Overview of the Electricity Sector in Egypt

Overview of the Electricity Sector in Egypt Milan 22-23 October - 2 nd Capacity building Reporting methodologies: how to collect data and monitor regulated entities Salma Hussien Osman Egypt ERA www.egyptera.org

Egypt Area:1002450km 2 Population: 86502500 Population density : 84/ km 2 GDP : total $275.748 Per Capita : $ 3213 2

Electricity Sector In Egypt 3

History Electricity Service started in Egypt in 1893 by private companies. In 1962 all private companies were na>onalized. In 1964 Ministry of Electricity was established. In 1965 the Egyp>an Establishment for electricity was established to manage and operate the electricity business chain. In 1976 the Egyp>an Electric Authority (EEA) was established to replace the Egyp>an Establishment for Electricity through Law 12. In 1996 private sector is allowed to have concession agreement by law no. 100. In 2000 The Egyp>an Electricity Holding Company EEHC was established to replace EEA by Law no. 164. In 2001 EEHC has legal Unbundled the Electricity business chain into; Genera>on, transmission and Distribu>on Companies In 1997 the regulatory framework was setup, The Egyp>an Electric U>lity and Consumer Protec>on Agency was established by Presiden>al Decree 399/2000 4

Egyptian Power Sector ü 99.03% of Egyptian population has an access to electricity. ü The peak demand for the year 2012 has reached 27000 MW and it is expected to reach 54,200 MW by the year 2027 ü In the year 2013, 91% of the power generation relies on oil and gas, 7.5% from hydro and 1.5% from wind and other resources ü It is planned to increase the renewable energy sources (including hydro) in the electricity mix to 20% by the year 2020 ü This target is planned to be achieved by relying principally on wind. The required added installed capacity of wind power to achieve this target is 7200-8000 MW. 5

Evolution of Energy Consumption FY Energy Consump>on Annual Accumulated (m KWh) % % 2005/2006 92085 - - 2006/2007 98443 609 6.9 2007/2008 106595 8.28 15.76 2008/2009 111714 4.8 21.32 2009/2010 118903 6.44 29.12 2010/2011 125159 5.26 35.92 2011/2012 133969 7.04 45.48 2012/2013 140256 4.69 52.31 6

Energy Consumption (m KWh) Energy Consump>on (m KWh) 160000 140000 120000 100000 92085 98443 106595 111714 118903 125159 133969 140256 80000 Energy Consump9on (m KWh) 60000 40000 20000 0 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 7

Generated Energy mix (1000Gwh) actual 2011/2012 conven9onal Hydro RE 8,20% 1,27% expected2012/2013 conven9onal Hydro RE 1% 8% 90,53% targeted2013/2014 conven9onal Hydro RE 1% 7% 91% 92% 8 11/02/15 8

Electricity Per Capita Electricity Per Capita 3000 2500 2000 KWh 1500 1000 500 0 2011/2012 2012/2013 2013/2014 Residen>al Only 696 739 792 All putposes 1646 1716 1803 9

Energy Sold from Distribution Companies According to Purpose of Usage (Medium and low Voltage) 10

Evolution Peak load (MW) Demand & Energy 2012/2013 2006/2007 0 5000 10000 15000 20000 25000 30000 2006/2007 2012/2013 Peak load (MW) 18500 27000 2012/2013 Energy Consumed (mkwh) 2006/2007 0 20000 40000 60000 80000 100000 120000 140000 160000 Energy Consumed (mkwh) 2006/2007 2012/2013 98812 140918 11

Evolution 2012/2013 Fuel 1000TOE Fuel 2006/2007 0 5000 10000 15000 20000 25000 30000 35000 2006/2007 2012/2013 Fuel 1000TOE 22286 31750 FCR (gm oil equ/kwh) 2012/2013 2006/2007 206 208 210 212 214 216 218 220 222 224 2006/2007 2012/2013 FCR (gm oil equ/kwh) 221,6 212 12

Evolution No of Customers (million) 2012/2013 Consumers 2006/2007 0 5 10 15 20 25 30 35 2006/2007 2012/2013 No of Customers (million) 22,05 29,7 Average electricity per capita 2012/2013 2006/2007 0 500 1000 1500 2000 2500 Average electricity per capita 2006/2007 2012/2013 1575 1950 13

Interconnection Descrip>on Egypt/ Libya Egypt / Jordan Interconnec>on Countries Libya Jordan- Syria- Lebanon Interconnec>on Voltage (K.V) 220 400 Purchased & Imported Energy (GWh) 100 1277-220- 82 Sold & Exported Energy 64 36-2- 0 14

Electricity Market 15

Institutional Structure of the Electricity Sector in Egypt 16

Present Status of Electricity Market ü Egyptian Electricity Holding Company (EEHC) owns: About 90% of generation, 100% of transmission over 99% of distribution ü Private sector participation is manifested in three long term (20 years) BOOT contracts with the Egyptian Electricity Transmission Company ü Sixteen private electricity producers are licensed ü Twenty Four private electricity distributors are licensed 17

Electricity Structure 6 Gen Public companies Generator Imports Egyp>an Electric Regulator Egyptian Electricity Transmission Company EETC 9 Distribution Distributors Companies 3 BOOTS Traders Large customers Connected to the Transmission network Customers Exports 18 18

Tariff Structure Old Tariff New Tariff 19

Old Tariff Consumer Group 1. Extra High Voltage Consumers a) Consumers with Special Rates Kima Fer9lizer Company Subway (Ramses Line)Somid Petroleum Piping Other Non Industrial Consumers PT/kWh 4.7 6.8 27.3 12.9 b)energy Intensive Industries (Iron- Cement- Fer9lizers- Aluminum- Copper Petrochemicals) off- peak energy charge 27.7 on- peak energy charge 41.5 c) Industries (Glass - Ceramics And Porcelain) 25.2 d) Other Industries not included in b) and c) 15.4 20

2. High Voltage Consumers Consumer Groups P.T/kWh a) Consumers with Special Rates Subway(Tora Line) Other non industrial consumers 11.34 15.7 b)energy Intensive Industries (Iron- Cement- Fer9lizers- Aluminum - Copper Petrochemicals) off- peak energy charge on- peak energy charge 30 45 c) Industries (Glass - Ceramics and Porcelain) 28.6 d) Other Industries not included in b) and c) 18.6 21

Consumer Group PT/kWh 3. Medium and Low voltage Consumers 3.1. More than 500 KW Max Demand a)energy Intensive Industries (Iron- Cement- Fer9lizers- Aluminum- Copper Petrochemicals) off peak energy charge 35.8 on peak energy charge 53.8 demand charge (L.E/kW- Month) 12.1 b) Industries (Glass - ceramics and porcelain) energy charge demand charge (L.E/kW- Month) c) Other Industrial Consumers not included in a) and b) energy charge demand charge (L.E/kW- Month) d) Other Consumers energy charge demand charge (L.E/kW- Month) 3.2. Up To 500 KW Max Demand a) Agriculture energy charge fixed charge for irriga9on (L.E/Feddan- Month) 32.7 11.6 25.5 11.1 25 10 11.2 135.2 b) Other purposes 29 22

4- Residen>al Consumers Consumer Group PT/kWh 1) up to 50 kwh 2) from 51 to 200 kwh 3) from 201 to 350 kwh 4) from 351 to 650 kwh 5) from 651 to 1000 kwh 6) over 1000 kwh 5 12 19 29 53 67 5. Commercial Consumers 1) up to 100 kwh 2) from 101 to 250 kwh 3) from 251 to 600 kwh 4) from 601 to 1000 kwh 5 ) over 1000 kwh 27 41 53 67 72 6. Public ligh>ng and Traffic Lights 47.5 23

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Market Reform ü The objective is to establish a fully competitive electricity market, where electricity generation, transmission and distribution activities are fully unbundled. ü The proposed market will adopt bilateral contracts with a balancing and settlement mechanism. ü Efficiency increase and service enhancement are sought by virtue of introducing competition, freedom of electricity supplier choice, and third party access. 25

Why Market Reform? ü maintain electricity system reliability under conditions of high growth increase of demand, thus facilitating significant generation and network capacity additions to the system in order to meet the needs; ü gradual enhancement of procedures and functions promoting competition within electricity market in a way that creates a fair and attractive investment environment for new comers in electricity generation and trading. 26

The Proposed Electricity Market Structure 27

MARKET STRUCTURE 28

WHY MARKET SEGMENTATION? ü Need to maintain favorable economic conditions, which may not comply with cost reflectiveness, for parts of the consumption due to social and economic policies ü Have also to protect fair competition conditions and real market operation for all eligible customers ü Create project viability conditions for private investors, who take decisions under long-term horizon and pure techno-economic criteria ü Re-organize institutions and functions within the existing system, capable to operate efficiently 29

MAIN CHARACTERISTICS OF THE MARKET (1) 1. Eligible Customers have a choice of Electricity Supply; initially the threshold for achieving Eligible Customer status would be set at a level, namely all EHV and HV customers that opens a meaningful portion 16% of the Electricity Market to competition, according to 2010/11 statistics 2. Eligible Customers can freely negotiate prices directly with Generators operating in the competitive Electricity Market, or with Suppliers, which are expected to be established in order to serve Eligible Customers 3. Balancing Service to the competitive Electricity Market shall be provided by the Transmission System Operator (TSO) and financially settled by the Market Operator (TSO/MO), established in the TSO. On the contrary the regulated tariff segment of the market is expected to be self-balanced under the responsibility of the Wholesale Public Trader 30

Challenges Several challenges are facing the energy strategy. These include: ü Consumer awareness regarding the benefits of the market as well as how to deal with it. ü Necessary restructuring of the power industry and the necessary financial as well as human resources to achieve this. ü Economical changes and its impact on achieving the set targets with the set timeframe. ü Mobilizing necessary investments for the extension as well as expansion of the transmission system. ü Regional interconnection plans and establishment of regional 31 electricity market.

Renewable Energy 32

Renewable Energy Strategy ü In February 2008 the supreme council of energy has set a target to have 20% of the electrical energy mix from renewable sources including hydro by the year 2020 ü The current hydro installed capacity represents 12% this will become less than 8% by the year 2020 ü This means that 12% contribution from renewable source other than hydro need to be added by 2020. This is equivalent to installed capacity of 7200 MW. ü Other sources will be used to cover the difference such that the 20/20 target can be achieved 33

RE Electricity Law New electricity law under ratification has adopted three mechanisms for power generation from renewable sources these mechanisms are: ü Plants built by NREA ü Plants built through Competitive bidding ü Plants built through the Feed-in Tariff 34

Renewable Energy Development Business Models Program size Item Single Wind Farm Size Developer finances Tariff Seing Contrac>ng Off taker O/M Construc>on Responsibility NAREA 2200 MW Large (100-400 MW) NAREA Governmental and soa financing from interna9onal development agencies Proposed by Egypt era and approved by the cabinet of ministers 20 years NAREA NAREA through EPC Grid Compe>>ve Bidding 2500 MW Large ten Modules each (250 MW) Private (most probably interna9onal) Commercial finance According to the bid outcome Long term PPA mostly for 20 years Developer Developer Feed- In- Tariff 2500 MW Medium and Small below 50 Mw Private (focus on local) Commercial finance proposed by Egypt era and approved by cabinet of ministers 15 years Grid or distribu9on system Developer Developer 35

Egypt ERA 36

Evolvement Egyptian Electric Utility and Consumer Protection Regulatory Agency ü 1998 Regulatory system designed ü 2000 Presidential decree # 339 initiating the current agency ü 2001 Regulatory agency operational 37

Objectives Egyptian Electric Utility and Consumer Protection Regulatory Agency (cont.) ü Regulates and supervises all electricity generation, transmission, and distribution ü Ensures availability of supply to users at the most equitable prices and considers environmental issues ü Ensures fair competition in the field of electricity including generation and distribution ü Considers interests of customers, producers, transmitters, and distributors 38

Organization Chart 39

Licensing and Cost of Service Codes Competition Promotion & Electricity Market Development Performance Evaluation and Benchmarking Cost of Service Licenses 40

Competition Promotion & Electricity Market Development Electricity Law Preparation for competitive Market Investment Promotion in the field of Electricity Demand Side Management 41

Consumer Protection & Disputes Resolving Monitoring Customer Satisfaction Consumer Complaints Regulations Disputes Resolving Consumer Awareness 42

Licensing System License Procedures License application, conditions, procedures License applica>on License applica>on Decisions clarification submit application ااfulfilled application Not fulfilled Rejection Licensing Dept Applic a>on fulfille d fulfilled BOD BOD decision Gran>ng License approval 43

License aplications To fulfill license conditions General obligations Technical obligations Financial obligations Customer service obligations 44

General Requirements Applicant Data Egyptian company (commercial registration, taxes registration) Organization Chart Accounting System Land or Grid ownership 45

Technical Requirements Generation Heat transfer Diagram Fuel Quantities per unit Basic data for power plants and its stations Capacities, energy consumption, FOH, SOH, SH, RH per unit Distribution & Transmission SLD Grid components, substations data, Peak Load, Losses, Purchased and sold energy, No of customers 46

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Stakeholders Distribu9on Companies Transmission Company Genera9on Companies Consumers Egypt ERA Investors MOERE NGO CEEU 49

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