With power cuts and electricity prices due for a hike, why aren’t more households making the shift to solar? The Madbouly government is working to phase out electricity subsidies, yet households remain hesitant to install PV cells. We speak to industry experts to understand the obstacles preventing people from using solar power and find out what can be done to increase solar demand.

IN CONTEXT-

We’re bracing for electricity price hikes: The government will hike electricity prices in July with the beginning of the new fiscal year. On average, the hikes will exceed 20%, but studies and discussions are still underway to determine the new prices.

Electricity subsidies are on the way out: The Madbouly government in 2020 laid out aroadmap to phase out subsidies by 2025 — pushing back an existing July 2022 deadline that was already an extension of a 2019 deadline penciled in way back in 2014. Most recently, Prime Minister Moustafa Madbouly said that the Electricity Ministry will work on a plan as to how the government can completely cut its spending on electricity subsidies over the coming four years

Green investment on the rise globally: The International Energy Agency (IEA) expects global energy investment to exceed USD 3 tn for the very first time this year, USD 2 tn of that will go to clean energy technologies and infrastructure.

Trying to boost local demand: Solar power players are currently working to attract more customers – be it residential or commercial, Hatem Tawfik, Cairo Solar managing director, told Enterprise. The Sustainable Energy Development Association has put forward a number of proposals aimed at accelerating residential demand for clean energy, particularly solar energy, Tawfik added.

INCENTIVES ARE KEY-

Solar companies need a helping hand: Solar plant components have become very expensive to import, especially after the float of the EGP, Tawfik explained. Some 70% of the costs of solar power plants are denominated in USD due to the import of solar panels, BeNeshty Solar Chairman Romany Hakeem previously told us, adding that some of the solar companies have opted to locally assemble solar panels to cut down the installation costs.

Other obstacles include: Private sector players can’t use the state’s electricity grid to transmit electricity to their end clients — the state is working on resolving this issue, having recently launched an initiative which will allow the private sector to use the state’s electricity grid to transmit electricity to their end clients.

To help sweeten the pot the state should look into introducing custom breaks for PV cell imports to help solar power players cut down on costs, Hakeem said. He also pointed to possibly introducing VAT breaks, a move which would cut down on the cost of solar plants by 20-25%.

It’s a good offer: Whatever losses the state ends up suffering from these proposed tax and custom breaks will be compensated by a reduced natural gas bill, he added.

MEANWHILE, on the client side: Clients looking to install solar PV cells on their roofs are faced with a cap on the amount of energy they can produce and issues concerning roof ownership. They also have to decide on one of the many private solar companies in the market, each of which offers different installation fees and net metering.

This raises the need for customer-focused incentives: Tawfik suggests that customers should receive tax incentives, such as property tax breaks, when installing PV cells on their rooftops.

That could also include: Allowing residential buildings to share or sell excess energy, similar to the system in place for industrial facilities, could stimulate solar energy use, Tawfik said. He also proposed creating a mechanism for establishing low-capacity plants, to attract low-consumption households. Collective plants within residential neighborhoods, under a single distribution company, could further drive sector growth with standardized procedures and fees.

Also preventing the shift to solar: The 10-kWh cap on residential solar production is holding households back from making the shift to solar, Hakeem said, adding that some households need between 15-25 kWh to keep the lights on. Meanwhile, larger units like hospitals and warehouses can’t even get the greenlight to install PV cells due to the production cap.

EFFORTS ARE ALREADY UNDERWAY TO INCREASE SOLAR USE-

The state has taken some steps in the right direction: The government launched a website earlier this year to streamline the installation of solar panels for households and companies in a bid to fast-track its goal of increasing the share of renewables in the country’s energy mix as it eyes generating 42% of electricity from renewable sources by 2030.

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