Increasing the price for electricity produced from solar energy to a maximum of EGP 1.025 will raise the value of the electricity purchased by investors to EGP 36m per power station, according to an official at the Ministry of Electricity.
The official, who preferred to remain anonymous, said: “The ministry should have set the maximum price for purchasing solar energy for households or the private sector at EGP 0.945. If this rate is not accepted by investors, the government can negotiate the price again and raise it a bit higher.”
The official attributed the government setting the maximum price at EGP 1.025 to competition from other countries in the region, especially Jordan and Algeria, which attract significant investments in the sector.
On Saturday, the ministry announced prices for electricity generated from new and renewable energies for both households and the private sector.
According to a press statement made by Electricity Minister Mohamed Shaker, the current prices will attract investments in the renewable energy sector.
According to Shaker, the ministry aims to attract investments to set up solar and wind power plants with a capacity of 4,300MW.
According to the official, the ministry has received offers to implement projects with capacities of 13,000MW and a two-year project set to generate 4,300MW has been agreed upon with investments in excess of $3bn.
Shaker has stated that 95% of the energy consumption costs will draw from traditional forms of energy, while the remaining 5% will come from new forms.
The official added: “The final price for new energy for consumers has not yet been determined, but the cabinet will do so during a session in the next few days.”
He stated that the first three usage categories will be exempt from the prices for renewable energy, but categories four and above will be charged.
The first category covers 0-51KW of consumption, the second, 51-100KW, and the third, 101-200 KW. The fourth category ranges from 201-250KW, the fifth, 351-650KW, and the sixth category is from 651 to 1,000KW. The seventh category is for 1,000 KW of consumption and above.
The tariff for power generated from solar energy has been divided into five categories, where the price for the first category is EGP 0.84 per KW for households. The second category rate of EGP 0.901 is applied for less than 200KW of usage, according to the official.
The third category will be charged EGP 0.97 for 200-500KW of usage while the fourth category rate of EGP 0.97 will be levied for 500KW-20MW of consumption. The fifth category covers 20-50MW and the rate is EGP1.025 per kWh.
Shaker added: “The sale price for power generated from wind is based on the number of operating hours, where for 2,500-3,000 hours, the price is EGP 0.82. From 3,000 up to 4,000 hours, the price is EGP0.68.”
The government is committed to purchasing electricity from investors by taking inflation into account as consumption fees are paid in local currency. The tariff will be reviewed after two years, according to the official, who explained that this feature allows the ministry to lower prices in accordance with decreasing production costs due to technological development.
President Abdel Fattah Al-Sisi has stated that Egypt requires investments estimated at $13bn over the next five years to overcome the electricity blackout crisis.
Allocations for electricity subsidies in the budget for the 2014/2015 are estimated at approximately EGP27bn, which the government aims to lift completely over the next five years.
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