The target for 20% of Egypt’s power requirements to be generated from renewable sources will remain unchanged following the flotation of the Egyptian pound, according to Mohamed El-Sobky, head of the New and Renewable Energy Authority (NREA).
El-Sobky hopes the flotation will not affect investors’ desire to invest in Egypt.
He added that the new pricing implemented in October may attract more investment that would help the Ministry of Electricity carry out its plans for the near future.
He believes that the new pricing will not be changed before a year has passed, adding that the value-added tax would be considered.
A great deal of problems faces potential new investments in the field of renewable energy. He explained that the main problem is that the need for energy declined in 2015 after supplying 6.8GW, which made the government reduce approvals for new investments.
He added that investors are looking in other places after finding that the rate of return on investment is far less that 22%, which was what they wanted. The rate does not exceed 14%, according to studies by the NREA.
He emphasised that the government must control the markets to allow other renewable energy projects to be carried out.
El-Sobky explained that the price for a tonne of rice straw used to be EGP 30, which attracted investment for power-generating projects. However, the price increased to EGP 400 due to demand and the lack of governmental management, which stopped investments in the sector.
He noted that globally, it is known that the price of biofuel is approximately 70% of fossil fuel, but unfortunately it is not used in Egypt.
We will continue to work on attracting new investment to achieve our targets, El-Sobky said.
In October, companies specialised in producing new and renewable energy began negotiations with foreign and domestic banking institutions to finance the second phase of their feed-in tariff projects.
El-Sobky, said that 124 companies and alliances are proceeding to the second phase. Those are divided into 33 companies for wind projects, and 91 companies and alliances for solar power plants—all of which were included in the list of 136 eligible companies and alliances.