Egypt’s situation in terms of sustainability is far from excellent. The ecological footprint per capita is already 4.5 times higher than the country's biocapacity. Furthermore, Egypt is highly vulnerable to the threat of climate change on multiple fronts, including rising sea levels, heat waves, and water scarcity. Increasing the pace of decarbonization and energy diversification with low-carbon resources is an urgent priority for the country to achieve a more sustainable future.
“The Sustainable Development Strategy: Egypt Vision 2030” and “Integrated Sustainable Energy Strategy 2035” (ISES 2035) launched in 2015 are two major documents showcasing Egypt’s aspirations for a competitive, balanced, and diversified economy. According to ISES 2035, the diversification of energy resources by increasing the share of renewables and the improvement of energy efficiency are two fundamental strategies for Egypt’s energy transition. Accordingly, as part of the diversification process, Egypt targets to increase the share of renewables in the energy mix to 42% by 2035 with the engagement of all sectors. It also plans on nuclear power to contribute to the electricity mix with 3% by the same target year, once its first nuclear power plant in El-Dabaa (with a capacity of 4,800 MW) is completed.
The increasing share of renewables
Egypt’s official position is very committed to boosting its renewable energy capacity and production. The country has been developing policies, regulatory frameworks, and financial incentives for private investors such as removing obstacles and streamlining the procedures for renewable energy projects, deregulating the energy market, and offering investment guarantees with the new Egyptian Investment Law no. 72 of 2017. Currently, although hydropower has the largest share in Egypt’s total electricity generation from renewables with 73%, there have also been significant improvements in wind and solar energy with completed and ongoing projects. To illustrate, the installed wind power capacity has increased by 148% between 2011 and 2020. The country has been establishing large-scale wind farms including Zafarana Wind Farms (745 MW, in governmental cooperation with Germany, Denmark, Spain, and Japan), Jabal Al-Zayt 1 (240 MW, in cooperation with the German Construction Bank, the European Investment Bank, and the European Commission), and Jabal Al-Zayt 2 (220 MW, in cooperation with Japan International Cooperation Agency). The Jabal El-Zayt wind farm project is labeled as the largest wind power plant in the MENA region.
Similarly, total electricity produced by solar energy increased by 169% from 2018 to 2019. The remarkable Benban Solar Park has been recorded as the 4th largest solar park in the world, and also as the only one on the list from outside of Asia. For the establishment of its large-scale photovoltaic cell plants, Egypt’s international partnerships with the Japan International Cooperation Agency (JICA), the German Construction Bank (KfW), and the Arab Fund for Development have been instrumental. Furthermore, the support of the European Bank for Reconstruction and Development (EBRD) and of the Green Climate Fund (GCF) through Egypt Renewable Energy Financing Framework investments has critically boosted the progress in developing, financing, and constructing renewable energy projects in the path towards decarbonizing and diversifying the energy mix.
The prevailing role of fossil fuels
Despite promising developments, Egypt’s energy portfolio is still characterized by fossil fuels. The total energy supply in 2019 has been heavily dominated by natural gas and oil with 54.7% and 37.4% of shares, respectively. The increasing role of natural gas is also evident in the electricity generation.
From 2000 to 2019, Egypt’s electricity generation has increased by 148%. In parallel, there has been a 73% rise in total installed capacity for renewables between 2011 and 2020. Despite the trends in capacity and production of renewables, increasing electricity production is fulfilled mostly by natural gas since the share of renewables in the electricity generation has been following an almost stable trend between 2011 (9.4%) and 2019 (9%). This is highly relevant given significant recent gas discoveries, enabling Egypt to reach self-sufficiency for its domestic demand. To illustrate this, following the discovery of Zohr in 2015, which is the largest eastern Mediterranean gas field with 850 billion cubic meters of gas, Egypt’s gas production has been on the rise. In 2019, gas production reached a record level of 64.9 billion cubic meters.
Although the discussions on energy transition usually revolve around capacity-building and generation of electricity from renewables, its pace and success in the case of Egypt are highly dependent on the role assigned to natural gas in the country’s energy mix and in national vision. From a practical standpoint, considering natural gas as a baseload (bridging technology to complement intermittent renewables, smart networks, and efficient technologies) could help Egypt in the decarbonization process both in the short and medium-term. On the other hand, ISES 2035 also underlines Egypt’s national strategy to become an energy hub connecting its neighborhood and the broader region. Accordingly, Egypt’s plans to export the production surplus have further implications with regard to the role of natural gas in its economy.
Since the surplus level will highly be dependent on domestic gas consumption trends and the share of natural gas in the national energy mix, increasing the share of renewables versus natural gas will benefit Egypt to expand its export capacity. On the other hand, secure and continuous exports of natural gas would require further investments in transportation and distribution. Accordingly, Egypt will need to support political initiatives such as The Eastern Mediterranean Gas Forum with technical and financial resources for network upgrades, pipeline connections, or LNG terminals. This could create a technology lock-in risk for Egypt since investments required for its short and medium-term supplies and trade goals can hinder its long-term sustainability and climate targets. This risk can potentially lock in the energy systems into natural gas and keep fossil fuel players as vital actors of the economy.
The potential of energy efficiency
Apart from the difficult task of balancing renewables and natural gas, energy efficiency is another important pillar of Egypt’s energy transition strategy. Egyptian National Energy Efficiency Action Plan (NEEAP) (2018/2019 – 2021/2022) offers a detailed roadmap for the country to improve energy efficiency. The strength of this action plan rests in its comprehensive focus on both supply and demand sides. On the supply side, ensuring the infrastructure quality for electric power transmission to reduce the losses in the electricity distribution network remains a priority for energy efficiency. Without the establishment of quality infrastructure and/or upgrading of current systems, the energy transition in Egypt would remain slow and incomplete, especially given the pace of urbanization. As of 2020, 42.8% of the population lives in urban areas and the forecasts estimate that Egypt will be among the Top 20 countries worldwide with the largest projected urban population by 2050: 85.3 million citizens[1]. The pace of urbanization will continue to challenge Egypt in terms of resource consumption and climate resilience. Cities will emerge as one of the most important playgrounds for energy transition and smart energy-saving solutions, such as electrification of energy-intensive sectors (i.e., transportation) or digitalization of systems to increase the flexibility and responsiveness of the grids.
Egypt plans to improve energy efficiency measures in major electricity-consuming sectors such as residential and public buildings. To illustrate, renovating buildings in line with energy efficiency codes, and using photovoltaic (PV) power plants on rooftops are among some of the concrete targets in NEEAP. Furthermore, NEEAP indicates that for the rationalization of electricity consumption by end-users, in the long term 500,000 residential and 200,000 commercial and public buildings are required to implement renovations for energy efficiency. Even micro-level initiatives offer great potential for curbing consumption. For instance, Egypt plans to distribute 28 million LED lightbulbs for the households as part of an awareness-raising strategy which can also have positive financial implications: the replacement of 3.9 million streetlights with LED bulbs is reported to already save 872 million kWh of electricity.
Conclusion
As the host of COP27 in November 2022, Egypt’s climate and energy policies will critically be under the spotlight. While the country has both the political willingness and physical potential for a successful energy transition, developing a balanced energy system between hydrocarbons and renewables will remain a challenge. Although Egypt has already been establishing important international partnerships, attracting further foreign investments in renewables, green technologies, smart buildings, and efficiency technologies will be vital in financing its energy transition. Furthermore, on the efficiency front, increasing public awareness for shifting consumption habits and for the acceptance of new technologies will require rigorous efforts. Accordingly, investments in human capital for skill-building, sustainability literacy, and indigenous expertise will be as important as technical infrastructure for a complete transformation.
[1] UNDESA. 2018. Revision of World Urbanization Prospects.
