If you’re thinking about setting up a business in Egypt then there’s some good news – and some bad news – you ought to know about.
The good news is the financial infrastructure remains largely intact despite the well-publicised political and economic turmoil facing the country at the moment. So no problems then with vital payments and cash management and other business banking services available from well-known multinationals like HSBC or Barclays.
Power cuts. Blackouts. In case you hadn’t realised it, that’s the bad news. While the long-suffering Egyptian populace may, or may not, take the country’s daily power outages with the proverbial pinch of salt, the blood pressure of all but the most optimistic and genial of entrepreneurs is likely to hit stratospheric heights because of them. Not good for the country. Not good for business. Not good for the health of any self-respecting eco-warrior whose face is likely to turn from a peaceful green to a furious red faster than the flick of a light switch!
Egypt struggles to meet energy demand particularly during the hot summer months when air conditioning units are going full pelt. Unfortunately, that’s when the demand for power tends to outstrip the supply of electricity available. And, of course, that leads to the rolling power cuts.
The Egyptian government is well aware of the problem, fortunately, and is looking towards alternative and sustainable energy options in a bid to meet the increasing demand for power in the country. When it comes down to it, what choice does the hard-pressed government actually have? None really, so it’s just as well there are options available on the table in the form of hydro, sun and wind, potential renewable energy which is also friendly towards the environment.
Leading international law firm Norton Rose, experts in a string of industry sectors ranging from energy to pharmaceuticals and life sciences, believes hydroelectricity is not a growth area in Egypt because 85% has already been developed.
Solar power, on the other hand, has “significant potential” because of the country’s location, topography and climate. Egypt has an average level of solar radiation of between 2,000 to 3,200kWh per square metre a year.
But the uptake of solar projects has been slow, says Norton Rose, because of the high capital costs involved. To date, there has only been one major solar power project commissioned, at Kuraymat, involving a 140MW solar thermal combined cycle power plant of which 20MW is from solar energy.
The company says, “Egypt is recognised as having vast potential for solar energy application, but the investment cost of solar power plants is currently very high in comparison with oil and gas fired power plants and it is envisaged that Egypt’s strategy for developing its renewable energy capacity will be mainly directed at the wind sector.”
Egypt’s best-developed wind region so far is the Zafarana district, with average wind speeds of around nine metres a second. The project, which is owned and operated by the Egyptian government’s New and Renewable Energy Authority (NREA), consists of a series of linked wind farms, the first of which started construction in 2001. In 2010, Zafarana wind farm’s total installed capacity reached 550MW, making it one of the largest onshore wind farms in the world.
Norton Rose says that Egypt is recognised as having some of the world’s best wind resources, especially in the Gulf of Suez area, with significant additional potential along the east and west banks of the Nile.
Some 700 square kilometres have been set aside for new wind projects in the Gebel el-Zayt area which has wind speeds of 11 metres a second. The NREA is currently finalising a 200MW project in the Al-Zayt area which is expected to become operational in the first quarter of 2014.
Norton Rose adds that while there are a number of wind energy projects in the pipeline, the majority of which will be managed by the NREA, investor uncertainty and a weakened economy following the ousting of the previous government have significantly slowed down renewable energy development.
Check out the full Norton Rose report, Renewable energy in Egypt: hydro, solar and wind, here.
This is a guest article.