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Egypt

Egypt

Market Status: Egypt - Banking on private sector to keep momentum going

EGYPT: Egypt added 66MW of operating wind capacity in 2009 with the completion of a 120MW installation at Zafarana on the Gulf of Suez.

This brought the national total to around 430MW at the end of the year (see table). While there are some big projects on the way, Egypt will have its work cut out to install the additional 680MW or so of wind energy a year that is necessary to reach its target of 20% of green electricity by 2020.

Spanish firm Gamesa built the new plant at Zafarana, comprising 850kW turbines, funded with Japanese assistance. It is the seventh project at the site and represents the latest stage of a development managed by the New and Renewable Energy Authority (NREA), a division of Egypt's Ministry of Electricity and Energy. Total wind capacity at Zafarana now stands at 425MW. Egypt's only other grid-connected wind project is a 5MW test facility at Hurghada on the Red Sea coast.

The next and final phase at Zafarana is another 120MW plant due to be fully operational by June. Again, Gamesa is building the facility using 850kW turbines, although in this case Denmark is providing the assistance. After that, attention shifts 130 kilometres south to the Gulf of El-Zayt, where another swath of desert has been designated for wind power development. The most advanced of several projects here is a 200MW installation for which NREA expects to invite tenders by the end of March for the supply and installation of turbines. If all goes well, they should be operational by mid-2012. The European Investment Bank, the German development aid bank KfW and the European Union are providing a loan of around EUR270 million to finance the project, in addition to an Egyptian contribution of some EUR70 million.

From now on, however, the government is banking on the majority of new capacity being built by the private sector, as part of Egypt's drive to speed up development and liberalise the energy market. A long-awaited law is slowly working its way through parliament, which, among other things, will allow third-party access to the grid and long-term power purchase agreements. The government says it will also offer land to investors at token rates and apply lower customs duties on power generation equipment. It also intends to establish a special fund with World Bank and European assistance to support the projects. In addition, wind plant owners will be able to earn extra revenue from the sale of carbon emissions certificates.

Request for tenders

Although there is no indication of when the law might be ratified, its absence does not appear to be holding things up. Last summer, the Egyptian Electricity Transmission Company launched the first call for 250MW, out of a planned 2.5GW, to be undertaken on a build-own-operate basis. Ten companies and consortia have pre-qualified for the right to bid for the 250MW project on the Gulf of Suez between Hurghada and Zafarana (Winpow Monthly, February 2010). The deadline is March 31, 2011, with start-up expected in 2013 or early 2014.

In addition to the tender calls, some private companies have already expressed an interest in building large-scale wind plants at the Gulf of El-Zayt. In 2008, Italy's Italcementi signed a memorandum of understanding with the Egyptian government to install 120MW, with the possibility of expanding to 400MW. The output would partly feed the company's cement factories in the Suez zone. Italcementi says it will soon submit ornithological and environmental impact studies for approval. Once the land-use agreement is finalised, the company will begin working on turbine selection, layout and grid connection.

More recently, Masdar, Abu Dhabi's renewable energy investment vehicle, and NREA agreed to form a joint venture to develop a 200MW project at the Gulf of El-Zayt. They will carry out a feasibility study once the deal is signed.

On the manufacturing side, Egyptian cable and electric products manufacturer El Sewedy Cables is making progress in its plans to become a fully fledged wind farm supplier. Working in a 50-50 joint venture with Germany's SIAG, El Sewedy in December produced its first towers, for a German client, from its factory near the Red Sea port of Ain Sokhna. By the summer it should also start producing its first turbines, assembled under licence from M Torres Olvega. El Sewedy bought a 30% stake in the small Spanish manufacturer of direct-drive machines in 2008. Finally, El Sewedy expects to inaugurate its blade factory soon after, and for all three facilities to be fully operational by the end of the year.

PLUGGED IN
Egyptian wind
PLACE TURBINE MW
Hurghada various 5
Zafarana Nordex 63
Vestas 77
Gamesa 285
TOTAL 430

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