An Assessment for Technical, Economic, and - Universität Kassel

An Assessment for Technical, Economic, and Environmental

Challenges Facing Renewable Energy Strategy in Egypt

By

Eng. Ehab Mohamed Farouk Abd El Aziz Mohi El Din

A Thesis Submitted to the

Faculty of Engineering at Kassel University

Faculty of Engineering at Cairo University

In Partial Fulfillment of the

Requirements for the Degree of

MASTER OF SCIENCE

In

RENEWABLE ENERGY AND ENERGY EFFICIENCY

REMENA

FACULTY OF ENGINEERING, KASSEL UNIVERSITY

KASSEL, GERMANY

2011

An Assessment for Technical, Economic, and Environmental

Challenges Facing Renewable Energy Strategy in Egypt

By







MASTER OF SCIENCE

In


REMENA

Under Supervision of


KASSEL, GERMANY

2011

Prof. Dr.-Ing. Jürgen Schmid Prof. Dr. Mohamed Salah El Sobki (Jr.)Fraunhofer-IWES Professor Electric Power Systems

Universität Kassel Cairo University

Dr. Mohamed Moustafa El khayatNew and Renewable Energy Authority (NREA)

An Assessment for Technical, Economic, and Environmental Challenges

Facing Renewable Energy Strategy in Egypt

By







MASTER OF SCIENCE

In


REMENA

Approved by the Examining Committee

Prof. Dr.

Prof. Dr.

Prof. Dr.


KASSEL, GERMANY

2011

I

TABLE OF CONTENTSLIST OF FIGURES................................................................................................. VI

LIST OF TABLES ............................................................................................... VIII

NOMENCLATURE................................................................................................ IX

ACKNOWLEDGMENT......................................................................................... XI

ABSTRACT ...........................................................................................................XII

1 CHAPTER ONE: ENERGY SITUATION IN EGYPT ..................................... 1

1.1 Introduction .................................................................................................. 1

1.2 Energy........................................................................................................... 3

1.3 Institutions and Governance in the Energy Sector ....................................... 4

1.3.1 The Ministry for Electricity and Energy (MOEE) ................................. 4

1.3.2 The Ministry of Petroleum (MOP)......................................................... 6

1.3.3 Supreme Council of Energy (SCE) ........................................................ 6

1.4 Energy Policy ............................................................................................... 7

1.5 Energy Situation in Egypt ............................................................................ 8

1.5.1 Oil ........................................................................................................... 8

1.5.2 Natural Gas........................................................................................... 10

1.6 Electricity situation in Egypt ...................................................................... 12

1.6.1 Conventional Thermal.......................................................................... 14

1.6.2 Hydropower.......................................................................................... 14

1.6.3 Wind ..................................................................................................... 17

1.6.4 Solar...................................................................................................... 19

1.6.5 Nuclear ................................................................................................. 19

1.6.6 International Connections .................................................................... 20

2 CHAPTER TOW: ELECTRICITY DEMAND AND SUPPLY IN EGYPT... 22

2.1 Energy Demand Scenarios for Egypt ......................................................... 22

2.1.1 Energy Consumption............................................................................ 22

II

2.1.2 Drivers of Energy Demand .................................................................. 25

2.2 Electricity Market Design........................................................................... 29

2.2.1 Background .......................................................................................... 29

2.2.2 Present Status of Electricity Market..................................................... 29

2.2.3 The Proposed Electricity Market Structure.......................................... 31

2.2.4 Tariffs ................................................................................................... 33

2.3 Independent Power Producers, IPPs........................................................... 35

2.3.1 IPP frameworks and projects developed.............................................. 36

2.3.2 IPPs Projects in Egypt .......................................................................... 36

2.3.3 Future IPPs Projects in Egypt .............................................................. 38

2.3.4 IPPs Projects Evaluation ...................................................................... 39

3 CHAPTER THREE: NATIONAL RENEWABLE ENERGY STRATEGYin Egypt ................................................................................................................... 40

3.1 Introduction ................................................................................................ 40

3.2 Incentives for the Private Sector................................................................. 41

3.3 Energy Planning Model .............................................................................. 43

3.3.1 The Methodology of Data Processing.................................................. 44

3.4 The Current Situation at the Year 2009/2010 ............................................ 47

3.5 The Expected Situation of Electricity By 2020.......................................... 47

3.6 Wind Energy Situation ............................................................................... 50

3.6.1 The Land Required For Wind Farms ................................................... 51

3.6.2 The Available Land for Wind Projects ................................................ 51

3.6.3 Wind Atlas for Egypt ........................................................................... 52

3.6.4 Wind Farm Area Calculator ................................................................. 57

3.6.5 Repowering of wind turbines ............................................................... 59

3.7 Solar Energy Situation................................................................................ 60

3.7.1 Solar Atlas ............................................................................................ 61

III

3.7.2 EM Power Program, Country visit Report........................................... 62

3.7.3 CSP+D potential in Egypt “SolarPACES” .......................................... 65

3.8 The complete evaluation for the targeted plan ........................................... 71

4 CHAPTER FOUR: ECONOMIC AND FINANCIAL EVALUATION.......... 73

4.1 Renewable Energy Market and Industry Highlights .................................. 73

4.2 Economic and Financial Evaluation for Wind Projects ............................. 74

4.2.1 Investment costs ................................................................................... 75

4.2.2 Lifecycle Cost of Energy ..................................................................... 76

4.2.3 Operations and Maintenance................................................................ 76

4.3 Financing Schemes for Wind Park Projects in Egypt ................................ 77

4.3.1 Grant Scheme ....................................................................................... 77

4.3.2 Self-Finance/Grant Scheme.................................................................. 77

4.3.3 Self-Finance Scheme............................................................................ 77

4.4 The expected investment cost for wind projects ........................................ 78

4.5 The Expected Projects in the East and West Nile Banks ........................... 80

4.6 Economic and Financial Evaluation for Concentrating Solar power ........ 83

4.6.1 Investment Costs .................................................................................. 83

4.6.2 Operation and maintenance costs......................................................... 84

4.6.3 Costs of providing finance for CSP plants........................................... 84

4.6.4 Generating costs ................................................................................... 85

4.6.5 The expected investment cost of CSP in Egypt ................................... 85

4.6.6 Parabolic Trough Modeling in Solar Advisor Model (SAM).............. 86

4.6.7 Concentrating Solar Power Plant Model.............................................. 88

4.7 Economic and Financial Evaluation for Photovoltaic PV.......................... 90

4.7.1 Levelized Energy Production Cost....................................................... 91

4.7.2 Cost Reduction Goals........................................................................... 92

4.7.3 Cost of Turnkey PV in Germany drops, (the German experience) ..... 92

IV

4.7.4 The Expected Investment Cost of PV in Egypt ................................... 94

4.7.5 Tariff Requirements ............................................................................. 95

4.7.6 PV Power Plant SAM Model ............................................................... 95

4.8 General Economic evaluation and Impacts ................................................ 97

4.8.1 General economic indicators................................................................ 97

4.8.2 General economic impacts ................................................................... 98

5 CHAPTER FIVE: ENVIRONMENTAL IMPACTS EVALUATION OFRENEWABLE ENERGY....................................................................................... 99

5.1 Introduction ................................................................................................ 99

5.2 The Impact of Wind Energy on Climate Change ..................................... 100

5.3 Carbon Dioxide Emissions and Pollution ................................................ 101

5.3.1 How Much CO2 Can Wind Energy Save?.......................................... 101

5.4 Environmental Impacts of Wind farms .................................................... 103

5.4.1 Noise Problems .................................................................................. 103

5.4.2 Interference......................................................................................... 104

5.4.3 Appearance......................................................................................... 104

5.4.4 Land use ............................................................................................. 104

5.4.5 Impact on wildlife .............................................................................. 105

5.4.6 Safety.................................................................................................. 105

5.5 The Environmental Impacts of Wind farms in Egypt .............................. 107

5.5.1 Land characteristics and use: ............................................................. 107

5.5.2 Flora and Fauna (without avi-fauna):................................................. 107

5.5.3 Avifauna: ............................................................................................ 107

5.5.4 Water quality: ..................................................................................... 108

5.5.5 Air quality: ......................................................................................... 108

5.5.6 Noise levels: ....................................................................................... 108

5.6 Environmental Effects of Solar Energy.................................................... 109

V

5.6.1 Carbon Emissions............................................................................... 110

5.6.2 Abundant Components....................................................................... 110

5.6.3 Cadmium ............................................................................................ 110

5.6.4 Ecological Concerns........................................................................... 110

6 CHAPTER SIX: CONCLUSION AND RECOMMENDATIONS ............... 112

6.1 Introduction .............................................................................................. 112

6.2 Conclusions on the Present Work............................................................. 112

6.3 Recommendations and Proposed Action to Speed RE In Egypt.............. 114

6.3.1 Fossil-Fuels Subsidy .......................................................................... 115

6.3.2 Access to Transmission, Grid Connection......................................... 115

6.3.3 Promoting and Encouraging Solar Water Heating Systems .............. 116

6.3.4 Educate the awareness about the role of wind energy ....................... 117

6.3.5 Research, development and demonstration support of local industry 117

6.3.6 Garbage-To-Energy- Recycling instead of Burning .......................... 117

Energy Production per Ton of Garbage.......................................................... 118

REFERENCES...................................................................................................... 119

VI

LIST OF FIGURESFigure 1-1: Egypt’s Oil Production and Consumption 1990-2010, source EIA........... 9

Figure 1-2: Egypt’s NG Production and Consumption 1990-2010, source EIA ........ 10

Figure 1-3: fuel input and electricity generation in power plants in Egypt, in Mtoe

(EEHC). ................................................................................................................ 13

Figure 1-4: Development of Hydro Generated Energy (GWh), source EEHC .......... 15

Figure 2-1 Share of Egypt’s Total Energy Consumption, by Sector, 2007 ................ 23

Figure 2-2: Share of Egypt’s Total Energy Consumption, by Fuel Type, 2007 ......... 24

Figure 2-3: Share of Egypt’s Total Primary Energy Production, by Source, 2007, F 24

Figure 2-4: Historic and Future Population Trends in Egypt, 1990–2030.................. 25

Figure 2-5: Egypt’s GDP Growth, Two Scenarios, 1993–2030, ................................ 27

Figure 2-6: Egypt’s Real Per Capita GDP, 1993–2030, ............................................. 27

Figure 2-7: Egypt’s Economic Growth by Sector, 1993–2030,.................................. 28

Figure 2-8: Egypt’s Economic Growth by Sector, 1993–2030,.................................. 28

Figure 2-9: Structure of the EEHC, source H. El Salmawy........................................ 30

Figure 2-10: Power sector structure, source H. El Salmawy ...................................... 31

Figure 2-11: The proposed Electricity Market Structure ............................................ 32

Figure 3-1: Energy Planning Model Components....................................................... 44

Figure 3-2: current situation of electricity 2009/2010 ................................................ 47

Figure 3-3: the forecasting of total electricity generated up to 2020 .......................... 48

Figure 3-4: Estimate Targeted share of renewable energy up to 2020 ....................... 49

Figure 3-5 : Elevation map of Egypt showing the meteorological stations used for the

Wind Atlas for Egypt............................................................................................ 53

Figure 3-6: Mean wind speeds and power densities at a height of 50 m over

roughness class 1 (z0 = 0.03 m) for the 30 stations in Egypt............................... 54

Figure 3-7 Wind resource map of Egypt: mean wind speed at 50 m a.g.l. determined

by mesoscale modeling (Wind Atlas for Egypt, 2006). ....................................... 55

VII

Figure 3-8: offshore wind resource map of Egypt: mean wind speed at 50 m a.g.l.

determined by mesoscale modeling (Wind Atlas for Egypt, 2006). .................... 56

Figure 3-9: Solar Atlas of Egypt, source NREA annual report 2010.......................... 61

Figure 3-10: Egypt coastal strip in the Mediterranean Sea in red color...................... 66

Figure 3-11: Elevation profile of the Egypt coastal strip in the Mediterranean ......... 66

Figure 3-12: Egypt coastal strip in the Red sea in red color, ...................................... 67

Figure 3-13: Elevation profile of the Egypt coastal strip in the Red sea .................... 67

Figure 3-14: DNI results of the Egypt coastal strip in the Mediterranean Sea, .......... 68

Figure 3-15: Elevation profile of the Egypt coastal strip in the Red sea, ................... 69

Figure 3-16: Comparison between the planned targeted and the estimated planned

projects GWh........................................................................................................ 72

Figure 4-1: SAM Model Processing............................................................................ 88

Figure 4-2: result of CSP SAM modeling................................................................... 89

Figure 4-3: current performance and price of different PV module technologies, ..... 91

Figure 5-1: Global Power Capacity and avoided CO2 emissions (2008-2030)........ 102

VIII

LIST OF TABLESTable 1-1: Generated Energy (GWh), source EEHC .................................................. 15

Table 1-2: Hydro Power Indicators, source EEHC ..................................................... 16

Table 1-3: Fuel Saved Due to the Use of Hydro Power, source EEHC...................... 16

Table 1-4: Total Installed Capacity of Wind Energy, source Wind Energy Council . 17

Table 1-5: Egyptian Energy overview, source EIA .................................................... 21

Table 2-1: Egypt’s IPPs, source Anton Eberhard and Katharine Gratwick ................ 38

Table 3-1: The weighted capacity factor..................................................................... 50

Table 3-2: Estimated land for wind energy, scenario 1, source NREL web site ........ 58

Table 3-3: Estimated land for wind energy, scenario 2 .............................................. 58

Table 3-4: Proposed lands suitable for solar projects, source Em Power, .................. 63

Table 3-5: expected electricity generated from Kom Ombo,...................................... 64

Table 3-6: Targeted Strategy by 2020......................................................................... 71

Table 3-7: Real projects .............................................................................................. 71

Table 3-8: shortage from the targeted and planned projects ....................................... 72

Table 4-1: the expected investment of wind farm, source, 200 MW FS .................... 78

Table 4-2: Operation and Maintenance, source, 200 MW FS..................................... 79

Table 4-3: technical data of 200 MW wind in West of Nile ....................................... 80

Table 4-4: the expected cost of the project ................................................................. 81

Table 4-5: the results of the project of west of Nile.................................................... 81

Table 4-6: expected investment cost for CSP projects, PFC Kom Ombo .................. 86

Table 4-7: investment cost of 100 MW PV power plants, source PFC of PV in Kom

Ombo .................................................................................................................... 94

Table 4-8: results of SAM simulation for 20 MW PV................................................ 96

Table 5-1: Global Power Capacity and avoided CO2 emissions (2008-2030), source

wind roadmap ..................................................................................................... 102

IX

NOMENCLATURE

MW Mega Watt

GW Giga Watt

KWh Kilo Watt Hour

OPEC Organization of Petroleum Exporting Countries

MOEE Ministry Of Electricity and Energy

MOP Ministry of Petroleum

EEHC Egyptian Electricity Holding Company

EETC Egyptian Electricity Transmission Company

SCE Supreme Council of Energy

REF Renewable Energy Fund

EEL Energy Efficiency Labeling

GCC Gulf Cooperation Council

EGPC Egyptian General Petroleum Corporation

Tcf Trillion Cubic Feet

LPG Liquefied Petroleum Gas

AGP Arab Gas Pipeline

CC Combined Cycle

GHG Greenhouse Gas

X

Mtoe Million Ton Oil Equivalent

IEA International Energy Agency

GEF Global Environmental Facility

PPA Power Purchase Agreement

BAU Business-As-Usual

GDP Gross Domestic Product

HEG High Economic Growth

BOOT Build-Own-Operate-Transfer

EHV Extra High Voltage

HV High Voltage

TSO Transmission System Operators

EEUCPRA Egyptian Electric Utility and Consumer Protection Regulatory

Authority

IPPs Independent Power Producers

NECC National Energy Control Center

LCA life cycle assessment

UTM Universal Transverse Mercator

A.G.L Above Ground Level

Acre area unit (1 acre = 4000 m2)

XI

ACKNOWLEDGMENT

I would like to express my deep gratitude to my supervisors Prof. Dr. Ing. Jurgen

Schmid, Prof. Dr. Eng. Mohamed Salah El Sobki, Dr. Mohamed El Khayat for

their continuous help in my work and guidance to complete this thesis. I would also

like to thank them for their valuable advices in the different contexts of this

document.

My heartfelt thanks are due to Prof. Dr. Adel Khalil for his great help and support

during the time of this work.

Many thanks go to Dr. John Severs for his help and support during the various

stages of this thesis work. His insightful comments and notes were of great

significance for this work.

Many thanks to Eng. Ehab Ismaiel for his help, and providing me by all required

data and advices throughout this work. His contributions were of great impact on this

work.

I also wish to thank my colleagues at the REMENA Program for their friendship,

support and for creating an enjoyable working atmosphere throughout my working

period, specially Mustafa Shaban and Mohamed Rany.

Finally, I would like to express my gratefulness to my Family, my Wife and my

daughter Mai, my sons Omar and Ziad for their continuous care, patience, tolerance,

encouragement, and support.

XII

ABSTRACTSecuring energy demand for next generations is one of the most challenges aspects

facing any sustained development plans, due to the growing electric energy demand

and Egypt as a country of limited fossil fuel resources has to diversify its energy

portfolio by utilization of its renewable energy resources, mainly wind due to its

economic potential and solar as proved by Egypt's wind and solar atlases. In the year

2009/2010, the total installed capacity in Egypt was 24726 MW with electricity

generation 139,000 GWh, of which 89 % was delivered by thermal plants and about

10% from Hydro power with total installed 2800 MW and electricity generated is

about 12863 GWh and 1% from Wind energy with total installed 550 MW and

electricity generated 1542 GWh.

In the solar energy field, the first solar thermal power plant of 140 MW with a solar

share of 20 MW using parabolic trough technology was started the initial work since

the 1st of July with estimated total energy generated of 852GWh/year. Recently,

Egypt has adopted an ambitious plan to cover 20% of the generated electricity by

renewable energy by 2020, including a 12% contribution from wind energy,

translating more than 7200 MW grid-connected wind farms. Such plan gives a room

enough to the private investment to play the major role in realizing this goal. The plan

includes also a 100 MW Solar thermal energy CSP with parabolic trough technology

in Kom Ombo city, and also two PV plants in Hurgada and Kom Ombo with a total

installed capacity 20 MW each. Due to the high investment cost of solar energy

technologies, still limited in spread all over the world on the other hand wind energy

has an economic potential and becomes a commercial technology but the future

potential for solar energy due to the limited land for wind energy. Current study will

evaluate the Egyptian strategy for renewable energy up to 2020 and find how much

the planned projects from the Egyptian government will fulfill its target, the

economic study and the expected investment cost of these projects, and the

environmental impacts of the renewable energy.

1

1. CHAPTER ONE: ENERGY SITUATION IN EGYPT

1.1 IntroductionEgypt is a Middle Income Country with strong ownership of its development strategy.

The Government has established a good track record of economic reform. This has led

to a friendlier investment climate, which in turn has yielded a strong private sector

response. However, this economic growth has been accompanied by a growth in energy

use, especially higher demand for electricity implying adding about 1500 – 2000

MW/year.

Securing energy demand on continuous bases is a vital element for sustained

development plans and Egypt as a country of limited fossil fuel resources

In this sense and in line with the general framework of energy policies in Egypt, the

Supreme Council of Energy in Egypt announced the strategy for the electric power

based on diversifying energy sources of production, rationalizing the use of energy and

expanding use of renewable energy sources as a component of energy provision. The

strategy, which was approved in February 2008, aims to: “Contribution of renewable

energies by 20% of the total electricity generation by the year 2020. The share from the

grid-connected wind power is 12% of the total electricity generation, and that represents

about 7200 MW total capacities. Also, other renewable energy applications, led by

hydropower and solar energy, will have a significant contribution."

The polices to foster increasing private sector participation consist of two phases;

Competitive Bidding, which will apply for around 5 years, and Feed-in-Tariff

approaches. Current study will focus on analyzing main challenges facing the

renewable energy strategy of Egypt, such as:

A) High penetration of wind projects with very large scale projects will be

concentrated in 3 main regions. Such situation entails considering several issues

2

such as wind forecasting systems, wake effects of large farms, Energy security,

as well as grid stability issues.

B) Implementing about 600 MW yearly during the next 10 years in spite of

implementing 550 Mw during the last 10 years.

C) Recent financial crises could represent one of the main obstacles cause delay in

achieving the strategy target.

D) How to cover the gap between the production cost and the selling price.

E) Are current planned projects able to fulfill the strategy targets? If not, what are

the possible scenarios to reach 20% of electricity production from renewable

resources by the year 2020?

F) What is the Cost/Benefit Analysis of implementing such renewable energy

projects?

G) Environmental assessment for the implementing different scenarios.

3

1.2 EnergyEnergy plays a significant role in any nation’s development, and securing energy is one

of the most important challenges facing any development plans. We can understand

“Energy security” more when take it literally. We need to be secure in our energy in

terms of the source, i.e. where it comes from, the control of the consumption and

distribution of that energy, and having alternatives in place to allow us to withstand

highs and lows associated with any commodity. Securing energy resources and

production to meet the national demand both on the short and long terms, along with

adequate attention to environmental impacts concerns, are considered vital elements for

sustainable development. To face all these challenges Egypt takes a different effective

measures to increase the role of RE in the energy supply and use matrix. The very high

potential of renewable energy supports this orientation from the energy sector, which

are not completely exploited. Egypt is also still in the development phase of legislation

supporting the use of RE. A proposed electricity law is currently under construction and

development. It would include some legislation supporting RE in terms of obligations

or commitments on both energy consumers and producers to assign a part of their

production capacity and/or consumption to be from RE. In the same time there is a

renewable energy fund has been established between the Ministry of Electricity and

Energy “MOEE” and Ministry of Petroleum “MOP”, funded from the difference

between the international and local price of fuel saved by using RE. This difference will

be split equally between the two ministries. The share of MOEE will be directed to

support RE. Another incentive tool is that the Egyptian Electricity Transmission

Company (EETC) bears the cost of wind farms connection to the 220 kV transmission

lines until and including 22 kV in addition to paying a tariff per kWh about 10% higher

than that paid to conventional generation companies, finally the support of RE fund box

which ratified from the Egyptian Cabinet, [1].

Fossil fuels (Oil and NG) considered the main energy source, Egypt considered an

important non-OPEC energy producer. The large Commercial quantities of oil were

4

first found in 1908, and more petroleum was found in the late 1930s along the Gulf of

Suez. Later, there is large oil fields were discovered in the regions (Sinai Peninsula,

Gulf of Suez, Western Desert, and the Eastern Desert). The Abu Rudeis and Ra's Sudr

oil fields in the Sinai, captured by Israel in 1967, were returned to Egyptian control in

November 1975, and the remaining Sinai oil fields reverted to Egyptian control by the

end of April 1982, [2] . In terms of electricity generation, natural gas considered the

main fuel source and accounts for over 70 % of the total energy mix, the remainder

being met mostly by hydroelectricity. Plans are underway to further expand electricity

generation capacity by utilizing the country’s vast wind and solar resources.

1.3 Institutions and Governance in the Energy Sector

The Egyptian energy sector consists of a variety of institutions and organizations, some

of these have direct influence on the governance while others more indirectly influence

activities and decisions. Ministry of Electricity and Energy, and Ministry of Petroleum,

are basically taken care of the fields of electricity and of petroleum and natural gas, and

their connected authorities and organizations. In addition to the ministries, a Supreme

Council of Energy has been established; more details for each of them and the

responsibilities will be below.

1.3.1 The Ministry for Electricity and Energy (MOEE)

The main objective of the Ministry is to provide the electricity for all consumers all

over the country. In order to full fill that obligation, the ministry has to:-

Settle the general plane & energy generation, transmission and distribution using

the high-tech and the latest scientific development and supervise the execution of

such plan and follow-up the different activities concerning the electrical

network.

Suggest the electric energy prices for all different voltage levels and different

usages.

5

Supervise the study and execution of essential electrical projects.

Publish the statistics and data relating to electric energy production &

consumption

Supply the technical consultancies and services in the electric fields to Arab

countries and all others.

Ministry of electricity and energy has a lot of goals to be achieved includes:

Optimize use of available energy sources and minimize environment pollution

Provide electricity with minimum price and best quality

Expand utilization of new and renewable energy resources

Support electricity availability in towns and cities and complete electrifying the

urban areas and low population communities.

Interconnect the Egyptian Electrical network to African, west and east

neighboring countries

Boost local and domestic contribution to design, implementation and

manufacturing of electrical equipment’s.

Develop peaceful use of nuclear power.

Restructure electricity sector to optimize investments and improve electrical

services.

Utilize modern and sophisticated technical systems in electricity sector's

operation and activities.

Develop the expertise and skills of engineers and technicians working in the

electricity sector.

Export Egyptian expertise in design, manufacture, negotiation, construction and

operation of electrical projects.

Use soft loans as much as possible, [3].

Ministry of Electricity and Energy consists of Institutions and Authorities includes:

Egyptian Electricity Holding Company” (EEHC) which considered the main player and

6

consists of generation, transmission and distribution companies, Rural Electrification

Authority (REA) which had been canceled, New and Renewable Energy Authority

(NREA) the responsible entity for Renewable energy, The Electric Utility and

Consumer Protection Regulatory Agency, Hydropower Project Authority, Nuclear

Power Plants Authority, Atomic Energy Authority, Nuclear Materials Authority.

1.3.2 The Ministry of Petroleum (MOP)

The main strategy of Ministry of Petroleum is supporting oil and gas reserves and

increasing their production, meeting the local demand of oil, gas and petrochemicals,

supporting the exports and increasing Egypt's income from foreign currency and the

state's treasury. In 2000, the ministry of petroleum adopted an integrated strategy, the

most important mechanism to implement it is to develop and amend the structure of the

Egyptian petroleum sector through separating the activities of the natural gas and

petrochemicals from the activities of the Egyptian General Petroleum Corporation, and

establishing a strong entity for each of them, in addition to focusing the attention on

Upper Egypt through establishing an independent entity. After adding the activities of

the mineral resources to the duties of the ministry of petroleum and establishing the

Mineral Resources Authority on the 14th of October 2004, the petroleum sector now

consists of five strong entities cooperating and integrating to make the best use of

petroleum and mineral resources wealth. They are: The Egyptian General Petroleum

Corporation, The Egyptian Natural Gas Holding Company, The Egyptian

Petrochemicals Holding Company, Ganoub El-Wadi Holding Company and The

Egyptian Mineral Resources Authority, [4].

1.3.3 Supreme Council of Energy (SCE)

The Supreme Council of Energy (SCE) considered as the highest policy making

authority in the energy sector in Egypt, it was established in 1979 by the Prime

Minister's decree, No. 1093/1979. The decree defines SCE responsibility as short and

7

long-term energy planning reporting directly to president. Membership of the council

includes ministers of petroleum, electricity, industry, water supply, transportation and

housing; however, the council undertakes very limited activities and has thus presently

no importance for the decisions in the energy sector.

1.4 Energy PolicyThe energy policy is mainly prepared by The SCE. The main structure of it consists of

the ministers of electricity and petroleum, with consultations in the parliamentary

committee for industry and energy. Egypt's policy aims to increase the use of

renewables with in part by environmental considerations, and in part by an interest in

diversification of energy supply. Moreover, in Sept. 2006, the direction for using

nuclear technology to generate electricity and increase dependence on RE has been

announced by the ruling National Development Party, but still up to now the real

construction of the power plan postponed due to more safety.

The energy policy in Egypt focuses on the following;

- Enhancement of natural gas utilization,

- Adjustment of energy price and removal of subsidies,

- Energy conservation and efficient energy use,

- Promotion of renewable energy utilization.

There was an agreement in June, 2004 between the Ministry of Petroleum and the

Ministry of Electricity and Energy had been signed and established the “Renewable

Energy Fund, REF”. The REF aims to support the renewable energy resources by

around 0.3 Cent US$/kWh, this amount represent the difference between the prices of

selling N.G. inside and outside Egypt. The methodology behind REF is that, the

production of RE saves the consumption of natural gas in domestic thermal power

plants and also it can be exported, incentives for installing wind farms include

assignation free of charge lands, and exempting imported equipment from the Tax

Tariff. For solar heating systems there is a domestic standard code, meanwhile for wind

8

turbines and PV systems international codes; e.g. DIN, Germanschier Loyed, and IEC

are applied, [5].

The strategy for the electricity generation based on diversifying energy sources of

production, rationalizing the use of energy and expanding use of renewable energy

sources as a component of energy provision. The strategy, which was approved in

February 2008, aims to: Contribution of renewable energies by 20% of the total

electricity generation by the year 2020. The share from the grid-connected wind power

is 12% of the total electricity generation, i.e., reaching more than 7200 MW grid-

connected wind farms while the remaining will be from mainly hydro 4% and solar

energies 4%.

1.5 Energy Situation in Egypt

1.5.1 Oil

Crude oil is located in the Gulf of Suez, Sinai and western desert and recently

exploration activities have extended to southern Egypt and the east of Oweiynat.

Egypt’s proven oil reserves stand at 4.4 billion barrels, an increase from 2010 reserve

estimates of 3.7 billion barrels, according to the Oil and Gas Journal’s January 2011

estimation. The total oil production in Egypt averaged 660,000 (bbl/d), of which

approximately 540,000 bbl/d was crude oil, in 2010. Crude oil production continues its

decline, despite the new discoveries and enhanced oil recovery (EOR) techniques at

mature fields. At the same time, natural gas still increase in production due to new

fields production liquids and lease condensates which have offset some of the declines

in total oil liquids production.

The total estimation of Oil consumption is about 710,000 bbl /d, which slightly higher

than production and makes gap. To cover the gap with the increase of domestic demand

growth, oil imports are expected to continue with some refined product exports in the

short-term.

9

The government direction is to gradually lifting subsidized prices and targeting

subsidizes more effectively to reduce the demand growth of oil, despite this is a

politically and socially very sensitive issue that will be difficult to fully implement, [6].

Figure 1-1: Egypt’s Oil Production and Consumption 1990-2010, source EIA

1.5.1.1 Exploration and Production

There are mainly five areas for the production of the Egyptian oil: the first and more

effective is the Gulf of Suez and the Nile Delta but also the Western Desert, the Eastern

Desert, and the Mediterranean Sea. Most of the fields are mature, relatively small that

are connected to larger regional production systems. The Overall production of the old

fields especially the Gulf of Suez is in decline. However, these declines have been

compensated by small yet commercially viable discoveries in all producing areas, [6].

10

1.5.1.2 Exports

Egypt registered exports of crude oil about 145,000 bbl/d in 2010, although it is a net

oil importer. These exports went to India (50,000 bbl/d) as the first level, followed by

Italy (29,000 bbl/d), and the United States (16,000 bbl/d). The remainder of Egypt’s

crude oil exports went to other European countries and Asia, [6].

1.5.2 Natural Gas

The production of natural gas in Egypt is expanding rapidly with production

quadrupling between 1998 and 2009. The natural gas reserves stand at 77 trillion cubic

feet (Tcf), an increase from 2010 estimates of 58.5 Tcf and the third highest in Africa,

according to the Oil and Gas Journal 2011. In 2009, Egypt produced roughly 2.3 Tcf

and consumed 1.6 Tcf. Egypt will continue to be one of the most an important supplier

of natural gas to Europe and the Mediterranean region.

Figure 1-2: Egypt’s NG Production and Consumption 1990-2010, source EIA

11

In 2009 the electricity sector accounted for the largest share of natural gas consumption

(54 %) using mainly in electricity generation, followed by industrial sector (29 %)

according to Cedigaz. While still using natural gas in transportation sector through the

use and development of compressed natural gas vehicles and fueling stations a

relatively small share. For residential consumption and business use, the government is

encouraging the use of natural gas as a substitute for petroleum and coal. The World

Bank approved loans for the Natural Gas Connections Project, in January 2008 which

solve the problem of using liquefied petroleum gas (LPG) to natural gas through

investment in new connections and to further expand natural gas use in densely

populated, low income areas, [6].

1.5.2.1 Exploration and Production

In the Egyptian natural gas sector exploration and production activities continue its

growing. While there have been marked decreases in the production of natural gas

associated with oil extraction, new finds of non-associated gas fields combined with

growing domestic demand and export capacity, are increasing interest. Most industry

analysts place Egypt’s natural gas production on an upward trend in the short- and

medium-term despite the existing limitations to the sector’s growth. To promote

exploration in the more expensive deep-water offshore, the Egyptian government

revised pricing policies by agreeing to pay more for natural gas produced in these areas,

assuring continued international interest in developing these potential resources. Over

80 % of Egypt’s natural gas reserves and 70 % of production is in the Mediterranean

and Nile Delta but exploration and production continue in all major hydrocarbon rich

areas including the Western Desert.

Natural gas is locally distributed by Egypt Gas, City Gas, Natgas and Nile Valley Gas

Company. It is planned to supply natural gas to 2.5 million housing units by the end of

the 4th five years plan in the year 2002. It is expected that the demand on natural gas

will increase to 28, 36 and 52 billion m3 in 2002, 2007 and 2017, respectively, [6].

12

1.5.2.2 Exports

The exporting of natural gas began in the mid-2000s after the completion of the Arab

Gas Pipeline (AGP) in 2004 and the startup of the first three LNG trains at Damietta in

2005. Egypt exported about 650 billion cubic feet (Bcf) of natural gas in 2009, around

70 % of which was exported in the form of LNG and the remaining 30 percent via

pipelines, [6].

1.6 Electricity situation in Egypt

The power generation in Egypt is characterized by a prevalence of natural gas as the

main fuel, the absence of coal, as well as rather low generation losses (Fig 1-4) due to

significant hydro-power and a substantial capacity of efficient combined cycle (CC)

natural gas plants. This structure results in a rather low grid greenhouse gas (GHG)

emissions factor of approximately 0.5 kg CO2/kWh. The total losses due to on-site

consumption and the transmission and distribution system account for approximately

15% of gross production.

The plan will change when the ambitious plan of electricity generation expanded and

almost triple 2007 capacity by 2022, the fuel mix will become more unbalanced in the

power sector. According to this plan, most new capacity would be natural gas combined

cycle and steam turbine plants, the latter also being capable of using heavy fuel oil, [7].

13

Figure 1-3: fuel input and electricity generation in power plants in Egypt, in Mtoe (EEHC).

The Egyptian electrification rate in 2008 was approximately 99.4 %, according to the

International Energy Agency (IEA); this rate is among the highest in Africa with a 100

% urban access to electricity and 99.1 in rural areas.

The total installed capacity of electricity reached to be about 24.7 GW with total

generated electricity about 139000 GWh at the year 2009/ 2010, 21.4 GW of which was

conventional thermal generation capacity, 2800 MW hydro power with generated

electricity 12863 GWh and 550 MW of wind energy with total generated electricity

1540 GWh. Current peak demand is estimated to be 22.7 (GW). The rising demand and

ageing infrastructure have led to intermittent blackouts. The summer of 2010

highlighted these problems, as the country experienced rolling nationwide blackouts.

The Egyptian government planning to invest over $100 in the power sector over the

next decades to cover the increase of electricity consumption, and at the same time

seeking financing from external sources. Egypt encourage the privet sector to establish

more power plants and the other international organizations, and renewable energy

14

funds such as the World Bank’s Clean Technology Fund have all provided investment

in the sector. Under existing plans, Egypt hopes to produce 20 % of its electricity from

renewable energy by 2020 while also developing a nuclear power industry, (EIA Feb.

2011).

1.6.1 Conventional Thermal

The thermal power plant is the main player in the electricity generated in Egypt, in

2010, conventional thermal energy sources accounted for 125.5 GWh of electricity

generation, about 89% of the total. Almost natural gas is the main fuel used to produce

this electricity. Existing natural gas subsidies combined with plans to expand gas-fired

generation capacity indicate that the fuel will continue to play an important role in

Egypt’s electricity mix.

1.6.2 Hydropower

Hydro power is considered one of the cheapest and cleanest sources of power

generation. In Egypt, the power generation from hydro resources started in 1960, with

the construction of Aswan Dam to control the Nile water discharge for irrigation. In

1967 the 2.1 GW High Dam hydro power plants was commissioned, followed by the

commissioning of Aswan 2 power plant in 1985 and in cooperation with the Ministry of

Water Resources and Public Works; Isna hydropower plant was commissioned in 1993

and Naga-Hamadi in year 2008. Egypt generated around 14 Bkwh from hydroelectric

resources, the share of hydro generation represents about 9.2% from total generation in

2009/2010, almost all of which came from the Aswan High Dam and the Aswan

Reservoir Dams, (EEHC annual report).

15

Table 1-1: Generated Energy (GWh), source EEHC

Figure 1-4: Development of Hydro Generated Energy (GWh), source EEHC

It’s clear from the above figure (1-5) the decrease of the generated electricity from the

hydropower from 15510 GWh at the year 2007/2008 to 12863 GWh at the year

2009/2010 due to the decrease of the efficiency of the turbines.

16

Table 1-2: Hydro Power Indicators, source EEHC

Table 1-3: Fuel Saved Due to the Use of Hydro Power, source EEHC

the fuel saved by using hydropower energy is estimated to about 2773 Ktoe in the year

2009/2010 which equvelent to about 613 Million EGP.

17

1.6.3 Wind

The renewable energy in Egypt has gained momentum over the last two decades, thanks

to the successful international cooperation and the support of RE from the government.

The New and Renewable Energy Authority (NREA) was established in 1986 as the

national focal point to develop and introduce renewable energy technologies to Egypt

on a commercial scale together with implementation of related energy conservation

programs and investigate technology options through studies and demonstration

projects. Another aim of NREA is to introduce mature technologies into the Egyptian

market and to support the activities of the domestic industry. For the wind energy

technology in Egypt which considered the largest in Africa, since the 1980s, a series of

large-scale grid connected wind energy projects were installed, and 120 MW were

added in 2010, taking the total installed wind capacity to 550 MW, [8].

Year 1999/

2000

2000/

2001

2001/

2002

2002/

2003

2003/

2004

2004/

2005

2005/

2006

2006/

2007

2007/

2008

2008/

2009

2008/

2010

MW 5 5 68 98 145 145 230 310 365 430 550

Table 1-4: Total Installed Capacity of Wind Energy, source Wind Energy Council

1.6.3.1 Operating and planned wind farms in Egypt

Zafarana wind farm

Zafarana wind farm by the Red Sea coast considered the largest farm in Africa; it has

been constructed in stages since 2001, the international cooperation with Germany,

Denmark and Spain shared in financing these farms through a grants. Lastly in 2010,

120 MW of wind capacity were added to Zafarana in cooperation with the Danish

International Development Agency (DANIDA), taking the total installed capacity to

545 MW. The total generated electricity from the wind farm is about 1,147 GWh. The

18

region of the Gulf of El Zayt has an excellent wind regime, there are currently about

1,120 MW at various stages of development in cooperation with Germany, the

European Investment Bank (EIB), Japan and Spain. These include:

200 MW in cooperation with KFW, EU and the EIB. After a tender in 2010, the

contractor is expected to be selected at the beginning of 2011 and the project is

scheduled to start operations by the end of 2012.

220 MW in cooperation with Japan and 120 MW in cooperation with Spain are

in the pipeline.

Further projects in preparation include: 180 MW in cooperation with Spain; 200

MW in cooperation with Abu Dhabi’s MASDAR programme; and 200 MW in

cooperation with Germany, the EU and the EIB, [8].

1. Western Bank of the Nile

200 MW installed capacity are planned on the Western Bank of the Nile in cooperation

with Japan.

2. Gulf of El Zayt

The Gulf of El Zayt region had a good potential of wind with a high speed varies

between 7-10 m/s, the Egyptian government, in cooperation with the World Bank in

May 2009, published an international tender for a wind farm at the Gulf of El Zayt, and

inviting private sector from inside Egypt and international developers to submit their

prequalification documents for the first competitive bid to plan build and operate a 250

MW wind farm. The project will benefit from the conditions outlined above. Following

the tender, 34 offers were received and a short list of ten qualified developers was

announced in November 2009. A second stage of the tender calling for final bids will

be issued mid-2011 and the project is scheduled to start operations by 2014, (World

Wind Energy Council).

19

3. Gulf of Suez

The Egyptian government plans to install about 2,000 MW of wind power in the Gulf

of Suez region, through four stages. A first tender was published in January 2010 for

two projects of 250 MW each, again on a build, own and operate basis and a 20 year

PPA. A second tender for the same amount of wind power – two projects of 250 MW

each - is expected for July 2011, (World Wind Energy Council).

1.6.4 Solar

Egypt has an excellent potential of solar energy which will be suitable for a lot of solar

technologies projects even Concentrating Solar Power (CSP) or Photo Voltaic (PV), the

construction of the first solar thermal power plant at Kuraymat City with total installed

capacity of 140MW and solar share of 20MW, using parabolic trough technology integrated

with combined cycle power plant using natural gas as a fuel. Global Environmental Facility

(GEF) and the Japan Bank for International Development will finance this power plant. The

initial operation of this power plant started at the 1st of July 2011 with estimated total energy

generated of 852GWh/year.

1.6.5 Nuclear

Egypt is also working on developing nuclear power as an energy source. It has a 22-MW

nuclear research reactor at Inshas in the Nile Delta which began operation in 1997. The

Ministry of Electricity and Energy in 2010 approved a 1,200 MW power station at al-Dab’a

which is open to international participation and expected to become operational by 2019 as the

country’s first nuclear power plant. Bidding for the development of this plant was supposed to

have started in early 2011. Three additional plants are planned by 2025, (Source EIA 2011).

20

1.6.6 International Connections

Egypt has established an electric transmission grid with other countries in the region.

The five-country interconnection of Egypt's system with those of Jordan, Syria, and

Turkey was completed by 2002, and Egypt also activated a link to Libya's electric grid

in December 1999.

Gulf Cooperation Council (GCC) Power Grid

The GCC Power Grid project plans to link Egypt to the GCC through Saudi Arabia.

The link is expected to be complete between 2013 and 2015 and will allow the sharing

of 3GW of electricity between the two countries. This project will indirectly expand

each country’s electricity capacity by pulling from each other’s supplies at different

peak hours. Longer-term plans call for broader interconnections that would include

North Africa, the Middle East and Europe, (Source EIA).

21

As conclusion for the energy situation in Egypt, production and consumption and the

reserve of fossil fuels in this table:

Proven Oil Reserves (January 1, 2011) 4.4 billion barrels (Oil & Gas Journal)

Oil Production (2010) 660 thousand barrels per day

Oil Consumption (2010) 710 thousand barrels per day

Refining Capacity (2009) 975,000 bbl/d (OGJ and APS Review)

Proven Natural Gas Reserves (January 1,2011)

77.2 trillion cubic feet (Oil & GasJournal)

Natural Gas Production (2009) 2.21 trillion cubic feet

Natural Gas Consumption (2009) 1.57 trillion cubic feet

Recoverable Coal Reserves (2009) 23.1 million short tons (World EnergyCouncil)

Coal Production (2009) 0.03 million short tons

Coal Consumption (2009) 1.39 million short tons

Electricity Installed Capacity (2008) 23.4 gigawatts

Electricity Generation (2008) 124 billion kilowatt hours

Electricity Consumption (2008) 109 billion kilowatt hours

Total Energy Consumption (2008) 3.2 quadrillion Btus

Total Per Capita Energy Consumption(2008)

41.0 million Btus

Energy Intensity (2008) 7,681 Btu per $2005-PPP**

Table 1-5: Egyptian Energy overview, source EIA

22

2 CHAPTER TOW: ELECTRICITY DEMAND AND SUPPLY

IN EGYPT

“Egypt has witnessed growth in energy demand attributed to demographic trends,

increased industrial production as well as rising penetration of consumer products such

as electric and electronic home devices. In 2008, Egypt has reached a peak demand of

21,500 MW, 23,000 at 2009 and it is expected to reach 54,200 MW by the year 2027.

Moving to the installed electric capacity, it reached around 24,726 MW in 2010,

compared to 23,502 MW in 2009 with variance 5.2%, and to be 20,593 MW in

2005”, [9].The electricity demand increased by 6.7% between 2007 and 2008, and

expected to increases with around 7% annum until 2014 as a result of increasing the

electricity demand in the industry, agriculture and tourism largely as a result of rising

demand from the residential and commercial sectors, [10]. The key technological

option for fostering this high increase in demand is the direction of renewable energy

and energy efficiency. Rather than the burning of fossil fuels energy reserves

considered a spurious industrial competition that has no future, especially with a

country like Egypt gas a limited resources, by applying these programs it could build on

its engineering and industrial base and become a competitive player and regional leader

in the “new” energy economy of the 21st century.

2.1 Energy Demand Scenarios for Egypt

2.1.1 Energy Consumption

The indications of energy balance in Egypt for the year 2007 referees that the industrial

sector energy consumption was the largest share sector with about (34.2 %), followed

by transportation (24.2 %), residential (18.8 %), and agriculture and mining (4.7 %)

together accounting for 81.9 % of total consumption. On the other hand the energy

consumption by the fuel type, oil products account for (54.1 %), followed by natural

gas (20.6 %), and electricity (18.3 %) together comprising 93 % of total demand. The

23

remainder is non-energy use. Energy transformation for the internal market occurs

mainly via oil-refining activities, natural gas treatment, and power generation (hydro

and thermal). Natural gas (56.2 %) and oil (38.2 %) account for the bulk of primary

energy supply, representing 94.4 % of the total. The rest is mainly electricity, generated

with hydropower (3.9 %, according to IEA methodology) and other primary sources

(1.7 %), [11].

Figure 2-1 Share of Egypt’s Total Energy Consumption, by Sector, 2007, source Francisco Figueroa de

la Vega,

24

Figure 2-2: Share of Egypt’s Total Energy Consumption, by Fuel Type, 2007, source FranciscoFigueroa de la Vega

Figure 2-3: Share of Egypt’s Total Primary Energy Production, by Source, 2007, Francisco Figueroa de la Vega

25

2.1.2 Drivers of Energy Demand

There are several major factors contributing to the rapid growth in Egypt’s energy

demand, these factors including population growth, economic growth, and increased

motorization. We have to take these in our consideration to understand the present and

future dynamics of Egypt’s energy economy.

2.1.2.1 Population

Egypt is considered to be one of the populous countries in Africa and the Arabic

Region; it is estimated to be around 82,079,636 million people with growth rate 1.96%

(2011est.)[12], but the growth rate is expected to slow in the future, at a rate of 1.56 %

for 2030 as shown in fig (2-3) .

Figure 2-4: Historic and Future Population Trends in Egypt, 1990–2030, source Francisco Figueroa de

la Vega,

26

2.1.2.2 Economic Development

Egypt’s GDP witnessed a real increase of 5.0 % annually during 1993–99, which was

similar to the average growth rate of 5.2 % annually during 2000–07, and reached to be

5.3% in 2010. The evaluation of the real per capita growth has been positive

throughout the last two decades. According to the study of Francisco Figueroa de la

Vega, JCEE and GTZ, there are two future economic growth scenarios:

The first scenario is called business-as-usual (BAU) scenario for GDP in 2007–

30, which depends on assumption of a constant increase of 3.1 % year, or

roughly half the per capita GDP growth of the past. This scenario also assumes

that Egypt will pull out of the current economic crisis relatively slowly.

The second scenario is called high economic growth (HEG) scenario, which

depends on assumes that the economy continues to grow dynamically, at an

average annual rate of 4.5 %, on the basis that Egypt will implement important

investments in economic and social infrastructure that stimulate the internal

market for goods and services and for the domestic labor force.

There is no significant change in the economic growth by sector up to 2030; only a

modest increase in agriculture and mining, there will be a higher growth in industry

and slight reduction in commerce and construction growth. Nevertheless, there will

be an increase in economic activity in all sectors in terms of real GDP growth, [11].

27

Figure 2-5: Egypt’s GDP Growth, Two Scenarios, 1993–2030, Source: Francisco Figueroa de la Vega

Figure 2-6: Egypt’s Real Per Capita GDP, 1993–2030, source: Francisco Figueroa de la Vega,

28

Figure 2-7: Egypt’s Economic Growth by Sector, 1993–2030, Source: Francisco Figueroa de la Vega

Figure 2-8: Egypt’s Economic Growth by Sector, 1993–2030, Source: Francisco Figueroa de la Vega

29

2.2 Electricity Market Design

2.2.1 Background

The Egyptian electricity was introduced as the first time in the late of 19th century. And

since that time, the network of electricity has grown to supply and cover all the

locations in Egypt and rural areas to reach about 99.4% according to the estimation of

2008. The electricity sector market for the first time was totally in private hands. Then

after the revolution of 1952 the sector was nationalized. The competitive form is the

main change of the electricity market with applying the new the new electricity law

which has been prepared and will be ratified from the people’s assembly next elections.

The complete sector mostly owned by the government and the responsible entity is the

Egyptian Electricity Holding Company (EEHC) which manages the portfolio on behalf

of the government, and the sector activities were separated into generation, transmission

and distribution activities.

2.2.2 Present Status of Electricity Market

The present market status of electricity in Egypt is considered a monopoly market,

mainly consists of a single buyer form. Because of this we can find all generation

companies, including the four generating companies with their thermal power plants,

the three private BOOT projects, a wind farm sell their product to a transmission

company. The transmission company in turn is the responsible entity to sells the

electricity to all the customers and the nine distribution companies. Because of this

system of monopoly the market does not allow free competition among incumbent

generation companies, [13]. However, it’s the direction of the government towards the

establishment of a real liberal electricity market and builds a new system for a new

market. The Egyptian Electricity Holding Company “EEHC” owns about 90% of the

market electricity generation with installed generation capacity, and the three private

BOOT projects contribute with 9% of the installed generation capacity, when the last

30

1% is made of the present wind farms and small isolated units. The Egyptian Electricity

Transmission Company “EETC”, which considered the Single Buyer is the only

company licensed for EHV and HV electricity transmission, purchases electrical energy

from all generation companies and sells the electrical energy to:

the present nine distribution companies (23 million consumers),

the present 81 EHV and HV consumers, and

The seven private distribution companies (less than1% of the market).

Furthermore, EETC is exchanging energy with neighboring countries over the present

interconnections, [14].

Figure 2-9: Structure of the EEHC, source H. El Salmawy

31

Figure 2-10: Power sector structure, source H. El Salmawy

2.2.3 The Proposed Electricity Market Structure

The direction of the energy sector is to liberate the electricity market; the proposed

electricity market will be harmonized with the present practices in the EU. To that end,

to reach to the final situation, we have the transitional market which will be composed

of two submarkets working in parallel:

A competitive market where eligible consumers enjoy the liberty of choosing

their electricity supplier (outside and inside the regulated market);

A regulated market for non-eligible consumers.

The regulated market should gradually contract to the account of the competitive

market up to the point where the whole market is fully competitive.

Wind

32

Figure 2-11: The proposed Electricity Market Structure

2.2.3.1 The regulated market (single buyer model)

In the regulated market, like the current market, non-eligible consumers shall purchase

their electricity needs against a regulated tariff approved by the regulatory agency. The

government which owned companies is responsible for satisfying the needs of non-

eligible customer class. The prices of this class are sold at the regulated price on an

economic basis. The private generation entities will participate for satisfying a part of

the market needs in the regulated market. Under the single-buyer market model, the

Transmission System Operator perform the same function it does today, purchasing all

generation, and in turn, selling this power to wholesale customers including the

distribution companies and the EHV and HV customers directly connected to the

transmission system, [14].

33

2.2.3.2 The competitive market (bilateral model)

The second market model is the competitive market, in this there will be a free market

and every consumers shall have the right to sign a direct bilateral contracts with

present/future generation companies to satisfy their needs of electricity according to the

free competition, the transmission system operator (TSO) shall be responsible for

fulfilling those contracts for a unified transmission access charge proposed by the TSO

and approved by the EEUCPRA, the TSO shall purchase the required balancing energy

to the account of consumers or generator in the case of any deviation from the

quantities specified in the concluded contracts. This enables the settlement of

imbalances between contracted power flows against actual flows (balancing

mechanism) and helps the Transmission System Operator carry out its responsibilities

related to system security, [13].

2.2.4 Tariffs

The tariff will different from the old to new system or market design, currently the

Cabinet of Ministers approves tariffs. In the future, the intention is for the EEUCPRA

to decide on tariffs. Use of Network tariffs do not exist presently.

The history of retail tariffs have been below costs. There have been increases in tariff

levels (up to 7٫5٪ p.a.) Since 2004, to recover operating costs and fuel price rises. In

2006/2007 the government tried to increase the tariff and managed its revenues to at

least cover costs (companies almost broke even) but still these revenues not enough to

provide funds for new investments. The pricing system has substantial subsidies,

natural gas is subsidized as a fuel in the electricity generation and they do not pay taxes

on natural gas, this subsidizing system to encourage its use and achieve environmental

benefits. The categories of using natural gas as of 65٪ of the residential sector is

subsidized, 25٪ breakeven, remaining 10٪ pays above costs. The structure of tariffs

needs to be changed in order to provide the correct economic signals; tariffs are single

rate energy tariffs with some maximum demand charging for certain tariff categories.

34

The proposed change is to increase the charge tariff during the contribution to system

peak separately through a demand charge, this may avoid some of the customers of

consumers to use electricity during the peak and at the same time the investors can

generate electricity at this time to cover the shortage (approx. 1500MW is estimated to

be needed each year to cover the increase in peak demand). This means that the impact

on the high demand customers may not be significant (their average price paid is lower

than the highest tariff that applies to them), [14].

35

2.3 Independent Power Producers, IPPs.

Independent Power Producers or IPPs is the private investment in electricity generation

in grew dramatically in developing countries during the 1990s; now a day IPPs have

developed into a large market through a lot of projects and participate in the electricity

market.

The privet sector participation in the electricity market in Egypt started in 1996, with a

law that laid the foundations for a competitive bidding process for three IPPs that were

awarded in 1998 and 1999. The three projects sell electricity to the Egyptian electricity

holding company under long term contract, EEHC that are backed by a Central Bank

guarantee. The natural gas is used as a fuel in all projects which is provided by the

Egyptian gas monopoly at a substantial discount from market rates. The Egyptian IPPs

are occasionally cited as the most competitive in the world—for example, InterGen’s

(now Globeleq) SidiKrir project bid a price of US$0.0254 per kWh. Turbulence in

Egypt’s IPP arrangements arrived with a 2002 economic downturn and subsequent

devaluation of the Egyptian pound from 3.2 to 6 pounds against the US dollar.

According to the contract between the IPPs and the Egyptian government, all new

power generation projects must secure their own customers, i.e. the state utility will no

longer be the guaranteed buyer of electricity and all foreign currency debt must be

sourced from abroad. The project sample in Egypt contains all three operating IPPs.

These three projects are structured substantially similarly. The only variation exists

along in a few factors. First, SidiKrir was sponsored by a major US power company

(Intergen), while Suez and Port Said were sponsored by the French utility Electricité de

France. Second, SidiKrir obtained debt finance entirely from commercial banks, while

the EdF found few commercial options available and ultimately turned to multilateral

sources (the IFC) for substantial debt financing, [15].

36

2.3.1 IPP frameworks and projects developed

The starting of the IPPs in Egypt was with three generation facilities, built by InterGen

with Edison and EdF, respectively, the total installed capacity is about 2048 MW.

Despite large currency devaluation, there have been no renegotiations of contract terms,

but there has been high equity turnover. As noted by numerous stakeholders, it is

required another framework for the future instead of the current one, the proposed one

will evolve to accommodate future development for additional IPPs in Egypt.

The structure of the current framework which contains the (3 IPPs), BOOT structure -

20 year PPA -EEA/EEHC sole off-taker – (65-70%) take-if-tendered -Backed by

Central Bank Guarantee

When the 2ndframework underdevelopment for the future investment, foreign currency

must be obtained from abroad - local designers, contractors, and manufacturers must

contribute substantially to projects, the local currency must be paid for local costs, bids

with an increased equity-financing stake and a larger local investment component

favored, [16].

2.3.2 IPPs Projects in Egypt

Egypt currently has three IPPs, with a combined capacity of approximately 2,050 MW.

2.3.2.1 Sidi Krir.

Sidi Krir power plant considered the first IPP project in Egypt with total installed

capacity 682.5 MW, and the fuel used is natural gas. In 1996, a competitive bidding

process was generated substantial interest; more than fifty firms were applying for pre-

qualification. The project was awarded in February 1998 to a consortium consisting of

Intergen and Edison Mission Energy from the United States. The winning bid was

US$0.0254/kWh, which was considered the lowest electricity prices for an IPP in the

developing world. The project fired on natural gas that was domestically produced and

37

supplied at a healthy discount by the Egyptian state gas monopoly. Domestic Egyptian

banks provided most of the financing on a project basis; the Project debt is wholly

private, albeit denominated in dollars. International commercial banks provided the rest

of the debt, with no involvement from multilateral or bilateral lenders. The plant is

presently owned by Globeleq, which was spun off the UK’s Commonwealth

Development Corporation (CDC) in 2002. Intergen and Edison Mission sold their

interests in SidiKrir in 2005, apparently as part of global restructuring of their power

business, and not as a reflection of troubles in the project itself, [15].

2.3.2.2 Suez & Port Said.

Egypt’s second and third IPPs are Suez & Port Said, these projects are each 683MW

with natural gas-fired power plants awarded to Electricite de France. The projects were

awarded and developed along substantially similar lines as SidiKrir. EdF sourced its

lending from the IFC and a syndicate of international banks and institutional investors;

this was the significant difference between the two projects. This difference reportedly

reflects the fact that by the time the projects sought financing, Egyptian officials lacked

the appetite to mobilize additional domestic lending for power plants. With European

commercial banks reluctant to invest in what they deemed insufficiently environmental

projects (i.e. plants were for gas-fired steam generators and not combined cycle), EdF

turned to a multilateral, namely IFC to help secure additional debt. EdF, citing its plans

to concentrate its assets in Europe, sold its equity in the plants in 2006; both Port Said

and Suez are presently owned by KusasNusajaya, a subsidiary of the Malaysian firm

Tanjong Public Limited Company, [15].

38

ProjectSize

(MW)

Cost

(US$)

$/

KWhFuel

Contract

type

Contract

years

project

operation

Sidi

Krir682.5 417.8 612.61

Gas fired

steam

generator

BOOT 20 1996 – 2002

Port

Said683 340 497.8

Gas fired

steam

generator

BOOT 20 1998 - 2002

Suez 683 338 494.87

Gas fired

steam

generator

BOOT 20 1998 - 2002

Total 2048.5 1095.8 - - - - -

Table 2-1: Egypt’s IPPs, source Anton Eberhard and Katharine Gratwick

2.3.3 Future IPPs Projects in Egypt

The Egyptian electricity sector plans to develop an Independent Power Provider in

Dairut, Egypt through the Egyptian Electricity Holding Company, Egyptian Electricity

Transmission Company which considered the responsible entity. The purpose of the

project is to meet the increasing electricity needs in the country. The total installed

capacity of Dairut's combined cycle power plant is about 1,500 MW combined cycle

power plant consisting of two 750 MW blocks, each comprising two GTs and one ST,

with a capacity of 250 MW each. The output electricity guarantee form The Egyptian

Electricity Transmission Company (EETC) which will buy it under a PPA over a

period of 20 years. The natural gas will be provided from The Egyptian Natural Gas

Holding (Egas). The secondary feedstock will consist of light oil. The project is

expected to be completed in 2014, [17].

39

2.3.4 IPPs Projects Evaluation

2.3.4.1 Investment Outcomes:

The final evaluation for the IPPs projects in Egypt rated as Positive; there is no major

disruptions in the construction of these projects, the operations during this period or

payment have been reported. The contracts of power sales have weathered a

macroeconomic shock intact, and continue to generate revenue. The only negative

outcome identified was that sponsors for each project had invested at least partly on the

assumption that Egypt would continue to open investment opportunities. Egypt did

have plans to solicit additional projects (up to a total of fifteen IPPs), but reversed

course after the cost of the projects spiraled with the devaluation, [15].

2.3.4.2 Development Outcomes

The evaluation of the rate of development of IPPs projects is Positive, The cost of the

payments to the IPPs have almost doubled with the 2002-3 devaluation of the Egyptian

pound, and Egyptian officials now express some dissatisfaction with the projects as

being too expensive. Nonetheless, because (i) the original bids were very competitive,

(ii) the IPP sector remains small, and payments manageable even if unexpectedly high,

and (iii) electricity is being generated, the experience seems a positive one for Egypt.

Additionally, although the government has turned to state and multilateral sources of

capital for new development, the early IPP investments have been conducted in a

manner that provided valuable experience to the country, and have not unduly

prejudiced the prospects for future investment, [15].

40

3 CHAPTER THREE: NATIONAL RENEWABLE ENERGY

STRATEGY in Egypt

3.1 IntroductionRenewable Energy is one of the most potential measures to meet the challenges of

increasing energy demand and the best solution for securing energy use to the next

generations and the concern of environmental impact and climate change, every country

all over the world build its own strategy according to the available natural resources to

face the energy crisis which may face the world in the few coming years. Renewable

energy offers a promising alternative to traditional energy sources in developing

countries, which may face several constraints in meeting their energy requirements in

future. Most of developing countries have tried to promote renewable energy but till

now their efforts towards renewable energy contribution to the total energy use has not

achieved the targeted as the developed countries. The investment direction still towards

conventional energy technologies and it’s applications, even where commercially

available energy efficient and renewable technologies are technically feasible and

economically attractive, specially wind energy which take an effective steps to become

more economically and commercially. The fact that renewable energy accounts for only

a modest proportion in meeting the world’s commercial energy demand means that

there is a missing link in their potential and their implementation. In the early of

eighties the government of Egypt recognized the importance of renewable energy

sources and formulated a national strategy for the development of energy conservation

measures and renewable energy applications in 1982 as an integral element of national

energy planning. The New and Renewable Energy Authority (NREA) was established

in 1986 to be the focal point for renewable energy activities in Egypt, [18]. In February

2008, the Supreme Council of Energy in Egypt announced the strategy for the electric

power based on diversifying the energy sources of production and rationalizing the use

of energy and expanding use of renewable energy sources as a component of energy

41

provision. The strategy aims to contribution of renewable energies by 20% of the total

electricity generation by the year 2020. The share from the grid-connected wind power

is 12% of the total electricity generation of 31000 GWh. Also, other renewable energy

technologies of hydropower will share by 4% with generated electricity 10333 GWh;

solar energy will share by 4% with total generated electricity 10333 GWh. In the past,

renewable energy development in Egypt has been carried out through encouraging

programs for developing the renewable energy resource, setting up specialized bodies

to implement national renewable energy plans, and promoting business opportunities

for renewable energy projects. Now efforts are being exerted in order to reach total

capacities of 7200 MW and this will be achieved through two main paths: State-owned

projects implemented by the NREA with total capacities of 2375 MW (represents 33%

of total installed capacities). These projects will be financed through governmental

agreements. Private sector projects with total capacities of 4825 MW (represents 76%

of total installed capacities). Policy of increasing the participation of private sector will

include two phases:

Phase I: Adopting Competitive Bids approach as the Egyptian Electricity Transmission

Company will issue tenders internationally requesting private sector to supply power to

build, own, operate wind farms and selling electricity for the company with price

agreed upon between the company and the investor.

Phase II: Application of Feed-in-tariff system, taking into consideration the prices and

experience achieved in phase I, (NREA 2010).

3.2Incentives for the Private Sector

In 26/7/2009, the Supreme Council of Energy has approved the following policies in

order to stimulate and support generating electricity from wind energy:

Approving private sector participation through competitive tender and bilateral

agreements.

42

Reducing project risks through signing long term Power Purchase Agreement,

PPA, for 20-25 years.

The Government of Egypt will guarantee all financial obligations under the PPA.

The selling price for energy generated from renewable energy projects will be in

foreign currency in addition to a portion, covers operation and maintenance

costs, in local currency.

Investors will benefit from selling certificates of emission reduction resulted

from the project implemented.

Evaluation criteria for tenders of renewable energy projects will give privilege

for local components.

Forming mutual committee of representatives from Ministers of Petroleum,

Electricity, Finance and Investment in order to prepare and encourage proposal

against allocating lands to implement wind projects. In 26/5/2010 the cabinet has

approved the committee proposal of encouraging private sector participation

through :

Exempting renewable energy equipment from custom duties.

Obtaining approvals and all the required permits to obtain lands and

clearing it from land mines.

Preparing the studies required for implementing projects such as

environmental, bird migration and soil research studies, (NREA annual

report 2010).

43

3.3Energy Planning Model

This model was designed to calculate the current share of Renewable Energy from the

total electricity generated at the base case year 2009/2010 and the expected electricity

generated up to 2020, and also find if the planned projects of Renewable energy will

cover the targeted of Ministry of Electricity and Energy or will be there a deficit to

achieve this targeted and how we can cover this shortage to fulfill the Egyptian strategy

from Renewable Energy up to 2020.

The structure of this model consists of the input data which will be, the total generated

electricity at the base case year 2009/2010 (139,000GWh) and also the targeted of

Renewable energy share which will be 20% (12% wind, 4% Solar, 4% hydro), the

expected growth rate of electricity according to the previous growth rates and that

expected from the planning side of energy planning according to the increase in demand

and to achieve the targeted of RE up to 2020 (6.4% growth rate), and the data

processing which include the calculations of each technology and it’s generated

electricity, then find the shortage between the targeted and estimated share and how to

cover this shortage, then finally the results or the output which include how much of

Megawatts of installed of each technology to cover the shortage and the possible place

to install these projects.

44

Figure 3-1: Energy Planning Model Components

3.3.1 The Methodology of Data Processing

The energy planning model consists of 6 sheets; each one contains different data and

different technology calculations as follow:

Input Data: Sheet number (6) includes the input data which considered the

targeted to be achieved, according to the Egyptian strategy by 2020 includes

20% sharing of RE (12% wind, 4% solar, and 4% hydro)

Generated electricity forecasting: sheet number (1) includes the calculation to

estimate the forecasting of electricity generated by 2020, reference to the

generated in the year 2009/2010 and with the growth rate 6.4% , which expected

by the energy planning makers

Wind energy scenario: Sheet number (3) includes the calculations of wind

energy, how much generated from the planned projects and the deficit from the

targeted, finally how much GWh needed to cover this shortage. To calculate the

approximate annual energy production by multiplying the capacity factor (RCF)

with the rated power and time period, thus

InputsElectricity generated

2009/2010

Growth rate 6.4%

Targeted share of RE

DataProcessing

Outputs

Shortage

How much to cover

Possible projects

45

Total generated electricity KWh/year = (RCF) * PR KW *8760, (Dr. Sathyajith

Mathew, Springer-Verlag Berlin Heidelberg 2006)

Solar Energy Scenario: Sheet number (4) the calculations of solar energy

including CSP and PV and the generated electricity, the shortage and how much

needed to cover this shortage

PV system: the generating electricity from the PV power plant system calculated

as the equation of how much your Solar PV installation would produce every

year.

Predicted Generation (measured in kWh/year) = kWp x Shading factor x

Irradiance x 0.8, (http://www.uenergysolar.co.uk/domestic-pv/solar).

The KWp is the maximum power that your Solar PV system is able to work at,

based on it functioning under perfect conditions in the lab

Shading describes the proportion of panel which is not receiving full exposure to

sunlight. 1.0 describes a system where no part is shaded, 0.8 when there is slight

shading and 0.6 where there is moderate shading.

CSP system: the generated electricity based on the calculation of the last

feasibility study in Kom Ombo

Hydropower energy: Sheet number (5) hydropower which considered

approximately not constant but decreased by the time due to the efficiency, there

is no effective measures will be taken in this share, no projects planned

Cumulated RE: Finally sheet number (2) which includes the calculations of all

RE and the sum of it and make comparison between the estimated and the

targeted RE

46

The methodology of processing the data depends on the base case information and the

growth rate of energy sector which will lead to the expected target, according to the

calculations of each renewable technology and the generated electricity from the

planned projects to fulfill the announced strategy, and then we compare the generated

electricity from these planned projects with the targeted electricity, if there is any

deficit try to cover it with an expected projects even Wind, Solar or other technology

according to the land and the investment cost, also the sale tariff /kwh to the end user

or the consumers.

Taking in our consideration a suitable uncertainty when comparing the difference

between the targeted and the estimated share of RE

47

3.4 The Current Situation at the Year 2009/2010In the year 2009/2010, the total installed capacity in Egypt was 24726 MW with

electricity generation 139,000 GWh, of which 89 % was delivered by thermal plants

and about 10% from Hydro power with total installed 2800 MW and electricity

generated is about 12863 GWh and 1% from Wind energy with total installed 550 MW

and electricity generated 1542 GWh.

Figure 3-2: current situation of electricity 2009/2010

3.5 The Expected Situation of Electricity By 2020

According to the data analysis and the growth rate of 6.4% the estimated expected

generated electricity according to the calculation of the model, will be 258482.46 GWh

and the estimated sharing of renewable energy will be 20% with total electricity

generated about 51696.492 GWh divided as follow, 12% wind with total generated

electricity 31017.895 GWh, 4% Solar energy with total generated electricity 10339.298

GWh, and 4% Hydro power with total generated electricity about 10339.298 GWh.

89.64%

9.25%1.11%

Thermal

Hydro

Wind

48

When comparing the targeted and the estimated electricity and the share of RE we find

that the targeted wind energy was 31000 GWh when the estimated will be 31017 GWh

with difference about 17 GWh which will be allowed according to the uncertainty limit

with 50 GWh to mention the real targeted.

Figure 3-3: the forecasting of total electricity generated up to 2020

The situation will change completely when we change the expected growth rate

according to the energy demand, so the calculation depends on our expected growth

rate and this percentage 6.4% related to the Egyptian strategy and so they put the

targeted of RE for each technology according to it, so we can expect another growth

rate and investigate the results of each target of RE, to find how to cover this deficit in

this case.

0.00

50000.00

100000.00

150000.00

200000.00

250000.00

300000.00258482.46

The Forecasting Of total Electricity GeneratedGWh, with GR 6.4%

Total Electricity Generated

49

Figure 3-4: Estimate Targeted share of renewable energy up to 2020

The data will be in this section discussed in details, each technology and the

comparison between the targeted and the really estimated according to the prepared

projects and also how we can cover this shortage to its targeted share

0

5000

10000

15000

20000

25000

30000

35000

Wind Solar Hydro

31017.8

10339.2 10339.2

Estemated shared of RE GWh up to 2020

Targeted shared of RE up to 2020

50

3.6 Wind Energy SituationSince the 1980s, a series of large-scale grid connected wind energy projects were

installed in Egypt, the total installed wind capacity till now is 550 MW.

The targeted wind energy up to 2020 is to generate electricity about 31017.89531 GWh,

but when we calculate the planned projects which mentioned by the government to

achieve this target, find there is a shortage, because the total installed capacity will be

7200 MW with a total generated electricity about 22299.89 GWh , these projects will

be in the regions of Hurgada, Zaafarana, Suez Gulf and West of Nile with weighted

capacity factor 35% for all locations which related to the sum of the total capacity of

each location multiplied by the capacity factor of this location and divided by the total

installed, this means the weighted capacity will change according to the added installed

capacity and the location of these projects.

The total generated electricity from the mentioned wind projects represents about

8.63% from the total generated electricity which means the deficit will be about 3.37%

with 8718 GWh,

Location Installed Capacity factor

Hurgada 5 0.15 0.75

Zaafarana 545 0.32 174.4

Suez Gulf 2500 0.5 1250

Western Nile 4150 0.27 1120.5

Total 7200 0.35 2545.65

Table 3-1: The weighted capacity factor

51

From the above information we find that we need about8718 GWh to cove the deficit of

generate electricity from the wind according to the target of 2020.

This means that we have to find other locations to build new projects with a different

weighted capacity factor.

Still, critics often charge that renewable-energy sources require large amounts of land

compared to conventional energy-generation options, also the cost investment for the

renewable projects and the final tariff, We will try to find the available land for the

different proposed renewable projects in Egypt which will be suitable to cover this

deficit in the our targeted

3.6.1 The Land Required For Wind Farms

The required land area for wind power farm depends on the turbines’ spacing and their

configuration. The land required for a GWh of electricity from wind turbines typically

is larger than that needed for the solar-electric cycle. Wind turbines use only 1–10% of

the wind farm areas. The remaining free lands typically are utilized for grazing,

agriculture, and recreation. According to the estimation of indirect land transformation

from two LCA studies for an on-shore wind farm in Denmark. We adopted the

materials and energy inputs given by Schleisner and Vestas along with the Ecoinvent

database. The former source, based on 0.5 MW wind turbine, results in 5.5 m2 /GWh

while the latter, based on 1.65 MW wind turbine, gave 1.84 m2 /GWh assuming a 30-

years lifetime, [19].

3.6.2 The Available Land for Wind Projects

In light of the technical studies, especially wind Atlas, NREA selects sites suitable for

carrying out wind project. Then NREA obtains required approvals from various

authorities to allocate lands to carry wind project, helping the investor to avoid carrying

all the required procedures, not used for other purposes. Land proposed for carrying

wind projects by the private sector is desert areas. In May 10th 2006 Red Sea Governor

52

decree No. 136 for the year 2006 was issued allocating about 656 km2 to NREA to

establish wind farm projects. In May 30th 2009 a presidential decree No. 138 for the

year 2009 was issued to allocate about 1229 km2 at west of Suez Gulf.

In September 17th 2009, a presidential decree No. 319 for the year 2009 was issued

allocating of some lands to implement wind projects. This land is located in Upper

Egypt, West and East of the Nile to governorates of Beni Sueif, Minya, Assuit with

total amount of 6418 km2. The lands will be used according to a usufruct contracts and

to some rules approved by the cabinet, (NREA annual report 2010).

3.6.3 Wind Atlas for Egypt

The Wind Atlas for Egypt is one of the first – and certainly the most comprehensive –

numerical wind atlases ever established. The wind resource over an area of more than

one million square kilometers – much of which consists of mountains and remote desert

tracts – has been determined by two independent methods: a traditional wind atlas

based on observations from more than 30 stations all over Egypt, and a numerical wind

atlas based on long-term reanalysis data and a mesoscale model. The wind atlas allows

for wind resource assessment and siting anywhere in Egypt, and further provides

bankable resource estimates in the most promising regions. The measurement sites were

selected to cover six regions: the Northwest Coast, the Northeast Coast, and the Gulf of

Aqaba, the Gulf of Suez, the Red Sea and the Western Desert. The sites were chosen to

represent the most promising areas for wind energy exploitation, as well as to provide

information on all significant types of wind climatology in Egypt. Logistical aspects

have limited the site selection somewhat as large parts of the Western Desert and

mountainous areas are fairly inaccessible.

It will therefore be useful for decision making, identification of new measurements

sites, planning of feasibility studies and for actual project preparation. In areas where

wind atlas stations are in operation, such as in the Gulf of Suez and along the Northwest

53

Coast, the resource estimates may meet bankable accuracy – though this has to be

confirmed on a project by project basis, [20].

Figure 3-5 : Elevation map of Egypt showing the meteorological stations used for the Wind Atlas for

Egypt. The geographic and Cartesian (UTM) coordinates are referenced to the World Geodetic System

1984. Source: wind atlas for Egypt 2006.

54

Figure 3-6: Mean wind speeds and power densities at a height of 50 m over roughness class 1 (z0 =0.03 m) for the 30 stations in the Wind Atlas for Egypt. Source wind atlas for Egypt

55

Figure 3-7 Wind resource map of Egypt: mean wind speed at 50 m a.g.l. determined by mesoscale

modeling (Wind Atlas for Egypt, 2006).

West of Nile

East of Nile

Gulf of Suez

56

Figure 3-8: offshore wind resource map of Egypt: mean wind speed at 50 m a.g.l. determined by

mesoscale modeling (Wind Atlas for Egypt, 2006).

The Wind Atlas for Egypt confirms the existence of a widespread and particularly high

wind resource along the Gulf of Suez. The Wind Atlas further indicates that the wind

energy resource in large regions of the Western and Eastern Desert – in particular west

and east of the Nile valley between 27°N and 29°N, but also north and west of the city

57

of Kharga – are much higher than hitherto assumed. The mean wind speeds predicted

here are between 7 and 8 ms-1 and the power densities between 300 and 400 Wm-2,

estimated at a height of 50 m a.g.l. There are no meteorological stations for verification

in these regions; however, comparisons elsewhere in the Western Desert of predictions

derived from the mesoscale modeling to those derived from measurements suggest that

the mesoscale model is indeed able to resolve and predict the wind resource in this type

of terrain.

The Wind Atlas for Egypt represents a significant step forward in the application of the

wind atlas methodology in Egypt. Not only does it provide a coherent and consistent

overview of the wind energy resource over the entire land (and sea) area of Egypt, the

results of the mesoscale modeling are further available in a database (numerical wind

atlas) that may be employed directly for detailed wind resource assessments and siting

of wind turbines and wind farms. Utilizing this database together with elevation maps

derived from the Space Shuttle Topography Mission and land-use maps constructed

from satellite imagery, the wind resource and likely power production of a given wind

farm can be estimated in a matter of hours – anywhere in Egypt, [21].

3.6.4 Wind Farm Area Calculator

From the calculated data we find that we need generated electricity about 8718 GWh to

cover the deficit of the targeted which means if we use the location of west and east of

Nile with capacity factor 27%, the weighted capacity factor will be about 33% and so

the total installed capacity needed will be about 3700 MW will be installed in this

region, we can estimate the total land needed for these projects by using the wind farm

area calculator by NREAL with two scenarios

58

The first scenario, when using wind turbine with capacity of 2 MW each

Input Value 3700000 (kW)

Area per turbine 0.25 (Acres)

Size of turbine 2000 (kW)

Table 3-2: Estimated land for wind energy, scenario 1, source NREL web site

The estimated land area required is: 462.5 acres. (1850000 m2), this calculation

assumes 3"700"000 kW and 1850 turbines each requiring an area of 0.25 acres.

The second scenario when using wind turbine with capacity 1 MW each

Input Value 3700000 (kW)

Area per turbine 0.25 (Acres)

Size of turbine 1000 (kW)

Table 3-3: Estimated land for wind energy, scenario 2

The estimated land area required is: 925 acres. (3700000 m2)

This calculation assumes 3"700"000 kW and 3700 turbines each requiring an area

of 0.25 acres.

Note: This value represents the area taken out of production on a farm.

The area within the perimeter of the wind farm will be larger due to spacing

of the turbines, but is still useable by the farm.

Typical turbine spacing in wind farms is placing the towers 5 to 10

turbine diameters apart, depending on local conditions, [22], [23].

59

From the above information we can find that the region East and west Nile, we need

total area 462.5 acres (1850000 m2), to install a total capacity of 3700 MW wind energy

with a capacity factor of 27%, so we can cover the shortage.

3.6.5 Repowering of wind turbines

The suggested option also to cover this deficit is to repowering the wind farms in the

highest capacity factor regions, like Suez gulf and especially in the old wind farm in

Zafarana, we can use a wind turbine with capacity of 1.5 MW or 2 MW instead of 850

KW, which means we will double the generated electricity. The expression

“Repowering” refers to power plant in general and includes all measures which

improve the efficiency and capacity by means of retrofit to the latest technology.

Considering a coal power plant, repowering could mean to install a new steam

generator or a new turbine. Possible modifications on wind turbines are limited, thus

repowering affects the whole plant in general and essentially the entire wind farm. In

short, aim of the repowering is to use the existing renewable energy resources on site

more efficiently, respectively in a technically adapted or improved manner. Progressing

technology provides the option for operators to improve the profitability of their site, or

to cope with new technical or legal conditions. Frequently planned and often locally

supported is to restore the landscape. The reduction of the number of plant is linked

with a significant growth of hub heights and a reduction of the rotational speed.

Presently, the individual capacity of a wind turbine has advanced enough to fulfill the

initially formulated aim of doubling the capacity and reducing the number of plant by

50. The 2 MW turbines class and upward emit considerably less noise and comply with

the actual grid code to feed in larger capacities, [24].

60

3.7 Solar Energy Situation

The total solar power plant according to the Egyptian plan is the solar power plant in

Kuraymat with total installed 20 MW and generated electricity about 33 GWh, and the

solar power plant in Kom Ombo, 40 km North of Aswan and 150 km South of Luxor

with total installed capacity about 100 MW and generated electricity 256 GWh, so the

total generated electricity from concentrated solar power CSP will be 289 GWh.

On the other hand the planned projects for photovoltaic technology is about 40 MW

will be installed in Kom Ombo with total electricity generated about 77 GWh grid

connected electricity.

The total electricity generated from the solar power will be 366 GWh which considered

only about 0.14% from the targeted solar power by 3.86% with total electricity

generated about 9973 GWh deficit from the total 10339 GWh.

Because of the perfect location of Egypt which considered one of the Sun Belt countries

and the Egypt has a high potential of solar energy can cover any deficit in the future but

still the main barrier for introducing solar thermal power technology CSP are the large

initial investment and the inefficiency of the Egyptian electricity sector. Public utilities

are reluctant to charge higher electricity tariffs from their customers, and thus follow

mainly a business as usual approach, in many cases even making losses on conventional

electricity tariffs.

61

Figure 3-9: Solar Atlas of Egypt, source NREA annual report 2010

3.7.1 Solar Atlas

The Solar Atlas in Egypt was issued in 1991, indicating that Egypt as one of the sun

belt countries is endowed with high intensity of direct solar radiation ranging between

1970 to 3200 kwh / m2 / year from North to South. The sunshine duration ranges from

9 - 11 hours with few cloudy days all over the year and total sunshine hours varies

between 3200- 3600 hours/year, [NREA 2010]. The solar atlas of Egypt refers to a huge

suitable land for solar power plants including CSP or PV, Many studies have been

established to investigate, evaluate and asses the suitability of sites for implementation

and development of a CSP or PV power plants.

62

3.7.2 EM Power Program, Country visit Report

The EM Power study by the United Nations Environment program (UNEP), German

Ministry of Economic cooperation and Development (BMZ), which made a visit study

to about 13 places to investigate, evaluate and asses the suitability of sites for

implementation and development of a CSP or PV power plants and asses usable area to

determine the potential size of the power plants.

The final results of this study visit included the estimation of the suitable land, the

direct normal irradiation and the global horizontal irradiations and finally the

recommended projects for this area according to the land qualifications, [25].

63

Site name: Solar resources Used land Recommended projects

Abu Simbel DNI: 1980 KWh/m2a

GHI: 2100 KWh/m2a

500 * 500 m2

800 * 1500m2

10 MW PV

50 MW CSP (no TES)

30 MW CSP (with TES)

Toshka DNI: 2100 KWh/m2a

GHI: 2150 KWh/m2a

2 * 20 Km2 Up to 1600 MW PV

1000 MW CSP (with TES)

Toshka

15 KM

DNI: 2100 KWh/m2a

GHI: 2150 KWh/m2a

3 * 4 Km2 Up to 300 MW CSP (with TES)

Kom Ombo DNI: 2500 KWh/m2a

GHI: 2280 KWh/m2a

1.5 * 5 Km2 200 MW CSP (with TES)

Esna Edfu DNI: 2430 KWh/m2a

GHI: 2240 KWh/m2a

1 * 2.5 Km2 60 MW CSP (with TES)

Marsa Alam DNI: 3370 KWh/m2a

GHI: 2570 KWh/m2a

1000 * 2000 m2 Up to 100 MW CSP (with TES)

50 MW CSP with 10 h TES or

80 MW PV

Quseir Resory DNI: 3350 KWh/m2a

GHI: 2550 KWh/m2a

2*(1000*2000 m2) Up to 100 MW CSP (no TES)

50 MW CSP (10 h TES)

80 MW PV

West of Safaga DNI: 3300 KWh/m2a

GHI: 2520 KWh/m2a

500 * 300 m2 Too small for CSP

South of Safaga DNI: 3250 KWh/m2a

GHI: 2490 KWh/m2a

500 * 500 m2 10 MW PV

NREA Wind

park at Hurgada

DNI: 3110 KWh/m2a

GHI: 2410 KWh/m2a

1000 * 500 m2

500 * 700 m2

500 * 200 m2

Up to 15 MW CSP and up to 20

MW PV

Kuraymat

Extension

DNI: 2000 KWh/m2a

GHI: 2010 KWh/m2a

800 * 700 m2

200 * 1000 m2

10 MW CSP or 22 MW PV

8 MW PV

Farafra Oasis site GHI: 2000 KWh/m2a 900 * 900 m2 Up to 35 MW PV

Siwa Oasis site DNI: 2464 KWh/m2a

GHI: 2249 KWh/m2a

Not feasible

Table 3-4: Proposed lands suitable for solar projects, source Em Power, country visit

64

The conclusion of the above table refers to the total recommended projects are

estimated as 1863 MW installed capacity of PV and about 1935 MW installed capacity

of CSP.

The Kom Ombo site is a barren land located at N24.62° and E32.89° at the b order of

the village Faris, Kom Ombo, and about 40 km North of Aswan and 150 km South of

Luxor. Access to the site is through a paved road connecting Kom Ombo to the desert

highway Aswan-Luxor. Grid connection to the site will be through a substation (to be

constructed) connecting to a medium voltage line (66 kV) 1 km away from the site. The

total available land for CSP plant is approximately 750 hectares (750 * 104 m2). The

site is flat though slightly sloping to the East. The soil is compacted sand-gravel

sediments. Minor leveling will be required to prepare for flat collector fields. Several

meteorological data sources have been analyzed and compared. For the study the data

set generated with the Metronome database has been used. It shows an annual sum for

direct normal irradiation (DNI) of 2516 kWh/m2 for the site. The monthly DNI data of

the site shows some seasonal variations, [26].

CSP Description

Installed

Capacity

MW

Generated

Electricity

GWh

Capacity

factor

expected

installed

capacities

Generated

Electricity

Solar only 100 256 29.20% 2403.906 6154

Solar + 10% Auxilary

heating 100 281 32.10% 2190.035 6154

Solar + 6 Hours storage 50 195 44.50% 1577.948 6154

Solar + 8 Hours storage 50 263 51.40% 1169.961 6154

Solar + 12 Hours

storage 50 283 64.60% 1087.279 6154

Table 3-5: expected electricity generated from Kom Ombo, source PFC of Kom Ombo

65

3.7.3 CSP+D potential in Egypt “SolarPACES”

The main objective of this project is the assessment of concentrator power plant and

Desalination Potential in the MENA Area. Provide development of an implementation

strategy for the adoption of solar disinfection of drinking water as an appropriate,

effective and acceptable intervention against waterborne disease for vulnerable

communities in developing countries without reliable access to safe water, or in the

immediate aftermath of natural or man-made disasters.

One of the most important tasks of this project is the estimation of the solar resource

potential in the Egypt coastal strip using satellite images, the study done by the Spanish

company “IrSOLaV” in the framework of the activity “Assessment of CSP+D potential

in the MENA area” of SolarPACES.

It includes Yearly sums of global horizontal (GHI) and direct normal irradiance (DNI)

are calculated in all the Egypt coastal strip distributed with a mean distance of 5km

from the sea and separated between each other with a spatial resolution of 5km.

66

Figure 3-10: Egypt coastal strip in the Mediterranean Sea in red color, source IrSOLaV study

Figure 3-11: Elevation profile of the Egypt coastal strip in the Mediterranean, source IrSOLaV study

67

Figure 3-12: Egypt coastal strip in the Red sea in red color, The red line inland corresponds to the Egypt

border drawn by Google Earth, source IrSOLaV study

Figure 3-13: Elevation profile of the Egypt coastal strip in the Red sea, source IrSOLaV study

68

The results of this study is presented in an excel sheet containing yearly sums of global

horizontal and direct normal irradiance (kWh/ m2/ year) and yearly averages of

temperature (OC). In general terms, the dynamic of yearly solar radiation can be divided

in two main zones.

The Mediterranean Sea zone shows the yearly DNI results for each site. The range

oscillation is at 1854 to 2247 kWh/ m2/ year, [27].

Figure 3-14: DNI results of the Egypt coastal strip in the Mediterranean Sea, source IrSOLaV study

The Red sea zone shows the yearly DNI results for each site. Overall, the DNI values

show higher mean than the results for the Mediterranean zone. The minimum value is

2082 and the maximum 2611 kWh/ m2/ year. In this zone, there is higher variability

than in the Mediterranean cost due to the abruptness of the terrain, [27]

69

Figure 3-15: Elevation profile of the Egypt coastal strip in the Red sea, source IrSOLaV study

The study of “ASSESSMENT OF CSP+D POTENTIAL IN THE MENA AREA” has

been carried out considering the location of Port Safaga (Red Sea, Egypt), with an

estimated yearly DNI of 2496 kWh/m2. Considered distance from the sea is between 2

and 5 km. This last figure is the maximum distance to the sea to consider suitable the

facility. 50 MWe and 40520 m3/day have been considered as net power and water

production respectively, and 58ºC (0.18 bar abs) as the exhaust steam outlet turbine

conditions.

When all Egyptian coasts are analysed, in the Mediterranean strip and considering

radiation and orographic constrains, the 25% of the coast (900 km) can be considered

suitable to combined solar power and desalination facilities. In the case of the Red Sea

(1550 km), the estimated percentage is about 40 %. If 50 MW solar power plants +

40000 m3/day desalination facilities are considered at 20 km distance interval

70

(reasonable distance to provide power and water to nearby locations), the estimated

number of suitable CSP+D units in the Mediterranean Egyptian and Red Sea would be

11 and 31, respectively. This would means about 2.1 GW of installed power and 1.7

Hm3 of installed desalination capacity. [28]

So that we have the perfect land to install and generate the needed electricity from the

solar and more than the targeted, but still the main barrier is the investment cost of these

projects

71

3.8 The complete evaluation for the targeted plan

After making these data analysis for each technology and its share from the total

electricity generated by the year 2020, we have to evaluate the situation and From the

above technologies we find that the planned projects will not satisfy the targeted plan

there is a gap between the targeted and the estimated electricity according to the real

projects, the total targeted electricity from the renewable is about 51696.492 GWh,

when the estimated electricity is about 35528.694 GWh, which considered 13.75%

from the total expected generated, it means we need to generate 16167.798 GWh from

the renewable to achieve the targeted plan by 2020.

This will be possible to cover this deficit by more projects in the proposed land even for

wind farms or solar power plants.

Targeted Strategy by 2020 GWh

Wind Solar Hydro

31017.89 10339.29 10339.29

Table 3-6: Targeted Strategy by 2020

Real Projects planned GWh

Wind Solar Hydro

22299.89 365.80 12863.00

Table 3-7: Real projects

72

Shortage GWh

Wind Solar Hydro

8718.00 9973.49 -2523

Table 3-8: shortage from the targeted and planned projects

Figure 3-16: Comparison between the planned targeted and the estimated planned projects GWh

0

5000

10000

15000

20000

25000

30000

35000

Wind Solar Hydro

31017.89531

10339.29844 10339.29844

22299.894

365.800

12863.000

Planned up to 2020 estimated projects

73

4 CHAPTER FOUR: ECONOMIC AND FINANCIAL

EVALUATION

In this section an evaluation for economic analysis for the energy resources and

the investment costs of the future projects to cover the demand, as the result the

expected tariff of electricity which will be generated from the different

resources.

The evaluation depends on the data collection from global market and the

worldwide investment cost of these technologies projects, also according to the

estimated prices from the different feasibility studies which prepared in many

projects in Egypt even in wind or solar energy projects

4.1 Renewable Energy Market and Industry Highlights

The global market of the renewable energy technologies witnessed a fast growth during

the last few years, or a fast review of the global market of the most used renewable

technology (wind, CSP, and PV), the total installed all over the world and the total

investment cost of each of them which will be related to the Egyptian market and the

project’s cost even in wind and solar energy power plant.

The total investment in renewable energy reached $211 billion in 2010, up from $160

billion in 2009, continuing the steady annual increase seen since tracking first began in

2004. Including the unreported $15 billion (estimated) invested in solar hot water

collectors; total investment exceeded $226 billion. An additional $40–45 billion was

invested in large hydropower.

Asset finance of new utility-scale projects (wind farms, solar parks, and biofuel and

solar thermal plants) accounted for a record $128 billion in 2010, almost 60% of the

total and was the largest investment asset class. Wind power dominated the utility-scale

asset finance sector (70%), with $90 billion invested in projects, a 33% rise over 2009.

74

Large-scale solar power plants represented the second largest sector under utility-scale

asset financing, at $19 billion in 2010. This was about 5% higher than the financing

secured in 2009, although still below the 2008 record of $23 billion due to the sharp

decline in PV panel prices. Investment in small-scale distributed generation projects

(mainly solar PV) amounted to $60 billion and accounted for more than 25% of total

investment in renewable energy. For the first time, investment in renewable energy

companies and utility scale generation and biofuel projects in developing countries

surpassed that in developed economies. China attracted more than a third of global

investment during 2010, making it the leader for the second year in a row.

The total installed capacity of wind energy is about 198 GW by the end of 2010, The

PV industry had an extraordinary year, with global production and markets more than

doubling in 2010. An estimated 17 GW of capacity was added worldwide (compared

with just under 7.3 GW in 2009), bringing the global total to about 40 GW, the CSP

market has come back to life with nearly 740 MW added between 2007 and the end of

2010. More than half of this capacity was installed during 2010. Parabolic trough

plants continued to dominate the market. Dramatic reductions in PV costs are

challenging the growing market for CSP, at least in the United States, where several

planned projects were redesigned to use utility-scale PV technologies. At the same

time, project development is moving beyond the U.S. southwest and Spain to other

regions and countries, particularly the MENA region, [29].

4.2 Economic and Financial Evaluation for Wind Projects

The economic situation of wind energy considered the most promised in the

commercial way and under specific conditions, onshore wind energy is competitive

with newly built conventional power plants today, for example where the carbon cost is

effectively internalized, the resource is good, and conventional generation costs are

high, as in California. In Europe, with a stable, meaningful carbon price under the

European Emission Trading System, competition with newly built coal plants would be

75

possible at many sites. However, the competitiveness is not yet the rule, and reduced

life cycle cost of energy (LCOE) from wind is the main primary objective for the wind

industry. Therefore, the achievement of competitiveness with conventional electricity

production as a key goal, which is necessary so that market forces can be more heavily

relied upon to incentivize investment in new wind power deployment, [30].The main

parameters affecting the governing wind power economics include the following:

Investment costs, including auxiliary costs for foundation, grid-connection,

and so on.

Operation and Maintenance (O&M) costs.

Electricity production/average wind speed.

Turbine lifetime.

Discount rate.

Hence, from these the most important parameters are the wind turbines’ (WT)

electricity production and their investment costs. As electricity production is highly

dependent on wind regime conditions, choosing the right site is critical to achieving

economic viability, [31].

4.2.1 Investment costs

The investment cost of wind energy generation according to the reports in 2008 for the

installed projects in the European land ranged from USD 1.45 to USD 2.6 million/MW

(EUR 1 to EUR 1.9 million). This cost will different in other locations like n North

America, investment costs ranged from USD 1.4 to USD 1.9 million/MW (EUR 0.98 to

EUR 1.3 million); and in Japan from USD 2.6 to USD 3.2 million (EUR 1.8 to EUR 2.2

million) (IEA Wind, 2009). Costs in India and China stand at just under and just over

USD 1 million/MW (EUR 1.45), respectively (GWEC, 2009).

Following a period of steadily declining investment costs, from the late 1980s,

investment costs rose considerably in 2004, doubling in the United States for example.

This increase was due mostly to supply constraints on turbines and components

76

(including gear-boxes, blades and bearings) that made it difficult to meet the increasing

demand for these parts; as well as, to a lesser extent, higher commodity prices,

particularly for steel and copper. While the current recession has loosened the turbine

market, supply bottlenecks are likely to recur when markets fully recover, particularly if

new investment in manufacturing has stagnated in the meantime, and may lead to re-

inflated investment costs, [29].

4.2.2 Lifecycle Cost of Energy

The lifecycle cost of energy (LCOE) of wind energy can vary significantly according to

the investment cost, the quality of the wind resource, operation and maintenance

(O&M) requirements, turbine longevity and the date of commissioning, and the cost of

investment capital. Regional differences such as geography, population density and

regulatory processes contribute to variations in development and installation costs and

ultimately the LCOE of wind energy. Wind LCOE is considered to range from a low of

USD 70 (EUR 50)/MWh, under the best circumstances, to a high of USD 130 (EUR

90).

According to the last estimation of US Department of Energy Wind Technologies

Market Report the nation-wide capacity-weighted average price paid for wind power in

2008 (generated by projects commissioned during the period 2006 to 2008) was around

USD 47/MWh. This price includes the benefit of the federal production tax credit,

which has a value of at least USD 20/MWh according to the report, and other state level

incentives (US DOE, 2009), [29].

4.2.3 Operations and Maintenance

Operation and maintenance costs considered the most important component player in

the total investment cost of wind energy projects. (O&M) cost of wind turbines

including service, spare parts, insurance, administration, site rent, consumables and

power from the grid. It is difficult to extrapolate general cost figures due to low

77

availability of data. Because of the fast evolving of the technology, O&M requirements

differ greatly, according to the sophistication and age of the turbine. A sample of

projects examined recently in the United States suggested that O&M costs since 2000

range from USD 32/MWh (EUR 22) for projects built in the 1990s to USD 12/MWh

(EUR 8) for projects built in the 2000s (US DOE, 2009), [29]. Based on experiences

from Germany, Spain, the UK and Denmark, O&M costs are, in general, estimated to

be at a level of approximately 1.2 to 1.5 c€/kWh of produced wind power seen over the

total lifetime, (Wind facts, costs and price).

4.3 Financing Schemes for Wind Park Projects in Egypt

Egypt has many different types of financing its renewable projects as follows:

4.3.1 Grant Scheme

Grants was the first financing scheme, in this scheme local works such as civil works,

and local transportation had been financed by NREA. This scheme applied for

financing the pioneer and demonstration wind projects erected in Hurghada, in co-

operation with USA, Denmark, and Germany. In addition used also for financing the

first commercial large scale wind farm at Zafarana, with a total installed of 30 MW in

co-operation with DANIDA.

4.3.2 Self-Finance/Grant Scheme

In this scheme the maximum share of grants didn't exceed 25% of the total project

investment. This regime has been applied for three large-scale wind farms in co-

operation with DANIDA and KfW, with 110 MW total capacities.

4.3.3 Self-Finance Scheme

Self-Finance Scheme; has been applied for the 85 MW wind farm in co-operation with

the Spanish Government, in addition to three projects in the implementation phase with

320 MW total capacities. Foreign loans applied for the second or the third financing

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schemes vary between soft, mixed credit, and commercial loans. Meanwhile, local

loans offered from the Egyptian National Investment Bank, NIB, are commercial loans,

[32].

4.4 The expected investment cost for wind projects

According to the last feasibility study for wind farm with a total capacity of 200 MW

installed in Gulf of El Zayt we can expect the cost analysis for the other which will be

installed in the future and may be will less than the investment cost due to the decrease

of the cost with the time and especially wind projects which become commercialized

projects.

The cost estimates for the “KfW wind park” considered a proportional share of cost for

the NREA service installations, the main substation and the OHTL interconnection. The

estimated cost including consultancy services and 10% contingencies, and include even

the local (EGP) or hard currency (EUR)

100 x 2 MW

EUR EGP

189,550,000 598.000.000

Table 4-1: the expected investment of wind farm, source, 200 MW FS

The wind park shall be operated by NREA. For that service installations shall be

erected near the wind parks. A good indication for the expected O&M cost are the

recently contracted

Spare Part, Consumables and Service Cost for a three year warranty period. After the

warranty and service period a portion of foreign currency cost is shifted towards local

cost of NREA. The expected O&M cost are indicated below.

79

100 x 2 MW

EUR EGP

First 3 years 6.5 Mio 1.6 Mio

After 3 years 6.0 Mio 6.0 Mio

Table 4-2: Operation and Maintenance, source, 200 MW FS

The financing requirements amount to 280 million EUR without interest during

construction. Including IDC, the financing requirements ascend to 310 million EUR.

The analysis shows clearly that the present feed-in tariffs are insufficient to achieve a

satisfactory cash-flow in the first 10 years of the project life. A minimum feed-in tariff

of some 35 Pt/kWh would be needed without income from CDM: In case of additional

income from CDM, the minimum required feed-in tariff for financial sustainability is

about 31 Pt /kWh, [33].

From the above data we can find that the total investment cost of the wind farm with

total installed capacity about 200 MW in Egypt will be about 310 million Euros, and

the sale tariff at least must be 35 pt. /kWh

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4.5 The Expected Projects in the East and West Nile Banks

When we apply the data of the expected land in the East and West Nile into the

economic model of the previous project of Gulf of El Zayt, to install one project with a

total installed capacity of 200 MW as an example to investigate the investment cost

indications of this region, the input data of the project as follow

Technical Data

Project location West of the Nile Potential Site

Installed Capacity 200.00 MW

Capacity factor 31%

Energy Produced 543120.00 MWhr/Year

Equipment % 70%

Table 4-3: technical data of 200 MW wind in West of Nile

The weighted capacity factor is 31% according to the added land of the expected region

and so the total generated electricity less than the other regions with about 543

GWh/year.

For the expected cost of this project according to the mentioned cost for wind farms we

found the cost of each MW between 0.98 and 1.9 mil Euros /MW installed, it means the

average cost of each MW installed is about 1.44 mil/ MW

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Expected Cost

EURO/kW 1440.00

Taxes (EURO/KW) 100.80

Total Required Budget 308.160 mio Euro

Market Distortion

Include Tax Duties 10.00%

Include Customs 0.00%

Table 4-4: the expected cost of the project

The expected results of the data processing is as follow

Levelized Prod. Cost Without CDM 7.25 Cent EURO/kWhr 57.96 P.T./kWhr

Levelized Prod. Cost With CDM 6.90 Cent EURO/kWhr 55.22 P.T./kWhr

SUBSIDY FROM CDM 0.34 Cent EURO/kWhr 2.75 P.T./kWhr

Net Cash -28.42 Mio. EURO

IRR -4%

Table 4-5: the results of the project of west of Nile

These results means that the project will not be feasible for investment, because the

selling tariff less than the LPC (40 PT/KWh), so the IRR negative and there is no

income

We have to sell the produced electricity from the wind farm by at least 60 PT/KWh to

cover the investment cost of these projects.

In this case we can find the change in the other results which means that the project will

feasible economically

By changing the sell price or feed in tariff we can increase the income from these

projects

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The 1st scenario when we put feed in tariff 60 PT/KWh

Net Cash 44.02 Mio. EURO

IRR 9%

The 2nd scenario FIT is 65 PT/KWh

Net Cash 80.25 Mio. EUROIRR 18%

The 3rd scenario FIT 70 PT/KWh

Net Cash 116.47 Mio. EUROIRR 27%

We have to make balance between the levelized production cost and the selling price to

get an appropriate benefit and attract the private sector.

This balance according to the agreement between the investors and the government to

encourage the private sector.

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4.6 Economic and Financial Evaluation for Concentrating Solar power

Although the big difference in the capital investment cost between the projects of CSP

and wind energy, currently CSP requires higher capital investments than wind energy, it

offers considerable long-term benefits because of minimum fuel costs for

backup/hybridization. Moreover, the initial investment costs varies from the small to

big plants and decrease with the increase of the project, competition increases,

equipment is mass produced, technology improves and the financial community gains

confidence in CSP. In the near term, the economics of CSP will remain more favorable

for peak and intermediate loads than for base loads, for reasons explained in this

section, [34].

4.6.1 Investment Costs

For the CSP power plants with the most technology used is parabolic trough plants,

current investment costs are USD 4200/KW to USD 8400/KW depending on many

factors like labor and land costs, technologies, the amount and distribution of DNI and,

above all, the amount of storage and the size of the solar field. Plants without storage

that benefit from excellent DNI are on the low side of the investment cost range; plants

with large storage and a higher load factor but at locations with lower DNI (around

2000 kWh/m2/year) are on the high side. These investments costs are slightly higher

than those of PV devices, but CSP plants have a greater energy output per MW

capacity.

It is expected for the future the decrease of investment cost per watt for larger trough

plants, going down by 12% when moving from 50 MW to 100 MW, and by about 20%

when scaling up to 200 MW. Costs associated with power blocks, balance of plant and

grid connection are expected to drop by 20% to 25% as plant capacity doubles.

Investment costs are also likely to be driven down by increased competition among

technology providers, mass production of components and greater experience in the

financial community of investing in CSP projects. On the other hand the investment

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costs for parabolic trough plants could fall by 10% to 20% by using DSG, which allows

higher working temperatures and better efficiencies. Turbine manufacturers will need to

develop effective power blocks for the CSP industry. In total, investment costs have the

potential to be reduced by 30% to 40% in the next decade if these proposed action

taken, [34].

4.6.2 Operation and maintenance costs

Operation and maintenance costs for CSP include plant operation, fuel expenses in the

case of hybridization or backup, feed and cooling water, and field maintenance costs. A

typical 50 MW trough plant requires about 30 employees for plant operation and 10 for

field maintenance. Operation and maintenance costs have been assessed from USD

13/MWh to USD 30/MWh, including fuel costs for backup. As plants become larger,

operation and maintenance costs will decrease, [34].

4.6.3 Costs of providing finance for CSP plants

There is a big difference between the financing schemes of CSP technology from one

investment and legal environment to another according to significant consequences for

the costs of generating electricity and the expected rates of return on investment. Large

utilities building their own plants with available cash do not incur the costs that utilities

or investors face when combining equity and loans from various sources to finance

plants. Differences among fiscal regimes, in particular with respect to corporate taxes,

have an impact on the turnkey costs (the expenditures necessary before a plant is ready

for use) depending on how long it takes to secure financing and build the plant. This

impact might be significant for CSP plants that may require one to two years of

construction. The same parameters will have an even greater impact on the electricity

generating costs, as capital expenses are much larger for CSP plants than for, say,

fossil-fuel plants, [34].

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4.6.4 Generating costs

The actual cost of electricity generated from CSP depends mostly on the available

sunlight and how many hours the sun shining. Levelised energy costs, which estimate a

plant’s annualized lifetime cost per unit of electricity generation, range from USD

200/MWh to USD 295/MWh for large trough plants, the technology for which figures

are most readily available. The impact of storage on generating costs is not as simple as

it may seem. The investment cost increase when there is storage capacity, with the size

of the solar field and the added storage but so do the capacity factor and the yearly

electrical output (e.g. up to 6 600 hours in Spain with 15 hours of storage), thus the

energy cost changes only marginally.

In any case, the main merit of storage is not to reduce the cost of electricity but to

increase the value of the plant to the utility in making its capacity firm and allowing

solar plants to compete with fossil-fuel plants by supplying base-load power in the not-

too-distant future, [32].

4.6.5 The expected investment cost of CSP in Egypt

According to the feasibility study which has been prepared to the solar power plant in

Kom Ombo with total installed capacity of 100 MW, the total investment cost was 398

Million Euros for the solar only without storage.

And the next table refers to the expected generated electricity from each scenarios of

solar only and solar with auxiliary heating and finally solar with storage, we can find

the simplest and cheapest one is the solar power plant only without storage, due to the

increase in cost with more storage.

The expected investment cost per MW for solar CSP plant is about 933TEGP (124

Euro), when the required or expected FIT will be about 2.12EGP/KWh, which

considered more expensive than the mentioned in the wind energy.

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Plant design100 MWel

Solar only

100 MWel + 10%

Auxiliary heating

50 MWel + 12h

Storage

Power block nominal

capacity (electric)

100 MWel 100 MWel 50 MWel

Net Electricity

Generation [GWhel]

256 281 283

Investment cost [Mio

EUR]

398 411 465

Specific investment

cost [EUR/kW]2

3,975 4,105 9,300

Economic Levelized

Unit Costs (ELUC)

TEGP/MWh

933

984 1,044

EUR/MWh 124 123 130

feed in tariff required

EGP/kWh

2.12 2.34 2.41

Table 4-6: expected investment cost for CSP projects, PFC Kom Ombo

4.6.6 Parabolic Trough Modeling in Solar Advisor Model (SAM)

4.6.6.1 Overview of SAM

SAM is a performance and economic model designed to facilitate decision making for

people involved in the renewable energy industry, ranging from project managers and

engineers to incentive program designers, technology developers, and researchers.

SAM makes performance predictions for grid connected solar, small wind, and

geothermal power systems and economic estimates for distributed energy and

central generation projects. The model calculates the cost of generating electricity

based on information you provide about a project's location, installation and

87

operating costs, type of financing, applicable tax credits and incentives, and system

specifications. SAM also calculates the value of saved energy from a domestic solar

water heating system.

SAM is based on an hourly simulation engine that interacts with performance, cost, and

finance models to calculate energy output, energy costs, and cash flows. The software

can also account for the effect of incentives on project cash flows. SAM's spreadsheet

interface allows for exchanging data with external models developed in

Microsoft® Excel. The model provides options for parametric studies, sensitivity

analysis, optimization, and statistical analyses to investigate impacts of variations

and uncertainty in performance, cost, and financial parameters on model results.

SAM models system performance using the TRNSYS software developed at the

University of Wisconsin combined with customized components. TRNSYS is a

validated, time-series simulation program that can simulate the performance of

photovoltaic, concentrating solar power, water heating systems, and other renewable

energy systems using hourly resource data. TRNSYS is integrated into SAM so there is

no need to install TRNSYS software or be familiar with its use to run SAM, [35].

88

4.6.7 Concentrating Solar Power Plant Model

We can use Solar Advisor Modeling to simulate a solar power plant using parabolic

trough technology in Aswan region with a total installed capacity 100 MW solar only

without storage.

Figure 4-1: SAM Model Processing

Aswan region is one of the regions has a good potential in solar energy with a direct

normal irradiation of 2916.7 KWh/m2/year which will be suitable for a promised solar

power plant and can be connected to the Aswan – Luxor grid connection line

The output data or the result of the simulation is

89

Figure 4-2: result of CSP SAM modeling

The results refer to the approximately similarity between the SAM modeling and the

results from the feasibility study in the case of technical data and the Net annual energy

produce from the power plant and also in the LCOE, taking in our consideration the

change in the location and so the DNI

From the simulation of parabolic trough, it’s found that the LCOE is nearly 21.68 Cent

USD /KWh, about 1.19 EGP, which means we can change the FIT according to this

amount and so the change will be in IRR, in this case IRR is 15%

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4.7 Economic and Financial Evaluation for Photovoltaic PV

Due to the large variety of the applications of PV allows for a range of different

technologies to be present in the market, from low-cost, lower efficiency technologies

to high-efficiency technologies at higher cost. Note that the lower cost (per watt) to

manufacture some of the module technologies, namely thin films, is partially offset by

the higher area-related system costs (costs for mounting and the required land) due to

their lower conversion efficiency. Figure (4-3) gives an overview of the cost and

performance of different PV technologies. High investment costs, or total system costs,

represent the most important barrier to PV deployment today, although they are

decreasing rapidly as a result of technology improvements and economies of volume

and scale. Total system costs are composed of the sum of module costs plus the

expenses for the “balance-of-system”, including mounting structures, inverters, cabling

and power management devices. While the costs of different technology module types

vary on a per watt basis, these differences are less significant at the system level, which

also takes into account the efficiency and land-use needs of the technology. Total

system costs are sensitive to economies of scale and can vary substantially depending

on the type of application. Typical turn-key prices in 2008 in leading market countries

ranged from USD 4000 /kW for utility scale, multi-megawatt applications, to USD 6

000 /kW for small-scale applications in the residential sector, [36].

With expanding polysilicon supplies, average PV prices are projected to drop to $2000/

Kw in 2010. For thin-film PV alone, production costs are expected to reach $1000/Kw

in 2010, at which point solar PV will become competitive with coal-fired electricity.

91

Figure 4-3: current performance and price of different PV module technologies, source, PV road map

4.7.1 Levelized Energy Production Cost

The levelized electricity generation costs (LEGC) of PV systems depend mainly on two

factors: the amount of irradiation of sunlight during the year (and associated capacity

factor), and the interest/discount rate. The operation and maintenance costs of the PV

systems relatively small, there are no moving parts, estimated at around 1% of capital

investment per year. Assuming an interest rate of 10%, the PV electricity generation

costs in 2008 for utility-scale applications ranged from USD 240 /MWh in locations

with very high irradiation and capacity factor (2 000 kWh/kW, i.e. a 23% capacity

factor), to USD 480 /MWh in sites with moderate-low irradiation (1000 kWh/kW,

corresponding to a capacity factor of 11%). When the cost of electricity generated for a

92

residential use, PV systems ranged from USD 360-720 /MWh, depending on the

relevant incident solar energy. While these residential costs are very high, it should be

noted that residential PV systems provide electricity at the distribution grid level.

Therefore they compete with electricity grid retail prices, which, in a number of OECD

countries, can also be very high, [34].

4.7.2 Cost Reduction Goals

The essential target of PV economic is to reduce turnkey system prices and electricity

generation costs; it is expected to reduce by more than two-thirds by 2030. Turn-key

system prices are expected to drop by 70% from current USD 4000 to USD 6000 per

kW down to USD 1200 to USD 1800 per kW by 2030, with a major price reduction

(over 50%) already achieved by 2020. Large scale utility system prices are expected to

drop to USD 1800 per kW by 2020 and USD 800 per kW by 2050, and in the best case

will lead to long-term levelised generation costs lower than USD 50/MWh, [36].

4.7.3 Cost of Turnkey PV in Germany drops, (the German experience)

The German experience with PV technology system considered the leading and the

most successful all over the world, through encouraging spreading this technology.

Germany installed a record 3.8 GW of solar PV in 2009; in contrast, the US installed

about 500 MW in 2009. The previous record, 2.6 GW, was set by Spain in 2008.

Germany was also the fastest growing major PV market in the world from 2006 to 2007

industry observers speculate that Germany could install more than 4.5 GW in 2010. In

fact Germany installed 7.25 GW in 2010. The German PV industry generates over

10,000 jobs in production, distribution and installation. By the end of 2006, nearly 88%

of all solar PV installations in the EU were in grid-tied applications in Germany, [37].

According to Germany's PhotovoltaikZentrum, which interests for surveys of the PV

projects installation prices in Germany, in 2010 the price of installed PV dropped by

20.58% to 2,740 euros per installed kilowatt? The survey is based on responses given

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by 2,758 array owners from all over Germany who installed arrays smaller than 100

kilowatts in 2010.

This decrease in the price considered the greatest since the first survey in 2006, when

an installed kilowatt of photovoltaic cost around 5000 euros. In 2007, prices had only

dropped slightly down to around 4,800 euros, but prices began plummeting in 2008,

when an installed kilowatt cost around 4,300 euros, a decrease of just over 10 percent.

In 2009, prices then dropped by 19.77% to around 3,450 euros. In total, the price of

installed photovoltaic has dropped by around 45 % in Germany since 2006. It is

important to keep in mind that the prices for crystalline panels on the spot market in

Germany have fallen to around 1.8 euros per watt for modules from Europe and Japan

and to around 1.60 euros for modules from China. It is therefore roughly possible to

estimate what the local added value is even if the panels themselves are imported from

China. If we assume that the difference between 2.70 (installed price) and 1.60 euros

per watt (module price) is locally made installation equipment and local services

charged by installers, then the local added value is potentially already at 42 % in

Germany even if the panels are imported from China. Furthermore, Germany proves

that feed-in tariffs with a regular schedule of decreasing rates can bring down prices

drastically. While the official figures are not yet in from Germany's Network Agency,

the German Solar Industry Association estimates that some 7-8 giga watts were newly

installed in Germany in 2010. Spread across an estimated 230,000 solar arrays, the

average array size comes in at roughly 32.6 kilowatts, which shows that Germany

remains a market largely driven by homeowners. Thanks to this unparalleled growth, a

strong wholesale market and a large pool of skilled installers have been created in

Germany.

At the current exchange rate of roughly 1.33 US dollars per euro, 2,740 euros is

equivalent to 3,644 US dollars, but the cost of installed photovoltaic in the US is

nowhere near 3,600 dollars. In December, the Lawrence Berkeley National

Laboratory published its estimates of the installed cost of photovoltaic in the US for

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2010. After stagnating at around 7.50 US dollars per watt in 2008 in 2009, the price of

an installed array smaller than 100 kilowatts in California had fallen in the first six

months of 2010 to 6.1 dollars, compared to 5.7 dollars per watt (or 5,700 dollars per

kilowatt) in New Jersey -- but prices can be expected to be much greater in other states,

where PV markets are far less mature. Those who argue that feed-in tariffs keep the

cost of photovoltaic high should explain why arrays in the US cost at least 60 percent

more than they do in Germany, [38].

4.7.4 The Expected Investment Cost of PV in Egypt

With reference to the feasibility study which prepared by EM power program for 100

MWp Solar PV Plant – Kom Ombo, Jan 2010

The investment costs used in the analysis represent first quarter 2010 market prices and

are based on benchmark cost of EPC contracts for private investors, which have been

obtained through evaluation of numerous EPC contracts in southern Europe. A minor

discount on the services and components with higher national share of supply has been

considered. The costs reflect the current market price of contracts from international

EPC contractors with experience in large scale PV plant erection. The cost indicated

above covers the complete PV power plant including land preparation, control and

security, access and grid connection.

System Kom Ombo 100 MWp

grid connected system

Investment cost [Mio EUR] 246.4

Specific investment cost [EUR/kW] 2,460

Table 4-7: investment cost of 100 MW PV power plants, source PFC of PV in Kom Ombo

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4.7.5 Tariff Requirements

According to the financial analysis which was carried out to determine the project’s

required tariff given the target indicators for investor’s financial benefits, using the

same cost assumptions and time schedules as in the economic analysis. The expected

economic levelized unit costs amounted to 1,242 TEGP/MWh which is within the

typical range for photovoltaic installations in tropical climates. On the other hand, the

economic rate of the project is negative. Among the funding options, Development

Bank Financing generates the lowest project feed-in tariff requirement of 1.60

EGP/kWh (0.20 EUR/kWh) and payback period of 7 years, [39].

4.7.6 PV Power Plant SAM Model

Using PV model with total installed 20 MW in Cairo airport weather to verify the

results coming from the feasibility study or make comparison, After making the

simulation using the SAM modeling we found the technical results in the annual energy

production is nearly similar, but the change in economic results due to the different

installed capacity

In the feasibility study the total installed capacity is about 100 MW and the the SAM

model is 20 MW, it means that, the increase in the installed capacity will decrease the

investment cost and so the LCOE

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Table 4-8: results of SAM simulation for 20 MW PV

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4.8 General Economic evaluation and Impacts

4.8.1 General economic indicators

To conclude the economic evaluation for the three technologies, it is clear that the wind

energy is the leading and the commercial technology which reached to be a competitive

energy source with the other traditional resources.

The market investment cost of the wind energy become about USD 1.45 to USD 2.6

million/MW (EUR 1 to EUR 1.9 million), and the production cost range from a low of

USD 70 (EUR 50)/MWh, under the best circumstances, to a high of USD 130 (EUR

90), the expected production cost for the electricity generated in Egypt is to be

72Euro/MWh without the CDM subsidize, and so the selling tariff will be about at least

8 cent Euro /KWh (65 PT)

For the CSP technology the market cost is more expensive than the wind energy and

expected to be decreased with the next few years, it reached to be about USD 4200/KW

to USD 8400/KW (Euro 525 to 1050)/ KW, and the generating costs range from USD

200/MWh to USD 295/MWh (Euro 25 to 37)/ MWh, the expected investment cost for

the CSP plants in Egypt is to be about 933 EGP (124 Euro), when the required or

expected FIT will be about 2.12EGP/KWh

For the PV technology and according to the German projects at the year 2010, the

estimation is about 2,740 Euros/KW; the production cost was about from USD 240

/MWh to USD 480 /MWh (Euro 30 to 60)/MWh, and the expected investment cost for

the Egyptian market is 2,460 Euro/KWh and The expected economic levelized unit

costs amounted to 1,242 TEGP/MWh, the lowest project feed-in tariff requirement of

1.60 EGP/kWh (0.20 EUR/kWh) and payback period of 7 years

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4.8.2 General economic impacts

The expected wind projects during the wind park construction and operation

would have many economic benefits.

About 30 to 40 % of the investment volume would be produced locally.

During construction there will be an employment opportunities, local personnel

would be employed for civil, electrical and installation works. The works would

be carried out essentially by Egyptian companies.

During the operation a significant number of electricians, mechanics, engineers

and workers would be employed for O&M of the wind park.

At steadily increasing oil prices wind power utilization, especially at a site with

very high wind energy potential like the NREA area, is approaching

competitiveness. It saves indigenous gas and oil reserves, which alternatively

could be exported at world market prices.

For the CSP projects the expected impacts will be to offer Jobs:

- Direct Jobs, Temporary Engineering, Procurement, Construction,

Permanent Operations, Maintenance, Engineering, Administrative

- Indirect Jobs. Manufacturing, Hospitality & Services, Infrastructure,

Ancillary Commerce

Private Investment: Plant and transmission facilities, ancillary businesses and

infrastructure

Tax Base Increase: Real and personal property tax, sales tax, employment and

income taxes

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5 CHAPTER FIVE: ENVIRONMENTAL IMPACTS

EVALUATION OF RENEWABLE ENERGY

In this section an evaluation for environmental impacts of different renewable

energy and specially the projects which will be in Egypt mainly wind and solar

energy, the evaluation depends on the data collection from different web sites

and papers.

The general view of the land location which used for the wind farms or solar

power plants are desert land, it means that most of the environmental impacts

are very low and in some regions neglected, it is far from the population, the

agriculture regions and may be far from the bird migrations direction.

5.1 Introduction

The environmental problems is the result for the fossil and nuclear energy sources use,

the energy use and supply is the most fundamental importance to society and life.

The most environmental impacts of burning fossil fuels including: Global climate

change, acidification of ecosystems, risks from nuclear accidents, long term

accumulation of radioactive waste, and effects on the public health from air pollution.

With the possible exception of agriculture and forestry, energy has made the greatest

impact on the environment of any human activity - a result of the large scale and

pervasive nature of energy related activities. Although the local effect of using energy

on the environment such as problems associated with extraction, transport or noxious

emissions - they have now widened to cover regional and global issues such as acid rain

and the greenhouse effect. Such problems have now become major political issues and

the subject of international debate and regulation, [40]. It is a great challenge to win the

fight against climate change without a dramatic shift in the way of electricity

production and encouraging the use of renewable energy resources to face the increase

in electricity demand. The power sector accounts for around 40% of global CO2

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emissions, renewable energy technologies must be rolled out quickly to provide

emissions-free renewable electricity for industrialized and developing countries alike.

As renewable energy technologies rely on natural energy and material flow cycles, they

can reduce the environmental impact of energy supply. Although for most of them the

energy conversion process is emission free, environmental impacts result from the

provision of raw materials and the manufacturing and disposal of components, [41].

Electricity consumption will be changed due to the Climate change which will alter

energy demand patterns. Electricity consumption in the Mediterranean region will

increase due to projected temperature increases and the associated increasing demand

for space cooling. Energy demand for space heating in northern Europe will decrease,

but the net effect across Europe is difficult to predict. Climate change will affect power

production. Due to projected changes in river runoff, hydropower production will

increase in northern Europe and decrease in the south. Furthermore, across Europe,

summer droughts are projected to be more severe, limiting the availability of cooling

water and thus reducing the efficiency of thermal power plants. Both types of impacts

may lead to changes in emissions of air pollutants and greenhouse gases from energy,

which are, however, difficult to estimate at present, [42].

5.2 The Impact of Wind Energy on Climate Change

The impact of Wind farms may be strong on the surrounding area and it may affect

weather in their immediate vicinity. The mixing of heat and water vapor which

generated from the closed box of turbine rotors generate a lot of turbulence in their

wakes like the wake of a boat. This turbulence affects the meteorological conditions

downwind. Many studies had been demonstrated to investigate the impacts of wind

farms on weather and climate used a regional climate model. The main results of these

studies refer to; wind farms lead to a warming at night and cooling during the day time.

Which means a kind of climate change will happen in this region and to reduce this

effect we have to use more efficient rotors or placing wind farms in regions with high

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natural turbulence. Other studies have used climate models to study the effect of

extremely large wind farms. The result of the simulations shows detectable changes in

global climate for very high wind farm usage, on the order of 10% of the world's land

area. Wind power has a negligible effect on global mean surface temperature, and it

would deliver "enormous global benefits by reducing emissions of CO2 and air

pollutants". Another study suggested that by using wind turbines to meet 10% of global

energy demand in 2100 this could actually have a warming effect, causing temperatures

to rise by one degree Celsius in the regions on land where the wind farms are installed,

including a smaller increase in areas beyond those regions, [43].

5.3 Carbon Dioxide Emissions and Pollution

Wind power is clean electricity without any other pollution during the operation and

there is no emissions directly related to production. Wind turbines produce no carbon

dioxide, sulfur dioxide, mercury, particulates, or any other type of air pollution, unlike

fossil fuel power sources. Wind power plants consume resources in manufacturing and

construction. using fossil fuels During manufacture of the wind

turbine, steel, concrete, aluminium and other materials will have to be made and

transported using energy-intensive processes, this will cause emissions. The wind

turbine manufacturer Vestas states that initial carbon dioxide emissions "payback" is

within about 9 months of operation for off shore turbines. There was a study in 2006

found that the total emissions of CO2 of wind power to range from 14 to 33 tons per

GWh of energy produced. Most of the CO2 emission comes from producing the

concrete for wind-turbine foundations. On the other hand the generating electricity from

wind energy instead of fossil fuels makes reductions of in CO2 emissions ranging from

0.33 to 0.59 tons of CO2 / MWh, [43].

5.3.1 How Much CO2 Can Wind Energy Save?

The calculations on just how much CO2 could be saved by wind energy is based on an

assumption for the carbon intensity of the global electricity sector, i.e. the typical

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amount of CO2 emitted by producing one kWh of power. Individual countries’

emissions differ substantially, but here we use the IEA’s estimate of 600g/kWh as an

average value for the carbon dioxide reduction to be obtained from wind generation,

(wind road map, 2010).

Figure 5-1: Global Power Capacity and avoided CO2 emissions (2008-2030), source wind roadmap

2008 2012 2020 2030

GW 121 277 1,081 2,375

mil tCO2/year 157 408 1,591 3,236

Table 5-1: Global Power Capacity and avoided CO2 emissions (2008-2030), source wind roadmap

The expected CO2 emission will be avoided by the generated electricity from wind

energy up to 2020 will be estimated as approximately 18.6 mil ton CO2.

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5.4 Environmental Impacts of Wind farms

The environmental impact of wind energy is relatively minor when comparing it with

the huge impact of fossil fuels specially the amount of CO2 emission. Wind energy

does not consume any fuel and there is no any pollution production, so it is considered a

free emission energy source. Wind farms are seen as a great way of generating green

electricity without polluting the environment; however do they cause their own

environmental problems? There are plenty of concerns about the environmental

problems caused by wind farms which will be explained in details below.

5.4.1 Noise Problems

The noises created by wind turbine make people worried; the noise has been

minimized, by designing the turbines to minimize noise. Modern wind farms do not

create huge amounts of noise as many people expect.

Modern wind turbines produce significantly less noise than older designs. Turbine

designers work to minimize noise, as noise reflects lost energy and output. Noise levels

at nearby residences may be managed through the siting of turbines, the approvals

process for wind farms, and operational management of the wind farm. In a 2009 report

about "Rural Wind Farms", a Standing Committee of the Parliament of New South

Wales, Australia, recommended a minimum setback of two kilometers between wind

turbines and neighboring houses (which can be waived by the affected neighbor) as a

precautionary approach. In July 2010, Australia's National Health and Medical

Research Council reported that "there is no published scientific evidence to support

adverse effects of wind turbines on health".

A 2008 guest editorial in Environmental Health Perspectives' published by the National

Institute of Environmental Health Sciences, the U.S. National Institutes of Health,

stated: "Even seemingly clean sources of energy can have implications on human

health. Wind energy will undoubtedly create noise, which increases stress, which in

turn increases the risk of cardiovascular disease and cancer." A 2007 report by the U.S.

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National Research Council noted that noise produced by wind turbines is generally not

a major concern for humans beyond a half-mile or so. Low-frequency vibration and its

effects on humans are not well understood and sensitivity to such vibration resulting

from wind-turbine noise is highly variable among humans. There are opposing views on

this subject, and more research needs to be done on the effects of low-frequency noise

on humans, [43].

5.4.2 Interference

Wind turbines have moving blades which could make disturbance for the TV and Radio

signal, and so cause interference affecting TV and radio transmissions. It is well known

that obstacles affect radio and TV transmissions. However the blades are made out of

synthetic materials to minimize the risk. The generator and transformer could

potentially emit small levels of electromagnetic radiation, however these emissions will

be very week, and as the turbines are located off the ground, there is no risk at all, [44].

5.4.3 Appearance

The appearance of wind turbine different from person to another, so it is a very personal

topic; it depends mainly on whether people like the look of them or thinks that they

destroy the look of the landscape. This opinion depends on the background of each one,

if he knows the benefits of the using of wind energy instead of traditional energy or just

a structure like anything.

5.4.4 Land use

The land of wind farms can be used for another purposes like farming for example,

wind farms are normally built in mountainous regions to get higher wind speeds. In

mountainous or desert regions, farming normally concentrates on sheep and goats. The

sheep actually like wind turbines as they provide shade during hot days.

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The land can still be used for farming and cattle grazing. Livestock are unaffected by

the presence of wind farms. International experience shows that livestock will "graze

right up to the base of wind turbines and often use them as rubbing posts or for shade".

Wind-energy advocates contend that less than 1% of the land would be used for

foundations and access roads, the other 99% could still be used for farming. Critics

point out that the clearing of trees around tower bases may be necessary for installation

sites on mountain ridges, such as in the northeastern U.S.

Turbines are not generally installed in urban areas. Buildings interfere with wind,

turbines must be sited a safe distance ("setback") from residences in case of failure, and

the value of land is high. There are a few notable exceptions to this, [43].

5.4.5 Impact on wildlife

Environmental assessments are routinely carried out for wind farm proposals, and

potential impacts on the local environment (e.g. plants, animals, soils) are

evaluated. Turbine locations and operations are often modified as part of the approval

process to avoid or minimize impacts on threatened species and their habitats. Any

unavoidable impacts can be offset with conservation improvements of similar

ecosystems which are unaffected by the proposal.

Projects such as the Black Law Wind Farm have received wide recognition for its

contribution to environmental objectives, including praise from the Royal Society for

the Protection of Birds, who describe the scheme as both improving the landscape of a

derelict opencast mining site and also benefiting a range of wildlife in the area, with an

extensive habitat management projects covering over 14 square kilometers, [43].

5.4.6 Safety

Operation of any utility-scale energy conversion system presents safety hazards. Wind

turbines do not consume fuel or produce pollution during normal operation, but still

have hazards associated with their construction, operation and maintenance.

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With the installation of industrial sized wind turbines numbering in the thousands, there

have been at least 40 fatalities of workers due to the construction, operation, and

maintenance of wind turbines, and other injuries and deaths attributed to the wind

power life cycle. Most worker deaths involve falls or becoming caught in machinery

while performing maintenance inside turbine housings. If a turbine's brake fails, the

turbine can spin freely until it disintegrates or catches fire. Often turbine fires cannot be

extinguished because of the height, and are left to burn themselves out. In the process,

they generate toxic fumes and can scatter flaming debris over a wide area, starting

secondary fires below. Several turbine-ignited fires have burned hundreds of acres of

vegetation each, and one burned 800 square kilometers (200,000 acres) of Australian

National Park.

During winter ice may form on turbine blades and subsequently be thrown off during

operation. This is a potential safety hazard and has led to localized shut-downs of

turbines.

Electronic controllers and safety sub-systems monitor many different aspects of the

turbine, generator, tower, and environment to determine if the turbine is operating in a

safe manner within prescribed limits. These systems can temporarily shut down the

turbine due to high wind, electrical load imbalance, vibration, and other problems.

Recurring or significant problems cause a system lockout and notify an engineer for

inspection and repair. In addition, most systems include multiple passive safety systems

that stop operation even if the electronic controller fails.

In his book Wind Energy Comes of Age, Paul Gipe estimated that the mortality rate for

wind power from 1980–1994 was 0.4 deaths per terawatt-hour. Paul Gipe's estimate as

of end 2000 was 0.15 deaths per TWh, a decline attributed to greater total cumulative

generation, [43].

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5.5 The Environmental Impacts of Wind Farms in Egypt

The assessment of the different possible environmental impacts, which may be caused

by wind power development Egypt, did not show any significant bottleneck except

limitations set by expected impacts to the avi-fauna. The Consideration of competing

environmental interests, such as bird protection and renewable energy generation and

implied CO2 avoidance is the most important aspects, the most environmental impacts

of wind farms in Egypt according to the last feasibility study for wind farm and this

land similar to the other regions in the other promised locations for other wind farms in

Egypt, the source (200MW FS in GZ 2008).

5.5.1 Land characteristics and use:

All the area is consisting of desert ground (compacted gravel or rocky) and not

ecologically sensitive. Very little deterioration is expected. According to the previous

information received from last feasibility studies, the selected area is free from oil

concessions.

5.5.2 Flora and Fauna (without avi-fauna):

The field survey revealed that due to the desert nature of the land, there is a complete

absence of flora and very limited expected fauna, which is of common nature.

Accordingly, wind park utilization in the area will have no impacts on the biodiversity

and other environmental characteristics of the site. Not a single specie or animal

recorded in the area or expected to occur in it, is included in the Red Lists, both

internationally or nationally. Moreover, the nature of wind parks, which leaves most of

the wind park area untouched, is not critical to the rare existing fauna (not considering

avifauna) in that area, if basic mitigation measures are kept.

5.5.3 Avifauna:

Although, this area is away from the main migration routes and does not show

topographical bottlenecks, some smaller amounts of migrating birds were assessed to

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likely occur in that part of the greater area. Therefore, the wind park installation

requires technical Avoidance/mitigation measures at the plants and in the infra-structure

itself as to the best practicable standard. Moreover, a careful post installation

monitoring programme needs to be executed to assess, whether the impacts in a wind

park will remain on acceptable level or whether additional measures will have to be

carried out.

5.5.4 Water quality:

Wind power utilization in the area will not have any effects to the groundwater and

surface water. Eventually constructed service buildings near to the area, such as store,

control and apartment buildings, shall be interconnected to the existing water pipeline

and equipped with an appropriate waste water treatment system (e.g. septic tank with

underground seepage and regular sludge collection).

5.5.5 Air quality:

Some additional dust will occur locally during construction works what, however, is

not critical because of the absence of population or wildlife, which may be affected.

5.5.6 Noise levels:There is no settlement area in the surroundings of the proposed area.

Antiquities or sites of historical & cultural importance: None

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5.6 Environmental Effects of Solar EnergySolar energy is the source for electricity without air pollution during operation and

generation mode, only the impact of solar on the environment and the health during the

manufacturing, installation and the wastes after finishing. Materials used in some solar

systems can create health and safety hazards for workers and anyone else coming into

contact with them. The most danger comes from the manufacturing of Photovoltaic

cells often requires hazardous materials such as arsenic and cadmium. Even relatively

inert silicon, a major material used in solar cells, can be hazardous to workers if it is

breathed in as dust. Effective measures must be taken to protect the Workers involved

in manufacturing photovoltaic modules and components to protect them from exposure

to these materials. There is an additional-probably very small-danger that hazardous

fumes released from photovoltaic modules attached to burning homes or buildings

could injure fire fighters. None of these potential hazards is much different in quality or

magnitude from the innumerable hazards people face routinely in an industrial society.

This danger can be removed or reduce through effective regulation, the dangers can

very likely be kept at a very low level. For the Wildlife protection when using the large

amount of land required for utility-scale solar power plants- which approximately one

square kilometer for every 20-60 megawatts (MW) generated. Ecosystems can also be

affected by Water from underground wells may be required to clean concentrators and

receivers and to cool the generator, which may harm the ecosystem in dry climates.

Large central power plants are not the only option for generating energy from sunlight,

however, and are probably among the least promising. Because sunlight is dispersed,

small-scale, dispersed applications are a better match to the resource. They can take

advantage of unused space on the roofs of homes and buildings and in urban and

industrial lots. And, in solar building designs, the structure itself acts as the collector, so

there is no need for any additional space at all, [45].

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5.6.1 Carbon Emissions

There is no carbon emissions, this is the best thing when we use solar energy to

generate electricity, so that the there is no greenhouse gases, It doesn't burn oil, it

doesn't produce toxic waste, and its lack of moving parts reduces the chances of an

environmentally devastating accident to nil. By using solar energy to generate

electricity for a large scale will reduce its environmental footprint to tiny fractions of its

current level, [46].

5.6.2 Abundant Components

The photovoltaic cells which constitute most solar energy systems are usually made of

silicon, one of the most common minerals found on Earth. That means that creating the

components is extremely easy, doesn't require mining or drilling in a dangerous locale

to produce, and can be acquired without involvement in politically unstable areas such

as the Middle East. The environmental effects of this are subtle but, because fewer

resources are expended in the acquisition of silicon, its overall effect on the ecosystem

is reduced, [46].

5.6.3 Cadmium

Cadmium is used in cadmium telluride solar cells as a semiconductor to convert solar

energy into electricity. Though used in very small amounts, it is extremely toxic and

can build up in a given ecosystem if it isn't monitored. Firms which make this kind of

solar cell often instigate recycling programs so that damaged or unusable cells don't

inadvertently damage the surrounding environment, [46].

5.6.4 Ecological Concerns

The pro-alternative energy site Cooler Planet points out that many conservationist

groups are concerned about animal habitat depletion. There are concerns that the large

spaces required for solar energy production will create habitat problems, but these

doubts are often not balanced against the environmental needs of other power-

111

generation facilities. For example, a solar power generation plant requires the

destruction of fewer habitats than a coal-generating station when the land space of the

mines producing the coal is added into the equation, [46].

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6 CHAPTER SIX: CONCLUSION ANDRECOMMENDATIONS

6.1 Introduction

The goal of this thesis is to study the renewable energy strategy in Egypt up to the year

2020, and the different challenges technical, economic and environmental which may

face it. Possible scenarios for the estimating the expected total generated electricity

from different resources thermal and renewables at this year 2020 have been

investigated taking into considerations the renewable energy planned projects.

Is there is a gap between the targeted goals and the projects installed and planned?, and

if there is a gap, how could this gap covered?. Alternative scenarios consider different

site locations according to the projects criteria (wind, solar CSP, solar PV, …), the

expected investment cost, the production cost and the sell tariff.

In this study a model has been built and used to forecasting the electricity generation, a

gap between the targeted goal and the installations has been found. Also SAM,

simulation model has been used to check the findings with the model have been built,

and results are matched. SAM model used also to estimate economic parameters.

Main conclusions on the current study and recommended actions to speed the

renewable energy in Egypt are presented below.

6.2 Conclusions on the Present Work

Energy Planning Model refers to an annual growth rate of electricity generation by

6.4% until the year 2020, this result has been concluded based on past electricity

demand and the expected increased demand. Accordingly, the total generated electricity

will reach 258482 GWh. Consequently the estimated share of renewable energy, 20%

of the total generated electricity, is about 51696 GWh. This renewable energy could be

occurred from different sources, 12% wind with total generated electricity 31017 GWh,

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4% solar energy with total generated electricity 10339 GWh, and 4% Hydro power with

total generated electricity about 10339 GWh.

The estimated generated electricity from the projects, established and planned, to cover

the strategy is about 35528 GWh, which considered 13.75% from the total expected

generated. So, there is a deficit of about 6.25%, estimates approximately 16167 GWh

by year 2020. To cover this shortage there is a need to plan erecting more wind, solar,

and biomass projects.

For wind energy, based on Egypt Wind Atlas suitable locations for establishing wind

farms could be determined according to the following priorities: the east and west banks

of the Nile, the Gulf of Suez, and some areas located in the Western Desert. These sites

were chosen based on wind energy potential, the wind speed varies between 7 and 8

m/s, which result a weighted capacity factor about 30% to 35%.

Concerning solar energy, solar maps of Egypt indicate some of the promising locations

which are suitable for CSP and PV applications. Such sites exist in Abu Simbel,

Toshka, Kom Umbo, Esna, Marsa Alam, Quseir Resory, West and South of Safaga,

Hurgada, Kuraymat, and Farafra Oasis. The total recommended projects for these

locations are around 1863 MW installed capacity of PV and about 1935 MW installed

of CSP. Moreover the Egypt coastal strip at the Mediterranean and Red Sea have a

good potential for CSP with water desalination projects with estimated capacity of

about 2.1 GW of installed power and 1.7 Mil. m3 of installed desalination water.

Either for solar or wind projects several studies are needed to check the suitability of

these sites such as, environmental impact assessment, ornithological studies, grid

situation, …etc. consequently, it is expected that some of the proposed areas could not

be used as part of the proposed solution.

The economic evaluation for these renewable projects refers to that the investment cost

of the renewable energy technology varies from one to another according to the total

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installed all over the world and the mass production of its components, the wind energy

is the commercial technology till now and expected decrease in the investment cost of

CSP and PV projects for next years.

The market investment cost of the wind energy become about (EUR 1 to EUR 1.9

million) /MW, and the production cost range from a low of (EUR 50)/MWh, under the

best circumstances, to a high of (EUR 90), the expected production cost for the

electricity generated in Egypt is to be 72Euro/MWh without the CDM subsidize, and so

the selling tariff will be about at least 8 cent Euro /KWh (65 PT)/KWh

For the CSP technology the market cost is more expensive than the wind energy and

expected to be decreased with the next few years, it reached to be about (Euro 525 to

1050)/ KW, and the generating costs range from (Euro 25 to 37) / MWh, the expected

investment cost for the CSP plants in Egypt is to be about 933 EGP (124 Euro), when

the required or expected FIT will be about 2.12EGP/KWh

For the PV technology and according to the German projects at the year 2010, the

estimation is about 2,740 Euros/KW; the production cost was about from (Euro 30 to

60)/MWh, and the expected investment cost for the Egyptian market is 2,460

Euro/KWh and The expected economic levelized unit costs amounted to 1,242

EGP/MWh, the lowest project feed-in tariff requirement of 1.60 EGP/kWh (0.20

EUR/kWh) and payback period of 7 years

The environmental impacts of wind and solar projects in Egypt are limited, the general

view of the land location which used for the wind farms or solar power plants are desert

land, it means that most of the environmental impacts are very low and in some regions

neglected, it is far from the population, the agriculture regions and may be far from the

bird migrations direction.

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6.3 Recommendations and Proposed Actions to Foster RE In Egypt

Renewable energy is the coming future and the best choice for securing energy demand

to the next generations with clean environment. Egypt is a rich country with renewable

resources which can be used for power generation on a commercial scale.

to foster renewable energy we will need more capacity building with more awareness

through the different media facilities to strength the concept of renewable energy and

the importance of using it instead of conventional resources, and on the other hand the

concept of energy conservation and energy efficiency for electrical appliance which

will reduce the electricity consumption, for this purpose many effective measures must

be taken from the decision maker or suggested from the institutions and organizations

which interested in the field of renewable energy technology development, hereinafter

some suggestions for action plans to speed the utilization of renewable energy

technologies, these actions may be acceptable or non-acceptable from some experts,

this debate very useful for more development and spread the use of RE technologies.

6.3.1 Fossil-Fuels Subsidizes

In Egypt, most of the fossil fuels are subsidized. These subsidies may be reduced

gradually, to make renewable-energy marketable with cost competitiveness, these

resources will be “presented to citizens at its real cost,” but added that butane will

continue to be subsidized through cash payments to individuals, rather than what he

called “in-kind support,”

This will increase the end user electricity price which put the price of conventional and

renewable energy in comparison and the choice will be to the consumers.

6.3.2 Access to Transmission, Grid Connection

The right to access and connect to the grid must be obligated for all renewable plants,

which facilitate the electricity-wheeling between buyer and seller that provides open

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access to customers. Transmission-services should not discriminate against, or give

unfair advantage to, specific ownership or certain types of generation.

6.3.3 Promoting and Encouraging Solar Water Heating Systems

The use of solar water heater even in the domestic or commercial use will be reduce the

electricity consumption for heating water and we can benefit from this electricity in

another sector and decrease loads from the grid.

The main barrier for the use of SWHS is the high initial cost, financial support from the

government and the private sector and donor agencies should be put in place, so the

proposal action can help and support the use of SWHS and at the same time support the

local industries and decrease the unemployment.

This proposal depends on a financial program to encourage citizens to use the solar

water heater instead of the electrical or gas water heater by the following steps:

Funding system to facilitate the acquisition of solar heaters in Egypt

1. The electricity distribution companies make a contracting with solar water

consumers against payment of 10% of the total cost and the rest will be added as

monthly installment on the electric bill each month so as not to bear the high cost

of consumer the boiler solar.

2. Electricity distribution companies will make contract with the national banks to

finance the project through soft loans to cover 70% of the total cost.

3. The bank benefits will be covered through the support of international

organizations and bodies which encourage and support the clean and renewable

energy

4. The last 20% of the cost will be covered through national funds such as the

support fund for renewable energy which ratified by the supreme council of

energy to encourage the use of RETs

5. The electricity distribution companies will make a contract with the local

manufacturing and suppliers of SWHS for supplying a large number of solar

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water heaters with capacity of 150 liter, (enough for a family of five persons),

through public tender in accordance with the following specifications:.

The solar water heater certificate quite standard technical specifications

The contract includes the installation and maintenance throughout the

period of hire purchase (5 years, 10 years, and 15 years).

6.3.4 Educate the Awareness about the Role of Renewable Energy

It is very important that the general public and local populations in in Egypt of a

proposed development understand the full value of wind energy and using solar energy

technologies. The variability characteristic of renewable energy is taken by some as a

measure of unreliability so that its role in strategic socio environmental strategy to abate

CO2 emissions is often underestimated. This needs to be addressed with effective

public information campaigns that highlight quantifiable benefits of the technology.

To achieve this awareness, there is a need for training courses, demonstration systems,

brochures, and workshops for targeted users. These programs should be prepared based

on market surveys and studies.

6.3.5 Research, Development and Demonstration Support of Local Industry

Egypt must take effective measures toward encouraging the researches and support the

local manufacturing to transfer the technology from the advanced countries and start

self-reliance

6.3.6 Garbage-To-Energy- Recycling Instead Of Burning

Take one problem - worthless garbage - and solve energy crises.

Garbage then becomes a good thing – a fuel

Some researchers at the University of California have come up with ways to draw

energy from the garbage you dispose into bio-gas that has the potential to

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generate electricity and can power homes and offices. They have devised a “digester”

which works in two-stages (unlike most digesters which use just one stage).

Typically, all the food waste and other such forms of garbage is collected from homes

and restaurants for instance and is fed into these digesters which allow this feed to

undergo decomposition which is naturally occurring. Different classes of bacteria have

different effects on feed like this, but our group of bacteria actually decomposes the

entire feedstock and produces methane (up to 60-80%) which can then be used as fuel

to provide electricity.[47]

Energy Production per Ton of Garbage,If the landfills can be spared from the leftover food and other digestible waste, it can all

be used to produce power to run our homes. It is estimated that one ton of leftover food

can power a whopping 18 homes. The capacity of this process is slated to power about

25 homes a day and can also be extended to other uses such as fuel processing plants.

This is bound to be eco-friendly, easy for the industry to adopt and a great energy

source for the rest of the world.

For the Egyptian case, we have huge quantities of garbage in every place in all cities

and villages, we can collect every day what we need for producing energy or estimated

energy for each place individually, and use this energy for homes or another purposes

instead of using electricity from the conventional resources

A contract can be signed (were asked to sign) long term in every city or village to

deliver and pay for a guaranteed supply of garbage. If the city didn’t have enough

garbage, it had to pay anyway. The incentive to recycle would be gone.

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