no signs of an economic slump.
Measures to cop with the global crisis will positively influence the availability of proper infrastructure for wind electricity transmission and distribution, one of the barriers for the expansion of the sector so far. The government plans to invest around 100 to 120 million $ in the expansion of high voltage grid from Gulf of Suez to Cairo. On the other hand, the impact of the global crisis may also interfere with the efforts of the Egyptian government to deal with the non competitive prices of renewable electricity (see Chapter 1.5). For example, the government has frozen the industry electricity prices until the end of 2009 as a measure to stimulate the economy.

Within the framework of the energy liberalization process (see Chapter 1.4), and in part as a response to the global crisis, the government strives a greater involvement of the private sector in public projects as well as to intensify private investment. European companies such as Gamesa, have provided so far, most of the wind turbines to the projects at Zafarana. In total, the NREA has ordered 405 MW wind turbines from the Spanish company. Recently, Gamesa won an international tender, a 279 million € contract to supply NREA 284 wind turbines with a total capacity of 241 MW. Gamesa delivers turnkey products while the civil and electrical engineering, together with tower manufacturing is contracted locally.

NREA encourages local manufacturing of turbines and other components based on e.g. technology transfer or joint ventures. Previous experience has been gained with small-scale manufacturing of wind turbine components. As of 2005, also repairs and rewinding of generators have been carried out by local companies. The global cable and electric products manufacturer El Sewedy Cables is supposed to start producing turbine towers locally (at Ain El Sokhna) this year in a 50 – 50 joint venture (called SET) with German tower manufacturer SIAG Schaaf Industrie AG. The facility is part of El Sewedy's broader strategy to set up a fully fledged wind farm supplier that assembles
and manufactures wind turbines in Egypt. In 2008, the company bought a 30 % stake in M Torres Olvega, a small Spanish company producing direct-drive wind turbines for 40 million €, including an option to buy the remaining 70 % by March 2011. The company expects to roll out 111 units in 2010 and 256 in 2012 respectively. In the first year, a production of 50 turbines (83 MW) is planed, 225 (435 MW) turbines will be produced in the following four years.

Conditions for private sector to access the wind energy market are favourable and will probably be improved in the near future. As shown in Chapters 1.4 and 1.5, there is a package of instruments in the new electricity law that aim to facilitate the access to the markets. This will support the goal of meeting 87 % and 73 % of the renewable electricity target in the years 2010 and 2010 through private financed projects. Previous experiences, for instance in the gas sector, have been in general positive. The Egyptian government has demonstrated to be a credible partner. So far, one private company has expressed its interest in developing wind energy projects (see Current Use of Wind Energy and Project Pipeline). The tender process is currently taking place.

Independently of the crisis, a remaining obstacle for the development of the wind electricity sector is the availability of skilled workers, which is influenced by two main factors: the lack of specialized study programs and the emigration of well qualified personnel.In general, Egyptian universities and educational institutions do not offer programs that suit the needs of the wind sector, such as advanced studies in mechanical and electrical engineering. Although, there are some initiatives, supported for instance by the GTZ and the Federal Ministry for Economic Cooperation and Development (BMZ), to reform curricula, the process to adapt them is rather slow compared to the fast development in the wind sector. As for the emigration, well qualified Egyptian engineers and technicians usually prefer to work abroad, especially in the Middle East, where loans and economic benefits are substantially better than in Egypt. This may become particularly critical for NREA, since its loans are rather low compared to the private sector.

Solar Energy

Solar energy use is still in its infancy, however, in 2007, the German company Flagsol GmbH won a tender to build a hybrid solar combined cycle plant with a total gross capacity of 150 MW.7 The solar field is located at Kuraymat and is co-financed by the Global Environmental Facility (GEF) and the Japanese Bank for International Development. Commercial operation is scheduled for mid 2010. Egypt plans to extend the solar capacities with further projects of this kind.

Biogas

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Hydro Power

The total installed capacity from hydropower accounted for 2 842 MW in 2008. Hydropower installations include High Dam (2 100 MW), Aswan Dam I (322 MW), Aswan Dam II (270 MW), Esna (86 MW). urrent hydro power projects include the New Hammasi plant with an installed capacity of 4 x 16 MW, which started operations in 2008. For 2014, the commissioning of the New Assuit Barrage hydro electricity plant, with an installed capacity of 32 MW, is projected.

Other renewable Sources

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Political Framework Conditions in the Energy Sector

Egypt has a national energy strategy, although only adopted at the level of the energy policy committee of the governing party. The strategy covers the diversification of the energy mix, higher energy efficiency, a reform of the electricity and the oil and natural gas markets and reduction of energy subsidies. The renewable energy strategy is a fundamental part of the national energy strategy.

The diversification of the energy mix in the electricity sector is one of the main goals of the energy strategy. It aims to reduce the consumption of fossil fuels while increasing the share of renewable energy sources and giving a new impulse to the nuclear electricity program suspended in the 1980s. In February 2008, the government set a new ambitious target of 20 % renewable energy in electricity production by 2020 excluding existing large hydro power plants. Although no nuclear electricity generation targets have been set, the government launched a nuclear electricity plan in 2007. First steps to implement it have already been taken.

Improving energy efficiency is a fundamental part of the strategy as well. It aims at tackling the fast growth of primary energy consumption, which tends to grow as rapidly as or even higher than real economic growth. Although numerous regulations exist for the main energy consuming sectors, implementation and enforcement is often quite low.

The policy on energy subsidies has changed due to the reduction of oil reserves and the financial problems associated with the existing schemes. The domestic natural gas and electricity prices have been adjusted in 2008 in order to cover at least the cost of service. Subsidies are being reduced gradually, first in energy intensive industries, and second in the tourism sector, though energy subsidies for the average consumer are not expected to change significantly.

With regard to the energy market, the adopted energy strategy aims to establish a fully competitive structure, where electricity production, transmission and distribution activities are fully unbundled. The strategy should also create favourable conditions to achieve the 20 % renewable energy in electricity production.

Liberalisation

Article 7 of Law No. 100 dating from 1996 stipulates that local and international investors can obtain concessions for building and operating electricity plants. A new investment law enacted in 1997 includes various incentive mechanisms such as state guarantees for investors. At the time of contract negotiations concerning the supply of electricity from privately built power plants in the late 1990s, an initial public offering of stock in all seven of Egypt’s state-owned monopolistic electricity providers was in preparation for the Egyptian stock exchange. However, due to lack of interest among investors, the plan was never implemented. The last significant step of reform took place in 2000, when the Egyptian Electricity Authority was restructured to become the Egyptian Electricity Holding Company (EEHC). That conversion is regarded as a step towards a more entrepreneurial approach because, for example, EEHC is expected to finance future projects from its own budget without governmental intervention. The conversion also included the break-up of formerly vertically integrated utility companies into individual enterprises each of which is now an independent company with its own, autonomous management and separate accounting. EEHC was created as a new approach to the privatization of its subsidiaries, but no part of any state-owned enterprise has been privatized by now. Via EEHC, the Egyptian government still controls 90 % of all electricity production and is maintaining its monopoly on transmission and distribution. Until today three privately operated power plants with foreign investors have been built according to the build-own-operate (BOO) principle (Sidi Krir, Suez and Port Said), representing approximately 10 % (2 049 MW) of the current installed generating capacity.

Within the context of the new energy strategy and the ambitious renewable energy targets, recently, there has been some effort to create a more competitive electricity market in order to attract investors from the private
sector. The draft of the new Electricity Law, which is currently in the process of ratification by the People’s Assembly, is supposed to establish a liberalised electricity market, regulated by the Egyptian Electric Utility and Consumer Protection Regulatory Agency EEUCPRA. Article 20 – 22 of the draft law addresses the replacement of the current Single Buyer Model and allows for third party access to the electricity grid. The access to the electricity grids will be based on published tariffs and longterm electricity purchase agreements. Moreover, the government states that it plans to remove all energy subsidies by 2017.

Important Laws and regulations

The most important instrument to implement the energy strategy is the New Electricity Law, which is currently in the process of ratification by the People’s Assembly. The new law will:

• Establish a liberalized electricity market with various market participants, regulated by EEUCPRA
• Improve the conditions for renewable energy, cogeneration and demand side management in the electricity sector
• Provide some rules for electricity consumption and includes measures to encourage renewable energy electricity production.

With regard to renewable energy electricity generation, the law foresees that the private sector builds, owns and operates the projects and sells the electricity to the transmission company (EETC) under long term Power Purchase Agreements (PPA). Non-renewable energy based Independent Power Producers (IPPs) conclude bilateral purchase agreements with eligible consumers.

Framework Conditions for Renewable Energies

Strategy and objectives for renewable energies

Egypt’s renewable energy strategy was formulated in the early 1980s as an integral part of the national energy planning. This strategy has been revised and adapted according to the changing financial, market and technological framework conditions. The target of a 20 % renewable electricity by 2020 (around 12 000 MW) is highly ambitious compared to the previous target set in 2000 of 14 % RE-E by 2021/22.

Legal conditions and support Schemes for renewable Energies

To implement the strategy, a two phase policy is planned:

• Phase 1 will adopt competitive bids through issuing tenders requesting the private sector to supply electricity from renewable energy sources. A PPA agreement, mostly for 20 years, will be guaranteed. This competitive bidding is based on existing law, which also supports the existing IPP.
• In Phase 2, a feed-in-tariff will be implemented, in particular for medium and small size projects. This will be based on the new electricity law.

Further support instruments are the right of access and priority dispatching for electricity generation from renewable sources, which is already implemented, whenever they are available and the establishment of a Renewable Energy Fund. This fund will support the renewable energy activities of the MEE and the MoP covering the deficit between the renewable energy costs and market prices as well as providing financial support to pilot projects. It will be mainly financed through a levy on subsidized fossil fuel sales for electricity generation.

Competitive bids

It is planned to tender a total of 2 500 MW through five bids, divided in blocks of 250 MW. The framework criteria for the tenders include:

• Controlled increase of the renewable based electricity capacity according to the capacity of transmission system and the capacity of the market.
• Attracting highly qualified international developers with strong financial status and high capacity for technology transfer.
  
• Promotion of local manufacturing. In the evaluation of the proposals, advantages will be given to those offers having higher share of locally manufactured components.
  
• Achieving the lowest possible prices.
  
• Reducing the financial risk for investors guaranteeing long term PPAs (mostly of 20 years). The first process has started with a prequalification tender for 250 MW in Gabal el Zeyt. The last tender will be opened by 2017.
  

Feed-in-tariff

The system is supposed to offer incentives to install 2 500 MW of additional capacity. It is addressed to small and medium size projects up to 50 MW. The tariff will be probably set for 15 years, taking into consideration wind speed and installed capacity. The system is still under elaboration.

Clean Development Mechanism

Egypt’s Designated National Authority (DNA) was established in 2005, serving as the contact point for all CDM-related matters. Organizationally, it is part of the Egyptian Environmental Affairs Agency (EEAA). Egypt’s current climate change mitigation policies, plans and measures relevant to CDM are contained in:

1. The National Environmental Action Plan (2002 – 2017).
2. Egypt’s Climate Change National Action Plan (ECCNAP).
3. Egypt’s National Strategy Study Program on CDM.
4. Egypt’s National Energy Efficiency Strategy (NEES)
Currently, four CDM projects are registered. Minor corrections have been requested for one project. In April 2009, 18 projects were in the DNA pipeline, of which nine were renewable energy
projects. The CDM potential in Egypt has been estimated at 69.75 Mt CO2eq, of which around 21 % is in the renewable energy sector.27 As shown in table 10, the total annual savings of the registered RE projects amounts to 0.62 Mt CO2eq. This represents 5 % of the existing potential
in the renewable energy sector and around 1 % of the whole potential.

Institutional Set-up in the energy sector

Egyptian Ministry of Electricity and Energy

The first Ministry for Electricity and Energy was established in 1964. The Ministry supervises the Egyptian Electricity Holding Company as well as the New and Renewable Energy Agency (NREA) and the Rural Electrification Authority (REA). Next to supervising all activities related to energy projects, it suggests electricity prices and publishes data and statistics relating to electricity production.

Regulatory authority EEUCPRA

The Egyptian Electric Utility and Consumer Protection Regulatory Agency (EEUCPRA) was established by decree in 1997 (Decree no. 326 of 1997: »Establishing the electric utility and consumer protection regulatory agency«).The regulatory authority is located in Cairo and came into formal existence in 1998.

The primary task of the regulatory authority is to balance the interests of electricity producers, electricity providers and end users. It is supposed to ensure a reliable longterm supply of electricity while promoting and supervising environmental protection and operational reliability in the energy sector. It is also responsible for licensing the construction and operation of electricity generation, transmission and distribution facilities as well as for electricity trading. One of the authority’s declared objectives is to create an enabling environment for market-based competition within the framework of existing laws and to prevent the formation of commercial monopolies in the energy sector. EEUCPRA's Board of Directors is nominated by the Ministry of Electricity and Energy.

New and Renewable Energy Authority (NREA)

The Ministry of Electricity and Energy established the NREA in 1986 for the purpose of bundling activities aiming to promote both renewable sources of energy and energy efficiency. NREA is the operator of all wind power installations in Egypt, including the demonstration projects in Matrouh administrative district (hybrid wind/diesel system) and Hurghada (5.5 MW wind farm), as well as the grid connected Zafarana wind farms on the Gulf of Suez (reaching 425 MW by mid 2009 and still expanding).

With the new general orientation towards private sector involvement, NREA also engages in supporting private investment in wind energy by providing resource assessment, the necessary data for feasibility studies and technical support for potential project developers, and by being the partner in land use agreements.

Moreover, the NREA has a central laboratory for testing and certifying apparatus and equipment for utilizing renewable energy resources. Finally, the NREA offers training and upgrading courses, organises workshops and conducts studies – both on its own and in cooperation with international partner organisations.

Egyptian Environmental Affairs Agency (EEAA)

The EEAA was initially established in 1982 and restructured in 1994, according to Law 4/1994. The EEAA serves as the executive arm of the Ministry of State for Environmental Affairs (MSEA). Its administrative council is composed of the Minister of Environmental Affairs, the Chief Executive Officer of the Agency and representatives from relevant ministries, Non-Governmental Organisations (NGOs), the public business sector, universities and research centres. The Agency’s activities are financed by the Environmental Protection Fund (EPF), which is funded by donations and grants by national and foreign organizations, as well as fines and compensation awarded by courts of law. Principal functions of the agency include the formulation of environmental policies, the development and monitoring of projects and the implementation of pilot projects. The agency is further the national authority in charge of promoting environmental topics between Egypt and third parties.

Egyptian Electricity Holding Company (EEHC)

The government-owned and operated Egyptian Electricity Holding Company (EEHC) coordinates, supervises and monitors the activities of its 16 (+1 - Includes NREA –actually a research institute – also presents itself as the operator of the Zaafarana wind farm-therefore included as a electricity production company) affiliated companies in the field of production, transmission and distribution of electric energy. The EECH subsidiary EETC is responsible for the countrywide transmission of electricity to regional and local distributors. Next to the EETC, there are six generating and nine distribution companies. The EEHC is supervised by the Egyptian Ministry of Electricity and Energy (MEE).

Egyptian Wind Energy Association (EGWEA)

The EGWEA is the umbrella organisation, representing the wind energy sector in Egypt. It assists interaction and co-operation between all relevant players with professional involvement in the field of wind energy. The EGWEA is organised in a global network of wind associations. It aims at promoting and supporting the development of wind energy in Egypt by providing the means to facilitate the exchange of technical information, expertise and experience in the wind energy sector. It conducts studies, provides information on tenders and conferences and organises workshops for interested parties. IEGWEA is particularly interested in bringing forward wind energy interests of Egypt. However, the association is also engaged in the promotion of wind energy in developing countries in general.

International donor activities

Egypt is one of the priority partner countries of the German development assistance. In the last 50 years, Egypt has received approximately 5.5 billion € development aid. The current focus areas of the bilateral cooperation are water management, renewable energies (wind, solar and
hydro power), energy efficiency and climate protection. Within the framework of the German development cooperation, two initiatives to promote renewable energies
and energy efficiency were launched in 2008:

• The Regional Center for Renewable Energy and Energy Efficiency (RCREEE), based in Cairo. Key development partners in setting up RCREEE are Egypt, Germany, Denmark and the EU Commission. Besides Egypt, other Arab members of the RCREEE are Algeria, Jordan, Lebanon, Libya, Morocco, the Palestinian National Authority, Syria, Tunisia and Yemen. RCREEE formulates and disseminates policies in support of RE and EE in the region and provides a platform for the regional exchange on policy issues and technological questions. In addition, RCREEE encourages the participation of the private sector to promote the establishment of a regional RE and EE industry. The German development cooperation provides assistance for the establishment of the Center and the formulation of the initial work program by GTZ.
  
• The Egyptian-German High Level Committee on Renewable Energy, Energy Efficiency and Environmental Protection JCEE, is a bilateral Egyptian-German initiative. The JCEE is a platform for energy policy discussion, for developing initiatives for investment as well as institutional projects, awareness and capacity building activities and establishing contacts and exchange between the two countries. The project is financed by the Egyptian Ministry of Electricity and Energy and the German Federal Ministry of Economic Cooperation and Development (BMZ). The implementing partners of the cooperation are NREA and GTZ.
  

In addition, financial assistance is provided by the German Kreditanstalt für Wiederaufbau (KfW). Kf W provided a reduced interest loan to rehabilitate the hydro electricity plants at Aswan and additional loans for the construction of medium sized hydro electricity projects at the Nile River. In the wind energy sector, Kf W provided loans to finance an important part of the wind farm in Zafarana and is supporting a new wind farm in Gabal El Zeit through loans jointly with the European Investment Bank.

Apart from Germany, Denmark, Japan, Spain and Italy are the most important partners providing assistance for developing renewable energies.

At European level, a Memorandum of Understanding to enhance EU-Egypt energy cooperation was signed in December 2008. The priority areas covered are, among others, the development of the Egyptian energy strategy, including the market reform, the convergence of Egypt’s energy market with that of the EU, the promotion of renewable energy and energy efficiency, the development of energy grids as well as technological and industrial cooperation.

Financial and technical assistance is provided by international organizations as well. These include the World Bank, the UN organisations UNDP, UNIDO and UNEP as well as the African Development Bank. For instance, Egypt is one of the first countries to present a portfolio within the framework of the Clean Technology Fund established by the World Bank in 2008 to finance RE and EE projects. Egypt plans to use $300 million in concessional financing from the fund, blended with financing from the World Bank Group, the African Development Bank, bilateral development agencies, private sector and other sources to spur wind power development and introduce clean transport options. The projects include a transmission grid extension for transporting electricity from Gulf of Suez-based wind farms.

Existing Projects

Wind Energy

Egypt has passed the stage of initial resource assessment and demonstration projects (Hurghada wind farm) towards the planning and implementation of large scale grid connected projects (Zafarana and Gulf of El Zayt). A series of large-scale wind energy projects have been built in Egypt, resulting in a total installed wind capacity of 390 MW at the end of 2008.

So far, large scale wind projects were established mainly at Zafarana, with a total capacity of 360 MW by end of 2008. In cooperation with Germany, Denmark and Spain, the farm has been constructed and operated in stages since 2001. A partnership with Japan in 2008 added 55 MW. In the fiscal year 2007/2008, approximately 840 GWh of electricity were generated by the Zafarana wind farm with an average capacity factor of 35.5 %, saving 466 000 tons of CO₂.

NREA has precise plans for wind farm development at the two sites Zafarana and Gulf of El-Zayt. While at Zafarana a capacity of 600 MW on 150 km² is planned, total capacity at El-Zayt will reach 720 MW on 200 km². Between both areas, 1 300 km² have been designated to private investors, which are supposed to generate up to further 6 000 MW.

Projections for Zafarana between 2009 and 2010 include additional 75 MW in co-operation with Japan, and additional 120 MW in cooperation with Denmark. In total, Zafarana will host 555 MW of grid connected wind power, rendering it the largest wind farm in Middle East and Africa.

At the Gulf of El Zayt, various projects have been developed and will add up to 720 MW.
720 MW are expected in three stages: 200 MW in cooperation with Germany, 220 MW in cooperation with Japan, and 300 MW in cooperation with Spain.

In addition, a number of private companies have expressed interest in developing large-scale wind projects at the Gulf of El Zayt. Among them, the Italian company Italcementi signed a MoU with the Egyptian government in 2006 to install 120 MW with the possibility for extension to up to 400 MW. The output is supposed to partly generate electricity for auto-consumption in the cement factories in the Suez area.

On 2 August 2009, authorities have approved the designation of 1.5 million acres of state-owned land, located on the east and west of the Nile River for the implementation of wind farms, which are supposed to contribute 30 000 MW. One-third of this land will be developed for wind energy production by NREA and multinational organisations, whereas two-thirds will be offered to the private sector by bid-procedure.

Egypt Green Economy National Inititiative

Egypt recently faces several challenges: first, there is a widening gap in meeting basic needs of the population (food, health, education, housing and decent and secure jobs); second, its global and regional leadership in political and economic terms is called into question; third, Egypt has to win the race against time before water, energy and food scarcity become national security risks, and, forth, its export market share and investment in 21^st century technologies, growth sectors and industries is contested.

Therefore, the Egyptian National Competitiveness Council in cooperation with in cooperation with the Ministry of State for Environmental Affairs and the United Nations Environment Programme launched the " Egypt Green Economy National Initiative " on January 23, 2011.

Egypt's Competitiveness Strategy (ECS) is one part of the intitiative. It focuses on human development, green transformation and innovation.

These goals shall be reached by the ECS by the following:

• Human Development: Create a globally competitive and productive workforce in an efficient labour market with a special focus on a modern educational and training system that equips them with skills, critical thinking and technologies to adapt to a constantly changing environment.
• Green Transformation: To build a model of growth based on a Green Transformation of the economy assuring a modern, efficient, competitive and low-carbon economy that uses the unique availability of abundant renewable energy resources and builds on its strength in tourism and logistics.
• Green Innovation: To establish an outcome driven innovation model that addresses the major societal challenges and strenghten Egypt's leadership in key potential technologies: renwable energy, agri-business and communication technology.

Publications

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External links

• Egypt's Government Services Portal
  
• Egypt's entry at The World Factbook