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AfrElec COMMENTARY AfrElec
Egypt abandons coal as renewables prove cheaper
Coal cannot compete with solar and wind on price in Egypt, as Cairo abandons its flagship clean coal project, writes Richard Lockhart
EGYPT
WHAT:
Egypt has shelved plans for 6,600MW of coal capacity
WHY:
There is a danger of
a power surplus and solar and wind are now cheaper
WHAT NEXT:
Africa’s large coal-to- power projects now face an uncertain future as competitive tendering pushes down the cost of renewables
EGYPT has abandoned its plans to build 6,600MW of coal-fired capacity at Hamrawein, as the government is worried about future over- capacity and the cost of renewables continues to fall.
The Chinese-backed project, which had been previously talked up by Cairo as the world’s larg- est clean coal project, has fallen victim to coal’s new status as the world’s most expensive fuel as oil and gas prices fall.
The coal plans had previously been part of the government’s Integrated Sustainable Energy Strategy (ISES) to 2035, but Cairo’s recent emphasis on new solar and wind pro- jects, together with falling prices for renewables, means that the project faced being a stranded asset and would no longer be economically viable.
Project details
The project dates back to 2015, when the gov- ernment lifted restrictions on developing new coal plants.
Then in 2018, state-owned Egyptian Electric- ity Holding Co. (EEHC) announced that China’s Shanghai Electric and Dong Fang Electric, as well as local developer Hassan Allam Construc- tion, had had won a tender to build the project at a cost of $4.4bn. The deal involved a price of $0.054 per kWh for the capacity’s output.
The project was hailed at the time as the world’s largest clean-coal project, and Chinese and Egyptian banks said they would fund it.
In July 2019 Cairo also cancelled proposals for the 2,640-MW Oyoun Mousa coal project over worries that the country could have a sur- plus of generating capacity.
Green energy
At the end of 2018 Egypt had 50,000MW of installed capacity. This included 2,400MW of hydro, 1,000MW of wind and 170MW of solar. The rest was a mix of coal, fuel oil and gas.
Indeed, renewables accounted for just 3.5 TWh of generating output in 2018, or 1.75%, compared with 160.9 TWh (80%) from gas and 13.5 TWh (6.75%) from hydro, according to gov- ernment figures.
However, the government has set ambitious targets for renewables to account for 20% of elec- tricity generation by 2022 and 42% by 2035.
Solar is a key part of this, and the Benban Solar Park is rapidly approaching its design capacity of 1,465MW after opening its first 65-MW solar array at the start of 2019.
In the wind sector, Siemens Gamesa has plans to build 1,000MW of wind capacity, and in October 2019 announced a deal with IPP Lekela Power to build 250MW at the West Bakr wind farm.
The project was hailed as the world’s largest clean-coal project, and Chinese and Egyptian banks said they would fund it
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w w w . N E W S B A S E . c o m Week 14 09•April•2020