Latest news with #EgyptERA
Mada
2 days ago
- Business
- Mada
Govt grants renewables companies first licenses to sell directly to private sector, ‘speeding up' electricity liberalization
Egypt's government has granted four renewable energy companies permission to contract directly with private industrial consumers in what an informed source described as 'a very big step' toward liberalizing the country's electricity sector. The deal represents a 'slow transition' toward a free energy market, and will likely encourage more actors to enter the sector, said another source, a senior executive at one of the energy companies included in the government's decision. Regulatory groundwork for the development has been in place since 2015 alongside plans, recommended by international lenders, to cut subsidies on electricity rates for individual and corporate consumers. But the government has been slow to implement these policies in an already turbulent economic environment. Both the government and the European Bank for Reconstruction and Development (EBRD), which is providing technical support for the policy, announced the deals in recent weeks. The Cabinet said it had awarded contracts for the supply of solar and wind power to heavy, exporting industries to Enara and Taqa Arabia, both Egyptian-owned, AMEA, a Dubai-based company, and Neptune Energy. The providers will be allowed to use state-owned transmission infrastructure via the Egyptian Electricity Transmission Company (EETC) to wheel the power to private-sector consumers: Helwan Fertilizers, Alamein Silicon Products Complex, Ezz Steel, AP Moller (Suez Canal Container Terminal), BEFAR Group and Suez Steel. The informed source said that the companies had applied for an open bid by EgyptERA and were likely chosen on the basis of their experience and financial position. The total investments will be worth around US$388 million, the Cabinet said at the end of May, producing around 400 MW. In exchange for the wheeling services, the private companies will pay EETC the equivalent of around LE0.17 per kWh if they transmit the energy using a High Voltage line, and LE0.0725 if they use the Extra High Voltage line, according to the national electricity regulator, EgyptERA. 'There is talk that the wheeling fee could be updated by EgyptERA because there was a request from EETC to increase it a bit,' according to the informed source. The rate will not bring major revenues to the EETC in fees The real difference will be felt in the electricity sector's business environment, according to the two industry insiders who spoke to Mada Masr. Private generation companies were previously able to contract directly with consumers outside of the government-regulated sector. This meant companies were limited to using client premises which are often too small for the necessary infrastructure, capping the potential generation capacity especially for renewable energy, the executive source said. Now, the source continued, private companies will get to install power stations 'wherever' land is available, and get grid access to transmit power to clients 'wherever they may be.' The informed source noted that land allocations are yet to happen, however, adding that implementation will still take some time for the four companies. They described the projects approved as a pilot round, intended 'to set down all these rules, so that future projects are able to follow it as a blueprint.' But the source noted that there is a direction in government to 'speed up' planned liberalization of the electricity sector in general. They pointed to the recent approval granted in April for the EETC to be separated from the ministry-owned Egyptian Electricity Holding Company, a measure laid out in a 2015 law to turn the EETC into a sector regulator providing wheeling services to private power generation firms, rather than supplying electricity to consumers itself. The EETC's separation is due to be complete in July, according to state media services. In the government's announcement, the Cabinet said the policy was intended to stimulate 'private investment and increase the participation of private companies in energy projects' in order to 'to enhance competitiveness' in the sector. They also framed the step as part of efforts toward green transition and sustainable development. Egypt currently relies on natural gas, a heavier pollutant than coal, for 79 percent of its power needs. As Egypt's oil and gas production declined in recent years, the government has been increasingly relying on imported fuel to meet rising domestic consumption.
Web Release
4 days ago
- Business
- Web Release
EBRD supports Egypt with first private-to-private electricity contracts
Energy market reform is taking a major step forward in Egypt as the government approves the first bilateral power purchase agreements between private generators and consumers. As part of a pilot of the private-to-private (P2P) rules, developed with technical support from the EBRD to the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egypt ERA) and approved last year, four renewable energy projects with a combined capacity of 400 MW have been approved to contract directly with end-consumers of electricity. The four approved projects are: KarmSolar, which will develop a 100 MW solar plant to supply electricity to Suez Steel. AMEA Power, which is building a solar facility of the same size to serve BEFAR Group and the Suez Canal Container Terminal. TAQA PV, which will install 100 MW of hybrid capacity (solar and wind) to power operations at Ezz Steel. Enara, developing a hybrid plant to deliver 100 MW to the El Alamein Silicone Products Company and Helwan Fertilizers. The P2P rules set out the conditions under which generators can use the power grid to sell electricity directly to consumers, a major departure from the existing single-buyer model and a significant step forward in Egypt's efforts to liberalise its electricity market – a goal set out in the 2015 Electricity Law. This approach introduces competition into the electricity sector, expands consumer choice and promotes private investments in renewable energy. It also introduces a path for Egyptian businesses, especially those that are energy-intensive and focused on the export market, to sign agreements directly with renewable energy producers that are increasingly required to prove their low carbon product credentials, for example green hydrogen destined for the European market. Furthermore, given the electricity generation under these contracts will be entirely privately financed, the P2P scheme represents an important route for Egypt to scale up electricity production without the need for government contracts. Mark Davis, the EBRD's managing director for the southern and eastern Mediterranean region, said: 'This milestone shows how the right regulatory framework can unlock private investment and drive the energy transition. By enabling companies to procure green electricity directly from producers, Egypt is opening new opportunities for industry and enhancing its competitiveness. We are proud to have supported EgyptERA in designing this pioneering scheme and will continue working closely as projects move towards implementation.' Dr Mohamed Mousa Omran, the chairman of EgyptERA, said: 'This pilot marks an important step towards a more competitive electricity market in Egypt. By enabling direct agreements between producers and consumers, we are creating space for the private sector to play a greater role in meeting the growing demand for clean energy in Egypt. This is essential for accelerating the deployment of renewables at scale and achieving our long-term energy goals.' The EBRD's technical support is generously funded by the Swiss State Secretariat for Economic Affairs (SECO), a key partner for the Bank in many of its ongoing policy engagements that aim to decarbonise the energy sectors of its countries of operation. This work is being delivered under the EBRD's Renewable Energy Programme, which is currently supporting 16 countries in their development of market-based mechanisms to mobilise private investments. To date, activities under this programme have delivered over 8,500 MW of renewable energy capacity being awarded in 8 countries.
