REGULATORY FRAMEWORK FOR ELECTRICITY IN EGYPT WITH EMPHASIS ON WIND ENERGY 23 March 2010 Mohamed Salah Elsobki (Jr.) Professor & Director Energy Research Center Faculty of Engineering, Cairo University Egypt
REGULATORY FRAMEWORK FOR ELECTRICITY IN EGYPT WITH EMPHASIS ON WIND ENERGY Current, future demand and energy resources in Egypt Renewable energies and its current implementation programs in Egypt. Current and expected future legislation regarding renewable energy in Egypt
REGULATORY FRAMEWORK FOR ELECTRICITY IN EGYPT WITH EMPHASIS ON WIND ENERGY Current, future demand and energy resources in Egypt Renewable energies and its current implementation programs in Egypt. Current and expected future legislation regarding renewable energy in Egypt
Expected / Targeted Future Energy Status up 2022 (conservative) 160.0 Million toe 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Reduce energy consumption by 8,3% at 2022 Nuclear up 4000-5000 MW (6% at 2022) 56.4 59.8 63.4 67.2 71.2 75.5 80.0 84.8 Renewable - current 3000 MW and target 13500 MW (9% at 2022) Retain Oil and NG levels of production (a total of 40% at 2022) 89.9 95.3 101.0 107.0 113.5 120.3 127.5 135.1 Additional energy needed to get from else where (solar & others) (37%) 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Fuel productes N.G. Hydro Wind Fuel Fuel Fuel productes Fuel productes Fuel productes Fuel N.G. productes N.G. Hydro N.G. N.G. Hydro Wind Demand Hydro N.G. Nuclear WindHydro Demand Wind Nuclear Demand Demand Demand with Demand Energy Eff. Nuclear Demand Demand with Energy Eff. Energy gap
Future Energy Vision for Egypt A national energy target was declared by the end of 2007; and approved by the supreme council of energy stating : Diversity of energy resources Confirming the continuation of activities towards liberalization of energy markets Setting targets for the energy mix; including renewable, energy efficiency and nuclear Development & Energy
Million KWH Production and consumption of electricity (1995 2006) 120000 100000 80000 60000 40000 54469 51327 43259 Electricity needs increased by around 7% (higher than development) 57675 62362 68038 73375 78103 83259 88951 94913 100984 108357 92105 20000 0 1994/95 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Residential Total Industry Public utilities + Lighting Comm Government Agriculture total demand TOTAL Slide 6 46 M.S.Elsobki (jr)
Evaluation of Generation Capacity and Demand (1995 2006) 25000 20000 Mega Watt 15000 10000 5000 Generation to distribution capacity is about 50% 0 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 PEAK LOAD (MW) 8149 8491 9235 9850 10919 11736 12376 13326 14401 14735 15678 17300 Installed capacity 12978 13027 13303 13308 13935 14582 15286 16989 17671 18119 18775 20452 PEAK LOAD (MW) Installed capacity Slide 7 46 M.S.Elsobki (jr)
REGULATORY FRAMEWORK FOR ELECTRICITY IN EGYPT WITH EMPHASIS ON WIND ENERGY Current, future demand and energy resources in Egypt Renewable energies and its current implementation programs in Egypt. Current and expected future legislation regarding renewable energy in Egypt
Solar Atlas The Solar Atlas was issued, indicating that Egypt is gifted with high intensity of direct solar radiation ranging between 2000 3200 kwh/m2/year from North to South. The sun shine duration ranges between 9-11 h/day from North to South, with very few cloudy days.
GENERATED ELECTRICITY AROUND 950 MILLION kwh FUEL SAVINGS OVER 205000 TOE EMISSION REDUCTIONS OVER 52000 TON OF
Wind Energy in Egypt 4 November 2009 14
GOVERNMENT COMMITMENT FOR RE & WIND ENERGY PROJECTS ADDITIONAL PROJECTS WILL CONTINUE
2011 \2010 2012 \2011 2013 \2012 2014/2013 2015/2014 2016/2015 2017/2016 2018/2017 2019/2018 2020/2019 2021/2020 2010 \2009 MW 700 600 500 400 300 200 100 0 Renewable Energy Authority 33 % Private sector with total share about 66 % 200 200 200 200 200 200 200 200 200 200 200 200 300 300 380 400 400 400 400 400 400 400 400 200 2009/2010 2010/2011 Year 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021
REGULATORY FRAMEWORK FOR ELECTRICITY IN EGYPT WITH EMPHASIS ON WIND ENERGY Current, future demand and energy resources in Egypt Renewable energies and its current implementation programs in Egypt. Current and expected future legislation regarding renewable energy in Egypt
National policy/legislative framework that has been put in place to support the development of the renewable energies market.
Implementation Plan for Renewable Energies The proposed polices consists of two phases Phase 1: Competitive Bids (started with a wind farm) According to this approach the grid issue tenders requesting supplying power from renewable energies resources This is done within the following criteria: Coordinate RE capacities w.r.t. transmission and market capacities. Increase local manufacturing Increase private investment Achieving the lowest possible prices. Attracting FDI and provide the investors with guarantees through long term PPAs
Competitive Bidding 2500 MW to be executed by private sector through long term PPAs with the grid The 2500 MW will be issued in blocks each 250 MW The program includes 5 bids each consists of more than one block except the first one which will be restricted to one block. Attract highly qualified international developer with strong financial status and high capacity for technology transfer. Promotion of local manufacturing where bid evaluation will be based on points system which offers advantages for proposal having higher share of locally manufacture components (technology Transfer).
Competitive Bidding The bidding process consists of two parts Part1: Pre-Qualifications based on experience and financial status (1-Year Period) Wind measurements Bird Migrations & environmental impact assessment Soil testing Part2: Short listed bidders submit proposals to construct, own and operate the wind plant By the year 2017 the last tender for achieving the targeted energy by the year 2020
Measures Adopted for Renewable Energies in the proposed New Electricity Law (Contd.) Phase 2 (after the adoption of the New Electricity Law) Feed in Tariff will work in parallel with the competitive bids mechanism. International experience has showed that feed in tariff is more attractive for smaller investors like farmers, cooperatives and private investors. To prevent intersection between the two mechanisms competitive bid will be for large size installations (250 MW wind farm), while feed in tariff will be restricted from small capacities (less than 50 MW installations).
Feed in Tariff Goal is to reach another 2500 MW Support medium and small developer Projects with capacities of 50MW and less Tariff will be set for 15 years taking into consideration the wind speed, and capacity Request for technical support
Renewable Energy Development Business Models Item NAREA Competitive Bidding Feed-In-Tariff Program size 2200 MW 2500 MW 2500 MW Single Wind Farm Size Large (100-400 MW) Large ten Modules each (250 MW) Medium and Small below 50 MW Developer NAREA Private (most probably international) Private (focus on local and small and medium size developers) finances Governmental and soft financing from international development agencies Commercial finance Commercial finance Tariff Setting Proposed by Egypt era and approved by the cabinet of ministers According to the bid outcome proposed by Egypt era and approved by cabinet of ministers Contracting 20 years Long term PPA mostly for 20 years 15-20 years Off taker Grid Grid or distribution system O/M NAREA Developer Developer Construction Responsibility NAREA through EPC Developer Developer
Renewable Energy Fund Establishment of RE fund: The fund could cover: Full/partial deficit between the RE cost and market prices Exchange rate risk in case of transferring cost full or partially to consumers. Guarantee of the transmission company payments Financial support to pilot projects. Research and development for RET.
Renewable Energy Fund Establishment of RE fund: The main sources of finance of the fund will include: Subsidy currently given to the fossil fuels used in power generation. State Budget. Donations Investment of the fund money
Support of Egyptian Government Central Bank of Egypt will guarantee all financial obligations of EETC under the PAA. Signing long term PPA (20-25) years. Reduction of custom duties from 5% TO 2% for all renewable energy equipment and spare parts. An area of about 1228.7km2 has already allocated for establishing W.E. projects (law 168 year 2009) Signing usufruct agreement. All permits for land allocation are already obtained. The project will benefit from carbon credit. Preliminary EIA including Bird migration study will be prepared by NREA in cooperation with international consultant and financed by KfW. A general Authority for Investment GAFI provides assistance to all investors through one window operation for obtaining all permits and licenses. The project company shall get license for power generation from Egyptian Electricity Regulatory Agency.
EGYPT S WELL LOCATED GEOGRAPHICAL EU Agreement No customs imposed on some RE Egyptian industries exports from Egypt to Europe, whereas European imports into Egypt are subject to tariffs (limited) LOCATION Industry Regulations Arab Free Trade Agreement Egypt s RE industries COMESA Agreement No customs imposed on RE Egyptian industries exports from Egypt to all African member countries, whereas Arab and European competitors do not enjoy this privilege No customs imposed on RE Egyptian industries exports from Egypt to all Arab countries Egyptian industries enjoys a number of trade agreements between Egypt and Europe, Arab countries, and African countries
MOEE/EEHC ISP Generation Co.(s) Trans Co(s) Trans Co(s) Dis Co(s) MV & LV Customers Gov. PP BOOT(s) UHV Customers HV Customers MV Customers Exports & Imports Private Distributor LV customers ISP Target Market Current phase one
MOEE/EEHC NG ISP NG IPP expansion Generation Co.(s) Trans Co(s) Dis Co(s) MV & LV Customers Gov. PP BOOT(s) UHV Customers HV Customers MV Customers Exports & Imports Private Distributor LV customers ISP Target Market Proposed phase two
Ministry of Electricity and Energy IPP expansion MOEE/EEHC RE: Gov PP & IPP.. Generation Co.(s) Trans. TSOco. Dis Co(s) MV & LV Customers BOOT(s) UHV Customers HV Customers MV Customers Exports & Imports Independent Merchant Transmission & Distribution ISP(s) EEUCPRA Slide 31 46 M.S.Elsobki (jr) Target market proposed phase four
Spain Europe Tunisia Morocco Algeria Western Arabian countries Libya EGYPT Turkey Lebanon Jordan Eastern Arabian countries Syria Iraq Arabian Gulf Countries Kuwait Sudan African Countries Ethiopia Saudi Arabia Emirates Oman Bahrain Qatar 32
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