Energy is a vital line for any economy and an important factor in the lives of all Egyptians. Access to energy at affordable prices encourages growth in all economic sectors. Energy markets across the world are faced with a variety of similar challenges and each market can boost economic growth through the development of strategies to secure affordable, sustainable, and safe energy supplies.
Like many other countries, Egypt faces several challenges in the field of energy. The situation in Egypt requires a tailored solution, especially in light of the current economic changes and additional factors, which need to be taken into consideration.
Many countries such as Germany, the US, China, South Africa, South Korea, Saudi Arabia, and Russia consider the following in developing their energy strategy: reliability, efficiency, sustainability, reduction of carbon emissions, resource availability, competitive costs, quality of grid, energy transfer, diversification of sources of power generation, stability of supply, economic efficiency, and sustainability in a balanced way. The solution for the challenges facing the energy sector in Egypt needs to be fact-based, scenario-driven and to take long and short-term effects into account.
Therefore, we should start taking some strategic measures and actions to secure the future of energy and help Egypt achieve self-sufficiency. Moreover, the development of the energy market would also create jobs and foster industry growth.
Energy challenges facing the sector and key questions that must be answered:
- Egypt would have to generate 10-15% more electricity, which amounts to 3-4 GW, for meeting its own energy needs.
- Annual subsidies for the energy system in Egypt amount to about US $16 billion, about $5 billion of which go to electricity-related consumption.
- Losses during transmission and distribution of electricity amount to 10-15%, including non-technical losses.
- Investment in the oil and gas exploration and research sector has slowed down over the last 2-3 years.
- Gas demand increased 6% in 2012, while production fell 1.2%, which led to a shortage of natural gas and heavy fuel oil supplies to the industrial sector, and in return, a decline in the gross domestic product growth.
- Continued support from other countries to meet the daily fuel needs.
- The absence of a clear vision for the energy pricing system over the next ten years, which has made foreign and local investors reluctant to invest in the energy sector.
- The lack of a clear vision for a comprehensive energy system, including different scenarios for electricity generation, energy mix for the industry sector and maximizing the use of local resources such as gas, oil, wind, sun and waste to meet the needs of the industry and other economic sectors. The absence of such a vision prevents Egypt from obtaining a positive economic return in the short and long term from the energy sector.
- The absence of binding laws and procedures to rationalize energy consumption and promote energy efficiency in different economic sectors.
Road map and proposed solutions:
- Increasing electricity tariff alone will not solve the subsidy problem; technology can play a key role in solving the energy challenges and accelerate reaching financial sustainability. Egypt needs urgently a target date for eliminating energy subsidies or reducing them to the lowest amount possible.
- Increase the use of wind power could play an important role in mitigating the fuel shortage; generating electricity at a competitive cost, and meeting the demand for electricity. Peak electricity use during summer coincides with the time of maximum air speed in several locations in Egypt. Allow major industrial companies to import natural gas to meet their needs.
- Encourage the optimization of waste as a secondary fuel in energy-intensive industries through the development of an integrated system to ensure access to the required waste plants.
- Take immediate actions to control the increase in electricity consumption in the household sector, which reached 10% in 2012, according to the Ministry of Electricity.
Improve the efficiency of energy system through the deployment of highly efficient gas-fired combined cycle power plants (CCPP).
- Develop a legislative framework to allow and encourage the private sector to invest in the electricity and energy sector.
- Egypt has sufficient gas reserves to meet industrial and consumer electricity needs until 2030, provided the necessary investments to extract the gas are available. The volume of reserves amount to 2.1 billion cubic meters of conventional gas and 2.8 billion cubic meters of shale gas, according to the latest report issued by BP and the US Energy Information Administration EIA dated June 2013.
- We have to reduce energy consumption in industry and household sectors via increasing energy efficiency at least 2% per year for 20 years, which will also create a market and new business opportunities.
By Eng. Emad Ghaly – President Renewable Energy-Egypt,- Head of Wind Power, ME – Siemens