7 ELECTRICITY SECTOR DEVELOPMENTS IN EGYPT …
205
Looking Toward the Future
With carbon-free electricity generation and energy sector competition
both on the rise, Egypt is on the path to a more sustainable and prosperous energy sector. Furthering competitive initiatives in the sector
by rolling out the reforms contemplated in the 2015 Electricity Law
should help lower power prices and lead to improved market methods
for ensuring security of supply, while supporting economic development
and a cleaner sector overall.
Yet risks remain. Egypt should anticipate potential unintended consequences caused by sector overhaul and seek to
manage these consequences proactively rather than reactively. For
example, prudence in the pursuit and management of expensive
megaprojects is paramount. While nuclear power may help to achieve
perceived prestige or future geopolitical gains, the economic cost of the
project could prove troublesome, negatively impact other parts of the
energy sector and larger economic. Given Egypt’s domestic instability
and international geopolitical uncertainty (including recent attacks on a
major Saudi oil processing facility), protection of physical infrastructure
and large capital projects should be taken seriously.
In addition, the integration of large amounts of intermittent renewable
energy generation can also be an issue for grid stability and electric reliability. To this end, appropriate measures and international norms should
continue to be adopted and enforced, and a framework for additional
market products to help mitigate the destabilizing effects of renewables
should be rolled out. Egypt may be served by considering an electricity
storage policy support mechanism to better balance supply and demand,
thus creating new investment opportunities and positioning itself as an
international leader in the nascent power storage market industry. If
successful, such an initiative would likely afford Egypt new business
relationships and geopolitical power.
Egypt is in the midst of a complex balancing act and faces a trying
task. The nation seeks to reap the rewards of private sector participation in renewable energy while ensuring a good deal for the country,
while simultaneously developing a costly nuclear plant without overextending itself financially. It also intends to use this new power generation
capacity as a geopolitical tool, while meeting IMF-mandated conditions
and maintaining stability within the domestic milieu.
205
Looking Toward the Future
With carbon-free electricity generation and energy sector competition
both on the rise, Egypt is on the path to a more sustainable and prosperous energy sector. Furthering competitive initiatives in the sector
by rolling out the reforms contemplated in the 2015 Electricity Law
should help lower power prices and lead to improved market methods
for ensuring security of supply, while supporting economic development
and a cleaner sector overall.
Yet risks remain. Egypt should anticipate potential unintended consequences caused by sector overhaul and seek to
manage these consequences proactively rather than reactively. For
example, prudence in the pursuit and management of expensive
megaprojects is paramount. While nuclear power may help to achieve
perceived prestige or future geopolitical gains, the economic cost of the
project could prove troublesome, negatively impact other parts of the
energy sector and larger economic. Given Egypt’s domestic instability
and international geopolitical uncertainty (including recent attacks on a
major Saudi oil processing facility), protection of physical infrastructure
and large capital projects should be taken seriously.
In addition, the integration of large amounts of intermittent renewable
energy generation can also be an issue for grid stability and electric reliability. To this end, appropriate measures and international norms should
continue to be adopted and enforced, and a framework for additional
market products to help mitigate the destabilizing effects of renewables
should be rolled out. Egypt may be served by considering an electricity
storage policy support mechanism to better balance supply and demand,
thus creating new investment opportunities and positioning itself as an
international leader in the nascent power storage market industry. If
successful, such an initiative would likely afford Egypt new business
relationships and geopolitical power.
Egypt is in the midst of a complex balancing act and faces a trying
task. The nation seeks to reap the rewards of private sector participation in renewable energy while ensuring a good deal for the country,
while simultaneously developing a costly nuclear plant without overextending itself financially. It also intends to use this new power generation
capacity as a geopolitical tool, while meeting IMF-mandated conditions
and maintaining stability within the domestic milieu.