7 ELECTRICITY SECTOR DEVELOPMENTS IN EGYPT …
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demand (also known as load), and include power generators and authorized suppliers. 55 This will likely permit government-owned generators
to compete directly with privately-owned independent power producers
for power supply contracts with large load customers. Via the authorized
supplier construct, the law will also allow for independent marketers to
commercialize electricity, creating opportunities for brand new market
entrants exclusively focused on electricity retail, and independent power
producers that seek to establish separate retail companies. Authorized
suppliers may also find themselves in direct competition with governmentowned generators and independent power producers to supply qualified
customers.
This new market construct may help facilitate renewable energy
development. For example, qualified customers such as large industrial
customers (or organizations with corporate sustainability goals) will be
able to purchase electricity directly renewable energy developers. Qualified customers will also be able to purchase power from electricity
marketers. Renewable developers may elect to overbuild capacity in
certain areas, for example, off the back of a contract won via a FIT or an
auction, with the expectation of offloading additional generation to qualified users or electricity marketers. This additional flexibility represents a
potential boon for renewable energy capacity additions.
Ancillary Services and ‘Stabilization Power’
Ancillary services products, which help maintain the stability of the electric grid, will likely emerge in order to help balance the transmission
system with generation reserves. This is particularly true given Egypt’s
planned addition of substantial intermittent renewable energy generation,
which may increase the error rates of electricity production forecasts. This
can in turn apply stress on the electric system, causing electricity prices
to rise and electric reliability to suffer. The Electricity Law contemplates
‘Stabilization Power,’ which is electricity that would be purchased by the
EETC to help compensate any supply-demand imbalances, and stabilize the grid. 56 More diverse and advanced ancillary services related to
grid synchronization, flexibility reserves and other products are likely to
emerge over time as the market advances and new grid needs emerge. To
the extent that renewable energy sources are also able to provide ancillary
services to the grid, this may provide additional return on investment, and
help incentivize renewable capacity buildout.
201
demand (also known as load), and include power generators and authorized suppliers. 55 This will likely permit government-owned generators
to compete directly with privately-owned independent power producers
for power supply contracts with large load customers. Via the authorized
supplier construct, the law will also allow for independent marketers to
commercialize electricity, creating opportunities for brand new market
entrants exclusively focused on electricity retail, and independent power
producers that seek to establish separate retail companies. Authorized
suppliers may also find themselves in direct competition with governmentowned generators and independent power producers to supply qualified
customers.
This new market construct may help facilitate renewable energy
development. For example, qualified customers such as large industrial
customers (or organizations with corporate sustainability goals) will be
able to purchase electricity directly renewable energy developers. Qualified customers will also be able to purchase power from electricity
marketers. Renewable developers may elect to overbuild capacity in
certain areas, for example, off the back of a contract won via a FIT or an
auction, with the expectation of offloading additional generation to qualified users or electricity marketers. This additional flexibility represents a
potential boon for renewable energy capacity additions.
Ancillary Services and ‘Stabilization Power’
Ancillary services products, which help maintain the stability of the electric grid, will likely emerge in order to help balance the transmission
system with generation reserves. This is particularly true given Egypt’s
planned addition of substantial intermittent renewable energy generation,
which may increase the error rates of electricity production forecasts. This
can in turn apply stress on the electric system, causing electricity prices
to rise and electric reliability to suffer. The Electricity Law contemplates
‘Stabilization Power,’ which is electricity that would be purchased by the
EETC to help compensate any supply-demand imbalances, and stabilize the grid. 56 More diverse and advanced ancillary services related to
grid synchronization, flexibility reserves and other products are likely to
emerge over time as the market advances and new grid needs emerge. To
the extent that renewable energy sources are also able to provide ancillary
services to the grid, this may provide additional return on investment, and
help incentivize renewable capacity buildout.