Egypt Government to Invest in Wind, From $110 Billion Renewable Energy Budget

wind egypt desert photoIt can get windy over there in Egypt. Now, Egypt plans on making renewable energy 20% of its national energy goals.

The Egyptian government has announced plans to generate 1,000 megawatts of wind power this year. Speaking at the energy forum for the Middle East and North Africa 2010, Egypt’s Electricity Minister Hassan Younis said that the country is ready to increase its capabilities in alternative energy projects by 2027. He said the planned projects are estimated to cost the government around $110 billion.

According to the minister, the government and electricity sector is adopting a “scientific approach to face the challenge of a growing power demand.” He added that his ministry is looking at diversifying the energy sector to promote renewable energy projects such as wind power and solar power.

In March, el-Sewedy Cables invested 40 million euros to open two factories that will make equipment for electricity-generating wind farms, the country’s Stock Market said.

According to the statement, a wind poles plant in Ain Sokhna – a resort town on the Red Sea coast an hour from Cairo – will begin operations on March 16. It is unclear whether it would open its turbine factory in 10th of Ramadan city just outside of Cairo.

El-Sewedy is the largest Arab cable maker by market value and has production plants in Ethiopia, Libya, Nigeria, Yemen and Qatar, in addition to Egypt. The company, which is due to post full year earnings this month, said last November that it expected flat or slightly lower net profit in 2009, but 25 percent growth in 2010 as sales recovered.

With the government warning that water shortages by 2015 could lead to widespread water cuts for the country’s poor, alternative energy is needed in order to bolster a sector that has been largely stagnant for decades, relying on oil and natural gas, which is heavily subsidized by the government.

Hope for Cairo

Wind farms are the next best hope for Cairo and ten companies bid for contracts to build near the Gulf of Suez in the Eastern desert late last year.

According to the ministry of electricity, the new wind farm will have a capacity of some 250 megawatts and construction is expected to begin sometime in 2011, after bids are turned in during the first quarter of the year.

Sewedy has been getting much of the attention due to its already large interest in wind power. Some 27 percent of its assets involve wind farms.

The sale of the rights for this wind farm is for a build-operate-own (BOO) operation, meaning that whichever company wins the bidding will be responsible for the design, construction, and operation of the facility. It will sell the electricity to the Egyptian Electricity Transmission Company as part of the agreement.

Egypt wants to increase its alternative energy sources to approximately 20 percent of its total output. Wind is planned to take the lead among these renewable sources with around 12 percent of the country’s energy.

Solar power is also being looked into, especially in cities, but without the finances to cover such massive projects, the government has shied away from this renewable source in recent years, leaving it to individuals and private companies to take the initiative.

“The government is liberalizing the energy sector gradually to reduce its debt and subsidy burden, and restructure the sector to allow more private sector participation. Electricity is subsidized twice through the subsidy of the natural gas or mazot used in powering the plants and the subsidy on electricity prices,” wrote Beltone Financial in a note.

Environmental observers say the move to 2011 – after initial bids were submitted at the end of last summer – will give companies a better opportunity to engage in the process and understand what will be needed in order to develop the massive farm.

The news agency quoted Minister Younis at the time as stating the large number of offers received indicated Egypt’s success in encouraging investment in wind energy.

Officials say Egypt’s combined oil and gas reserves will last the most populous Arab country for roughly three more decades, pushing the drive for more renewable energy.

Younis had said in June a total of 72 international companies had expressed interest in the tender by buying the bidding documents. Egypt, a gas and oil producer, has been developing wind power along its Red Sea coast in the east of the country.

More on renewable energy new from Egypt:
Egypt Nears Completion of Solar Thermal Energy Plant
Cold Peace May Keep Israel-Egypt Solar Energy Deal on Ice
Egypt Builds Climate Change Plan for Nile Delta

(This article was published under an agreement with Bikya Masr) Image via endlisnis

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One thought on “Egypt Government to Invest in Wind, From $110 Billion Renewable Energy Budget”

  1. Peter Taylor says:

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