{"id":569924,"date":"2020-03-11T04:16:40","date_gmt":"2020-03-11T04:16:40","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/why-egypt-looks-set-to-be-a-regional-leader-in-electricity-for-the-next-nine-years\/"},"modified":"2020-03-11T04:16:40","modified_gmt":"2020-03-11T04:16:40","slug":"why-egypt-looks-set-to-be-a-regional-leader-in-electricity-for-the-next-nine-years","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/why-egypt-looks-set-to-be-a-regional-leader-in-electricity-for-the-next-nine-years\/","title":{"rendered":"Why Egypt looks set to be a regional leader in electricity for the next nine years"},"content":{"rendered":"

<\/a> Why Egypt looks set to be a regional leader in electricity for the next nine years: <\/strong>We\u2019re setting aside our covid-19 talk of last week to look beyond the current crisis in the infrastructure, where Fitch Solutions\u2019 BMI Research Egypt Power report (paywall)<\/a> on Egypt\u2019s electricity sector is on track to generate an exportable surplus. The report sees Egypt increasing power generation to 265 terawatt hours (TWh) by 2023 from 231.5 TWh this year. This will allow it to generate a surplus even as domestic demand rises to 234.9 TWh by 2023.<\/p>\n

Electricity sector growth driven by gas-fired power plants:<\/strong> Egypt will remain heavily dependent on fossil fuels through to 2028, with gas and coal-fired plants producing 85% of the country\u2019s electricity. Most of this will be powered by the country\u2019s large natural gas resources, with gas-fired plants \u2014 like the Siemens \/ Orascom Construction \/ Elsewedy Electric combined cycle power plants \u2014 expected to account for 75% of total power generation.<\/p>\n

Coal among the biggest losers in the sector:<\/strong> The report is bearish on coal and expects it to become increasingly marginalized as the use of gas-fired plants increases. \u201cCoal-fired power has lost favor in Egypt once again, following the discovery of robust domestic gas reserves,\u201d the report says, pointing to the number of high profile projects that have either stalled or cancelled altogether. These include the 2.65 GW Al Nowais plant that was scrapped last October<\/a>, and the 6.6 GW Hamrawein project, which looks to have been relegated to \u201czombie\u201d status.<\/a><\/p>\n

Renewables will be the fastest growing segment through to 2028:<\/strong> \u201cEgypt will be one of the fastest growing non-hydropower renewables market in the region over our 10-year forecast period, with capacity expanding by more than 8.5 GW at an average rate of 22.1% y-o-y between 2019 and 2028,\u201d the report says. This rate boils down to a number of key factors, including the availability of solar and wind potential, and the decreasing costs of harnessing solar and wind energy. \u201cFalling equipment costs will make such facilities increasingly profitable while offering cost-competitive electricity tariffs relative to average thermal power rates,\u201d it says. This in particular will help to bring in private sector investment, which BMI Research sees as crucial to growing the sector.<\/p>\n

Continued foreign funding and private sector involvement are driving growth in renewables<\/strong>:<\/strong> The number of renewable energy projects in the pipeline has been growing with an influx of foreign funding and increasing private sector activity. Other key projects in the pipeline include: the Orascom Construction-led 500 MW wind farm in Ras Gharib, ACWA Power\u2019s 200 MW Kom Ombo solar plant, Lekela Power\u2019s USD 325 mn 250 MW West Bakr wind farm, and Smart Energy solutions 250 MW solar power complex, whose first phase is expected to cost USD 1.2 bn. That\u2019s not forgetting the USD 4 bn Benban solar park that was officially completed<\/a> last October.<\/p>\n

Still, the gov\u2019t looks unlikely to meet its 2022 target of 20% renewables: <\/strong>Despite the rapid growth in the sector, BMI Research does not think the government will meet its target to generate 20% of its power from renewable energy by 2022, calling it \u201can unrealistic target, especially given the hefty investment registered in gas-fired thermal power projects.\u201d<\/p>\n

Ditto nuclear: <\/strong>\u201cWe remain downbeat on the prospect of the Dabaa nuclear power plant project reaching completion and entering commercial operations within our forecast period to 2028,\u201d BMI says, citing the high costs and steady growth of generation from other sources. The report does note, however, that Egypt\u2019s strategic ties with Russia might provide it with the impetus to continue with the project. You can check out our starter pack on the Dabaa nuclear power plant here<\/a>.<\/p>\n

Other \u201cweaknesses\u201d in the sector:<\/strong> In addition to coal and nuclear, the report highlights a number of issues that it feels are \u201cweaknesses\u201d in the sector. These include:<\/p>\n