Where the global electricity grid is at, what it needs, and where Egypt’s grid stands right now: To secure sustainable electricity supplies and meet climate targets, the global electricity grid needs to double in size by an additional 80 mn km by 2040, according to the International Energy Agency’s (IEA) maiden Electricity Grids and Secure Energy Transitions report (pdf). Upgrades are needed as global electricity demand grows over the next few years, with the IEA predicting demand to grow at a rate of 2.7% annually if countries were to meet national climate targets.

Developing countries will see a faster increase in demand: Demand in emerging markets and developing countries is expected to increase at a rate of 3.1% per year, accounting for two-thirds of global electricity demand, according to the IEA.

By the numbers: The global electricity grid as of 2021 stood at a total of 80 mn km of overhead power lines and underground cables — with an annual expansion rate of 1 mn km over the past 50 years — equivalent to “a hundred trips to the moon and back,” the report states. To meet current national climate targets, annual grid investments should be increased to USD 600 bn by 2030, a feat in itself amid sluggish investment stagnating at USD 300 bn per year over the past decade.

The problems facing electricity grids now: A large portion of global electricity grids are aging, the report explains. Only 23% of the grid infrastructure in advanced economies is less than 10 years old, and more than 50% is more than 20 years old. Some 40% of developing countries’ grid infrastructure — most of which was developed recently — is under 10 years old, and less than 38% is over 20 years old, according to the report. Another challenge facing grids is supply chain issues, which impact key material used for grid infrastructure, including steel, copper and semiconductors, the report added. Purchasers can currently face delays of over 18 months due to labor market tightness and soaring material prices on the back of the war in Ukraine.

Outdated grid infrastructure could hold back renewables integration: One of the major challenges the report outlines is the abundance of green energy sources that might not be effectively utilized given the outdated grid infrastructure that is unsuited for supporting renewable energy sources.

What’s at stake? The report details a potential scenario — a “Grid Delay Case” — where carbon emissions could surge by an additional 60 bn metric tons between 2030 and 2050 if countries fall behind in expanding and upgrading their grids sufficiently enough to accommodate renewable sources of energy.

Egypt is working on modernizing its grid: Egypt’s grid is already undergoing an upgrade, backed by the European Bank of Reconstruction and Development (EBRD), Egypt’s key partner in the Nexus for Food, Water and Energy (NWFE) energy plan. The grid might receive up to EUR 165 mn from EBRD for upgrades towards decommissioning an outdated gas-powered energy plant, upgrading a couple of small-scale substations, and building a 200 km transmission line that will transmit some 2.1 GW of renewable energy from wind plants in the Gulf of Suez. The EBRD pledged in 2022 to fund the decommissioning of gas-fired power plants with a 5 GW capacity by 2025.

We’ve already made strides over the past few years ahead of an increase in renewables capacity: We’ve poured up to EGP 400 bn to develop the local grid, with an eye toward transforming Egypt into an energy hub in the region, a ministry source tells Enterprise. To this end, Egypt has devised a plan for the next decade, lasting until 2035, to replace damaged and hazardous power lines with new high-efficiency ones, our source said. We’ve upped targets for renewables as a share of our total energy mix to 42% by 2035. The government also aims to add some 4.1 GW of renewable capacity by 2027.

Interconnected grids go a long way: One of the ways to upgrade global grid infrastructure and upscale their capacities is to expand grid interconnection within and between countries, the report says. The benefit of interconnected grids is that they allow countries with surpluses to transfer clean energy sources to those with high demand or lower energy capacity.

Egypt has connected its grid to several in the region, with many more coming up: Egypt’s grid is currently linked with Jordan, Palestine, Libya, and most recently Sudan, with plans to export around 15 GW of the excess capacity to neighbors in Europe, Africa, and the GCC.

We have regional grid interconnection projects with Saudi Arabia, Iraq, Jordan and Africa, with the Egypt-Saudi interconnection set to go live in mid-2025 with a 1.5 GW initial phase. The government also intends to draw in funding in order to commence the planned electricity interconnectors with Europe, our source said.

REMEMBER- There are five proposed projects to link Egypt’s power grids to Europe; if implemented, Egypt would be exporting its surplus of generated electricity through high-voltage direct current cables to Italy, Cyprus, and Greece.

The private sector is a key player in grid expansion: The IEA identified bringing in the private sector as a key stakeholder in the grid industry, whether through awarding long-term concessions or through privatization, as another strategy to establish an enhanced and flexible energy sector. Engaging the private sector would strike a balance between risk allocation, cost reduction, competition stimulation, and service quality improvement. This aligns with the findings of the 2023 joint report issued by the International Finance Corporation (IFC) and the IEA, which identified that countries’ sole reliance on public funds for expanding electricity grids is bound to fail in delivering global energy access and addressing climate change.

We’re also getting closer to privatizing our grid: Officials from Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) and the European Bank for Reconstruction and Development (EBRD) recently held talks with a number of private sector players — including representatives from Elsewedy Electric, Orascom Construction, and KarmSolar — to look into opening the local electricity market to the private sector, sources reportedly told Al Borsa. The talks also looked into draft agreements for private-to-private sector projects. Another Al Borsa report earlier this year suggested that the government will likely move to open up the grid to the private sector in 2025.

REMEMBER- The EBRD is advising Egyptera on improving its regulatory framework to promote a more competitive market and increase the private sector’s role in producing, distributing, and selling power. Private-sector players have long been asking for the ability to use the state’s electricity grid to transmit electricity to their end clients. Currently, clients operating solar and wind facilities generate electricity and sell it to the state under a long-term offtake agreement.

Your top infrastructure stories for the week:

• Intro + Siemens to build CHP plants in Egypt and the region: Intro Group subsidiary Intro Sustainable Resources will work with Siemens to build 300 MW of combined heat and power (CHP) plants in Egypt and the region by 2030.
• 5G licenses could soon be up for grabs: The National Telecommunications Regulatory Authority (NTRA) is planning to issue a tender for Egypt’s first licenses to provide 5G services as early as December.
• Egypt to launch network of “green food centers”: The Madbouly government will establish 17 logistics hubs for the wholesale of fruit and vegetables — which the government has dubbed “ green food centers ” — in concert with the private sector.
• A new Beni Suef dry port in the works: Samcrete Holding’s industrial arm, Industrial Development Group (IDG), has “ initiated the process ” to ink an MoU with Alexandria-based logistics company Star Shine Shipping & Logistics (SSSC) to develop and operate a new dry port in Beni Suef.