Power integration gains popularity in Egypt

Egypt is embarking on an ambitious plan to link up its electricity grid with Saudi Arabia. But full regional integration is a long way off due to perennial power shortages and pricing issues

Egypt’s plans to link its power network with Saudi Arabia are the latest in a growing network of electricity grids in the Middle East. But a regional power shortage and the question of how to price the sale of power mean there is a long way to go before full integration can be achieved.

In August 2010, soaring temperatures put such a strain on Egypt’s electricity grid that the daily celebrations to break the Ramadan fast were subject to frequent blackouts. Such was the discontent at the situation that on 19 August protesting crowds blocked the main road southwest of Cairo connecting Egypt’s north and south.

An emergency plan was quickly introduced to bring on stream a raft of new power capacity, including a 375MW power station in Nubria province, a 120MW gas/solar hybrid plant at Kuraymat, south of Cairo, and a 175MW increase in output from the Aswan Dam hydroelectric plant.

Electricity demand challenges

But the challenge of providing for rapidly rising electricity demand is likely to remain a problem for Egypt for years to come. According to the country’s main power utility, the Egyptian Electricity Holding Company, over the next five years 11,110MW of additional capacity will need to be added for a projected cost of $120bn.

The government is working on a series of schemes to plug the gap. In April, Energy Minister Hassan Younis said the government had allocated $1.7bn to build 24 new power facilities, with total output of 2,680MW. The units will be located in Damietta, El-Shabab and on the Cairo-Alexandria Desert Road.

Increasing emphasis is also being placed on alternative energy. In 2007, the government outlined a plan to increase the contribution of renewable energy to 20 per cent of total power capacity by 2020.

A 200MW wind farm scheme on the Gulf of Suez has already been launched by the state-owned Egyptian Electricity Transmission Company and is due to come on stream in 2013. Plans are also being developed for a $4bn nuclear power plant, with capacity of 4,000MW, which is scheduled to begin operations in 2025.

Aware that it needs to explore every possible avenue to address the power problems, the government is now pursuing a scheme to set up a 3,000MW power exchange with Saudi Arabia.

The project is designed to take advantage of the timing of peak demand in the two countries, with Egypt exporting electricity during the afternoon and Saudi Arabia returning the favour in the evening.

“It would make sense in light of Egypt’s power shortage,” says Angus Blair of Cairo-based Beltone Financial. “If there is a way for it to buy some power, it could help them get out of a bit of a fix.”

The project will involve laying 1,300 kilometres of power lines, including 450 kilometres in Egypt, costing $1.5bn. A feasibilty study has been carried out and a tentative deadline for completion has been set for 2013. Given the strain on government finances caused by the economic slowdown from the political events of 2011, it is an ambitious undertaking.

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Richard Nield is a freelance journalist, photographer and filmmaker covering the Middle East and Africa. In 10 years covering the region, he has been published and broadcast by clients including the BBC, Reuters, Al Jazeera, The Economist, The Financial Times, The Independent and Foreign Policy magazine. He has reported from throughout the region, including Algeria, Egypt, Libya, Morocco, Tunisia, South Sudan, Jordan, Lebanon, Syria, Kuwait and Saudi Arabia.