Solar energy in EgyptGreen Power in Egypt: The new feed-in tariff scheme

Special Report

Published: September 2014

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Summary

Power outages in Egypt have intensified over the last two years especially in summer months. The growth in installed and actual production capacity could not meet an uncontrolled increase in domestic consumption of electricity. This was brought about by both insufficient investments into production infrastructure, the inadequate supply of fuel (partially due to accumulation of areas to foreign oil companies and freezing of new concessions), and the pickup in illegal consumption of electricity. To partially reduce household power cuts, the government opted to redirect natural gas supplies from the industrial sector to households, leading to extended periods of production disruptions in the manufacturing sector. Increased reliance on renewable sources to generate electricity had long been contemplated by all stakeholders but actual electricity production from these sources remained limited due not only to the lack of proper investment incentives but also the absence of a solid regulatory framework, a prerequisite for long-term investment decision.

In 2012/13, electricity production from renewables (solar and wind) represented only 1% of total electricity produced. According to news sources, the Egyptian government is planning to launch tenders for the construction of 2 GW solar power plants to come online by June 2015, and 2 GW wind power plants to fully operate by end of 2015.

On September 20, 2014, the Ministry of Electricity and Renewable Energy announced details of the new tariffs for purchased electricity to be produced by the private and household sectors using renewable solar or wind energy. The new tariff scheme aims at encouraging private investments into green power generation to help meet Egypt’s soaring energy demand and needs. Prior to the new scheme, the government paid an average of EGP 0.47 per 1 KW. The government aims at increasing the amount of generated solar power from 20 MW to 2,300 MW as well as increasing wind power production from 547 MW to 2,000 MW.


Table of Contents

I. Introduction

II. Solar Power

  1. The New Feed-in Tariff Structure
  2. Maximum Production
  3. New Financing Options
  4. Dollar Anchoring for Large-scale Projects
  5. Land Use Agreements
  6. Customs on Imports

III. Wind Power

  1. The New Feed-in Tariff Structure

Phase 1: 5 years

Phase 2: 15-20 years

2. Land Use Agreements

3. Customs on Imports


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