Bring on the coal: Egypt’s journey to becoming regional energy hub



Wed, 04 Jul 2018 - 10:13 GMT


Wed, 04 Jul 2018 - 10:13 GMT

The chimneys from a coal-burning power station are seen on the outskirts of Beijing September 23, 2009. REUTERS/David Gray

The chimneys from a coal-burning power station are seen on the outskirts of Beijing September 23, 2009. REUTERS/David Gray

CAIRO – 4 July 2018: Minister of Electricity and Renewable Energy, Mohamed Shaker, announced July 3, 2018, the establishment of a major power station in Moussa Water Spring (Ayoun Moussa) in Sinai. The station is set to produce 2,640 Mega Watts, feeding all of Sinai with electricity.

During his announcement of the project, Shaker pointed out that a number of alliances have been created to ensure that this project is done to the highest of standards.

Furthermore, during his meeting with the Energy and Environment Committee of the House of Representatives (Parliament) on Tuesday, Shaker said that the electricity that will be produced from this power plant will be used to develop Sinai, helping Sinai continue on the path towards development.

Shaker suggested that the power station will be able to feed the whole of Sinai, including the 3 million houses that will be built by the government as part of their development plan for the area.

Shaker pointed out that there are a number of new projects for pumping and storage of ‘hydro power projects’ to generate energy for the expansion of energy and space for the maximum capacity and approved in the lifting of treated water. There are also two new stations in Luxor for pumping and storage that will produce electricity with high capacity.

With an eye on details and sustainability, Shaker confirmed the importance of up-keeing and servicing the station, especially given the high temperature in the area within which the station is built. He also pointed out that there will be a need to provide electric reserves to accommodate the increase of loads.

The Clean Coal Power Plant, which will be in Moussa Water Springs (Ayoun Moussa), will be the first coal-fired plant in Egypt. Located on the Sinai Peninsula in the Suez region of Egypt, the plant will be developed by Emirati investment company Al Nowais Investments in cooperation with the Egyptian Electricity Holding Company.

As it is the first coal plant in Egypt, coal will need to be imported, mainly from South Africa and Indonesia, to ensure that the plant operates to its full capacity.

HSBC is the financial adviser for the project, which will received 70 percent of its finance from Al Nowais Investments and the remaining 30 percent from foreign and local investors, and the Italian firm Technimont will serve as a technical consultant.

In keeping with Egypt’s 2030 Agenda, which includes reducing carbon dioxide emissions and shrinking Egypt’s carbon footprint, to cut down on carbon dioxide emissions, the Ayoun Moussa plant will use ultra super-critical low NOx pulverised-coal burners.

Hamrawein Power Plant

Simultaneously, Egypt will see the development of another clean coal-fired energy plant, estimated to cost some $4.2 billion.

Set to be the largest coal-fired power plant in the region (Middle East and Africa), the plant will constitute six 1,000-Mega-Watts-generation units. The Hamrawein Power plant is expected to take seven years to be build on the Red Sea Coast, and is expected to produce a whooping 6,000 Mega Watts.

In comments to Al-Bawaba News, Shaker revealed that there are a number of new pumping and storage projects, called “water power plants,” that are designed to generate electricity for the expansion of energy, including a new pumping station with higher capacity than the Aswan High Dam. He added that these plants will produce electricity with high capacity, making it one of the most important hydro power plants.

In late June 2018, “A Chinese consortium of Hassan Allam Construction, China’s Shanghai Electric and Dong Fang has won a USD 4.4 bn contract from the Egyptian Electricity Holding Company (EEHC) to build a 6 GW clean coal power plant on the Red Sea,” writes Enterprise. This means that a considerable part of the project will be done by Hassan Allam Holding subsidiary, PGESCO.

The Hamrawein plant will be built on an engineering, procurement and construction, plus finance (EPC+F) basis, MEED reports.

During his time in Parliament on July 3, the Minister of Electricity and Renewable Energy said that President Abdel Fatah al-Sisi is expected to visit China in September to discuss the signing of the power plant agreement.

A look-term plan in the works

Egypt’s long-term strategic energy plan is currently on track, which begins in financial year 2018/2019 and ends in financial year 2029/2030, with major parts of the plan taking place in the current financial year (2018/2019). This year will feature $1.833 billion for wind farms, $229 million for solar PV and $3.662 for solar thermal power plants.

The plan includes $135.258 billion and $38.6 billion, respectively, for electric power and coal power. In the upcoming financial year (2019/2020), the strategic plan includes $3.365 billion in investments for coal out of $10 billion in total.

In the financial year 2021/2022, $7.529 billion is budgeted for coal power plants, while $484 billion for solar PV and $2.972 billion for solar thermal (out of a total of $12.781 billion) are set to be spent.

“Overall, during the period, 16,800 MW will be added from coal, 4,800 MW from nuclear, 4,650 MW from natural gas and oil, 9,350 from wind, 6,950 MW from solar thermal, and 9,020 from solar PV. The total capacity increase in the period is 51,738 MW,” writes SourceWatch.

Egypt on its way to becoming the regional energy hub

The Minister of Electricity and Renewable Energy attended March 13, 2018, the launch of Benban solar plant’s operation. The first of 32 stations in the world’s largest solar power station, Infinity station is the first station in the Benban solar park.

During the ceremony, Shaker expressed his happiness regarding the launch of the world’s biggest solar park in Egypt, explaining that this is a big move towards sustainable development and a green economy.

“We have been working on this project for two years and a half now,” Shaker said, expressing his happiness at the results achieved so far. “The Infinity Company has truly shown its seriousness and professionalism.”

“We went through a rough patch that ended in 2014,” said Shaker. Currently, he explained, the Ministry of Electricity is working on building a nuclear power plant, which will produce 4,000 Mega Watts, and another plant that will produce energy from coal, set to produce about 6,000 Mega Watts.

Shaker also explained that although this is the start of the operating phase, the power plant will be officially inaugurated by President Abdel Fatah al-Sisi due to the importance of the project in the investment sector.

On the margins of the inauguration, Shokry told Egypt Today that lifting the subsidies from electricity bills will not take place during 2018; instead, it will be extended over a three-year span, where subsidies will gradually decrease.

“We have a very big problem when it comes to subsidies, especially after it has risen to LE 69 million. If we continue on the same path and continue to use the same prices that we are currently using, the deficit will increase. This is because I am meant to get back the ministry’s money in full but this does not happen.” Shaker continued, “I am truthful and honest with people.”

Shaker further elaborated that he understands the pressures under which civilians currently live, explaining that they are working on offering citizens better service. To ensure that the level of service is better, explained Shaker, there is a need to increase prices.

Moreover, in an interview with Extra News on the margins of the ceremony, Shaker told the news agency that the ministry and the government, hand-in-hand, are working on achieving 20 percent clean energy by 2022 and 37 percent clean energy by 2035.

Shaker elaborated that the addition of clean energy to the national grid is set to reduce the prices of the photovoltaic cells used, thereby, reducing electricity. This will eventually, according to Shaker, lower the cost of electricity for the government and civilians.

Previously, Engineer Mohamed Amara, Project Manager of Infinity Station at Benban solar park, Aswan, told Egypt Today that there are currently some 650 workers at the station, which has started operating December 2017. Amara pointed out that the technological system used in the production of energy works to reduce the emission of carbon dioxide.

Amara also explained that the advanced technology is set to ensure that the systems continuously follow the sun, meaning that the most amount of energy will be collected.

Amara further revealed that the company has agreed with the Ministry of Electricity to work on the plant and benefit from it for 25 years.

Inside Benban solar park - Egypt Today
Inside Benban solar park - Egypt Today

The Benban solar park is set to generate the equivalent of 90 percent of the energy produced by Aswan’s High Dam. Already home to the most important electricity production plant in Egypt, Aswan is set to bear and implement Egypt’s dream of having 20 percent clean energy by 2022.

Benban solar park, named after a Nile River village close to the power plant, is set to be the largest solar plant in the world. The power plant will cover Egypt’s electricity needs and edge it forward on its path to becoming the region’s energy hub.

Benban, built in the eastern region of the Sahara Desert, is set to produce between 1.6 and 2.0 GW of solar power by mid-2019. Engineer Ahmad Fathy, Head of Projects Sector in Upper Egypt in the Egyptian Electricity Transmission Company, told Egypt Today that after the effective launch of Infinity, work will start on Vas Station.

According to Fathy, the park is set to start working at its full capacity at the start of 2019.

As it stands, the project has received no incentives. Still, it has signed a 25-year contract with the state-owned Egyptian Electricity Transmission Company (EETC), who will buy its electivity at a rate of 7.8¢/kWh, pegged to the value of the U.S. dollar.

Currently, 29 projects have been financed at a total of $1.8 billion, producing almost 1.5 GW of solar power, on the 14.3-square-mile plot of land.

Built on an area that receives some of the best sunlight on the planet, Benban is arguably the second best spot for solar power plants, behind the Chilean desert highlands.

By producing a huge power plant, Egypt is set to reduce the costs of costly power lines, power substations and expensive hardware, which, in turn, is set to lower the cost of electricity.

Benban solar park - Egypt Today
Benban solar park - Egypt Today

According to the project’s original analysis, Benban 1.8 GW PV Solar Park, Egypt – Strategic Environmental & Social Assessment, released February 2016, “NREA (New and Renewable Energy Authority) has in turn divided the site into 41 separate but contiguous plots, which it is making available to developers/companies to implement individual projects (the Benban Projects). … Once constructed, Benban will be the world’s largest solar PV park, at an estimated total cost of between $3.5 and $4 billion.”

The report continues, “The 41 projects on the Benban site will be connected to the Egyptian high-voltage network through four new substations, which will be constructed on the site by EETC. These substations will in turn connect to an existing 220 kV line, which passes nearby the Benban site at a distance of approximately 12 km. At a later stage, EETC may also construct an additional connection to the neighboring 500 kV line. EETC will construct the high-voltage connections. NREA has prepared site access roads and on-site roads for the Benban project area.”

In Brief:

- 41 Solar photovoltaic plants; total installed capacity 1.8 GW.
- Related infrastructure including roads, administrative buildings and four high voltage substations.
- A high voltage interconnection.
- Sharing costs, reducing overall price of electricity for government and citizens.

The project’s analysis also looks into the environment, employment, local villages nearby and the effect of the project on them, water supply and usage, and many other factors, concluding that the power plant will have an overall effect on the aforementioned topics.

According to the report, Egypt is expected to generate 20 percent of its power from renewable sources by 2022.

“The potential is endless,” says Lamya Youssef, head of the EETC, adding, “Because of the enormous increase in (Egypt’s) population, we need large investments in infrastructure, which the government cannot afford on its own. That’s why we need private sector investments.” For Youssef, Egypt can easily generate the 20 percent by 2022.

In July, the International Finance Corporation (IFC) approved $660 million in funding to 13 feed-in tariff (FiT) projects in Benban, near Aswan, according to a statement from the Ministry of International Cooperation. These projects are worth a total of $730 million and have a total capacity of 500 MW.

The European Bank for Reconstruction and Development (EBRD) is also expected to finance a total of 16 solar projects in Egypt at a total capacity of 750 MW. It pledged $500 million in funding framework for the FiT project.

More than 325 MW of Benban is designed to use NEXTracker’s single axis trackers and 64 MW of single axis trackers will be deployed by German Group Mounting Systems GmbH.

Inside the control room inside Benban 1 - Egypt Today
Inside the control room inside Benban 1 - Egypt Today

The Benban plant has managed to jump-start economic growth, especially in the region where the project is being built.

With unemployment levels particularly high in that region, the Benban project has led to a decrease in unemployment by opening up the opportunity for more than 10,000 people to work in the construction site. Engineer Ahmed Hany, a researcher specialized in the solar energy sector in the Renewable Energy Authority, under the authority of the Ministry of Electricity, told Egypt Today that some 10,000 to 12,000 workers are present and working on a daily basis in the power plant.

After the project’s completion, the operating park is set to employ some 4,000 people, many of whom will be from this region.

Thus, not only will the plant lead to cheaper electricity and help Egypt on its path to becoming the regional energy hub, it will also lead to economic prosperity and the decline in unemployment rates.

The Benban project is also building confidence in Egypt, with Sunil Kulkarni, chief executive officer of Shapoorji Pallonji, an Indian company specializing in renewable energy that is building one of the plants, calling the project “revolutionary”.

Kulkarni explained, “In many emerging markets, there is always a question about whether a project will go through, but the way (this project) was carried out gave us confidence. Our experience so far has been very good.”

'Infinity' solar power pannels, one of the pannels in Benban solar park - Egypt Today
"Infinity" solar power panels, one of the panels in Benban solar park - Egypt Today

In terms of development, the project will also decrease Egypt’s carbon footprint by decreasing the levels of carbon dioxide emission. According to the IFC, the project is “expected to avoid 2 million tons of greenhouse gas emissions a year, the equivalent of taking about 400,000 cars off the road.”

Mouayed Makhlouf, IFC director for the Middle East and North Africa, said, “This project will help Egypt tap into its massive potential for solar energy and scale back its use of expensive and polluting fossil fuels. That’s especially important with the specter of climate change looming.”



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