Energy Efficiency Policy in Egypt and its perspectives Energy Efficiency Improvement & Greenhouse Gas Reduction Project Energy Efficiency Policy in Egypt and its perspectives

Introduction The energy sector is playing a vital role in Egypt's economy. However, the Egyptian government currently faces a real challenge to make a strategic choice between satisfying the ever increasing national primary energy demand (depending by more than 94% on oil and gas) that is being offered to end-users with subsidized prices, and maintaining a certain level of hard currency revenues from oil and gas exports at world prices, even with a growing risk of accelerated depletion rates of national proven reserves. For the electricity sector, the load and energy demand grows by more than 10 % per year where the load is expected to reach 39703MW and the energy 220450 GWh by year 2020.

Energy Forecast up to 2030

Peak Load Forecast up to 2030

Supply and Demand Sides Meeting the ever increasing demand on electricity with a high degree of reliability and sustainability has been one of the main issues addressed by the strategy developed and implemented by the Ministry of Electricity and Energy. The Egyptian Electricity sector has adopted strong measures in order to improve energy efficiency at both the supply and demand sides, this resulted in reducing the overall average specific fuel consumption from 340 gm to 221 gm of oil equivalent per kWh, reducing losses from 18 % to11.5% in 2004/2005. Comparable efforts have been conducted on the demand side to effectively utilize the electrical energy.

Electricity Energy Mix Egypt has traditionally been using large amounts of renewable energy, especially hydropower, to generate electricity. In recent times the use of wind, solar and biomass energy has contributed to electricity production. However, at present, almost 87% of the total generated electricity origins from fossil sources with 80 % natural gas , 12% from Hydro and 0.7% from wind , a rate which will increase in future due to continuing high rates of demand growth. For renewable energies a share of 20% on the energy production by 2020 For energy efficiency the objective was defined to save 20% of today’s consumption by 2020.

Electricity Sector Strategy The national strategy for Egypt’s power sector includes among others the following: Optimize use of available energy sources and minimize environment pollution Provide electricity with minimum price and best quality Restructure electricity sector to optimize investments and improve electrical services Utilize modern and sophisticated technical systems in electricity sector's operation and activities Develop the expertise and skills of engineers and technicians working in the electricity sector. Energy Efficiency Improvement

Energy Efficiency Improvement & Greenhouse Gas Reduction Project As continuation of the electricity sector efforts, the Energy Efficiency Improvement & Greenhouse Gas Reduction (EEIGGR) Project, was decided in 1998, fits very well into this strategy: The Project with the overall objective to reduce the long-term growth of greenhouse gas emissions from electric power generation and from consumption of non-renewable fuel resources is mainly based upon higher efficiency of equipment in the sector and better know-how of the professional staff through capacity building and learning. The Project’s aims were specifically to assist Egypt in loss reduction in the electricity transmission system and in load management, enhance the end-use efficiency by market incentives and provide further information and support for co-generated electricity.

Quantitative objectives for renewable energies and energy efficiency: This GEF project shall be vital to the achievement of such goals. The program presents an integrated effort focusing on electricity consumption. Given the current shortage of capacity in addition to the reduction of electricity consumption and thus C02 emissions the government of Egypt through the Ministry of Electricity and Energy has an additional strong interest in these activities as an effort to curb the growth in load. The program covers the technologies of: Energy efficient lighting (mainly CFL lamps but also modern lamps for street lighting)

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Project Activities Component 1: Loss Reduction & load Shifting in the Unified Power System (UPS) Component 2: Energy Efficiency Market Support Component 3: Cogeneration Energy Efficiency Improvement & Greenhouse Gas Reduction Project

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 1 EEIGGR Reduce Transmission Losses 0.17 MTOE Energy Savings Set Priorities for Dynamic Response of Generating Unit. LOSS REDUCTION, LOAD SHIFTING AND LOAD MANAGEMENT IN THE UPS Network Analysis & Control Strategies CO2 0.48 MTons Load Shifting through (TOU) Tariff

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 1 EEIGGR The project target is to reduce the transmission losses of the UPS from 7% – 5%, reduce energy consumption by 0.17 MTOE and 0.48 MTons of CO2.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 1 EEIGGR Improving Network Losses Measurement Capability Calibration and maintenance of measuring devices using the high accuracy (0.01%) calibrating equipment procured by the project. Improve Dynamic Response of all Thermal Stations: Assessment of dynamic response of generating units (37 units- 10 000MW) based on original specifications and take mitigation actions to improve their performance. Tuning of 24 units to work under Automatic Generation Control (AGC)

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 1 EEIGGR Improve Transmission Losses through Network Analysis and Control Strategies: Maximum use of reactive power of the generating units. Improve the power factor through installation of capacitor banks at selected locations. Optimization of network planning by using the up to date software program “Optimum Power Flow (OPF)”. Load re distribution

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 1 EEIGGR Percentage %

Fuel Saving and CO2 Reduction from component 1 All these activities lead to a reduction of percentage losses to reach 3.68% by year 2007/2008. Accumulated Fuel Savings from the start of the project in 1999 up to year 2006/2007: 3.2 MtOE. Accumulated CO2 reduction from the start of the project in 1999 up to year 2006/2007: 9.59 MTons

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Efficiency Industry Support 2.95 MTOE Energy Savings Energy Standards & Labeling Energy Efficiency Market Support Energy Codes for New Buildings CO2 8.25 MTons Energy Efficiency Center

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Audits Total of 200 energy audits using 10 different technologies have been accomplished in industrial and commercial facilities. Training of 60 engineers in the field of energy audits. 20 audits only have been implemented. Obstacles preventing Implementation Under capitalized ESCO (problems to access to finance). Unfavorable lending terms. High prices of efficient equipment. Exchange rates of the currency led to reduction of the economical attractiveness of the E.E. projects.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Loan Guarantee Program EEIGGR project has developed a new scheme for the loan guarantee mechanism to provide the necessary finance for the energy service companies (ESCOs) through providing guarantee to these companies to get loans from the banks. An agreement has been signed between the Egyptian Electricity Holding Company and the Credit Guarantee Company and an approved list of projects are expected to benefit from this mechanism.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Loan Guarantee Program 7 ESCOs have been selected and energy efficiency technologies have been adopted which can payback in less than 3 years. It is required to leverage additional funds to facilitate implementation of large size projects.

Loan Guarantee Mechanism Bank ECC ESCO EEIGGR CGC END USER EEIGGR: Energy Efficiency Improvement and Greenhouse Gas Reduction project CGC: Credit Guarantee Company ESCO: Energy Service Company EEC: Egyptian Consulting Center 100% loan guarantee Loan payment Loan Installment EE Project Legal, accounting and administrative support Partial guarantee (50-70%) Registration Techno-economical feasibility Reporting Technical Support Marketing Subcontracted

Efficient Lighting Initiative In Egypt, the share of lighting accounts for nearly 23 % of the total energy sold in the country : The residential and commercial sectors consumes nearly 25% of their energy -estimated at 44% of the total energy – for lighting purposes, the lighting consumed by the industrial sector accounts for10%, while the public lighting and government buildings lighting accounts for nearly 7% .

Share of lighting out of the total consumption for the most consuming sectors % of lighting out of sector consumption % of lighting out of total consumption Residential 37.2 25 9.3 Commercial 7.2 1.8 Industrial 35 10 3.5 Governmental 5.6 38 2.1 Street Lighting 6.8 Total 91.8 23.5

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Project Initiatives to face these obstacles: Study for the reduction of custom duties of two selected equipments : CFL from 30% to 5% and efficient motors from 30% to 10%, ( not yet approved). Undertake a program for the diffusion of CFL by the DCs through replication of the leasing program. Encourage the Local manufacturers to manufacture CFL locally (6 factories were established). Public awareness program for the diffusion of efficient lamps which led to the increase of the market size of CFL from 434 million/2001 to 4.4 million/2007 Encourage NGOs to implement energy efficiency projects.

Component 2 4.4 Million Development of Egyptian Market for CFL’s Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Development of Egyptian Market for CFL’s 2000 To 2007 No. of CFLs 4.4 Million Year

Component 2 Decrease of price lamp from 1999-2008 EEIGGR Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Decrease of price lamp from 1999-2008

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 2 80 EEIGGR Cooperation with NGOs Cooperation with GEF Small Grants Program (SGP) to assist 7 NGOs in financing energy efficiency lighting programs. Promoting the use of efficient lighting equip. many demonstration application have been executed at different locations: Some street lighting, in Cairo and Alexandria; Headquarter offices, garage and some offices in EEHC building (total of 620 lamps); Electricity compounds and power plants in Cairo.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Within the cooperation with NGOs training of 60 electric technicians and lending them money for buying and mounting CFL and electronic ballasts to customers thus their increasing awareness Application of leasing program for CFL (revolving fund) in Cairo, Alexandria and Beheira DCs

Fuel Saving and CO2 Reduction from efficient lighting applications Accumulated Fuel Savings from the start of the project in 1999 up to year 2006/2007: 0.77MTOE. Accumulated CO2 reduction from the start of the project in 1999 up to year 2006/2007: 2.274 MTons

Public Lighting and Governmental Buildings Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Public Lighting and Governmental Buildings Public lighting and governmental buildings consumes 7%and 5.5% respectively. Two important studies were carried out: Energy efficiency opportunities in governmental buildings, Public lighting energy efficiency through the use of efficient lighting systems.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Efficiency Initiatives in Governmental Buildings Study recommendations: Short term recommendations: Appointment of an energy manager for each governmental building in addition to awareness programs Medium term recommendations : Implementing retrofits of the current governmental building facilities especially for the lighting system, in addition of improving power factor for these buildings. Long term recommendations: Developing governmental procurement guidelines to take into consideration energy efficiency concept. This stage will rely on the results and experience gained from the medium term recommendations.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Efficiency Initiatives in Governmental Buildings The Ministry of Electricity and Energy has taken the initiative of starting by its own buildings. The electricity distribution companies started already implementing energy efficiency measures in their administrative buildings where real savings have been achieved

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Efficiency Labels and Standards: A ministerial decree of the Minister of Industry was issued for applying the specifications and the energy efficiency labels for three selected appliances (Refrigerators, air conditioners and washing machines). Accredited Energy Efficiency Testing Laboratories have been erected at New and Renewable Energy Authority premises for the (Refrigerators, air conditioners and washing machines). Efficient lighting equipment CFLs and electronic ballasts

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Energy Efficiency Labels and Standards: Refrigerators and Washing Machines and efficient lighting Energy Efficiency Testing Labs. At NREA

Energy Efficiency Improvement & Greenhouse Gas Reduction Project 80 Component 2 EEIGGR Residential Energy Efficiency Building Code A ministerial decree (482/2005) by the Ministry of Housing Utilities & Urban communities has been issued on 20/12/2005 for enforcement of E.E. code for residential buildings. The Ministerial decree for the commercial buildings will be issued within the next few months. Work is undergoing for developing an energy efficiency code for the administrative buildings. Legislation is needed for ensure enforcement mechanisms for adoption of energy efficiency building codes where the expected savings could reach 20 to 25% of the consumption.

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 3 EEIGGR 1.08 MTOE Energy Savings Legal Framework Cogeneration Agriculture Waste CO2 3.00 MTons

Energy Efficiency Improvement & Greenhouse Gas Reduction Project Component 3 EEIGGR Maximize the utilization of the existing cogeneration capacity An Agreement with Arab Contractors Co. has been signed to develop the cogeneration unit at Alu Misr for its parallel operation with the grid. A feasibility study for the parallel operation has been carried out for testing the unit under loading conditions and identify ways to improve its current load factor of 57% to an increased targeted load factor of 80% after maintenance.

Future Energy Efficiency Projects Energy Efficiency Improvement & Greenhouse Gas Reduction Project Future Energy Efficiency Projects EEIGGR National Efficient Lighting Initiative (NELI) in Egypt Develop Energy Efficiency Standards and Labels for More Electrical Appliances. Increase the capacity of the loan guarantee mechanism for financing more energy efficiency projects. (Part A) National Efficient Lighting Initiative in Residential Sector PART (B) Energy Efficiency Improvement in Governmental Buildings.

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