Egypt is blessed with many opportunities for producing sustainable energy: long stretches of windy coastlines, especially along the Red Sea, for wind power; and vast desert areas bathed in sunlight throughout the year that could make the country a solar powerhouse. Yet sustainable energy investments haven't taken off, largely due to the country's rich – if dwindling – fossil fuel resources. For decades, local oil and gas production more than satisfied domestic demand and energy was highly subsidised for consumers and industry, leading to wasteful practices.
However, change is in the air: oil, though not gas, reserves are running low. Fuel and energy prices are gradually being brought in line with market rates, strengthening the case for efficiency gains in Egypt's energy-intensive industries. The government aims to reduce energy consumption by 20% between 2010 and 2022, and regulatory reforms are promoting sustainable energy projects largely driven by the private sector. National strategies are closely aligned with EU policy objectives on climate change mitigation and reduction of greenhouse gas emissions.
Energy efficiency measures in production processes generally require significant capital; so do new plants to produce renewable energy. Often the financial institutions and strategic investors who finance such investments are daunted by technical aspects. Overcoming this obstacle is one of the main goals of the Regional Sustainable Energy Financing Facility (SEFF). In Egypt, it will be extending at least €140 million of credit to partner financial institutions, who will lend it on to householders and businesses for energy efficiency and sustainable energy investments.
SEFF II, a joint action between EBRD (lead financier), AFD and EIB, also provides technical assistance to partner financial institutions so they can better assess the merits of sustainable energy investments and embrace Egypt's potential in this field. The EU NIF contribution supports technical assistance and provides investment incentives to partner institutions and their borrowers to encourage early adoption of sustainable energy technologies, which, in the short term, often appear more costly than traditional technologies. This grant, limited to 15% of the loan value, is to increase uptake significantly and demonstrate the benefits of energy innovation.
SEFF II will also work with Chambers of Commerce, associations and providers of technologies and services related to energy efficiency and renewable energy production helping them to cope with increased demand and to encourage the development of a vibrant, innovative local energy sector.
All aspects are considered that are needed to create a dynamic clean energy market - finance, know-how and, crucially, the NIF's early-adopter incentives. Thanks to SEFF II, businesses and residents are supported in reducing their energy bills and contribute to a healthier environment; and energy producers will emerge to tap the power of Egypt’s wind and sun.