Egypt eyes private wind farms
Cairo, March 17, 2010
Egypt is likely to launch the second round of bidding in mid-2011 to choose from 10 firms short-listed to build its first private wind farm, a World Bank energy specialist said on Tuesday.
In the first round, Egypt shortlisted the firms in November 2009 for the 250-megawatt project. The most populous Arab country, trying to diversify its energy sources, aims to generate 12 percent of its power from wind by 2020.
The success of this bidding process is key to achieving a target to boost Egypt's wind capacity to 7,200 megawatts from the current 520 megawatts over the next 10 years, said Mohab Hallouda, senior energy specialist at the World Bank, which is assisting the tender process.
"It is a bit difficult to achieve 7,200 by 2020. I think if they reach 5,000 megawatts by then, that would be quite a good achievement," said Hallouda, who is based in Cairo and specialises in the Middle East and North Africa.
"It will depend on how successful the competitive bidding will be. 2020 is 10 years away and that means they need close to 600 megawatts (more) at least every year," he said in an interview.
"They need to speed up the private company involvement," he said, adding that 2,000 megawatts of the 7,000 megawatt target was expected to be generated by the private companies.
The wind farm will be constructed on a build-own-operate (BOO) basis, and is expected to start up in 2014.
The project developer will design, finance, construct, own and operate the power plant for 20 to 25 years and will sell the power produced during that period to the Egyptian Electricity Transmission Company.
Another difficulty could be securing financing, he said. The government funds wind projects through what Hallouda called 'soft financing' -- bank loans with long maturities and favourable interest rates.
"This is not always very easy to get," Hallouda said. Egypt should also speed up efforts to expand in solar energy, Hallouda said, saying it had huge potential due to the high amount of sun it gets and the available land.
The country's first solar power plant will start production by the end of the year. The integrated solar thermal power plant, located south of Cairo at Koraymat, has a capacity of 140 megawatts, of which 20 megawatts comes from concentrated solar generation.
Solar projects in the northern African country have lagged behind wind schemes. Hallouda said high costs were one of the main reasons.
"As the technology develops and there is more local manufacturing and understanding and more human resources in this field, I think the cost will come down and it would be beneficial for the sector to engage in such a technology early in time," he said.
The World Bank currently partly finances four energy projects in Egypt, including gas, electricity and renewable energy. Projects are worth a total of nearly $3 billion.
Hallouda said two more power projects, worth around $1.5 billion, were waiting for World Bank partial funding approval. - Reuters