HomeIndustry SectorsBusiness and marketsHow Egypt banks on renewables to meet likely energy demand surge

How Egypt banks on renewables to meet likely energy demand surge

Egypt is turning to renewables to meet a soaring demand in energy. If it meets the targets it will become a pioneer in the African energy landscape, but are the plans realistic?

Toufik Khitous, the business development manager for North Africa at Wärtsilä Energy Business, says Egypt has no choice but to invest in renewables, but wonders whether the country has considered all the variables.

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As one of the most populous and fastest-growing nations in Africa, with a population of more than 100 million, Egypt has prioritised providing electricity to all citizens.

To ensure continuous security and stability of energy supply the country has launched the 2035 Integrated Sustainable Energy Strategy (ISES), which aims to set up the development of the country’s renewable energy and energy efficiency.

Egypt wants to produce 20% of its electricity using renewable sources by 2022 and 42% by 2035. “For the second target the goal is for wind to provide 14%, hydropower 2%, and solar 25%,” explained Khitous.

Ambition driven by necessity

“This is a hugely ambitious energy plan, but it is one that is necessary for Egypt to flourish,” said Khitous.

In order to diversify its mix of power sources, Egypt wants to introduce nuclear power and is developing a few megaprojects, which should bring a massive amount of gas into the mix.

Egypt wants to produce 20% of its electricity using renewable sources by 2022 and 42% by 2035.

“This is in stark contrast to 2014 when, due to electricity shortages, Egypt was forced to introduce more coal into its energy mix in order to lower its dependence on imported gas,” explained Khitous.

Rising demand, the falling cost of renewable energy and the discovery of new natural gas sources though have allowed Egypt to become an exporter of gas as it diversifies its energy mix to include more renewables.

Egypt has signed up to the United Nations Framework Convention on Climate Change, which means it has no option but to reduce its dependence on fossil fuels.

The spillover effect

Tapping into renewables will enhance the country’s economic growth and bring in foreign currency revenue. “The increased usage of renewable energy is expected to lead to exporting fossil fuels or using them in other areas domestically, such as industrial production.”

“The transition to renewable energy sources is also expected to help local business in Egypt, since the cost of electricity is an essential factor for business owners. While solar power and sustainable electricity is not widely available in the country yet, there is merit to Egypt’s plan to tap into renewable energy sources in the long run. More factories will lean towards sustainable renewable energy sources if it is economical, due to the cost of production and increasing price of electricity,” said Khitous.

Need of the hour

But, as Khitous points out, Egypt needs to overcome infrastructure and geographic hurdles if it is to leverage any of the benefits of transitioning to renewable energy.

Solar panels in Egypt. Source: Wärtsilä Energy.

An International Renewable Energy Agency (IRENA) report sets out recommendations for the measures Egypt must consider to achieve its 2035 ISES goals.

Egypt’s electric power sector strategies need updating to reflect the growing cost advantages and other benefits of renewable energy. IRENA also suggests Egypt needs to reform its existing market framework to improve the economic feasibility of projects.

Many of the regions in the south of Egypt, on the other side of the river Nile, are not connected to the national grid. “Egypt is very keen to invest in the tourism sector along the Red Sea, meaning there is a need for not only infrastructure but also the power to supply these regions.”

Egypt’s energy situation has changed since 2011. Today the issue is distribution rather than consumption and its tradition of setting its energy distribution vertically has a negative impact on how energy is consumed.

“But, this can change since we are starting to see more industries coming into the country as Egypt is encouraging private sector participation.”

What lies ahead?

Between 2022 and 2022, Egypt plans to install an additional thermal power plant and two clean coal technology plants, which should then exceed the nation’s peak power and electricity demands.

Of the 2022 renewable energy targets, both solar and wind are considered achievable. The Benban Solar Complex project, which at a total installed capacity of 1.8GB would be one of the largest solar PV power plant projects in the world, is foreseen to come online alongside a number of utility-scale wind farm projects in the Gulf of Suez.

“Egypt certainly has a lot of unanswered questions at present, but it does seem to be on the right track. Three big parts – gas, sea turbines and renewables – need to play their part going forward. The country has no choice, it must invest in renewables. The sector at the moment only makes up around 2% of the energy mix, but these announcements could take it up to 20%. This is almost a revolution,” said Khitous.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.