The energy sector in Egypt is dominated today by oil and gas. Oil was first exploited extensively during the 1970s and the country has become asignificant producer, though its output is small compared to the main Middle-Eastern producers.
More recently natural gas has begun to flow too, following recent discoveries. Output rose by 30 per cent between 1999 and 2007 according the US Energy Information Administration and the fuel is expected to form the mainstay of the energy sector in the short to medium-term. The country is a net exporter of natural gas but it consumes most of the oil it produces and with production slowing, the country is expected to become a net importer in the near future.
On the back of its oil and gas reserves, Egypt’s electricity sector, once largely based on hydropower, is now increasingly reliant on fossil fuel for power generation. Liquid fuel from the country’s oil reserves has provided much of the fuel in the recent past but the country is now attempting to switch away from liquid fuel to natural gas as indigenous supplies are tapped.
At the same time the Egyptian electricity sector is undergoing a period of rapid growth as it seeks to match rising demand. The country’s sixth five-year plan, which runs from 2007 to 2012, is based on a proposed annual growth in output of 9.1 per cent each year following the first year covered the plan when growth of 7.1 per cent was expected.
Actual growth in electricity output between 2006/7 and 2007/8 was 8.4 per cent according to the Egyptian Energy Holding Company (EEHC).
Electricity sector history
Electricity production in Egypt began in 1893 and between then and 1961 power was generated by private companies. These companies were nationalized in 1961 and after various structural changes the Egyptian Electricity Authority was created in 1976. The first moves towards restructuring the industry took place in 1983 with the creation of an electric power distribution authority.
Then after further structural tinkering a major change took place in 2000 with the unbundling of the sector to create four independent thermal power plant companies, one hydropower company, a transmission and distribution company and seven distribution companies.
All these companies were created as subsidiaries of EEHC and in principle up to 49 per cent of the shares in these companies were to be sold to the private sector. However, today all shares remain in government hands. Since the restructuring a further thermal power plant company and two distribution companies have been added to those controlled by EEHC.
Hydropower became the main source of power in the 1970s with the construction of the Aswan High Dam and an associated power plant with a generating capacity of 2100 MW. During that decade this single plant provided over 50 per cent of Egyptian electricity. Since then thermal capacity has grown and it now accounts for most of the power generated.
In addition to the power capacity controlled by companies affiliated to EEHC, there are a limited number of independent power producers that sell power to the grid and some Build-Own-Operate-Transfer (BOOT) projects currently controlled and operated by private sector companies. The Egyptian grid is now extensive, stretching along the length of the Nile from the Aswan dam but there remain remote communities that must be supplied from isolated power plants.
Installed generating capacity
The installed generating capacity in Egypt in 1981 was just under 5000 MW of which, as noted previously, 2100 MW were derived from the Aswan power plant. By 2002, total installed capacity had risen to 16 650 MW, more than three times the capacity of two decades earlier. Growth in capacity has been steady since then, reaching 17 979 MW in 2004, 20 452 MW in 2006 and 22 583 MW in 2008.
Figure 1. Annual generating capacity and peak demand Source: Egyptian Electricity Holding Company
Of the capacity in 2008, 2842 MW was based on hydropower, 17 389 MW was from thermal plants under the control of EEHC affiliate companies, 305 MW was derived from wind power plants and a further 2047 MW came from private sector BOOT projects. Total installed capacity grew by 2.9 per cent between the 2006/2007 and the 2007/2008 accounting year but the country’s wind power capacity grew by 35.6 per cent during this period.
The growth in generating capacity has mirrored closely the growth in overall peak demand but the margin has fallen gradually during this decade. In 2002, peak demand was 13 326 MW, allowing a margin of around 25 per cent of installed capacity over peak demand. By 2004 the peak demand had risen to 14 735 MW and the margin was 22 per cent, but by 2008, with peak demand reaching 19 738 MW, the margin had slipped to 14 per cent.
While installed capacity has increased by a factor of 4.6 between 1981 and 2008, annual production has risen by a factor of 7.This is a result both of the higher capacity factor achieved with the thermal power plants that provide most of the power today, compared to the hydropower plants that provided much of it in the 1970s, and the reduced margins observed above.
Total output in 1981 was 18 TWh but this had risen to 42 TWh in 1990 and by 2002 the output was 83 TWh. Output has continued to rise this decade, reaching 125 TWh in the 2007/2008 accounting year. When the latter is broken down by source, thermal power plants controlled by EEHC affiliates provided 95 783 GWh, hydropower added a further 15 510 GWh and wind output from the grid-connected Zafarana wind farm was 831 GWh.
Table 1. Projected capacity additions, 2007-2022 Source: Egyptian Sixth Five-Year Plan 2007-2012
The output from private sector BOOT plants fed into the grid was 12 642 GWh. IPP’s – mostly industrial plants exporting power to the grid – generated an additional 14 GWh while the country’s isolated power plants provided their local customers with 350 GWh of power.
Fuel for Egypt’s thermal power plants is a mixture of natural gas, heavy fuel oil and light fuel oil. In line with the government policy of shifting to natural gas for power generation, 79.3 per cent of all thermal power generation in the country was based on natural gas during the 2007/2008 accounting year.
According to EEHC figures, the thermal efficiency of thermal plants operated by its affiliated companies over the year, was 40 per cent. This is a very respectable overall efficiency but probably reflects the fact that many of the thermal plants are modern. The most recent of these are the 1500 MW Cairo North combined-cycle project, where commissioning tests on the last steam units were carried out in late 2008, the 1500 MW Nubaria combined- cycle plant which was in full commercial operation by the end of 2006, and two 750 MW combined-cycle plants at Talka and El-Kuriemat which entered full commercial service in 2008.
The Egyptian grid
The Egyptian transmission grid is based on a 500 kV backbone, which runs from the Aswan dam in the south along the length of the Nile as far as the capital Cairo. A further 500kV line runs from Cairo to Taba on the Gulf of Aqaba. Other population centres are linked via 220 kV and 132 kV high voltage lines. Plans to integrate the Egyptian grid with those of neighbouring countries are already well advanced; there is already an interconnection with Libya to the west and through Taba, a connection with Jordan. A further interconnection between Jordan and Syria has enabled these four countries to exchange power.
Further interconnection is envisaged through Egypt’s participation in the Nile basin initiative, signed in 2006, which is expected eventually to lead to energy exchange between Egypt, Ethiopia and Sudan and via its involvement in the East Africa Energy Forum.
The country is also part of the Observatiore Mediterranean de l’Energie which is studying the linking of the European and north African networks via Turkey to the west and Spain to the east. Finally, discussions are underway concerning a link between Egypt and Saudi Arabia which would allow Egypt and the Magreb countries to create an interconnection with the Gulf Cooperation Council countries.
In 2007 the Supreme Energy Council of Egypt adopted a resolution committing the country to deriving 20 per cent of its electrical energy from renewable sources by 2020. Based on current plans for capacity growth that would require around 10 000 MW of renewable capacity by the end of the next decade, though with the existing hydropower capacity there is already over 3100 MW of renewable capacity in operation. Meanwhile the country’s sixth five-year plan has targeted 12 per cent of renewable generating capacity by 2012.
In addition to the country’s hydropower capacity, which has mostly been exploited, the country has two significant indigenous sources of renewable energy that can be harnessed for electricity generation, wind power and solar power. The best wind regime is found in the Suez Gulf region where stable wind speeds averaging 8-10m/second can be found.
This is where the 305 MW El Zafarana wind farm is located. The current target for wind capacity is to achieve 965 MW in the 2011/2012 accounting year. This is a modest target given the current capacity, and the government appears ready to allow private sector companies to construct and operate further wind capacity, selling their output to the grid.
A country with vast areas of uninhabited desert is an ideal location for solar power plants and Egypt is to host the first of an advanced type solar power plant, which integrates solar thermal energy collection with a combined-cycle gas turbine power plant. The Kuraymat project is under construction at a site 90 km south of Cairo. It will comprise a solar field of parabolic trough collectors capable of providing enough energy to generate 20 MW of power. The solar energy will be harnessed within the cycle of a gas fired combined-cycle power plant comprising 79 MW gas turbine and a 76.9 MW steam turbine. This project is being supported by the Global Environmental Facility with a grant of $50 million out of a total estimate cost of $150 million.
Detailed plans for the short-term expansion of the Egyptian electricity system are contained in the sixth five-year plan. Over the period of the plan 8547 MW of new capacity are due to be added to the grid. Apart from around 600 MW of additional wind capacity planned for the Suez Gulf region, 82 MW of new hydro capacity and 20 MW from the solar-thermal combined-cycle plant at Kuraymat will also be added. This will all be derived from either combined-cycle or steam cycle power stations burning fossil fuel.
Beyond 2012, the sixth plan also includes and outline for power sector development for the succeeding ten years. Between 2012 and 2017, 11 732 MW of new capacity are provisionally expected to enter service while between 2017 and 2022 a further 12 700 MW is planned. This will bring the aggregate capacity to around 55 000 MW.
Whether this expansion will all take place under the auspices of the EEHC or if it will involve the private sector, remains a moot point. The framework for private sector involvement in the development of the power sector already exists as the limited number of BOOT schemes, which were allowed around the turn of the century demonstrate. However since then the government has not allowed any significant private sector involvement, so whether, and if so, when further loosening will take place, is difficult to predict. MEE