Egypt - Oil drought sparks shift to renewables

EGYPT: Egypt, like Morocco, stands to benefit from Desertec and its potential revenue streams but, for the moment, the country is struggling to meet its own rising domestic demand and curb its carbon emissions.

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The country is also mindful that its own oil and gas reserves are running out - and that it is better to maximise their value in the export markets. Egypt began diversifying into renewables in the 1980s and has slowly built up 430MW of wind power along the Suez coast. This was financed by mixing state funds with foreign grants and loans. Recently, revenues from CERs have also played a key role in ensuring projects are built.

Now the government is opening the market to private-sector participation to speed up development. It is offering 2.5GW for tender, with long-term power purchase agreements for successful candidates. Private investors are also developing large-scale projects. Italy's Italcementi, for example, wants to install 120MW, partly to secure power for its local factories and partly to green its supply chain.

First of all, however, the government needs to pass the draft electricity law submitted to parliament in January 2009. This allows for some sort of support mechanism, most likely a feed-in tariff, and for the establishment of a renewable-energy fund to cover the difference between the production cost and the subsidised price paid by domestic consumers.

The government is gradually scaling back energy subsidies to redirect funds to social programmes. Some might also go towards the renewable-energy fund. Such moves are vital if Egypt is to begin to fulfil its potential.

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