In February 2008, Egypt's Supreme Council of Energy announced an ambitious plan to generate 20% of the country's electricity from renewable sources by 2020, including a 12% contribution from wind energy, translating into 7,200 MW of grid-connected wind farms.
This ambitious goal is expected to be achieved through two distinct project development approaches, one third (approx. 2,400 MW) will be implemented through public investments by NREA in cooperation with different international ficing institutions and the remaining two thirds (approx. 4,800 MW) by the private investments through 3 phases:
Competitive bids approach through issuing tenders internationally requesting the private sector to supply power from wind energy projects.
Feed-in-tariff system will be applied taking into consideration the prices achieved in phase one.
Investors are allowed to build and operate renewable energy power plants to satisfy their electricity needs or to sell electricity to other consumers though the national grid.
The Government of Egypt has developed a tailor-made, investor-friendly incentive scheme for investments in renewable energy projects, underlining its commitment to the development of the renewable energy sector in Egypt. These incentives include the following:
- More than 7,600 square km of desert lands have been allocated for implementing future projects.
- All permits for land allocation are already obtained by NREA.
- Environmental impact assessment including bird migration study has been prepared by NREA.
- Signing land use agreement with the investor, through auction processes, against payment equivalent to 2% of the annual energy generated from the project or its value.
- Exempting all renewable energy equipment and spare parts from the customs duties.
- Signing long term Power Purchase Agreement (PPA) (20-25) years.
- Central Bank of Egypt will guarantee all financial obligations of Egyptian Electricity Transmission Company (EETC) under the PPA.
- Connecting new installations to the national grid.
- The project will benefit from carbon credit.
- Establishing a Renewable Energy fund that will help through:
- Bridging the gap between cost of electricity from conventional and renewable energies.
- Addressing the risk of the Foreign currency exchange
- Contributing in ficing RE pilot projects.
- Supporting R&D activities in renewable energy field.