Power policy

The government has set its sights on clean power providing 42% of electricity generation by 2035, with the target broken down by renewable technology type. Worryingly, the target-setting strategy document has not been published, while intermediate targets for 2022 are unlikely to be met. But after some trial and error, Egypt has successfully implemented a number of competitive renewables tenders. These include the landmark 1.4GW Benban solar project, commissioned in late 2019. However, a healthy auction pipeline has shrunk due to an oversupply of generation capacity. There is little visibility on tenders due over coming years. Efforts are being made to encourage rooftop PV through net metering, rules for which were reissued in April 2020.

Power prices and costs

Retail power prices are being raised as part of the government’s economic reform program. An announced phaseout of electricity subsidies by 2022 has been delayed until 2025 – ostensibly due to the coronavirus pandemic. Similar efforts are being made to remove subsidies for cooking gas, diesel and gasoline. Average residential electricity bills have been raised from 240 Egyptian pounds($40) per megawatt hour to 1,180 Egyptian pounds($75)/MWh over 2012-20. At $0.084/kWh, the feed-in tariff awarded to Benban projects is high by international standards, although recent auctions tendering individual projects have reached lower prices. Egyptian PV was cheaper than any other source of new bulk generation in 2020.

Power market

Egypt’s power mix is dominated by the addition of 14.4GW of Siemens combined-cycle gas turbines, invested in after a power crisis in late 2014. Together, these additions have provided a substantial reserve margin. Despite recent additions, renewables made up only 1% of the power fleet in 2020. The oversupply could crimp growth in the short term. Renewables that have been commissioned are contracted on a take-or-pay basis, guaranteeing tariff payments regardless of demand. Despite the growing role of independent power producers, state utility and its subsidiaries own and operate some 80% of installed capacity. Moreover, private-to-private power deals can be signed, but a robust framework governing such contracts has yet to be finalized.

Egypt has ambitions to become a regional electricity hub, and is actively expanding power interconnector capacity with neighboring countries such as Saudi Arabia. There is also talk of leveraging renewable power to become a hydrogen producer. Both areas would require a massive build-out of clean generation capacity.

Doing business and barriers

Peak electricity demand has increased by some 30% over 2010-20 to reach 23.3GW. The pandemic has slashed power consumption, but demand is expected to resume strong growth. Favorable wind and especially solar resources align with the government’s ambitions regarding renewables. Egypt has its sights on boosting gas extraction, but plummeting renewables costs will render future combined-cycle gas plant additions unlikely. While the country enjoys an abundance of generation capacity at the moment, much of Egypt’s power fleet is made up of old, highly inefficient diesel plants which will be replaced over coming years. For its part, a 6.6GW coal plant postponed in April 2020 is unlikely ever to be built.

EV market

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage. The government officially ended fuel subsidies on road fuels. This may facilitate uptake when support for electrifying transport is more forthcoming. The only real incentive is an exemption to import duties for EVs that are up to three years old.

EV policy

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.

Buildings market

A National Energy Efficiency Action Plan kicked off in 2012 was supposed to address the energy performance of Egypt’s buildings fleet. However, the initiative has made little headway in enhancing energy efficiency across the economy. A second such plan was adopted in 2018 and, like the first, has yet to bear its fruits. Egypt has established the framework for energy efficiency building codes, but the framework remains unimplemented.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the low-carbon heating market remains at an early stage.