Power Procurement is Evolving to Meet New Government Priorities
Egypt’s power sector is evolving with extraordinary rapidity and the focus has switched forcibly towards renewables.
Egypt Power Report 2021 is a comprehensive guide to the risks, realities, opportunities, and threats associated with entering Egypt's electricity industry.
The report makes a detailed examination of the government’s power sector priorities as it plans for the next phase of procurement and examines the opportunities and challenges facing the electricity supply industry, including the impact of coronavirus on demand growth and sectoral reforms and the government's ambitious renewable generation targets.
The report examines sector opportunities, including:
- An imminent opening of a secondary market for the solar FiT project.
- Progress towards the potential sale of three 4.8GW gas-to-power (GTP) plants and the alternative priorities that the authorities could use for evaluating bids in a process which is still opaque.
- Early net-metering projects, which represent the first phase of market-based projects.
- The prospects for Egypt as a regional energy hub.
The analysis is underpinned and informed by independent power generation forecasts based on the actual project development pipeline, with data drawn from African Energy Live Data - our proprietary database of more than 6,500 power projects and plants.
Key Features
- The government’s priorities as it plans for the next phase of power sector procurement.
- Risk Management Index and 15-year (2010-24) power supply analysis, identifying trends on installed capacity broken down by fuel, technology and provinces.
- Demand and supply outlook scenarios (2020-2035)- including a look at how much of the existing less-efficient thermal generation may have to be decommissioned.
- An examination of the potential impact of desalination on the currently very large reserve capacity margin
- An estimate of the proportion of power customers now paying close to cost-reflective tariffs
- Comprehensive information on existing and planned generation projects, including project profiles.
- Political and economic risk analysis.
- Profiles of key players in the sector.
- Analysis of policy and regulation including future plans, major legislation and legal requirements for generation, transmission and distribution.
- Natural gas resources and availability.
Reasons to buy
- Identify the risks - Investors have good reasons to be wary about the political, economic and sectoral risks. The report looks beyond standard assessments of government stability to identify where the real risks might lie.
- Examine the opportunities - The report analyses progress towards the potential sale of three 4.8GW power plants and questions alternative priorities that the authorities could use for evaluating bids in a process which is still opaque.
- Understand the shift towards renewables - The trajectory of Egypt’s power sector has shifted forcibly towards renewables. The report analyses the progress of that change and the opportunities which come out of it including the imminent opening of a secondary market for solar FiT projects.
- Evaluate the progress of sectoral reform - Coronavirus has slowed progress towards subsidy reform and full sector liberalisation but important steps have been taken. African Energy’s analysis of tariffs and market structure provides an estimate of the proportion of power customers now paying close to cost-reflective tariffs.
- See how procurement is evolving in line with government priorities - Egypt’s power generation procurement started with large scale state-owned EPC+finance initiatives and has progressed rapidly through the feed-in tariff and BOOT tender processes to the increasing predominance of bilaterally negotiated IPPs. The report looks at the government’s priorities as it plans for the next phase of procurement.
- Examine Egypt’s potential as a regional energy hub - The government aims to open markets in the three main regions of the Arab world, sub-Saharan Africa and in Europe. The report itemises progress towards the development of the necessary interconnections.
Table of Contents
1. Executive Summary
2. Risk Management Report
3. Politics
3.1. Despite pressures, Sisi is firmly in control
3.2. The constitution gives power to the military
3.3. The geopolitics of human rights
4. Macroeconomic overview
4.1. Overview
4.2. The impact of coronavirus and Cairo’s response
4.3. Economic management: hard medicine from the technocrats
4.4. Currency policy
4.5. Debt and major creditors
4.6. A structural economic shift
4.7. WBG Doing Business 2020 ranking
5. Power sector overview
5.1. Overview
5.2. ESI history
5.3. The domination of gas
5.4. The renewables drive has begun
5.5. Nuclear power
5.6. Subsidy reform
5.7. The ESI’s financial health
5.8. Market structure
5.9. Key institutions
5.10. EEHC five-year plans
- Map: Egypt's electricity infrastructure
6. Power sector policy and regulation
6.1. Overview
6.2. Major
6.3. EgyptERA’s regulatory role
6.4. Renewable energy targets
6.5. Generation
6.6. Transmission
6.7. Distribution
6.8. Net-metering and distributed generation
6.9. Tariffs - moving towards cost-reflectivity
6.10. Sovereign guarantees
6.11. Local content
7. Resource availability
7.1. Natural gas
7.2. Solar
7.3. Wind
7.4. Hydro resource
7.5. Geothermal resource
- 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
8. Competitive landscape
8.1. Overview
8.2. Landmark power projects
8.3. Selected power plants under construction
8.4. Selected planned generation projects
8.5. Selected developers in the Egyptian market
8.6. Selected key financiers
9. Transmission and distribution
9.1. Transmission developments
9.2. Access and consumption
10. Market openings for investors
10.1. New IPPs and other private financing opportunities
10.2. Desalination - Egypt’s answer to the Gerd dispute
10.3. The nascent C&I market
10.4. Off-grid initiatives
11. Supply and demand outlook
11.1. Overview
11.2. Demand projections
11.3. Commissioning policy
11.4. Decommissioning policy
11.5. Reshaping the network
11.6. The outlook for generation
11.7. As many concluding questions as answers
12. Installed capacity data
- Installed capacity, RE vs non-RE, 2010-2025 (MW)
- Installed capacity, RE vs non-RE, 2010-2025 (%)
- Installed capacity by fuel type, 2010-2025 (MW)
- Installed capacity by fuel type, 2010-2025 (%)
- Installed capacity, liquid fuels breakdown, 2010-2025 (MW)
- Installed capacity, liquid fuels breakdown, 2010-2025 (%)
- Installed capacity by technology type, 2010-2025 (MW)
- Installed capacity by technology type, 2010-2025 (%)
- Installed capacity by ownership type, 2010-2025 (MW)
- Installed capacity by ownership type, 2010-2025 (%)
- Installed capacity by governorates, 2010-2025 (MW)
- Installed capacity by governorates, 2010-2025 (%)
- Installed capacity by fuel, Alexandria, 2010-2025 (MW)
- Installed capacity by fuel, Assiut, 2010-2025 (MW)
- Installed capacity by fuel, Aswan, 2010-2025 (MW)
- Installed capacity by fuel, Cairo, 2010-2025 (MW)
- Installed capacity by fuel, Dakhalia, 2010-2025 (MW)
- Installed capacity by fuel, Damietta, 2010-2025 (MW)
- Installed capacity by fuel, El Beheira, 2010-2025 (MW)
- Installed capacity by fuel, El Wadi El Jadid (New Valley), 2010-2025 (MW)
- Installed capacity by fuel, Giza, 2010-2025 (MW)
- Installed capacity by fuel, Ismailia, 2010-2025 (MW)
- Installed capacity by fuel, Kafr El-Sheikh, 2010-2025 (MW)
- Installed capacity by fuel, Matruh, 2010-2025 (MW)
- Installed capacity by fuel, Minya, 2010-2025 (MW)
- Installed capacity by fuel, North Sinai, 2010-2025 (MW)
- Installed capacity by fuel, Port Said, 2010-2025 (MW)
- Installed capacity by fuel, Qalyubia, 2010-2025 (MW)
- Installed capacity by fuel, Qena, 2010-2025 (MW)
- Installed capacity by fuel, Red Sea, 2010-2025 (MW)
- Installed capacity by fuel, Sohag, 2010-2025 (MW)
- Installed capacity by fuel, South Sinai, 2010-2025 (MW)
- Installed capacity by fuel, Suez, 2010-2025 (MW
13. Power generation projects
- Operating on-grid power plants
- Under construction on-grid power plants
- In development on-grid power plants
Executive Summary
Political risks exist but are navigable
Investors have good reasons to be wary about the political, economic and sectoral risks associated with major financial commitments in Egypt. The report looks beyond standard assessments of government stability to identify where the real risks might lie.
A strategic economic shift is opening new risks and opportunities
President Sisi has adopted a hybrid economic model based on experience and a thirst for capital which has enlarged the role of both the military and the private sector at the expense of the traditional public sector. The report analyses the risks and opportunities which this strategic shift might bring.
The pivot from gas to renewables
Egypt’s power sector is evolving with extraordinary rapidity. It has witnessed a massive transition to GTP generation since 2015. Now the trajectory has shifted forcibly towards renewables. Egypt Power Report 2021 analyses the progress of that change and the opportunities which come out of it.
Coronavirus slows but does not halt sectoral reform
Coronavirus has slowed progress towards subsidy reform and full sector liberalisation. However, important steps have been taken. Our analysis of tariffs and market structure provides an estimate of the proportion of power customers now paying close to cost-reflective tariffs.
The government’s priorities are shifting, and procurement is evolving to meet its needs
Egypt’s power generation procurement started with large scale state-owned EPC+Finance initiatives and has progressed rapidly through the feed-in tariff and BOOT tender processes to the increasing predominance of bilaterally negotiated IPPs. Early net-metering projects represent the first phase of market-based projects. Some of these processes are advancing in parallel. The report looks at the government’s priorities as it plans for the next phase of procurement.
Investment opportunities are opening at different levels of the market
One of the largest privatisations anywhere in the MENA region in any sector is under preparation in Egypt’s power sector. The report analyses progress towards the potential sale of three 4.8GW power plants and questions alternative priorities that the authorities could use for evaluating bids in a process which is still opaque. These are not the only opportunities for investors looking at established assets. The report also looks at the imminent opening of a secondary market for solar FiT projects.
Development of a regional energy hub
Subsidy reform is not the only factor likely to impact the demand for power generated in Egypt. The government aims to open markets in the three main regions of the Arab world, sub-Saharan Africa and in Europe. The report itemises progress towards the development of the necessary interconnections.
The power for water opportunity
The structure of the domestic market may also change in response to factors such as the growing water shortage, and Ethiopia’s development of the Grand Ethiopian Renaissance Dam. The report considers the potential impact of desalination on the currently very large reserve capacity margin
Is it time to retire older thermal capacity?
The regulator’s estimates for demand growth to 2035 will have to be revised in light of the coronavirus pandemic. The report considers potential supply and demand scenarios and asks how much of the existing less-efficient thermal generation may have to be decommissioned.
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Access Energy
- Acciona
- Actis
- Acwa Power
- Agence Française de Développement (AFD)
- Al Nowais Investments
- Alcazar Energy
- AMEA Power
- Arab Fund for Economic and Social Development (AFESD)
- Arabian Cement Company (ACC)
- Atomenergomash JSC
- BNP Paribas
- BP
- Cairo Electricity Production Company
- Central Bank of Egypt
- Crédit Agricole Corporate and Investment Bank
- Dakahlia Group
- Desert Technology
- Deutsche Bank
- DNV GL
- Doosan Group
- EDF Energy
- Edison
- Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA)
- Egyptian Electricity Holding Company (EEHC)
- Egyptian Electricity Transmission Company (EETC)
- Egyptian General Petroleum Corporation (EGPC)
- Egyptian Natural Gas Company (Gasco)
- Egyptian Natural Gas Holding Company (Egas)
- Elecnor
- ElSewedy
- Engie
- Eni
- Enneray
- European Bank for Reconstruction & Development (EBRD)
- European Investment Bank (EIB)
- Eurus Energy Holdings
- Gas Market Regulatory Authority (GMRA)
- General Authority for Suez Canal Economic Zone
- General Electric (GE)
- Globeleq
- Grupo TSK
- HSBC
- ING Bank
- Intec Energy
- Japan International Cooperation Agency (JICA)
- Japanese Bank for International Cooperation (JBIC)
- Jinko Solar
- KarmSolar
- KfW
- Kuwait Investment Authority
- Lekela
- Mainstream Renewable Power
- Mitsubishi Electric
- Multilateral Investment Guarantee Agency
- Nari Group
- National Bank of Egypt (NBE)
- New and Renewable Energy Authority (NREA)
- Nuclear Power Plants Authority (NPPA)
- Orascom Construction Limited
- Power Generation Engineering and Services Company (Pgesco)
- Rosatom
- Scatec Solar
- Schneider Electric
- Shell
- Siemens
- Siemens Gamesa Renewable Energy
- SolarizEgypt
- Sumitomo Mitsui Banking Corporation (SMBC)
- Taqa Arabia
- Tharaa Sovereign Wealth Fund
- Total Eren
- Toyota Tsusho Corporation
- Upper Egypt Electricity Production Company
- Vestas
- Voltalia
- West Delta Electricity Production Company
- World Bank
