Will we finally get movement in our waste-to-energy sector? The government has long touted waste-to-energy (WtE) projects as an attractive investment for private sector players and a potential solution to the country’s massive waste problem. After introducing a new law to regulate waste management and incentives to private firms to get into the WtE sector, the state and private-sector partners have eight waste-to-energy projects worth EGP 10 bn in the pipeline, including a USD 120 mn WtE plant in Abu Rawash city. So where do those plans stand — and is the environment sufficiently attractive to entice private players?

Abu Rawash is the poster child for our WtE ambitions: In April, a consortium led by Renergy Egypt signed to design, build, own, and operate the government’s new waste-to-energy factory in Abu Rawash. Joining Renergy in the project are the National Organization of Military Production, Green Tech Egypt and Bahrain-headquartered Oak Group Holdings.

The USD 120 mn plant will convert some 1.2k tons of municipal solid waste per day to 30 MWh of electricity. The consortium will handle the entire project for a 25-year period before transferring ownership to Giza governorate. While we don’t yet have a timeline for when the facility is expected to come online, we do know that it’s in line for a golden license meant to fast track the construction process.

More projects will likely get the greenlight this year: The Waste Management Regulatory Authority (WRMA) plans to sign several agreements with eight companies that have been shortlisted for phase one of a planned national WtE project, Dr Khaled Al Furra

consultant for the WRMA told Enterprise. Earlier in April, Finance Minister Mohamed Maait said that eight WtE projects worth EGP 10 bn are in the pipeline.

Companies on the shortlist to build WtE plants include: Orascom Construction and Qalaa Holdings, Hassan Allam Holding and Elsewedy Electric, the military’s Arab Organization for Industrialization in partnership with a Dutch consortium and MEDAF Holding, according to Al Furra. The plants would be located in Alexandria, Fayoum, Giza, Gharbia, Beheira, Damietta, Menoufia, and Sharqiya governorates, Maait said in April.

These plants are part of an ambitious longer-term strategy: The government wants to generate 300 MW of electricity from WtE projects by 2025, the Electricity Ministry said back in 2020.

And a new gov’t authority is responsible for overseeing tenders: The government wants this new WtE capacity to be largely built and operated by the private sector under the Build-Own-Operate (BOO) model. The Waste Management Regulatory Authority — a body created by the Waste Management Act, which came into force last year — is responsible for publishing tenders for new WtE projects as the key regulator for the waste management sector.

WtE tenders could be a draw for FDI: The companies shortlisted for WtE projects are required to invest in hard currency, Al Furra said, estimating that the total investment value of the projects set to be signed this year will range between USD 750 mn and USD 1 bn.

Financing is available: WtE projects are eligible to apply for the government’s subsidized 11% loan program, Al Furra told us — as long as the initial investment comes in USD and from outside the Egyptian banking sector.

But some players want a boost to incentives: The feed-in tariff (FiT) rate for WtE plants — the set price that the government pays for the electricity they generate — hasn’t changed since it was set at EGP 1.40/Kwh in 2019 — the equivalent of around USD 0.08 at the time. Successive devaluations of the EGP in the past year mean that the FiT is “no longer competitive” and needs to be reconsidered, said Mahmoud Abouelnaga, a fellow at the Center for Climate and Energy Solutions. The rate should be increased to some EGP 2.60/Kwh, he said, bringing it back up to around 0.08 in USD terms — almost the same as the second-phase FiT rate for solar power producers.

It’s not only a question of incentives: Companies interested in entering our WtE sector need more information on the types of waste held at landfills, says Abouelnaga. WtE plants can produce more energy using non-organic waste — plastics or glass, for example — than organic waste such as biodegradable materials. That means the composition of available waste is key to figuring out how profitable a project may be. Because informal waste collection systems continue to be the norm, most non-organic products — which tend to be recyclable or reusable — are removed from waste before it arrives at landfill.

What needs to happen next: Creating a national waste infrastructure where waste is collected and sorted and records are maintained of the type of waste held at landfills would allow companies to calculate anticipated costs and energy generation, Abouelnaga suggests. He estimates that such an infrastructure could take 5-10 years to implement.

Your top green economy stories for the week:

  • India’s Ocior Energy has inked preliminary contracts with the government to set up a USD 4 bn green hydrogen plant in the Suez Canal Economic Zone.
  • India’s ReNew Power could break ground on its USD 8 bn green hydrogen plant in the Suez Canal Economic Zone early next year.
  • Green Sharm: The Environment Ministry launched yesterday a project dubbed Green Sharm which aims at transforming the Red Sea resort town into a sustainable city.
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