Current Status and Future Prospects for the Power Market in Egypt

Transcription

1 Current Status and Future Prospects for the Power Market in Egypt Dr. Walid El-Khattam Ain Shams University (Cairo, Egypt) The Egyptian Electricity Regulator (EgyptERA) Berlin, June 11 th,

2 Contents Overview of Institutional Structure of the Electricity Sector in Egypt Status and Challenges to the Power Sector in Egypt Power Sector Strategy Development of the Electricity Market Renewable Energy Resources in Egypt Electricity Subsidy Regional Interconnections 2

3 Overview of Institutional Structure of the Electricity Sector in Egypt EEHC EETC 3

4 The Current Status of the Power Sector in Egypt 4

5 Status and Challenges of Power Sector in Egypt Egypt has successfully managed to secure electricity supply to 99.1% of its population. The electrical peak demand increased by an average of 7% over the last decade. However, it increased by more than 12% in the year 2007/2008 and around 11% in the year 2011/2012. The peak demand has reached 27,000 MW in August To meet the increase in demand an average annual expansion in generation and transmission as well as distribution of 3000 MW is needed over the next 20 years. The potential for adding more hydro-generation is limited. 5

6 Status and Challenges of Power Sector in Egypt In 2011/2012, electricity purchased from self generation and cogeneration units in industry represents only 0.07% of the total electrical energy generated. Till 2012, the installed RE consists of 545 MW wind and 140 MW Solar/Thermal (20 MW Solar) representing < 2% of the total installed capacity. The generated energy from these sources represents only 0.9% of the electrical energy generated. 6

7 Status and Challenges of Power Sector in Egypt Evolution of Installed Capacities (MW) 7

8 Status and Challenges of Power Sector in Egypt Annual Investment Cost Annual Investments for Generation (Million EGP) 60,000 50,000 40,000 30,000 20,000 10,000 0 Total Investment Cost 472,836 Million EGP Years Source: Report on Cost of Supply and Pricing MOF,

9 Status and Challenges of Power Sector in Egypt Main Challenges High annual rate of increase in electricity demand, Huge investments required to meet the demand, Public investments is not enough to cover all additional capacities, Fuel needed for the power generation expansion is limited, The present tariff is less than the economic cost of service (Subsidy), i.e. electricity tariff does not reflect the cost of service. Both wholesale and end users tariffs are based on cross subsidy scheme. 9

10 Power Sector Strategy in Egypt Ensure Security of Supply with high quality. Developing market reform to improve efficiency and quality of supply as well as enable sufficient flow of investments into the power sector. Environment improvement and mitigation of greenhouse gases. Efficient energy utilization. Objective electricity subsidy policy. 10

11 Development of the Electricity Market The objective is to establish a fully competitive electricity market, where electricity generation, transmission and, distribution activities are fully unbundled. The proposed market will adopt bilateral contracts with a balancing and settlement mechanisms. Efficiency increase and service enhancement are sought by introducing competition, freedom of electricity supplier choice, and TPA. 11

12 Current Status of Electricity Market in Egypt 6 Gen Public companies Generator Imports Egyptian Electricity Transmission Company EETC 3 BOOTS Traders 9 Distribution Distributors Companies Large customers Connected to the Transmission network Customers Exports PHYSICAL FLOW OF POWER MONEY FLOW 12

13 Current Status of Electricity Market in Egypt Bilateral Contracts 6 Gen Public companies Generator Imports Egyptian Electricity Transmission Company EETC 3 BOOTS Traders 9 Distribution Distributors Companies Large customers Connected to the Transmission network Customers Exports PHYSICAL FLOW OF POWER MONEY FLOW 13

14 Renewable Energy Resources in Egypt The annual average solar radiation for Egypt The wind resources for Egypt 14 14

15 Reasons for giving Wind Energy First Priority in Egypt Egypt possesses the best sites with high capacity factor Local experience in wind energy since 20 years ago, support by a current installed capacity of 545 MW High potential for an increasing share of local manufacturing of wind energy equipment Electricity generated from wind resources represent a near reach opportunity where it has the closest price to electricity generated from oil and gas 15

16 Reasons for giving Wind Energy First Priority in Egypt Location Capacity Factors at different Plant Locations in Egypt Capacity Factor in % Abu Darag 52.7 Location Gulf of El-Zayt NW Capacity Factor in % 69.5 Zafarana, Mast Gulf of El-Zayt 66.8 Zafarana 53.3 Gulf of El-Zayt SW 68.9 Zarafana W 40.0 Hurghada WETC 32.9 St. Paul 48.7 Ras Sedr 39.3 Ras Ghareb 65.7 El Tor 22.5 Gulf of El-Zayt N

17 Share of Different Sectors in Subsidy in Egypt Public Lighting, 2% Commercial, 2% EHV, 1% HV, 1% MV > 500 kw, 9% Till 500 kw, 17% Residential, 68% 17

18 Subsidy Challenges in Egypt Although residential sector consumes 40% of the electricity, most of the subsidy is directed to this sector, other sectors cease around 30% of the total subsidy Subsidy increases annually as the tariff to the residential sector is freezed. Residential sector is the major contributor to the peak demand (45%) due to its consumption pattern which has lower elasticity. To overcome this, tariff reform as well as new tariff such as TOU is needed TOU will request additional investment to upgrade the current metering system, this investment is estimated at 3 Bil. US$. 18

19 Needs for Tariff Reform in Egypt Complicated current subsidy scheme leads to less transparent subsidy, which is hidden in the power companies broken financial structures and unpaid liabilities (paper settlements) as well as the devalue of the natural resources. Sector subsidy restructure is very much needed, this restructuring may include: - Switch to customer subsidy rather than electricity subsidy, this will request. - Electricity Tariff needs to change both in value as well as structure to express customer cost to the system. 19

20 Regional Interconnections Regional interconnection can offer several advantages to the Internal interconnection Including: o Security of Supply - Increase energy security and efficiency and reduce cost of supply to consumers o Sustainability - Improve system reliability and more efficient and effective use of existing infrastructure. - Facilitate access to resources, greater RE penetration and reduction of greenhouse gases o Enable Necessary Investments 20

21 Regional Interconnections 21

22 Thank You Dr. Walid El-Khattam 22