A recent Media Avenue-organised round table, under the title “Investing in wind energy – from here sustainability begins”, saw significant interaction from government decision-makers, private sector officials and investors in renewable energy and associated logistical services.
The discussion’s participants said that the state has made great strides towards diversifying Egypt’s sources of energy production and its sustainability. The government has opened the way for companies and the private sector to pump more investments, provide job opportunities, and localise the industry.
The round table speakers recommended that attention be paid to development plans, as well as setting up opportunities and projects to be implemented for investor participation. This would also make use of the enormous capacities produced in energy exchange with Arab countries, and feeding national projects.
They suggested that renewable energy be exploited in sea water desalination and in electric vehicles (EVs), as despite the slowdown in demand the market is large and open.
Ehab Ismail, Vice President of the New and Renewable Energy Authority (NREA), said that the government’s future plan for renewable energy relies on a short-term strategy. This would see Egypt produce 20% of renewable sources of its total electrical capacity added to the electric grid in 2022, in addition to a long-term goal of doubling the percentage to 42% by 2035.
Ismail explained that this figure is being updated, and is subject to an increase based on costs and the government’s plans to increase the percentage of reliance on renewable energy. Egypt, though, now has a reserve of installed capacity of 58 GW, with the volume of demand not enough to accelerate the pace of wind energy at the present time.
He said that renewable energies have witnessed successive batches over the past five years, but the present slowdown in market demand has reduced the pace of growth. This comes despite the presence of many projects on the ground, some of which have been cancelled due to these circumstances.
He added that subsidising electricity tariffs remains a barrier to investing in renewable energy, and that project lands are available particularly east of the River Nile. It is in this area where greater hikes can be allowed than in any other region.
Discussion moderator Salah Ibrahim, member of the Arab Consulting Office (ACO) and Vestas agent in Egypt, confirmed that the private sector was able to assist the government in its plan towards diversifying production sources. At the same time, the contribution of renewable energy to the country’s electrical network has also increased.
Ibrahim said that energy storage can be achieved in other ways, including with the continued implementation of renewable energy projects. He also said that Saudi Arabia has started defining a plan to store energy.
He added that the cost of selling to countries such as Libya, Lebanon, Jordan, and Syria, remains large, so the cost of financing must be reconsidered. This is in addition to the fact that the expenses of extending the connecting lines are also very large.
Omar Nagy, General Manager of Wind Energy at Infinity, said that the demand side was negatively affected. This represents an opportunity for companies to reconsider how to reach the 2035 target percentage of renewable energy, by relying on Egypt’s natural capabilities. It includes turning to wind energy, with the required speeds existing only in the Gulf of Suez region.
Nagy emphasised that the financing cost of producing electricity from renewable energy in Egypt is high compared to other countries, which offer competitive prices.
He explained that exporting renewable energy to Europe may be the solution to these problems, but that needs to reduce the cost of financing. Also needed would be the allowance of green bonds to finance renewable energy projects.
He called on the government to remove obstacles to the production of electricity from wind energy, as this would help make Egypt a regional centre for the export of energy to Europe, Asia and Africa.
Nagy said that local manufacturing needs to increase the current levels of demand, and that his company is currently negotiating with the government on renewable energy projects for the coming period.
He said that multinational companies are currently asking Infinity to establish wind farms, but it is necessary to put in place regulatory legislations for such farms. This includes the independent producer system, which creates a new market and provides a less expensive alternative to electricity.
Nagy added that applying 2% customs duties to the requirements of all types of renewable energy stations without exemption reduces the pace of market growth. It also contravenes the state’s trend to encourage renewable energy.
Ayman Saad, CEO of Siemens Gamesa in Egypt, said that the global economy is slowing, and will take at least two years to return to its levels previous to the novel coronavirus (COVID-19) pandemic.
He also said that the slowdown in demand for electricity is linked to the global economy, along with the increase in domestic reserve ratios. Despite the significant local competitiveness in renewable energy, the aftershocks of the coronavirus pandemic is set to affect this sector for at least two years.
Saad added that the cost of financing for companies in Egypt is high compared to other countries. As a result, the government must overcome these obstacles to improve the levels of demand for electrical interconnection projects with Sudan or Libya.
He said that if the percentage of reliance on renewable energy reached 75% in Egypt, this would be considered a great success.
He added that the Siemens Gamesa Training Center was supposed to start training courses at the beginning of the summer, but it was postponed due to the spread of the Coronavirus pandemic.
Mansour Brick, Commercial Director of the Engineering Company for Containers, said that Egypt’s move to implement wind energy production projects has changed the ideas and strategies of stevedoring companies. It has caused a shift in thinking towards unloading operations in other ways, and train workers on these processes to ensure that no errors occur.
He explained that the process management now requires a prior study of receiving the various parcels, and unloading them in certain ways.
Brick stressed that the safety processes involved in unloading windmills and their parts are different to other types of goods. This is due to their large dimensions and weight, which has created great challenges in dealing with this form of energy production, particularly since ports require certain specifications in unloading and transporting these items.
He emphasised that importing windmill equipment and parts has had a positive impact on the institutional and social performance of transport and unloading companies.
Ibrahim posited a question relating to the extent to which Egypt’s roads and ports are currently prepared to receive large-scale windmill equipment. Brick said that the ports have no problem in receiving these goods, and stressed that the process of determining the port of discharge is the source of the shipments and parcels, not their size or weight.
He added that the obstacles to transporting the equipment are represented in the high sensitivity of this type of goods along with their large size and area, particularly since not all ports have the required capacity to accommodate the equipment. He also noted that the equipment’s unloading time may reach as long as 12 hours, requiring the commensurate communication with each port’s administration port before shipments arrive.
Brick said that the problem of poor coordination between all parties can be solved with time, which will help overcome the obstacles that were discussed in the session.
Ahmed Ghoneim, CEO of EWA Group, said that the process of transporting goods to wind farms currently faces great challenges, including adhering to specific delivery dates. He said that quickly dealing with customs clearance processes will help to deliver parcels on time.
He emphasised that the transportation field has seen significant gains during the last 20 years, with some cargo travelling as far as 600km. This requires coordination with the government, and technical studies of the equipment used.
Ghoneim said that, despite the Egypt’s significant and ongoing development of roads and bridges nationwide, some companies and entities still prefer to use certain ports due to road widening projects in their vicinity.
He also said that road tariff costs present a challenge to transporting goods of this size, particularly as it sometimes amounts to EGP 30m for some projects. It has been agreed with the National Roads Company (NRC) to price each project separately, provided that it be paid at the first port corresponding to the shipments.
Ghoneim called for an improvement to payment methods, provided that they can be made electronically as part of the state’s push for greater financial inclusion.
Mohamed Mazen Nadim, General Manager of the National Transportation Company (NOSCO), explained that transporting windmill equipment and turbines was previously difficult. This was, in part, due to the condition of Egypt’s roads before government renovations took place to improve the country’s road networks.
He said that there is a danger of transferring “tariff” money with shipments, especially with the desire to reduce the circulation of paper currencies as part of the precautionary measures for the coronavirus pandemic.
Ibrahim said that the wind turbines in Hurghada were manufactured in Egypt, and there is an Egyptian study confirming the country’s ability to locally manufacture the majority of this type of equipment.
Ahmed Al Deeb, Chairperson of the Board of Directors at the Egyptian Company for Engineering Equipment (ECEE) has highlighted that the most prominent obstacles it faces are the lack of trained workers. This includes both winch and turbine operators, with the practical training for workers in the sector a general problem.
He added that Egyptian workers frequently do not have a GWO certificate that allows them to install turbines, and there is no local training centre that grants this certificate. Al-Deeb said that the only centre in Africa for this certificate is located in South Africa. He called on the bigger companies working in the Egyptian market to support the greater provision of training for this type of qualification.