Renewable energy sector in Egypt
Egypt’s renewable energy market is relatively new and has great potential given the sunny weather and high wind speeds.
Egypt plans to generate 12-20% of its electricity from renewable energy sources by 2020, 12% of which to come from wind energy (7.2-gigawatt).
The government provides many incentives to private investors that range from easing the licensing process to identifying logistically suitable areas for potential projects which makes it easier for projects to connect to the national grid.
85% of the Nile’s hydro power generation is exploited, while a considerable percentage of the country’s total hydropower comes from the Aswan High Dam. This paves the way for diversification of renewable energy sources, focusing on solar and wind energy.
Areas with great wind energy potential include the Western and Eastern deserts, the Red Sea coast along the Gulf of Aqaba, and the Gulf of Suez. Hours of operation in areas with the highest wind speeds can reach up to 3,900 hours per year.
The country is located at the world’s solar belt with annual sunshine duration up to 4,000 hours.
Egypt has an abundance of land (4 times the size of the UK), a hot climate, and relatively cheap labour. All of which make way for opportunities in biomass production.
Egypt will allocate $100-120 million to a clean technology fund to co-finance a high capacity transmission system from the wind farms in the Gulf of Suez to serve heavily populated areas such as Cairo. Moreover, the National Renewable Energy Authority is preparing a study in cooperation with the German Government to identify the suitable locations for thermal solar stations.
The United Arab Emirates will finance the establishment of a new solar power station in Matrouh, the capacity of which is 20 MW.
The Egyptian Electricity Transmission Company plans to set up 2 wind farms with a total capacity of 1000 MW in the energy park at the Gulf of Suez. The budget of the project is estimated at $150 million. The project includes the construction of a transmission line that will connect the wind farms to the grid, stretching from the Gulf of Suez to Samalaut (280km).
The New and Renewable Energy Authority will set up an Integrated Solar Combined Cycle System power plant in Kureimat. The location receives over 2400 kV hours of direct solar radiation per square meter every year which makes it perfect for the project. The project is an EPC type of contract. It is worth $325 million.
The New and Renewable Energy Authority is considering developing two new hybrid facilities at sites between Luxor and Aswan. The facilities will combine natural gas and thermal solar power to generate around 100 to 150 megawatts (MW) each. The project involves building a 100 MW plant at Kom Ombo, Aswan. Its budget is estimated at $808 million.
The New and Renewable Energy Authority is setting up a 200 MW wind farm in Gabal Al Zeit. The wind farm is located 120 kilometres north of Hurghada. The project will be financed via the BOO system. It is estimated at $550 million.
The Egyptian Electricity Holding company will build a nuclear power plant in Dabaa. It will be the first installation in a series of 1000 MW nuclear power plants across Egypt. The project is handled by the Supreme Council for the peaceful purposes of nuclear power and has a budget of $1,800 million.
Getting into the Market
Egypt is an attractive market that can offer major business opportunities to informed traders and investors. Trade and investment between the UK and Egypt is promising. However it is not always an easy market. A successful entry into Egypt will be determined by the quality of the information and advice upon which the decision to enter is based. Continued success is also dependent upon the ability to navigate the laws and practices of Egypt.
The Egyptian market requires careful study and a sustained sales effort. There is strong competition from other exporting countries. Price and credit terms are a deciding factor when obtaining contracts, though quality is increasingly important. Back-up servicing facilities and the supply of spare parts is also important.
Having a local partner can be vital to successful penetration of this market. There are several reasons for this:
Firstly, given the continuing bureaucracy, a local partner can shepherd the foreign business through the delays and obstacles.
Secondly, foreign companies require a local agent to bid for government tenders.
Thirdly, as the Egyptian market becomes more sophisticated there is a growing demand for after sales service, which a local agent can convincingly provide.
In general, British products and services are very highly regarded in Egypt for their quality. The main obstacle facing the growth of British involvement in the Egyptian market is that British products have a reputation as being expensive compared to some foreign products, though this has lessened slightly over the past year as exchange rate fluctuations have been in favour of UK exporters.
British companies wishing to develop their business in the Egyptian market are advised to undertake as much market research and planning as possible in the UK.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists based overseas – or contact your local international trade team.
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.