7 ELECTRICITY SECTOR DEVELOPMENTS IN EGYPT …
199
project developer and the EETC, have led to some delays and can significantly increase financial risk for investors. Even so, project developers
receive additional benefits including discounted state-owned land for
development, the ability to participate in consortium for multiple projects
(as long as a majority equity interest is limited to one project), and other
tax incentives. As such, projects from the FIT scheme continue to come
online, with clean energy comprising an increasingly larger proportion of
Egypt’s capacity and generation.
Consistent with global trends, Egypt has moved away from FITs,
implementing competitive auctions for renewable support. Egypt’s
auctions have thus far been successful in incenting efficient price discovery
and high levels of competition, facilitating low electricity prices, with
reported lowest bids of approximately $28 per MWh. 51 Solar projects
receive 25-year PPAs with the EETC. Compared with the round one FIT
of approximately $140 per MWh and round two FIT of $84 per MWh, 52
the strike price under the auction system is clearly more favorable, due to
both the competitive nature of auctions and the ever-increasing maturity
of solar PV technologies. Egypt is likely to continue holding auctions
for long-term PPAs with private developers as a primary renewable
development policy support tool.
Law 87/2015
Issued in July of 2015, Electricity Law 87/2015 outlines a more competitive path for the future of Egypt’s power sector, introducing a partially
liberalized market structure, and restructuring the sector to accommodate
competition. Such measures can help lead to increased competition and
lower power prices, better electric service and reliability, and enhanced
sector innovation and economic development. It can also encourage
increased investment in renewable energy capacity. The Electricity Law
creates opportunities for the private sector in new markets for bilateral contracts and retail choice, grid balancing, ancillary services, and
in the regulated market via private ownership of regulated monopoly
distribution companies. 53
199
project developer and the EETC, have led to some delays and can significantly increase financial risk for investors. Even so, project developers
receive additional benefits including discounted state-owned land for
development, the ability to participate in consortium for multiple projects
(as long as a majority equity interest is limited to one project), and other
tax incentives. As such, projects from the FIT scheme continue to come
online, with clean energy comprising an increasingly larger proportion of
Egypt’s capacity and generation.
Consistent with global trends, Egypt has moved away from FITs,
implementing competitive auctions for renewable support. Egypt’s
auctions have thus far been successful in incenting efficient price discovery
and high levels of competition, facilitating low electricity prices, with
reported lowest bids of approximately $28 per MWh. 51 Solar projects
receive 25-year PPAs with the EETC. Compared with the round one FIT
of approximately $140 per MWh and round two FIT of $84 per MWh, 52
the strike price under the auction system is clearly more favorable, due to
both the competitive nature of auctions and the ever-increasing maturity
of solar PV technologies. Egypt is likely to continue holding auctions
for long-term PPAs with private developers as a primary renewable
development policy support tool.
Law 87/2015
Issued in July of 2015, Electricity Law 87/2015 outlines a more competitive path for the future of Egypt’s power sector, introducing a partially
liberalized market structure, and restructuring the sector to accommodate
competition. Such measures can help lead to increased competition and
lower power prices, better electric service and reliability, and enhanced
sector innovation and economic development. It can also encourage
increased investment in renewable energy capacity. The Electricity Law
creates opportunities for the private sector in new markets for bilateral contracts and retail choice, grid balancing, ancillary services, and
in the regulated market via private ownership of regulated monopoly
distribution companies. 53