Africa-EU Energy Business Dialogue, Egypt

Transcription

1 Africa-EU Energy Business Dialogue, Egypt Joining forces: Private Sector Engagement for an Energy Secure Future 9 th of November 2015, Cairo The Africa-EU Energy Partnership (AEEP) Energy Business Dialogue in Egypt held its forum under the slogan Joining Forces: Private Sector Engagement in an Energy Secure Future in Cairo on November 9 th, The forum commenced with welcome words from the Secretary General of the Confederation of Egyptian European Business Association (CEEBA), Dr. Alaa Ezz, the Chairman of the Union of African Chambers of Commerce, Industry, Agriculture and Professions, Ahmed El Wakil, the President of the Association of the Mediterranean Chambers of Commerce and Industry, Mohamed Choucair, as well as Vice President of EUROCHAMBRES, Rifat Hisarciklioglu. A series of keynote addresses followed the opening of the forum. The first key note address by H.E. James Moran, EU Ambassador and Head of the EU Delegation acknowledged that Egypt and Africa are blessed with renewable resources. He noted that expanding sustainable energy in Africa requires the availability of financing, as well as markets, while both aspects in the continent were a dream only few years ago, they have become a reality. Demand is growing, technology costs are falling and the political will to support in Africa, Europe and in Egypt has become stronger. Moran further indicated that the European Union is funding a number of renewable energy projects in Africa through its financing institutions and stressed that access to sustainable energy is critical, fundamental to the successful implementation of any global climate agreement. The second note was given by H.E. Dr. Elham Ibrahim, Commissioner for Infrastructure and Energy, African Union, who showed appreciation to the on-going excellent cooperation between the European Union and the African Union (AU) Commission in addressing energy development challenges in Africa. Ibrahim welcomed both Egypt and COMESA as new members of the AEEP Steering Group along with existing members Germany, Italy the EU and the AU Commissions. She indicated that the forum is particularly targeting the private sector to contribute to secure future energy supplies, as the engagement of the private sector is essential to

2 share knowledge and experiences with energy practitioners and policy makers. According to Ibrahim, the AU Commission is supporting the African member states in order to strengthen and accelerate effective governance and the regulatory reforms needed to promote practices that will increase compliance to attract investments towards the development of the energy sector. The AU Commission is also focusing on the African agenda 2063 where the energy plays key role in ensuring the building of environmentally sustainable and climate resilient economies and communities all over Africa. H.E. Dr. Mohamed Shaker, Egypt s Minister of Electricity and Renewable Energy, expressed the Egyptian government s will to extend and expand power capacity in the country and explained how Egyptian companies are currently working along with European partners building power plants. The Egyptian electricity sector has taken actions in order to maintain energy supply that would lead to both social and economic progress. An electricity tariff plan to remove all energy subsidies by 2019 was laid out in During the year 2015, the Egyptian electricity sector succeeded to bridge the gap between the production and the demand of electricity by adding 6,882 megawatt of capacity to the grid. Future plans include 14,400 megawatt through a contract with Siemens which should come online within the next three years and will result in a 50% increase to the network.

3 Panel Discussion 1: Energy Sector: Economic, Political and Social Challenges and on Investment opportunities in the Renewable Energy Ashish Kanna, Energy Specialist at the World Bank, revealed that the challenges faced by the MENA region include underinvestment in the sector since the political turmoil and Arab springs; vulnerability to exogenous shocks such as the fall of oil prices and refugees. Mr Kanna also mentioned that subsidy reforms are already underway in some MENA countries such as Egypt, Jordan and Oman, adding that the income saved by energy subsidy reforms will help increase budget deliveries in other fields such as education, health, water and the promotion of sustainable energy systems. Eng. Marwa Mostafa, Senior Planning Engineer of Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) continued the discussion by highlighting the energy challenges with a special focus on the regulatory perspective. The issuance of the new electricity law in Egypt helped immensely in terms of establishing a competitive market in transmission system operation and for setting plans for the promotion of renewable energy. The promotion of governance approaches based on an integrated decision-making process, transparency and understanding of the needed changes in energy systems was highlighted during the presentation. In her presentation about the energy market trends in the Mediterranean, Maria Rica, Resident Loan Officer of the European Investment Bank, noted that there is a rapidly growing demand for energy in the region, with historically subsidized tariffs and inefficient use. Hence, the financing capacity of the energy utilities, public sector for the main part, declined together with economic activity during the past five years. Other trends include new gas discoveries in the Mediterranean region; increase in potential and focus on renewable energy and energy efficiency as well as growing interconnections. However, some of the key pending issues remain: clear and transparent regulatory system including a roadmap and action plan for private investors; updating and expanding the transmission capacity to coincide with the planned increase in generation capacity and capacity building of institutions to effectively manage all planned initiatives in the sector.

4 Panel Discussion 2: Energy Efficiency sector, with a focus on North Africa region Dr. Ahmed Badr, Executive Director of the Regional Centre for Renewable Energy and Energy Efficiency (RCREEE), gave an overview of the total renewable energy installed capacity in the Arab world, public financing channels for renewable energy projects, private sector companies and international funding institutions. Badr addressed the different challenges in the energy sector that are tackled by RCREEE in its work with the respective member states governments, as the institution works towards increasing the share of renewable resources and a highly efficient use of energy in the member states. Kawther Lahidheb, Key Expert at the Energy Efficiency in the Construction Sector in the Mediterranean (MED-ENEC), focused on energy efficiency opportunities in buildings in the MENA region. According to Lahidheb, the building sector is one of the largest energy consumers and emits 1/3 of the world s carbon emissions.. Lahidheb warned about the risk of constructing inefficient buildings now locking in the potential for the coming decades. The energy efficiency expert explained the benefits of saving energy for the security of supply in a country including lowering peak electricity demand and reducing fuel imports.. Lahidheb also explained some of the main market barriers challenging the proliferation of energy efficient building. Yasmine Fouad, Assistant Minister of Environment for Sustainable Development and External Affairs presented the new African Renewable Energy Initiative (AREI), a transformative, Africa- continental-wide initiative aiming to map existing renewable energy initiatives and to help African countries to achieve a low carbon strategy that will be an integral part of the global climate change agreement to be reached at COP21 in Paris. The initiative is planned to be carried out over two phases, with expected results of generating at least 10 GW by 2020, and at least 300 GW as an inspirational goal by 2030.

5 Round Table 1: Role of the Private Sector in the Development of the Energy Sector in Egypt Dr. Galal Osman, the founding vice-president of the World Energy Association and a member of board of directors of International Solar Energy Society (ISIS) moderated the first round table. Mohamed Shoeb, Ex- Chairman, EGAS, explained the important role of the private sector has played in the oil and gas industry in Egypt since the 1940s. Shoeb outlined that due to energy prices being regulated and subsidised by the government, revenues from sales can only pay investments with certain tardiness. Emad Ghali, President of the Renewable Energy, O&G and Industrial Power divisions at Siemens,mentioned mentioned that Siemens has worked intensively to introduce highly efficient power plants to the Egyptian power system and has done extensive work to increase the efficiency of existing plants. said he also pointed out that there are a number of requirements needed to achieveve a successful development of the Egyptian renewable energy sector, including efficiency upgrading of the existing thermal generation for back-up, extending transmission distribution grids and demand side management measures.

6 Round Table 2: The role of renewable energy and energy efficiency in a secure energy economy Mr. Marco Caponigro, Key Expert from the EU funded program Technical Assistance to support the reform of the Energy Sector, Arab Republic of Egypt spoke about the consideration of energy efficiency within a comprehensive energy planning. Concerning the growing consumption of energy, energy efficiency is the first fuel to ensure security of energy supply. Mr. Arnulf Knorr, project coordinator at Project Coordinator at the Regional Center for Renewable Energy and Energy Efficiency (RCREEE) presented highlighted the aims of the German Energiewende to transform energy systems and make them more sustainable through the use of renewable energy and energy efficiency and then elaborated about the factors of its success. Factors include a healthy mix between utility type and distributed systems as well as smart financing schemes and quality products and services. Challenges on the way to success in other countries are qualified staff for installation maintenance of equipment.

7 Round Table 3: Cross-border electricity market, initiatives and outlook Mr. Andre Merlin, CEO of MedGrid, explained that MedGrid aims to achieve a better integration of renewable energy and thrives to promote the development of the Mediterranean transmission and interconnection grid. Mr Merlin also revealed that there are three possible corridors that allow a connection between Europe and the Mediterranean and that the projects proposed by MedGrid could be completed by the year The benefit is that the interconnections will allow the participating countries to share the power peak. In summer, the peak is in North Africa and in winter, it would be in Europe. Eng. Emad Abou El Naaj, Senior Advisor, League of the Arab States presented an overview on the interconnection status and outlook of a shared Arab Electricity network. Favourable conditions for an interconnected electricity network are the diversity of the energy sources in the Middle East, the different timing of the daily peak load as well as the different seasonal and yearly demands for electricity in the Middle East. In order to achieve an interconnected electricity network, it is necessary to have a coordinated planning strategy and each country should improve and qualify its internal grid to match the interconnection criteria. El Naaj then further presented the efforts that the Arab League undertook to conduct a study on a completely interconnected Arab electricity network that links all countries of the region together. He also explained the legal, institutional and policy framework related to the interconnected Arabian electricity market and outlined that the Arabian interconnected electricity grid could be implemented until the year Eng. Marwa Mostafa, Senior Planning Engineer at EgyptEra, the Egyptian Electric Utility and Consumer Protection Regulatory Agency gave a presentation about the study Interconnection Infrastructure in the Mediterranean A Challenging Environment for Investments that was done by MedReg. The study focuses on mapping the existing and planned regulated cross-border energy infrastructures of regional interest in order to allow Mediterranean regulators to evaluate their existing and potential contribution to the security of supply as well as challenges to establishing a regional energy market. Mostafa then elaborated on the necessary steps for assessing the electricity interconnections; provided Country-specific legislations for Southern Mediterranean countries and gave an overview on the challenges to investments which can be summarized as unclear

8 institutional architecture; lack of transparency; significant subsidization and lack of cost-benefit analysis and cross-border cost allocation. Round Table 4: Financial Tool in the Energy Sector: Grants, Technical Assistance and Novel Financial Instruments Wolf Muth, Director of the Egypt Office of KfW, moderated the fourth round table. Philip ter Woort, Country Director of the European Bank for Reconstruction and Development (EBRD) explained that EBRD has invested 1.1. bn EUR in 28 projects in Egypt since The bank has invested in electricity generation, transmission and distribution including renewable energy generation, large hydro as well as natural gas distribution networks. According to Woort, progress in the Egyptian energy sector included the introduction of a tariff increase in July 2014, the new renewable energy law in December 2014, the Dairut and the Gabal El Zeit bids in 2015, as well as issuance of project documents FiT in November Christophe Lucet, Head of the Regional Office of the European Investment Bank talked about blending as one of the most powerful mechanisms to fund energy infrastructure. This system can address sub-optimal investment situations in the case of activities or infrastructure that could be viable but do not attract sufficient funding from market sources. By combining EU grants with public and private financing, a total of EUR40 billion estimated investment was made in EU partner companies over the period between 2007 and Examples of the blended energy projects in Egypt include the Gulf of El Zeit wind farm project of 200 MW, the Egyptian power transmission project, the combined cycle master plan for renewable energy and energy efficiency, the Kom Ombo 20 MW photovoltaic feasibility study, the Egyptian gas connection project and the 200 MW Gulf of Suez wind farm project. Dr. Ahmed El Beltagui, Senior Expert - Energy and Transport Sector Manger at the EU Delegation to Egypt explained that the European Union finances energy infrastructure projects in Egypt while trying to make use of blending grants in order to leverage additional funds from other institutions. Beltagui added that the EU

9 has recently signed a grant of 68 million Euros for a project to provide residential houses in Egypt with natural gas. The EU will also be contributing with a grant of 30 million Euros for a 340 billion Euros encompassing energy project funded by the European Neighborhood Investment Facility" he said.

10 Wrap up and Closing Session The forum s concluding word was given by Angel Gutierrez, First Counsellor and Head of Economic Reform second at the EU Delegation to Egypt. He concluded that the forum addressed a number of very important issues within the energy sector in general and renewable energies in Egypt and the North African region in particular. While notable advancements have been made by the Egyptian government in issuing new regulatory laws and integrating the private sector within the energy sector, there is still a lot of work ahead. Gutierrez also thanked everyone for their interventions and vivid discussions at the forum and explained how the forum has once again confirmed that the Africa-EU Energy Partnership is a critical player to achieving sustainable energy systems in Africa, as was highlighted by the G7 Group Meeting in Elmau, Germany, early this year. Key conclusions from the event include: Energy efficiency and renewable energies entail a large potential for enhancing energy security Engagement of the private sector is essential to share knowledge and experiences stakeholders ground and to leverage public financing Technology costs for renewable energy have already fallen, political will is large, therefore a very dynamic market for investors in North Africa is in place Income savings by subsidy reforms in Egypt will help in increasing budget delivery in other fields such as education, health, water or the promotion of sustainable energy systems Newly introduced policies should be followed up by the promotion of governance approaches based on an integrated decision-making process, transparency and needed change in energy systems Plans of an interconnected electricity network will open a lot of cooperation possibilities between the participating countries in the MENA region The Africa-EU Energy Partnership (AEEP) constitutes one of the initial eight partnerships under the Joint Africa-EU Strategy (JAES), a long-term framework for cooperation between the two continents. The work of the Secretariat is steered by the AEEP co-chairs: European Commission, African Union Commission, Italy, Germany, Egypt and the Common Market for Eastern and Southern Africa (COMESA).

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