No more darkness: Egypt's strategy to counter electricity shortage

Ghada Ismail , Thursday 15 Feb 2018

The electricity sector has come a long way over the past four years

Siemens engineers during the celebration of the arrival of four H-class gas turbines at the Beni Suef power plant in Egypt (Photo: courtesy of Siemens Official website)

The memory of long electricity outages is still fresh in the minds of many Egyptians. Studying by candlelight, long nights of darkness, and factories shutting down were common complaints across the country in the summer of 2014.

The peak of the crisis came on the back of a combination of factors including shortages in the fuel needed to operate power stations, not enough power stations, and weak electricity transmission networks. These in turn were the result of a lack of investment in the sector due to distorted pricing and outdated legislation.

Since then a lot of investment has gone into the sector to prevent such a crisis being repeated. Today, the deficit in electricity production has been converted to a surplus. Electricity power stations have undergone a process of development and maintenance.

The main transmission and distribution networks are being upgraded to facilitate the discharge of load and to absorb added capacity. The investment required to complete this work has already been approved. The state has also given renewable energies a kickstart through a bundle of legislation and regulations that encourage investment in the field, leading to the establishment of solar plants in many areas, including in Upper Egypt.

According to Mohammed Shaker, minister of electricity and renewable energy, the sector has been able to add an estimated capacity of 15,000 megawatts (MW) over the past three years. This allowed it to achieve a surplus of 5,300 MW in the summer of 2017. In comparison, the electricity deficit in the summer of 2014 recorded 6,050 MW.

One of the projects to add capacity, according to Jaber Al-Desouki, chairman of the Electricity Holding Company, was the sector’s conclusion of a contract with the German company Siemens to build three giant power stations in Beni Sweif, Borollos and the New Capital City worth 6 billion Euros.

The project capacity is 14,400 MW, with each station having a capacity of 4,800 MW, or more than double the capacity of the Aswan High Dam.

In addition, measures are underway to establish 6,000 MW electricity power plants using clean coal technology at Al-Hamrawain on the Red Sea coast.

A long-term energy strategy extending until 2035 has been developed. The Supreme Council of Energy has adopted a scenario that stresses the diversification of the country’s energy mix and maximises the contribution of renewable energy, which could reach 42 per cent, together with clean coal technology at 33 per cent,  at 17 per cent, and eight per cent nuclear energy.

For the renewable energy sector, renewable energy projects are being encouraged through different mechanisms. According to Mohamed Al-Khayyat, chairman of the New and Renewable Energy Authority, energy-purchase agreements have been signed with 30 companies, 13 of which are financed by the International Finance Corporation (IFC).

The output from these will be bought by the government within the framework of its feed-in-tariff (FIT) programme under which the government is obliged to buy electricity generated from renewable energy installations by the private sector at a fixed price. Total capacity contracted in the framework of FIT have reached 1,465 MW.

Efforts are being made to strengthen transmission networks. Gamal Abdel-Rahim, president of the Egyptian Electricity Transmission Company, said that electricity transmission and distribution networks, one of the challenges facing the sector and the main cause of the electricity outages, were being strengthened to deal with increased production capacities. An ambitious plan worth $42 billion has been started and will end in 2018/2019, he said. The project is being implemented by Egyptian as well as foreign companies.

Alongside investment in traditional and renewable energy sources, the government has embarked on an ambitious plan to produce nuclear energy. An agreement was signed for the construction of a nuclear power plant in Dabaa on the North Coast at a cost of $30 billion with a total capacity of 4,800 MW.

According to Hafez Al-Salmawi, an energy expert at the World Bank, the station belongs to the third generation of nuclear reactors and works with compressed water. This kind of reactor has the highest standards of safety.

Converting Egypt to a regional energy hub has also been stressed. A project for electricity linkage with Saudi Arabia with total investments of nearly $1.5 billion is in progress. Moreover, linkages with Sudan, Ethiopia and the Congo, and another project to link Egypt, Cyprus and Greece, are also being studied. These should help achieve stability and the security of the electricity networks in Egypt.

Alongside the new investments, the sector is implementing a programme to restructure electricity prices. This aims to ease the burden of subsidising energy by the state and make high electricity consumption groups shoulder some of the burdens of lower income groups.

The money saved will be directed to other sectors in the economy and used to make new investments in the sector. The government began cutting subsidies in 2015-2016. Although they were scheduled to end in the next fiscal year, the phasing out of the subsidies has been extended until 2021-2022.

Extending the time frame is intended to make the process gradual, keeping the social dimension in mind. 

* This story was first published in Al-Ahram Weekly

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