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Despite being described as having ‘tremendous potential’ for renewable energy, Egypt is expected to see a shortfall in its renewable power generation target for both 2022 and 2035 partly due to its overdependency on gas, according to GlobalData. However, the leading data and analytics company does note that the country is set to meet its 2035 wind power target.
Research as part of the ‘Egypt Power Market, 2022-2025’ report by GlobalData has revealed that Egypt’s renewable power generation will fall short by 7.2% of its 2022 target and 15% short of its 2035 target.
Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData, comments, “Egypt has tremendous potential for renewable energy, but the market faces multiple challenges. Firstly, the country has an overdependency on gas-based power generation. The country has huge gas reserves that are just too tempting to ignore for a country that is experiencing regular electricity shortages. Gas made up around 83.5% of its capacity in 2021. Egypt also has an existing monopoly of state-run companies in the electricity sector, a lack of private investment and poor infrastructure to integrate clean energy generation. Moreover, the country’s distribution sector faces high technical and commercial losses due to numerous illegal connections, non-payment, and non-enforcement of payment requirements.”
To meet its rapidly increasing energy demand, the Egyptian government has taken an energy diversification strategy known as the ‘Integrated Sustainable Energy Strategy’ (ISES). This aims to maintain the security and stability of the country’s energy supply. Of its 42% renewable target, the ISES has planned for wind power to make up 12% —with the rest coming from solar projects and small hydro. To meet these targets, the country has been rapidly increasing its wind power capacity.
Saibasan continues, “Egypt is recognized as having some of the world’s best wind power resources on the east and west banks of the Nile, as well as in the Gulf of Suez. With high wind speed measuring up to 9-10 meters per second and solid investments made in this area, GlobalData estimates that the country should easily meet its wind power target. Wind power is expected to account for 12.2% of the total annual generation in 2035. Given the climate, the country’s solar potential is also high, and the Ministry of Electricity and Renewable Energy (MoERE) has introduced net metering, feed-in tariffs (FiT), and tax incentives to boost renewable power generation.”
The Egyptian government has put a number of policies into place to encourage the use of renewables, but its recent efforts have been focused on preventing outages—a common occurrence due to a reduction in the availability of domestic gas, low-capacity utilization factor, weak networks, and maintenance issues. Shortages are especially bad during the summer months.
Saibasan adds, “Developing new transmission infrastructure will be essential for the promotion of renewable power in Egypt since most of its renewable power generation sites are situated in remote areas and far from consumption centres. Improvements to grid connections are also required for grid integration, as well as the evacuation of power generated from renewable sources. The government should look to create an open market and encourage private investments to boost renewable power capacity.”