Egypt (Photo credit: NASA Goddard Photo and Video)
After years of steady development for wind and solar efforts, Egypt’s push towards adopting green energy alternatives hit a snag when political protests led to the ousting of the government of Hosni Mubarak early last year. Since then, investor uncertainty and a weakened economy have slowed renewable progress, as available funds and willing project partners disappeared from sight. The potential was there, as were the plans, but money and needed foreign assistance were harder to come by.
Earlier this month, Egypt’s Supreme Council of Energy began taking steps towards reversing course by offering tax exceptions for green energy components and access to state-controlled land as long as it would be used for solar and wind projects. According to reporting by Green Prophet, the new regulations would offer exemptions on customs and taxes for parts and components used in renewable energy efforts. The new framework would also offer the chance for the “allocation of plots of land belonging to the Renewable Energy Authority would be made available to private companies working in the field.”
The new incentives are aimed at tossing a lifeline to a series of costly solar projects that have stalled over the last year, reducing the country’s over-dependence on natural gas and helping the country on their way to a 20 percent renewable contribution by 2020.
Gas Still a Part of the Puzzle
Despite the effort to reduce the country’s gas usage, which amounted to about 90 percent of the country’s power generation last year, Egypt has not turned its back on the vital product completely. Instead, in an effort to boost local supply, Cairo has begun offering natural gas exploration at 15 blocks, including offshore options.
Still, the maturity of the country’s green power options presents the surest way towards a necessary diversification of energy options.
In recent years, the country’s narrow options and overly generous subsidy program have stressed the country’s energy production sector amid rising domestic demand. According to an Oxford Business Group report from February of this year, Egyptian electricity demand is expected to rise to 50GW over the next 13 years, “around twice the current level”. To meet such an increase, the new government will be charged with a massive expansion of supply and diversification. The report notes that while a campaign was launched to attract about $110 billion in energy investment by 2027, the effort pre-dates last year’s ousting of the Mubarak government – an event that understandably gave pause to potential investors.
The Egyptian diversification push has been especially pressing in the months since the collapse of the Mubarak government, as rolling blackouts, shortages and threats of fuel subsidies have tested the patience of many. Currently, about two-thirds of Egypt’s total subsidies go towards fuel costs – an amount that is expected to increase 40 percent this year to reach $16 billion, according to the Council on Foreign Relations.
While a steady rise in demand has helped cause similar blackouts in years past, the loss of basic services in Egypt’s current political climate could prove especially dangerous to the young government. Building support for the new leadership when the state cannot even keep the lights on could make a hard job that much harder.
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