1. Egypt’s Electricity Subsidy Removal and the Unified Electricity Law; Paving the Way for Renewables SME Growth

2. Presentation’s Contents
Egyptian Context:
Egypt’s fiscal dilemma
Solutions
Subsidy removal benefits and plan
Renewable Energy potential and plan

3. Egypt’s Fiscal Dilemma
State Budget Expenditure
25.5%
Governmental Wages
24.7%
Debt Service
32.6%
Subsidies
56%
Electricity and Energy Subsidies

4. Egypt’s Fiscal Dilemma Contd
This puts the Egyptian government in a dilemma of having less than 25% of its state expenditures to developmental and other programs.

5. Solutions Long Term Short and Medium Term
Government wages restructuring
New civil workers’ law
Short and Medium Term
Removal of Subsidies; mainly Electricity and Fossil fuel subsidies
Developing Renewable Energy

6. Benefits for Energy subsidy removal in Egypt
A more relaxed state budget
Less budget deficit; which means Less debt
More resources can be allocated to developmental efforts

7. GoE Embarked on a Plan to Eliminate Electricity Subsidies by 2019
The Egyptian government, in 2014, decided to gradually decrease electricity subsidies within 5 years when they will be eliminated.

8. New Unified Electricity Law
It allows for private sector participation, in the generation of electricity, for both locals and foreigners
Allows for the first time for private sector participation in the transmission of electricity
Introduces the concept of competitive electricity markets for the first time in Egypt

9. New Unified Electricity Law Contd
Restructures the roles of both the Egyptian Electric Utility & Consumer Protection Agency (“ERA”) and the Egyptian Electricity Transmission Company (“EETC”)
Codifies the fundamentals of permitting and licensing; and
Unifies various regulations relating to the electricity sector

10. Renewable Energy Plan
Increase the share of generated energy from Renewable Energy
Renewable Energy to be 20% of the total electricity generation by 2022
12% Wind
4-6% Hydro
2-4% Solar Power (Targeting to install 3,500MW)
The Egyptian government has embarked on an ambitious plan to produce 20% of electricity generation by 2022.

11. Solar Potential in Egypt
Egypt is a prime location for the use of Solar Energy.
The country enjoys 2,400 hours of solar operation with high intensity of solar radiation equivalent to 2,600 KWh/m2 annually.
Egypt receives some of the highest solar radiation power levels in the world, coupled with the fact that 96% of the country is desert;

12. SMEs Challenges Access to Finance is limited Human capacity is limited
Government policies have been ignoring SMEs development, but
This is beginning to change
The Egyptian government realized that SME entities have the potential to act as the backbone of the economy, therefore;
Regulations have been put in place for banks to allocate 20% of their loan portfolios to SMEs over the coming 4 years

13. Renewable Energy: a Fertile Industry to Foster SME Growth
Renewable Energy; with the great potential outlined above can foster SME development in a number of ways:
SMEs can work as subcontractors for solar power projects without the need for direct access to finance.
When SMEs operate alongside experienced solar or renewable energy firms, they will gain first grade knowledge raising their human, technical as well as financial capacities.
Solar projects, according to the round 2 FIT program must provide 30% of its’ components from local suppliers
This provides SMEs with opportunity to benefit from this regulation, if they were able to seize it and supply what the promising solar and renewable markets in Egypt will offer.

14. FIT Rounds 1 and 2 FIT Round 1 FIT Round 2 Residential 84.4 P.T/Kwh
PV Power Installed Capacity
Corresponding FIT
Residential
84.4 P.T/Kwh
<= 200KW
90.1 P.T/Kwh
200KW <= Installed Capacity < 500KW
97.3 P.T/Kwh
500KW <= Installed Capacity < 20MW
13.6 $.Cent/Kwh
20MW <= Installed Capacity < 500MW
14.34$.Cent/Kwh
PV Power Installed Capacity
Corresponding FIT
Residential
102.8 P.T/Kwh
<= 200KW
P.T/Kwh
200KW <= Installed Capacity < 500KW
500KW <= Installed Capacity < 20MW
7.88 $.Cent/Kwh
20MW <= Installed Capacity < 500MW
8.4 $.Cent/Kwh

15. Electricity Prices Before and After partial Subsidy Removal
2014/2015
2015/2016
Residential
0-50
7.5
P.T/Kwh
51-100
14.5
0-200 16
30.5
40.5 71
over 1000 84
Residential
0-50 11
P.T/Kwh
51-100 19
0-200
21.5 42 55 95
over 1000

16. Electricity Prices Before and After partial Subsidy Removal
2014/2015
2015/2016
Commercial
0-100 32
P.T/Kwh
0-600 56 81
over 1000 86
Commercial
0-100 35
P.T/Kwh
0-600 69 96
over 1000

17. Lower, Middle and Higher Tiers Prices
It is clear from the above tables that the lower tiers of electricity consumption will not be affected much by the removal of subsidies.
Current Price of Electricity for the middle and high consumers which is  expected to increase even further, will render solar PV as a feasible alternate energy sources
creating potential for propagation of solar Energy and creating an emerging market for IPPs

18. Medium Scale PV plants (500kw-20MW) is the Way to Go in Egypt