The New & Renewable Energy Authority (NREA) was set up in 1986 with the objective to assess the country’s renewable energy resource and to investigate technology options through studies and demonstration projects.
Another aim of NREA has been to introduce mature technologies to the Egyptian market and to support the activities of the domestic industry.
Since the 1980s, a series of large-scale grid connected wind farm projects have been planned and implemented in Egypt. In 2009, 65 MW of wind power was added, bringing the total installed wind capacity to 430 MW at the end of 2009.
An excellent wind resource
Egypt enjoys an excellent wind regime, particularly in the Gulf of Suez, where average wind speeds reach 10 m/sec.
Egypt cooperated with Denmark to develop a wind atlas, published in 1996, for the Gulf of Suez west coast. In 2003, a detailed wind atlas for the same area was issued, concluding that the region can host several large scale wind farms.
The atlas was expanded to cover the entire country in 2005, to establish the meteorological basis for the assessment of wind energy resources all over Egypt.
The atlas indicates that large regions of the eastern and western deserts of the Nile River and parts of Sinai have average annual wind speeds of 7-8 m/s.
Egypt has large deserts and abundant land mass, the majority of which is only scarcely populated. These areas are well suited to host renewable energy projects, both to increase the country’s share of renewable energy as well as to export excess energy to Europe.
Large areas with high wind power potential are already earmarked on the west of the Gulf of Suez, as well as the eastern and western deserts of the Nile River banks.
Land use agreements for these areas will be signed with qualified wind farm developers. In addition, the Egyptian national grid is extensive, providing over 99% of the population with modern electric energy services. Currently, grid connected renewable energy projects enjoys priority in dispatching.
Policy development and investment opportunities
In February 2008, the Egyptian Supreme Council of Energy approved an ambitious plan to produce 20% of total electricity from renewable energy sources by 2020, including a 12% contribution from wind energy. This translates into more than 7,200 MW of grid-connected wind farms.
The plan gives enough room for private investors to play a major role in realising this goal. In order to achieve its ambitious renewable energy target, the Egyptian government has earmarked 7,600 square kilometers of desert land for implementing future wind energy projects.
All permits for the land allocation have already been obtained by NREA. draft for a new electricity act was published in 2008, and is still undergoing consultation with stakeholders. This draft aims to reflect the ongoing market reforms and to strengthen the regulatory agency.
It includes articles supporting renewable energy through encouraging private investment in the sector. In addition, it guarantees third party access and priority dispatch for renewable electricity. No progress on this act was made in 2009.
Polices to foster an increasing wind contribution in the Egyptian electricity mix consist of two phases. Phase I will use a competitive bids approach, through international tenders requesting bids from the private sector to supply energy from renewables.
The financial risk for investors is reduced through guaranteed long term Power Purchase Agreements. Tender documents for the prequalification of the competitive bids were issued in May 2009, and 34 offers were received by the August deadline, including both domestic and foreign wind turbines companies.
10 developers have been shortlisted. Phase II will introduce a feed-in tariff, taking into consideration the prices achieved in Phase I.
Large scale projects in Egypt
ZAFARANA WIND FARM
During the last decade, a series of wind power projects were established in Zafarana. The wind farm has been constructed and operated in stages since 2001, in cooperation with Germany, Denmark and Spain.
65 MW of wind capacity, using Gamesa wind turbines, were added to Zafarana in 2009 in cooperation with Japan, taking the total installed capacity up to 425 MW.
In 2009, 1033 GWh of electricity were generated by the Zafarana wind farm, avoiding emissions of about 570,000 tons of CO2. Another 120 MW are under implementation, in cooperation with Danish International Development Agency (DANIDA), scheduled to start operations in May 2010. Zafarana will then host 545 MW of grid connected wind power and will be the largest wind farm in Africa and the Middle East.
GULF OF EL ZAYT
An area north of Hurgahda in the Gulf of El Zayt has an excellent wind regime and was dedicated for developing wind energy projects. In addition to 5 MW already operating, there are currently about 720 MW in various phases of development in cooperation with Germany, the European Investment Bank, Japan and Spain.
For the first 120 MW, an environmental impact assessment is currently being finalised and is scheduled to be published in March 2010. Another 200 MW IPP wind farm is planned in cooperation with MASDAR of the Abu Dhabi Government.
BUILD-OWN-OPERATE (BOO) WIND FARM PROJECT AT GULF OF EL ZAYT
In May 2009, the Egyptian government floated an international tender for a wind farm at the Gulf of El Zayt. In cooperation with the World Bank, it invited private international and local developers to submit their prequalification documents for the first competitive bid to build a 250 MW wind farm.
The sale of the rights for this wind farm will be for a build-operate-own (BOO) operation, which means that the developer will be responsible for the planning, construction and operation of the wind farm. The power produced will be sold to the Egyptian Electricity Transmission Company (EETC) under a 20-25 year Power Purchase Agreement (PPA).
Egypt’s Central Bank will guarantee all financial obligations of the EETC under the PPA. All renewable energy equipment will be exempt from customs duties, and the projects will benefit from carbon credits through the Clean Development Mechanism.
Following the tender, 34 offers were received and a short list of 10 qualified developers was announced at the beginning of November 2009. The bidders will now compile their final bids to be submitted in early 2011. The wind farm is scheduled to be operational at the beginning of 2014.
An environmental impact assessment, which will also include a bird migration study, will be prepared by NREA in cooperation with international consultants, and financed by the German Kreditanstalt für Wiederaufbau (KfW).
The experiences gained through a series of competitive bids for private wind energy projects will pave the way to develop a commercial framework for wind energy in Egypt.