The Egyptian energy sector faces considerable challenges: oil reserves are running low; gas is a valuable export revenue earner; and power plants do not always receive the fuel supplies they need. Moreover, investments in electricity generation have failed to keep up with increasing demand, and many old plants are poorly maintained and inefficient. Demand for energy has increased, from both industry and consumers, and blackouts have become more frequent, particularly during summer months when cheap imported air-conditioners, now affordable for many urban Egyptians, are on full blast.
If outages make life sticky for people and cause them to doubt the state’s capacity to deliver public services, it has disastrous consequences for Egypt’s energy-intensive industries, with knock-on effects for industrial output and economic growth. The energy sector, largely ignored in the round of government investments following the 2011 revolution, has now become a major focus of attention for the Egyptian Government.
A comprehensive new energy strategy has been drawn up to increase Egypt’s electricity generating capacity using gas, coal and renewable energies, and to enact reforms to improve governance in the sector. Renewables are centre-stage: Egypt has a phenomenal potential for producing clean energy from wind and solar power, yet renewables account for only 1% of total installed capacity. The restructured New and Renewable Energy Authority (NREA) is working increasingly with private sector partners to meet the government’s goal of producing at least 20% of its energy from renewable sources 20% by 2022.
One major NREA project contributing to this goal is the Gulf of Suez Wind Farm, which is being built with loans from KfW, EIB and AFD, and an investment grant from the EU NIF. The EU is keen to support the project, which is closely aligned with NIF strategic orientations and EU Neighbourhood and climate change mitigation policies. The EU is also committed to supporting Egypt in implementing energy sector reforms.
The wind farm on the west coast of the Red Sea in Egypt, about 150 km north of Hurghada, will have an installed capacity of at least 200 MW and to generate at least 650 GWh per annum, enough to cover the electricity needs of about 370 000 consumers. This equates to 289 955t less CO2 entering the atmosphere every year. Strict environmental standards will be adhered to, protecting migratory birds in particular.