Egypt rushes towards solar energy amid surging gas prices
After a hot summer plagued by power cuts and growing discontentment, the Egyptian government is investing on solar energy in a bid to transition away from its current overly gas-dependent model according to Reuters on January 13th.
A cocktail of declining national gas production, increasing demand and a foreign currency gap plunged Cairo into darkness last summer as the Egyptian government was forced to impose daily power cut due to a shortage of energy.
As a result, Egypt allotted $1bn more than it planned to last year’s energy spending by way of importing mazut fuel oil and natural gas.
It is already estimated that energy imports will cost billions more in 2025, prompting the government to invest in solar power.
Hussain Al Nowais, chairman of United Arab Emirates-based renewables energy producer AMEA Power, says that summer blackouts were a wake-up call for the Egyptian government to finally take steps in this direction.
The company, that has inaugurated a 500 million solar plant south of Cairo, is set to build a second larger plant nearby, for which it will have to pour 300 millions of its own funds. The production is set to start by 2026.
Government subsidies, solar companies say, are to be blamed for the arduous process of developing solar energy in the country.
Electricity costs less than a cent per kilowatt hour ($0.0462) on average to richer Egyptian household, while a local producer estimates the production cost to be around 7 to 9 cents per kWh, making consumption heavily reliant on State subsidies.
On comparison, Nowais places the figure for solar energy between two and three cents an hour.
Ayman Rasekh, the CEO of SolarSol that provides solar panels privately, anticipates that solar energy will become a viable option for Egyptian households once the cost of electricity from State grids increases.
This could happen in the coming months, as Egypt has pledged to reduce energy subsidies as part of last March’s financial support deal with the International Monetary Fund which partially salvaged the Egyptian economy.
Many, including Ayman Rasekh, expect solar panels to become a ubiquitous feature in the Egyptian landscape once subsidies are scrapped.
Reuters
