7 ELECTRICITY SECTOR DEVELOPMENTS IN EGYPT …
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main driver of renewable development, geopolitical and environmental
considerations are motivators as well. Conversely, while nuclear energy
generation does not produce carbon emissions, Egypt’s nuclear ambitions
are primarily motivated by geopolitics. Nuclear energy is not an economically efficient option for Egypt in the short term, yet the pursuit of nuclear
generation is in line with Egypt’s desire to diversify its generation mix and
expand its base of international support in the form of business and political relationships. The geopolitical angle is highly important for Egypt
in the face of a rapidly changing geopolitical landscape in which postCold War codes and rules may no longer apply, with a new world order
emerging. These drivers are discussed in more detail below.
Security of Supply
With ample sunshine and high wind speeds in many areas, Egypt has superior natural resources for the development of renewable energy generation
capacity. Rising power demand and frequent blackouts have helped create
the economic incentive for Egypt to maximize these resources. With relative stability in the post-Mubarak era, from 2014 to 2018 the Egyptian
economy grew at an average annual rate of 4.6%, and more than 5.3%
in 2018 alone. This growth is notably higher than the greater Middle
East and North Africa (MENA) region, which experienced annual average
economic growth of 2.8% in the same period and 2.4% in 2018. 2 At time
of press, the final 2019 economic growth numbers were not yet available, yet forecasted at 5.5% for Egypt and 1.3% for the MENA region as
a whole. 3 Power demand is further supported by Egypt’s population of
nearly 100 million, the third largest in Africa, which is also rising steadily
relative to other MENA nations. 4
Egypt’s economic and population growth help apply upward pressure on energy demand in general, and electricity demand in particular,
which has been rising at 6% annually. 5 From 2013 to 2017, peak demand
increased by more than 30%, from 22.8 gigawatts (GW) in 2009 to 30.4
GW in 2019. 6 As overall electricity demand and peak power demand have
increased, new generation development has been necessary to maintain
a reasonable reserve margin and enhance the reliability of the electric
system. This is particularly important for Egypt, where installed capacity
has been steadily increasing, yet may be underutilized due to the aging
of units; as of 2016, a third of Egypt’s generation fleet was more than
20 years old, and efficiency rates of generation units were 5–8% below
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main driver of renewable development, geopolitical and environmental
considerations are motivators as well. Conversely, while nuclear energy
generation does not produce carbon emissions, Egypt’s nuclear ambitions
are primarily motivated by geopolitics. Nuclear energy is not an economically efficient option for Egypt in the short term, yet the pursuit of nuclear
generation is in line with Egypt’s desire to diversify its generation mix and
expand its base of international support in the form of business and political relationships. The geopolitical angle is highly important for Egypt
in the face of a rapidly changing geopolitical landscape in which postCold War codes and rules may no longer apply, with a new world order
emerging. These drivers are discussed in more detail below.
Security of Supply
With ample sunshine and high wind speeds in many areas, Egypt has superior natural resources for the development of renewable energy generation
capacity. Rising power demand and frequent blackouts have helped create
the economic incentive for Egypt to maximize these resources. With relative stability in the post-Mubarak era, from 2014 to 2018 the Egyptian
economy grew at an average annual rate of 4.6%, and more than 5.3%
in 2018 alone. This growth is notably higher than the greater Middle
East and North Africa (MENA) region, which experienced annual average
economic growth of 2.8% in the same period and 2.4% in 2018. 2 At time
of press, the final 2019 economic growth numbers were not yet available, yet forecasted at 5.5% for Egypt and 1.3% for the MENA region as
a whole. 3 Power demand is further supported by Egypt’s population of
nearly 100 million, the third largest in Africa, which is also rising steadily
relative to other MENA nations. 4
Egypt’s economic and population growth help apply upward pressure on energy demand in general, and electricity demand in particular,
which has been rising at 6% annually. 5 From 2013 to 2017, peak demand
increased by more than 30%, from 22.8 gigawatts (GW) in 2009 to 30.4
GW in 2019. 6 As overall electricity demand and peak power demand have
increased, new generation development has been necessary to maintain
a reasonable reserve margin and enhance the reliability of the electric
system. This is particularly important for Egypt, where installed capacity
has been steadily increasing, yet may be underutilized due to the aging
of units; as of 2016, a third of Egypt’s generation fleet was more than
20 years old, and efficiency rates of generation units were 5–8% below