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Egypt was one of the pioneers in Africa for large-scale renewable energy projects, reaching 555 MW of wind power capacity by 2012 through international donor support rather than domestic initiatives. In contrast, Egypt's significant investment in natural gas was highlighted by the completion of the world’s three largest combined cycle gas-fired power plants in 2018 by Siemens for the Egyptian Electricity Holding Company (EEHC), with a total capacity of 14.4 GW.
The geopolitical shift resulting from the Russian invasion of Ukraine has spiked global gas prices and redirected European demand towards alternative suppliers, including Egypt, which exported 80% of its liquefied natural gas to Europe last year. This surge in revenue, along with decreasing costs of photovoltaic (PV) components, is reshaping Egypt’s energy economic landscape.
According to the latest data from Egypt’s New and Renewable Energy Authority (NREA), the nation's power generation mix currently consists of 80% thermal, 12% wind, 6% hydro, and 2% solar. The Egyptian government has set ambitious renewable energy goals: 42% of the energy mix by 2030, including 22% from solar, requiring an increase in solar capacity to 31 GW from the current 1.77 GW. Moreover, a future target of 60% renewables by 2040 has been established.
As of the end of 2023, NREA reported that Egypt’s solar capacity included 1.5 GW at the Benban site, 26 MW at Kom Ombo near Aswan, and 50 MW from the Belectric-CCC joint venture at the Zafarana project on the Red Sea coast. Additionally, there were 97 MW of rooftop solar installations, 30 MW of standalone systems, and another 102 MW from various commercial and industrial (C&I) installations and smaller arrays.
Utility-scale solar power developments in Egypt have primarily been concentrated around Aswan in the southern part of the country, where solar exposure is highest and ample land is available for large projects.
The Benban solar park, located about 50 km from Aswan, is a standout in Egypt's solar landscape and one of the largest PV facilities globally. Its capacity is reported between 1.4 GW and 1.8 GW, with discrepancies likely due to potential expansions of certain segments.
This expansive facility spans 37 square kilometers and consists of 41 distinct projects. Major participants in this project include Voltalia, Infinity Solar, SP Energy, Acciona Energía, Horus Solar Energy, and Scatec Solar. The development of Benban was a significant financial undertaking, costing around $4 billion. Funding was sourced from several major financial institutions, including the World Bank’s International Finance Corp. (IFC), the African Development Bank (AfDB), and the European Bank for Reconstruction and Development (EBRD). Most construction phases were completed between 2018 and 2019.
Feed-in tariffs (FITs) in Egypt provide operators with guaranteed pricing for electricity over a 25-year period, and currently, these are the only private sector FITs available in the country, according to a Voltalia spokesperson in an interview with pv magazine. It's reported that the Benban solar project has generated approximately 6,000 management and maintenance jobs, creating a reservoir of skilled labor that could be leveraged for future renewable energy projects.
Voltalia's own venture within the Benban complex, the 32 MW RA project, utilizes Suntech 330 W solar panels. All the electricity produced by this project is sold to the Egyptian Electricity Transmission Co. (EETC) under a 25-year power purchase agreement (PPA) priced at $0.084/kWh, as part of Egypt’s FIT program. Notably, these payments are made in Egyptian pounds.
Additionally, Saudi Arabia’s ACWA Power is on track to complete its 200 MW Kom Ombo solar plant, located just 20 km from Benban, by April 2024. The project, which costs $182 million, has received financial support from several institutions including the European Bank for Reconstruction and Development (EBRD), the OPEC Fund for International Development, and the African Development Bank (AfDB).
In December 2023, ACWA Power signed a framework agreement to develop a $4 billion green hydrogen project in the Suez Canal Economic Zone. The project, set to initially produce 600,000 tons of green hydrogen annually, increasing to 2 million tons, will be powered by solar PV and wind sources. ACWA Power has a 1.4 GW development pipeline for these renewable energies in Egypt. The hydrogen facility will utilize the same 220 kV transmission line as the Benban solar park and will operate under a 25-year power purchase agreement with the Egyptian Electricity Holding Company (EEHC).
Other developments include Globeleq and Masdar, who also signed agreements in 2022 for green hydrogen facilities in the same zone. Meanwhile, Empower New Energy operates five 500 kW commercial and industrial (C&I) projects across various sectors in Egypt, with plans to expand with three additional solar projects. Other existing C&I solar installations include those in Sharm El Sheikh, a Luxor hospital, and a Giza industrial plant.
Current data from the New and Renewable Energy Authority (NREA) indicates that Egypt has 700 MW of solar capacity under construction, including the 500 MW Abydos project and a 200 MW project at Kom Ombo. AMEA Power, based in Dubai, anticipates completing the Abydos project near Aswan by March 2025. This project's financing comes from a consortium led by the International Finance Corporation (IFC), and it includes a power purchase agreement (PPA) with the Egyptian Electricity Transmission Company (EETC).
In another development, Scatec, already managing 380 MW at Benban, signed a cooperation agreement in December 2023 with the EEHC to develop a hybrid project featuring 1 GW of solar and 200 MWh of battery storage, marking the country's first utility-scale hybrid project. A preliminary financing deal has been secured with the African Development Bank (AfDB), and Scatec is now finalizing the agreement's details with the government, according to a company spokesperson.
Osmundsen notes that while Egypt's high solar yields and abundant land make it a fundamentally appealing market for photovoltaic (PV) energy, the nation's economic struggles, including significant currency depreciation, complicate foreign investment. The devaluation of the Egyptian pound has resulted in an "artificially low and heavily subsidized" grid tariff, affecting electricity prices for consumers. Additionally, challenges in currency conversion have deterred investments in the commercial and industrial (C&I) sector.
A spokesperson from Scatec also pointed out that, despite the competitive edge of renewables in Egypt, the primary barrier remains the elevated costs of financing, exacerbated by rising global interest rates.
Despite the government's commitment to phasing out fossil fuel subsidies, it still promotes thermal power generation. A spokesperson from Voltalia mentioned that ending power subsidies is crucial for accelerating the adoption of renewable energy. However, Voltalia is optimistic about the near-term prospects for Egypt's PV market. This optimism is partly due to recent power rationing—two hours daily during the winter—triggered by shortages of natural gas for thermal power plants and a lack of foreign currency to procure more gas, according to a Scatec representative.
The outlook for the renewable energy sector in Egypt is positive, driven by a 1.7% annual increase in population that raises electricity demand. According to Voltalia, most of the future renewable capacity will come from PV and wind energy, supported by a modest amount of battery storage. However, concentrated solar power is not anticipated to hold a significant portion of the future energy mix, as noted by the Scatec spokesperson. Looking ahead, there are possibilities for exporting solar power from Egypt to European markets via planned interconnectors between Egypt and Crete, and subsequently to mainland Greece.
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