Egypt’s Renewable Energy: Opportunities Amidst Challenges
Updated 6/4/2024 8:00:00 AM
Sunlight and wind have long graced the landscapes of Egypt. Recently, they have become more than just scenic features.
With Egypt’s growing population and the need for a secure energy future, the country is embracing renewable energy sources like solar and wind power. This shift is pivotal, bringing both challenges and immense opportunities.
Egypt's Shifting Energy Landscape
Egypt’s current energy mix mainly depends on fossil fuels, with some electricity generated from new and renewable resources.
When it comes to renewables, Egypt has a fixed share of the High Dam. Before, the High Dam used to provide most of Egypt’s energy, but now it represents less than 10% of the country’s new energy production.
This is due to population and urban growth as well as the country’s current focus on turning to solar and wind energy. On May 27th, Prime Minister Mostafa Madbouly highlighted big plans in this field during his tour of several projects in Beheira and Alexandria.
Egypt’s targets for renewable energy align with the United Nations (UN) Sustainable Development Goals (SDGs) Goal 7, which calls for modern, reliable, affordable, and sustainable energy for all by 2030. The country aims for 42% of its electricity to be generated from renewables by 2035.
Lamees El-Araby, Head of the International Economics Department at Egyptian Chinese University, tells Arab Finance, “The Egyptian government has pursued an energy diversification strategy, known as the Integrated Sustainable Energy Strategy (ISES 2035).”
“This strategy ensures continuous security and stability of the country’s energy supply,” El-Araby adds.
The ISES 2035 strategy rests on four key pillars: energy security, sustainability, competition, and governance, according to the Cabinet's website.
Expanding Renewables Footprint
Renewable energy sources offer a great opportunity for energy security and electricity shortages. Despite geopolitical challenges, Egypt's renewable energy plans are set to mitigate energy shortage.
Wafaa Ali, a PhD holder and an economic and energy expert, states to Arab Finance: "Egypt will not give up its dream or bow to geopolitical circumstances, but will responsibly move towards renewable energy to compensate for the shortage of supplies.”
Ali attributes this shortage to disrupted supply chains caused by the escalating events in the seas and oceans that have turned into a state of chaos.
Legislative frameworks and laws regulating renewable energy in Egypt have recently created a supportive renewable environment. President Abdel Fattah El-Sisi’s decision to allocate additional areas for renewable energies is a remarkable step.
Egypt is yet to reap fruits of the efforts exerted in the renewable energy field. Dina Samir ElWakkad, an instructor of economics and economic analyst, tells Arab Finance: “We can start to see tangible economic impacts from renewable energy projects in Egypt within the next three to five years.”
“As the country continues to invest heavily in wind and solar infrastructure, we will likely see energy costs decline, new job creation in the renewables sector, and increased foreign investment drawn into Egypt's growing clean energy market,” ElWakkad highlights.
Challenges vs. Incentives
Renewable energy development in Egypt faces a number of challenges that hinder the industry, particularly in attracting investments. Ali explains, “Egypt has all the advantages for the stages of value-added chains in the renewables industry.”
“The real challenge is securing funds and investments. This industry does not require large investments, so the state has opened horizons for private sector participation in this promising economic sector,” Ali notes.
In terms of human capital, ElWakkad explains, “Human capital development is absolutely crucial for the long-term sustainability and growth of the renewable energy industry in Egypt.”
“Robust training programs, educational initiatives, and career pathways to develop local expertise in areas like renewable energy engineering, project management, and technology innovation are key drivers,” ElWakkad
In May, Madbouly stated that Egypt was unable to expand the renewable energy file in recent years due to high production costs. Given the fact that these projects are implemented by the private sector with foreign investments, the state is required to pay for this service in dollars. That is why the state was keen not to get carried away with projects that have large bills.
However, with the current decline in exchange rates, the country has expanded the signing of contracts in the renewable energy sector, Madbouly pointed out.
On the other hand, Egypt’s manufacturing sector supports the country’s renewables agenda by providing locally manufactured components.
El-Araby says, “Egypt can leverage its steel, glass, and cable industries to produce solar and wind components locally,” adding that “the three producers of float glass in Egypt have production facilities that can produce high-purity silica sand for different industries, including PV module production.”
“In parallel, Egyptian steel companies can supply the necessary support structures for modules,” she points out.
Accordingly, ElWakkad emphasizes that achieving Egypt's ambitious renewable energy targets will greatly boost the country's economic growth.
“Reducing reliance on fossil fuel imports, creating new clean tech industries and jobs, attracting green investment, and lowering energy costs for businesses and households are some ways the renewable energy strategy can drive broader economic expansion in Egypt,” as per ElWakkad.
Egypt stands at a crossroads. Its abundant sunshine and strong winds offer a path towards a cleaner, more secure energy future.
The government's ambitious renewable energy targets, coupled with recent growth in the sector, paint a hopeful picture. However, significant challenges remain if not addressed properly.
By Sarah Samir
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