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Egypt Power Report 2020

  • ID: 5086955
  • Report
  • February 2020
  • Region: Egypt
  • 114 pages
  • Cross-border Information (London) Ltd
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Egypt's Electricity Surplus Could Reach 74GW by 2035

FEATURED COMPANIES

  • Acciona
  • Atomenergomash JSC
  • Elecnor
  • Fas Energy
  • KarmSolar
  • Rosatom
  • MORE
Egypt’s electricity generation plans mean the country could end up with an enormous surplus of 74.4GW by 2035, new research by African Energy finds. Electricity oversupply could be larger still as the impacts of the coronavirus pandemic are expected to subdue economic growth in the short-term. This raises further questions surrounding the country’s medium-term electricity sector planning. Despite these challenges power sector investment opportunities will continue.

While generation capacity has doubled over the past five years, Egypt may need as much as 100GW of new power over the next 15 years, our 2020-2035 supply and demand outlook shows. The success of the Benban solar complex has made headlines but renewable energy still accounts for less than 10% of installed capacity. With government plans to source 42% of generation from renewable sources by 2035, the need for solar and wind in particular will be greater than ever. Plans to privatise large-scale gas plants have been announced, but Egypt Power Report 2020 questions the space for new thermal power in the short- to medium-term, the viability of generation targets, and examines Egypt’s export options.

Providing incisive insight, expert analysis and unrivalled data on African energy industries

Report includes: Executive brief, Political and economic risk analysis, Market structure and overview, Policy and regulation outlook, African Energy Risk Management Index, Competitive landscape, Fuel resource availability, Transmission overview, Demand and supply outlook 2020-2035, exclusive power sector data on installed capacity (2010-2024 by fuel, technology, ownership and provinces) and project profiles.

Reasons to buy this report
  • Identify upcoming opportunities and threats
  • Benefit from power generation forecasts based on the actual project development pipeline
  • Match up government supply and energy mix targets to demand projections
  • Understand the competitive landscape
  • Assess industry and country specific risks
  • Understand the regulatory, political and economic context.
Egypt Power Report 2020 provides unique access to:

African Energy’s own Risk Management Index and 15-year (2010-24) power supply analysis using African Energy Live Data – our proprietary database of more than 6,500 power projects – to identify trends on installed capacity broken down by fuel, technology, provinces and more.

Egypt Power Report 2020 also provides comprehensive information on existing and planned generation projects; an appreciation of the political risk and the key players in the sector; an overview of the macroeconomic climate and outlook; details on the market structure and operations, analysis of policy and regulation including future plans, major legislation and legal requirements for generation, transmission and distribution; and natural gas resources and availability.

Key benefits of our reports
  • Independent expert analysis and forecasts – benefit from African Energy’s experience of constantly monitoring the sector since 1998
  • Competitive landscape modelling and benchmarking – examine your project or portfolio against other projects and what we consider to be Egypt’s benchmark wind and solar renewable projects.
  • Identify business opportunities and risks through our expert analysis of the latest projects, investments, regulatory changes and power sector trends.
  • Market positioning – our unique understanding of the project pipeline helps you position your project in the current and future competitive landscapes.
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FEATURED COMPANIES

  • Acciona
  • Atomenergomash JSC
  • Elecnor
  • Fas Energy
  • KarmSolar
  • Rosatom
  • MORE
1. EXECUTIVE SUMMARY
  • Country Snapshot
2. RISK MANAGEMENT REPORT

3. POLITICAL OVERVIEW
3.1 Structure of government
  • Political system
  • April 2019 constitutional changes
  • Authoritarian trend
3.2 Key actors
  • President Abdel Fattah El Sisi
  • Prime Minister Mostafa Kamel Madbouly
  • Minister of electricity and renewable energy Mohammed Shaker El Markabi
  • Deputy minister of electricity and renewable energy Osama Ali Asran
  • First under-secretary for research, planning & authorities follow-up Mohamed Mousa Omran
  • Egyptian Electricity Holding Company chairman Gaber Desouky
  • Egyptian Electricity Transmission Company chairwoman Sabah Mashaly
  • Electricity Utility Regulatory Authority CEO Mohamed Abdel Aziz Hassan Abdel Rahman
  • New and Renewable Energy Authority executive chairman: Mohammed El-Khayat
3.3 Overview of main political parties
  • Governing party: Independents and Sisi loyalists
  • Main opposition: Civil Democratic Movement
  • Other parties
3.4 Elections
  • Electoral system
  • Previous election
  • Next election
3.5 Major policy initiatives
3.6 Corruption
  • Transparency International rating
  • Major corruption concerns
3.7 Security risks
  • Risk of terrorism
  • Risk of ethnic/tribal conflict
3.8 Recent major developments

4. MACROECONOMIC OVERVIEW
4.1 Overview
4.2 GDP
  • Trends/projections
  • Breakdown of economy by sector
4.3 Inflation
4.4 Current account
4.5 Balance of payments
4.6 Public debt
  • Risk of debt distress
  • Debt-to-GDP
  • Debt service as percentage of exports
  • Major creditors
4.7 Credit ratings
4.8 Exchange rates
4.9 Key lending rates
4.10 Foreign reserves
4.11 Liquidity of local markets
4.12 WBG Ease of Doing Business
4.13 Major economic strategies
  • Economic reform programme
  • Flagship infrastructural initiatives
  • Suez Canal Corridor Area Project
  • New capital of Egypt
4.14 Major recent developments

5. POWER SECTOR OVERVIEW
5.1 Overview
5.2 Market structure
  • Future developments
5.3 Profiles of institutions
  • Ministries
  • Ministry of Electricity and Renewable Energy
  • Utilities
  • Egyptian Electricity Holding Company (EEHC)
  • Egyptian Electricity Transmission Company (EETC)
  • New and Renewable Energy Agency (NREA)
  • Egyptian Natural Gas Holding Company (Egas)
  • Egyptian General Petroleum Corporation (EGPC)
  • Regulators
  • Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA)
5.4 Market operation
5.5 Sector history
  • Ownership and organisation history
  • EEHC five-year plans
  • 7th Five Year Plan (2012-2017)
  • 8th Five Year Plan (2017-2022)
  • 9th Five Year Plan (2022-2027)
  • Role of IPPs 42
5.6 Regional electricity trade
5.7 Financial health of the electricity supply industry
5.8 Main consumers of electricity
  • MAP: ELECTRICITY INFRASTRUCTURE
6. POWER SECTOR POLICY AND REGULATION
6.1 Overview
6.2 Major legislation
  • Egyptian Electricity Law, 87/2015
  • Executive Regulation 230/2016 to the Electricity Law 87/2015
  • Renewable Energy Law, 2014
  • Ministry of Finance Law, 2013
  • Grid Codes
6.3 Sector plans
  • Egypt Vision 2030
  • New and Renewable Energy Strategy
  • Integrated Sustainable National Energy Strategy to 2035
6.4 Legal requirements
  • Generation
  • Transmission
  • Distribution
  • Local content
6.5 Procurement
  • Feed-in tariff
  • Competitive BOO auctions
  • Net-metering
6.6 Tariffs
  • Retail
  • Latest tariff change
6.7 Sector programmes
  • Fiscal Consolidation, Sustainable Energy and Competitiveness
6.8 IPP environment
6.9 Sovereign guarantees

7. FROM THE NEWSLETTER

8. RESOURCE AVAILABILITY
8.1 Overview
8.2 Natural gas
  • Main sources of gas supply
  • Gas infrastructure
  • Domestic pipelines
  • Regional pipeline interconnections
  • LNG terminals
  • Recent gas bid rounds
  • Ongoing gas expansion projects
  • Natural Gas Connection Project
  • Cairo and Giza Natural Gas Network Expansion
  • Imports
  • Exports
  • Gas regulation and prices
8.3 Solar
8.4 Wind
  • MAP: WIND AND SOLAR RESOURCES
8.5 Hydro
8.6 Geothermal
  • MAP: NATIONAL OIL AND GAS FIELDS AND INFRASTRUCTURE
  • MAP: OIL AND GAS IN THE NILE DELTA, WESTERN DESERT
  • MAP: OIL AND GAS IN THE RED SEA
9. COMPETITIVE LANDSCAPE
9.1 Overview
9.2 Project profiles: Landmark power projects
  • First IPP: Sidi Krir Gas, HFO III and IV
  • Largest power plants: Siemens CCGT gas plants
  • Privatisation of Siemens’ 14.4GW gas-fired plants
  • Benchmark wind PPA: Engie Gebel El Zeit Wind
  • Benchmark solar PPA: Kom Ombo Solar PV I
  • First Benban solar plant: Infinity 50 Consortium Benban 5-1 Solar PV
  • Largest state-owned plant: Giza North Gas, LFO
  • Largest hydroelectric plant: High Dam Hydro
  • Largest Emergency Power Boost Programme plant: West Assiut Gas, LFO
  • Benban solar park
9.3 Project profiles: Under construction generation projects
  • Cairo West Gas, HFO II Extension
  • Assiut El Walidia HFO III
  • Lekela West Bakr Wind
9.4 Project profiles: Selected planned generation projects
  • Abyodos Kom Ombo Solar PV
  • Amunet Ras Ghareb Wind
  • Dabaa Nuclear
  • Edison/Qalaa Abu Qir Gas
  • Gulf of Suez Wind I
  • Hurghada Solar PV
  • Luxor Gas
  • New Damanhour Gas II
  • Zafarana Solar PV
9.5 Company profiles: Selected key developers
  • Access Infra Africa
  • Acwa Power
  • Amea Power
  • Elsewedy Electric
  • Engie
  • Lekela Power
  • Orascom Construction Industries
  • Scatec Solar
  • Siemens
9.6 Selected key financiers
  • Arab African Development Bank (AAIB)
  • Arab Fund for Economic and Social Development (AFESD)
  • European Bank for Reconstruction and Development (EBRD)
  • KfW
  • National Bank of Egypt (NBE)
  • World Bank Group
10. TRANSMISSION AND DISTRIBUTION
10.1 Overview
10.2 Interconnections
  • Power pools
  • Imports/exports
10.3 T&D losses
10.4 Planned grid improvements

11. OFF-GRID
11.1 Overview
11.2 Electrification & access rates
11.3 Regulation
  • Licensing and power purchase agreements
11.4 Selected off-grid players/initiatives
11.5 Barriers to entry

12. DEMAND AND SUPPLY OUTLOOK
12.1 Overview
12.2 Demand projections
12.3 Commissioning policy
12.4 Decommissioning policy
12.5 Reshaping the network
12.6 Generation outlook
  • Medium-term outlook, 2020-2027
  • Long-term outlook, 2028-2035
12.7 Reserve margins and surplus power
12.8 Thermal additions and decommissioning
12.9 Export options
12.10 Conclusion

13. DATA TABLES
  • Methodology
  • Installed capacity, RE vs non-RE, 2010-2024 (MW & %)
  • Installed capacity by fuel type, 2010-2024 (MW)
  • Installed capacity by fuel type, 2010-2024 (%)
  • Installed capacity, liquid fuels breakdown, 2010-2024 (MW)
  • Installed capacity, liquid fuels breakdown, 2010-2024 (%)
  • Installed capacity by technology type, 2010-2024 (MW)
  • Installed capacity by technology type, 2010-2024 (%)
  • Installed capacity by ownership type, 2010-2024 (MW)
  • Installed capacity by ownership type, 2010-2024 (%)
  • Installed capacity by governorates, 2010-2024 (MW)
  • Installed capacity by governorates, 2010-2024 (%)
  • Installed capacity by fuel, Alexandria, 2010-2024 (MW)
  • Installed capacity by fuel, Assiut, 2010-2024 (MW)
  • Installed capacity by fuel, Aswan, 2010-2024 (MW)
  • Installed capacity by fuel, Cairo, 2010-2024 (MW)
  • Installed capacity by fuel, Dakhalia, 2010-2024 (MW)
  • Installed capacity by fuel, Damietta, 2010-2024 (MW)
  • Installed capacity by fuel, El Beheira, 2010-2024 (MW)
  • Installed capacity by fuel, Giza, 2010-2024 (MW)
  • Installed capacity by fuel, Ismailia, 2010-2024 (MW)
  • Installed capacity by fuel, Kafr El Sheikh, 2010-2024 (MW)
  • Installed capacity by fuel, Matruh, 2010-2024 (MW)
  • Installed capacity by fuel, Minya, 2010-2024 (MW)
  • Installed capacity by fuel, North Sinai, 2010-2024 (MW)
  • Installed capacity by fuel, Port Said, 2010-2024 (MW)
  • Installed capacity by fuel, Qalyubia, 2010-2024 (MW)
  • Installed capacity by fuel, Qena, 2010-2024 (MW)
  • Installed capacity by fuel, Red Sea, 2010-2024 (MW)
  • Installed capacity by fuel, South Sinai, 2010-2024 (MW)
  • Installed capacity by fuel, Suez, 2010-2024 (MW)
  • Project listing
  • Operating
  • Under construction
  • In development
  • Planned
ANNEX 1 – TARIFF SCHEDULE
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FEATURED COMPANIES

  • Acciona
  • Atomenergomash JSC
  • Elecnor
  • Fas Energy
  • KarmSolar
  • Rosatom
  • MORE
The Egyptian power sector is viewed as an attractive destination for investment due to a relatively stable government, economy and policy direction. However, a number of underlying tensions and challenges mean that long-term investments in the country are far from being risk-free. Egypt Power Report 2020 outlines the market’s attractions and downsides for power developers, financiers and other industry stakeholders.

Sisi tightens his grip as discontent simmers

Following a leadership merry-go-round – which began with the dramatic ousting of President Hosni Mubarak in 2011 and ended with the military coup which deposed the democratically-elected and first ever Islamist leader, Mohammed Morsi – the former general turned president, Abdel Fattah El Sisi, has recreated a highly authoritarian and military-led form of governance whose foundations are security, control and economic efficiency rather than popular or democratic support.

This does not mean that President Sisi has – or had – no base. It is true that his two presidential election victories in 2014 and 2018 were both formalities as no serious opposition was permitted but even so, there is believed to be a substantial minority of the population whose preference is for competent authoritarianism over what they view as incompetent and potentially radical popular Islam. The July 2013 coup which brought Sisi to power was supported by mass demonstrations. The social compact on which Sisi’s rule depends is thus identical to that which sustained Mubarak, Anwar Sadat and Gamal Abdel Nasser before him – that is the exchange of democratic freedoms for security and economic well-being.

For now, any threat to the current political settlement is unlikely to come from a resurgence of the popular Islamic movement. Millions would likely support such a movement if it emerged, but Sisi has crushed the Muslim Brotherhood (al-Ikhwan al-Muslimeen) and there is no other focus around which popular discontent can organise itself.

An unbalanced social contract?

However, this does not mean that there will be no consequences should the authorities fail to deliver their side of the bargain – namely guaranteeing the economic well-being of the wider population. President Sisi is under pressure both from within the system and from a restive and frustrated population.

In the past five years, President Sisi has pushed through an impressive raft of macro-economic reforms in parallel with a statist and military-led re-energising of the command economy (the development of the Suez Canal Economic Zone being one such example).

According to its own parameters, the November 2016 to November 2019 International Monetary Fund (IMF) Extended Fund Facility (EFF) has succeeded. The devaluation of the Egyptian pound and cuts in subsidies and other spending have opened space for investment. While a great deal more structural reform is needed, at the end of 2018 foreign reserves were 19% of GDP. The government is targeting growth of 6-7% in the 2019/2020 fiscal year, while the IMF is forecasting growth of 5.9%. All three big credit rating agencies have issued upgrades between 2018-2019.

While this performance has won the confidence of multilateral financial institutions and foreign investors, the immediate effect has been a fall in living standards. Between 2015 and 2018 the proportion of Egyptians living below the poverty line increased sharply. This means that not only are the benefits of reform not being felt, the reforms are actually causing pain. This is the driver behind the re-emergence of popular protest.

Underlying pressures

A campaign of mass arrests quickly shut down the street demonstrations which flared up in September 2019 following the dissemination on social media of allegations that members of President Sisi’s close circle had enriched themselves via a lavish programme of presidential palace building. The government also eased up on some price rises and austerity measures to ease growing discontent. The first inchoate rumours of disquiet within the top ranks of the military following these protests suggest that the President is neither impregnable nor all-powerful, despite the constitutional changes passed in April 2019 which allow him to stay in power until 2030. If President Sisi cannot neutralise the source of popular anger, he could face a challenge from within, rather than from outside, the ruling structures. He may also find himself confronting the kind of leaderless social media-inspired protest that have destabilised Algeria, Sudan, Hong Kong and even some Western democracies.

Neither of these kinds of challenge would necessarily alter the system of governance. However, both could result in a less liberal outlook towards foreign investors and a reconsideration of policies such as the liberalisation of markets, including the electric power market. Alternatively, by stifling dissent while adopting more popular economic policies Sisi could ride out this period of dissatisfaction, particularly if he can find ways of better sharing the benefits of economic reform. In this latter case, the pace of reform would also be likely to slow down. These factors have contributed to African Energy issuing Egypt a ‘D’ rating for political risk, with a deterioration in ‘democratic accountability’ being offset by improvements in macroeconomic conditions.

Power sector context

The political imperative to avoid blackouts and to ensure the consistent availability of electric power at peak times has been a defining feature of the Sisi presidency. The collapse of the Mubarak regime and the brief rise and fall of the Brotherhood’s Mohamed Morsi took place against a backdrop of a severe energy crisis.

The long-term mismanagement of the gas production and export industry meant that by 2012 Egypt not only had to cease gas exports, it also had insufficient production to supply domestic industry and power generation. The related balance of payments crisis made it difficult to import replacement liquid fuels. Morsi’s failure to respond to these economic challenges (conspiracy theorists have alleged that his opponents – not least in the military – may have covertly exacerbated the difficulties) was an important factor behind his downfall. It is certainly the case that after taking control in July 2013, the military swiftly resolved the most debilitating aspects of the power supply crisis. Policies to guarantee sufficient domestic gas supply and a generous reliable reserve margin for power generation have remained at the top of the agenda ever since.

Priority one: massive procurement of generation capacity

The procurement drive opened with an emergency Fast Track programme to install 4,736MW of gas-fired generation capacity to meet expected demand peaks during the summer of 2015. Earlier that year in March 2015, the government had attracted billions of dollars of private sector investment pledges across every sector of the economy with power supply at the forefront. The most effective programmes to emerge from this were the 1.44GW solar feed-in tariff (FiT) scheme at the Benban solar park, and a large scale tendering process for wind projects on the Gulf of Suez.

In June 2015, President Sisi oversaw the signing of an $8.1bn agreement with Germany’s Siemens for the installation of three vast gas-fired combined cycle gas turbine (CCGT) plants totalling 14.4GW. At the time there was no solid evidence that improved incentives for upstream exploration would restore domestic gas production in time to provide feedstock to the plants. Eni’s discovery of the giant 2.7bcf/d offshore Zohr field two months later virtually guaranteed the success of the government’s plans to restore gas-fired baseload capacity. As this report went to press, the government was in talks with international investors about the multibillion-dollar sale of Siemens’ three gas-fired power plants in what could be one of the biggest privatisations in Africa in any sector.

Priority two: structural reform

Parliament also passed an electricity law in 2015, which provided the basis for the gradual unbundling of the transmission system operator and distribution subsidiaries from the heavily indebted state-owned utility Egyptian Electricity Holding Company (EEHC); the removal of barriers to IPP entry; abolition of costly subsidies; and division of the supply sector into regulated and unregulated markets. The result is that installed capacity almost doubled from 30.9GW at end-2014 to 59.9GW by end-2019. With a generous reserve margin of 83% in place, the obsession for installing new power capacity by any means has been replaced by a policy of least-cost expansion.

No new gas capacity will be added during EEHC’s current five year plan (2017-2022); the focus is entirely on renewables. The government is also attempting to realise a fresh ambition to become a tri-continental hub for power exports, with interconnections planned to facilitate trade throughout North Africa, sub-Saharan Africa, the Gulf, and even Europe via an interconnection with Cyprus.

A recovery in gas production

There remain significant unexploited natural resources in Egypt, both in oil and gas and renewable energies. The development of numerous gas fields has helped put Egypt on course to being a net exporter of natural gas after several years of being dependent on liquefied natural gas (LNG) imports.

The discovery of 16 gas fields in 2017/18 in the Western Desert and Nile Delta have helped satisfy the rising use of gas as a source of power generation – the sector now consumes 63% of domestic gas use as power generation moves away from liquid fuel. Parallels can be drawn between regulatory trends in the gas and power sectors; wide-ranging legislation introduced in 2017 has helped liberalise the natural gas market to reduce the burden on state entities.

Push for increased renewables

Despite having a reserve margin of around 83% – which many argue represents significant over-capacity – further capacity additions are expected in the medium-term as the government targets up to 47% of generation from renewable sources by 2035 (compared to 6% currently).

With demand expected to reach 70-85GW by 2035, the government’s long term plan implies that generation capacity could be expanded to 160GW. This would represent a reserve margin of 87% by this time, far in excess of the more modest target of 20%-30% recommended in 2015. Whether Egypt will require such a large reserve margin, or have an export market for this surplus power, will be just two of the questions which will determine government policy in this area over the coming years.
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  • AMEA Power
  • Atomenergomash JSC
  • BP
  • Dana Petroleum
  • Deutsche Bank
  • Doosan Group
  • Edison
  • Egyptian Electricity Holding Company (EEHC)
  • Egyptian Electricity Transmission Company (EETC)
  • Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA)
  • Egyptian General Petroleum Corporation (EGPC)
  • Egyptian Natural Gas Company (Gasco)
  • Egyptian Natural Gas Holding Company (Egas)
  • Elecnor
  • Electricity Utility Regulatory Authority
  • Elsewedy Electric
  • Engie
  • Eni
  • European Bank for Reconstruction & Development (EBRD)
  • European Investment Bank (EIB)
  • Eurus Energy Holdings
  • ExxonMobil
  • Fas Energy
  • Gas Market Regulatory Authority (GMRA)
  • General Electric (GE)
  • Globeleq
  • Grupo TSK
  • HSBC
  • Japanese Bank for International Cooperation (JBIC)
  • Japan International Cooperation Agency (JICA)
  • Jinko Solar
  • KarmSolar
  • KfW
  • Kuwaiti Fund for Arab Economic Development
  • Lekela
  • Mainstream Renewable Power
  • National Bank of Egypt (NBE)
  • New and Renewable Energy Authority (NREA)
  • NobleEnergy
  • Orascom Industries
  • Power Generation Engineering and Services Company (Pgesco)
  • Qalaa Energy
  • Rosatom
  • Scatec Solar
  • Schneider Electric
  • Shell
  • Siemens
  • Siemens Gamesa Renewable Energy
  • Sumitomo Mitsui Banking Corporation (SMBC)
  • Total Eren
  • Toyota Tsusho Corporation
  • Vestas
  • World Bank
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