Solar opportunities on the rise in Egypt

As the Egyptian government ushers in a new era of unprecedented solar development in the country, opportunities are abounding for domestic and international PV companies.

The country is aiming to install 2.3 GW of solar by 2017, along with a renewable energy target of 20% by 2020, and foreign investors are already planning multi-GW projects well beyond that.

Egypt last year announced a feed-in tariff (FIT) program to support the 2.3 GW target, including 2 GW of large scale (with a production cap of 50 MW per project) and 300 MW of small scale, below 500 kW. The FIT was initially set at $0.136/kWh for installations between 500 kW and 20 MW, and $0.143/kWh for plants between 20 MW and 50 MW.

Egypt’s New and Renewable Energy Authority (NREA) selected 69 consortiums with large-scale projects of more than 20 MW as part of the initial FIT program for 2 GW of solar capacity. Participating companies include global players such as First Solar, SunEdison, EDF Energies Nouvelles and Tata Power as well as local firms like SolarizEgypt, a solar PV system grid integrator and installer working on residential and commercial projects, and Sun Infinite.

Some industry watchers have expressed concern over a number of issues, including the oversubscription that occurred during the initial round of the FIT program, which led to more projects qualifying than the stated capacity tendered, as well the question of sufficient grid capacity for new solar and wind installations.

The government will charge PV developers participating in the FIT program with an interconnection fee of around $70,000 per megawatt in an effort to finance necessary enhancements to the country’s aging electricity grid. Egypt continues to face serious power shortages and regular power outages.

pv magazine spoke to Rana Alaa, co-founder and technical director of Cairo-based SolarizEgypt, about the coming wave of solar development in Egypt.

pv magazine: Are you concerned about the FIT program being oversubscribed or are you confident that you and your partners will be able to realize your projects?

Alaa: Being oversubscribed means all prequalified companies have strong financial positions that will help them get the debt and equity required for financial closure.

pv magazine: Were you surprised at the high interconnection fee that you will have to pay as a qualified developer of the FIT Program? How much will you have to pay per megawatt?

Alaa: Honestly it was slightly higher than expected around EGP 530,000 [$69,481] per megawatt but it shouldn’t have a drastic impact on the IRRs [internal rates of return].

pv magazine: What measures are being taken by the Egyptian government and industry to insure the electricity grid can accommodate the great increase in power that solar PV projects will generate? Is limited grid capacity a major concern for developers?

Alaa: For the first phase of the FIT this shouldn’t be too much of an issue. Substations are being built and renewables penetration is still quite low. I do believe it will be a major issue as more and more wind and solar is integrated into the grid.

pv magazine examines Egypt’s recent solar developments in the May issue.