CAIRO: In the great lottery of modern energy resources, Egypt’s neighbors have been lucky. Saudi Arabia, Iraq and Algeria, for example, were blessed with vast oil reserves; Egypt was not, but it has coped, largely thanks to a number of major natural gas discoveries over the last two decades.
But even Egypt’s now-abundant reserves of gas are not permanent. And with the European Union recently reaffirming its commitment to shrink its greenhouse emissions 20 percent by 2020, renewable energies like wind and solar power are starting to appear less idealistic and more lucrative.
Over the past six years, the World Bank has come to play a steadily larger role in Egypt’s energy sector. This is partly due to lower interest rates on the bank’s part, and partly due to a fresh class of Egyptian politicians who share in the bank’s often pro-market worldview.
Here’s a look at where the World Bank’s money is headed now.
Solar power
Drenched in sunlight, host to swathes of desert and only the Mediterranean Sea separating it from clean-fuel-hungry European markets, it seems North Africa has all it needs to become a giant supplier of solar power. Except, that is, for the technology.
Solar science in general is still relatively nascent. And often what innovation there has been has come out of countries ill-suited to use it: Sultry-weathered Germany is among the field’s leaders, as is land-scarce Japan.
“This part of the world is a good candidate for these projects, but it is still relatively costly, said Mohab Hallouda, senior energy specialist at the World Bank.
Solar panel fields produce about 20 megawatts per square kilometer, he said. “That’s a huge amount of land. And in this land you are going to put all these solar collectors, so that’s a huge amount of material.
But there is still plenty of interest in the area. Earlier this year Gianpiero Coppola, vice president of Middle Eastern operations for Avelar Energy, claimed that covering a “relatively small portion of Egypt with solar collectors could power all of Europe.
Environmental advocacy group Greenpeace suggested solar energy here could generate 230 billion kilowatts annually, more than double Egypt’s needs. The World Bank is funding through a GEF grant the solar part of a 140-megawatt plant in Kureimat that will include a solar component producing 20 megawatts. If completed as scheduled by 2010, the plant will be the first of its type in the region – one is also being planned in Morocco and another in Mexico.
The World Bank is providing $50 million for the project, with the remaining $200 to $250 million coming from the Egyptian government and the Japan Bank for International Cooperation, Hallouda said.
The plant will demonstrate the costs and potentials of big-scale solar energy projects and could open the way to more if successful, Hallouda said.
Wind power
Of Egypt’s renewable resources, wind is perhaps most promising for shorter-term private investment. The technology is cheaper than it is for solar energy, and Egypt has already invested in it relatively heavily.
As far back as 1986, the Ministry of Electricity and Energy showed interest in the area, founding the New and Renewable Energy Authority (NREA), which aims to increase the amount of energy in Egypt coming from renewable sources.
In 2003, Denmark and Egypt drafted a “wind atlas, which suggested the Gulf of Suez had the greatest potential to create wind energy in Egypt.
Windmills here now generate 310 megawatts annually, or about half a percent of the country’s total energy supply. While this is more than double the 145 megawatts produced in 2005, it is still minuscule compared with the 3,129 megawatts generated in Denmark, 15,145 in Spain and 22,247 in Germany last year. Even Belgium, a country with less than one-seventh the population and one-thirtieth the land, generates more.
The Ministry of Electricity and Energy wants to boost Egypt s wind power production to 7,200 megawatts – or about 12 percent of the total energy – by 2020, Hallouda said.
The World Bank’s involvement in this area has so far been mostly administrative. The bank is helping the government prepare bidding documents for Red Sea-area wind farms, which should be auctioned off over the next two years.
Conventional power
Conventional resources like natural gas, steam and hydroelectricity are still Egypt’s biggest sources of energy by far. Over 85 percent of the country’s electricity comes from natural gas alone. And, given the nation’s vast amount of reserves of gas, this is unlikely to change much for some time.
For all its importance, the history of natural gas in Egypt is fairly recent.
Following a series of big discoveries in the 90s, production jumped 30 percent between 1999 and 2007, with 1.9 trillion cubic feet produced and 1.3 trillion consumed in 2006. This abundance has helped Egypt back away from increasingly unstable oil markets and still fuel a big expansion over the past few years.
But the suddenness of the sector’s rise has bred some concerns. Egypt s liquefied natural gas industry has developed overnight, read a study published by the University of Cape Town last year. “In just two years the country has become the world s sixth largest exporter, which raises questions about the long-term sustainability of gas-fired plants.
Two of the World Bank s power generation projects in Egypt are an on going project to build a steam power plant of 700 MW in El-Tebbin with $250 million IBRD loan and an upcoming super critical steam power plan of 1300 MW at Ain Sukhna. The bank is also funding a $75 million gas connection project for Greater Cairo.
Egypt does produce some oil too, but relatively little, particularly next to its neighbors. In 2006, Egypt produced just 653,000 barrels of oil per day.
Compare this to 2.13 million barrels per day for Algeria and between 10.5 million and 11 million for Saudi Arabia in the same year.
For now, natural gas still dominates local energy production, with hydroelectric and other conventional sources filling in most of the gaps.
Whether the NREA, with its ambitious targets, can shift this balance significantly in the coming years remains to be tested.
