Investment, Technology Transfer and Climate Change

Case Study: Wind Power in Egypt

Peter Wooders, Senior EconomistClimate Change, Energy and Trade

Mohamed ElSobki, Yasser Sherif (Environics, Egypt)

14 December 2009

Research Questions

• Egypt has all the necessary conditions for wind power– Excellent wind resource– Land with very low alternative value– Rapidly increasing electricity demand– Sites close enough to centres of population

for grid expansion to not cost too much– Lots of donor interest and support

• Current share of electricity generation: 0.7%

• Why? What could be done differently?

Natural Gas has replaced oil in Egypt’s exports

Natural Gas now dominates electricity generation

Where the wind blows – Gulf of Suez, W. coast

Hurghada Turbines (Pilot Scheme, Red Sea)

Zafarana (Gulf of Suez, 85 MW, Denmark aid)

http://www.folkecenter.net/gb/news/world/zafarana/

Development of Wind: Donor Led, now with CDM

• Firm plans for a further 280 MW at Zafarana

Egypt’s wind plans (Supreme Council of Energy, April 2007 )

• From 2014 will all be private sector investment

Break-even Natural Gas cost for Wind Generation

Main Barrier: Price of Natural Gas to Generators

Price to Egyptian

power generator

s

New Electricity Law (before Parliament 2010)

• Articles 45-49 of Chapter 4, Section 1– NREA (National Renewable Energy

Agency) or EETC (Transmission Company) can issue competitive tenders for construction• Electricity then sold to EETC• May 2009 pre-qualification for 250 MW

BOO (Suez)– Private developers will get 15 year

PPAs– EETC responsible for grid connection– Special fund for purchasing

renewable electricity• Avoided gas/oil, donations, return on

investments

5 Necessary Conditions for the Large-Scale Implementation of Wind in Egypt1. A clear statement of why Egypt wishes to

support wind power2. A clear statement of the strategy Egypt will

follow to build up its wind capacity3. Setting the tariff that wind power should

receive, and how this may change over time4. A plan identifying how investments in grid

connections and strengthening will be realized

5. Identification of the role NREA and other state organizations will play, and how this can encourage private sector participation