With growing demands for energy in Egypt, the government is moving beyond fossil fuels and hydropower, and is promoting renewable energy sources, like solar energy.
Solar power is indeed a promising alternative source of energy for Egypt. The country is part of the Sun Belt, which stretches from western North Africa to eastern Central Asia. It receives between 9 and 11 hours of sunlight per day and cloudy days are rare. This means solar energy is both economically and technically feasible to harvest in the country.
Currently, 90% of Egypt’s energy production depends on fossil fuels, 9% on hydropower, and the remaining 1% on solar and wind. The government is aiming to increase the share of renewables to 20% by 2020.
To encourage solar energy production, it is providing incentives for producers. These include feed-in-tariffs (FiT). Under this scheme, the government pays a tariff to individuals or consortia that provide electricity from renewable sources to the national grid. After the government’s announcement that it would provide FiT, more than 180 private companies submitted bids.
This strong expression of interest is a testament to the government’s important role in increasing renewable energy production in Egypt. In an interview with Al-Monitor, Samir Sobhi, Chairman of the Board of Directors at the Egyptian Solar Energy Systems Company, said, “[t]he … government decisions to set a tariff for renewable solar and wind energy constituted the main drive and incentive for companies to work in this field. Prior to this decision, there were major delays in the solar energy market.”
The Ministry of Finance is also providing loans to promote renewable energy investment, at a low interest rate of 4%. While the loans only seem to be available for projects that will prioritize supplying energy to government buildings, they still provide investors with a source of funding for renewable energy initiatives.
Despite these promising developments, one main obstacle to increasing renewable energy production in Egypt had persisted. Any disputes between investors and the government could only be settled via arbitration inside Egypt; for foreign investors this was a cause of concern. The Egyptian government has since rectified this; arbitration will now take place “outside Egypt in neutral countries.
With the government committed to diversifying Egypt’s power sources, the future of renewable energy in Egypt seems bright.