OBG talks to Hassan Younis, Former Minister of Electricity and Energy

Interview: Hassan Younis

What incentives does the ministry provide to accelerate investments in renewable energy?

HASSAN YOUNIS: The ministry is working hard to upgrade the electricity market to bring it in line with global standards in order to attract foreign investment. Renewable energy investment is currently encouraged in two ways – through a competitive bidding system and via a feed-in tariff scheme. Several incentives have been developed to encourage more focus on renewable energy investment in Egypt. These include reimbursing land preparation costs to companies once a project is operational. Private investors are guaranteed to recover their investments plus profit through securing long-term power-purchase agreements for around 20-25 years, to be specified through competitive bidding. Moreover, renewable energy hardware and equipment has been made fully exempt from Customs duties.

Where does the government’s aim to have 20% of energy from renewable sources by 2020 stand?

YOUNIS: Egypt is on schedule to generate 20% of its energy from renewable means by 2020. Private investment will have a 66% share and will enhance the relevant local industrial capabilities. An invitation for the prequalification of a private 250-MW wind farm has been completed based on a build-operate-own scheme. The wind farm is scheduled to come on-line in 2014. Another wind farm with a capacity of 1000 MW is expected to be operational by 2015 or 2016 and will be completed in four phases.

With regards to solar energy technologies, the first concentrating solar power (CSP) project in the country – the Integrated Solar Combined Cycle Power Plant – has been in operation since July 2011 and has a generation capacity of 140 MW, which included 20 MW generated by solar energy. A long-term solar energy plan will begin with a 100-MW and CSP project and another 40-MW one, which will be developed during the next five-year plan for 2012-17. The ministry is then aiming to add 3500 MW to the national grid by 2027.

A feasibility study for the project has shown there are significant benefits to be gained for both countries. This interconnection will permit the exchange of 3000 MW per day due to a difference in peak load times. The peak load in Saudi Arabia is during the afternoon, while Egypt’s is in the evening. Currently, Saudi Arabia and Egypt are reviewing the agreement to exchange electricity, following which they will announce a bid to implement the project.

How successful has the ministry been in attracting independent power producers (IPPs) to power generation and distribution?

YOUNIS: The ministry has been taking key steps to restructure the power sector through unbundling and creating a competitive environment to generate private investment opportunities. A cornerstone in these developments was the establishment of the Regulatory Agency in 2001. Further to this, a new electricity law that is currently awaiting approval is aimed at improving transparency and will see the introduction of an independent transmission system operator.

Three private thermal power plants have already been successfully implemented in the country since 2002. At present, two initiatives are being carried out to encourage further private sector participation. The first scheme will allow the private sector to build, own and operate a power plant as an IPP and sell its power generation to direct customers based on a bilateral agreement between the two parties. The Egyptian Electricity Transmission Company (EETC) will provide third-party access to transmit the power generated from a plant to the end-customers.

The second scheme will enable private developers to take part in competitive bidding to own and operate a power plant on a pre-determined site allocated by the ministry. The power that is produced will then be sold to the EETC during a set term at the lowest price.