Wednesday, October 7, 2009

Egypt: Plenty of sun, nobody catching any rays

[30 Jul 2009]

Egypt receives some of the highest annual solar radiation in the world, yet the desert country remains heavily dependent on fossil fuels.

"There is a lot of unachieved potential here," says Amr Mohsen, chairman and CEO of Lotus Solar Technologies, an Egyptian firm specialising in solar applications. "The sun is not only strong, but you have everything you need to produce the cheapest kilowatt hour in the region."

Egypt lies in the North African sun belt with flat desert topography and perennially clear skies favourable to commercial solar technologies. Annual solar concentration averages 2,300 KWh per square metre, about 130% higher than Germany; yet per capita use of solar technologies is less than 10% of Germany's.

Instead, the country relies on dwindling oil and gas reserves to generate over 85% of its energy requirements. A national strategy to utilise 20% renewable energy by 2020 anticipates a share of just two percent for solar energy, the remainder allocated to hydro and wind energy.

While photovoltaic (PV) solar panels are used to power some low-energy applications such as telecom relay towers and highway billboards, consumer initiatives to encourage the use of solar water heating have failed to generate widespread support.

"The total area of domestic solar water heaters in Egypt is 400,000 to 500,000 square metres for a population of 80 million - and half (the units) don't work," says Mohsen. "In Israel, by comparison, the area is six million square metres for six million people."

Mohsen attributes the low penetration rate to a combination of factors, including high upfront cost, risk aversion, and the reluctance of high-rise tenants to share limited roof space. "About 90 percent of residential buildings in Egypt are five storeys or taller with a lot of different families occupying their apartments," he says. "The roof is used mostly for TV antennas and satellite dishes."

A 360-litre solar water heater, enough to meet the daily hot water needs of a small family, has a six-square-metre footprint and costs about 1,200 dollars. "It takes only five years to realise savings," says Gamil Nazir, a sales technician at Egypt Solar Energy Systems. "But people don't buy because the initial cost is high and the government doesn't offer any financing incentives."

According to Nazir, most solar water heater installations have been in the so- called new communities that have been built on the outskirts of the major cities. A ministerial decree issued in the mid-1980s requires all homes in these communities to utilise solar water heating. Up to 500,000 units have been installed, though most are believed to be inoperable or disconnected.

The decree was a positive step, says Mohsen, but consumers were turned off by the shoddy quality of government-built solar water heaters used by state contractors.

Residents of these new communities included some of the nation's leading businessmen, who may have carried their negative perceptions of solar energy to the boardroom. Industrial process heating remains the largest untapped potential application for solar energy in Egypt.

"More than half of the fossil fuel burnt in Egypt is for the sole purpose of heating water or generating steam, which is well within the reach of solar technology," says Mohsen. Solar hot water systems could be used to pasteurise milk, sterilise bottles and clean laundry in tens of thousands of factories and businesses.

Egypt's first solar steam plant, which went online in 2004, replaced boilers that burned mazout (heavy oil) to produce steam for a pharmaceutical plant. But the experimental project, with 2,000 square metres of reflective surface, was undermined by the government's poor choice of location. The rows of parabolic mirrors are located inside a military industrial complex, downwind from a factory emitting corrosive particulates.

Despite pitting of the sensitive coating on the reflectors, the solar boiler managed to produce steam within spec, proving the design's feasibility. Yet apart from some tourist resorts in remote areas, Egyptian companies have shown reluctance to switch to solar water heating, citing space and cost concerns.

Many company owners are unaware of financial incentives offered for converting to solar energy. Factories that apply clean energy solutions are eligible for a grant from the Cairo-based Industrial Modernisation Centre (IMC) equivalent to 15% of the conversion cost. They may also receive funding under the Clean Development Mechanism (CDM) of the Kyoto Protocol, which enables companies and governments to meet their emission compliance targets by funding energy-saving projects in developing countries.

Mohsen says the availability of cheap, subsidised oil and gas means companies have no incentive to change. "With subsidies in place, the payback on capital for mazout (conversion) is about 10 years; and about six years for natural gas. But if you remove subsidies on natural gas, the payback comes in under four years. People would certainly reconsider then."

Egypt is preparing new legislation to regulate its electricity sector that proposes the removal of energy subsidies and, for the first time, feed-in tariffs for renewable energy. But what could really shift the balance is an amendment to municipal building codes, say environment officials.

"We need legislation establishing that building permits will not be issued to investors unless they install solar water heaters on the roofs of their buildings," says Hisham El-Agamawy, head of Energy Projects at the Egyptian Environmental Affairs Agency (EEAA). "This will encourage owners of factories, offices and apartments to think green."

After a long delay, construction has begun on an experimental solar thermal power plant at Kureimat, 95 kilometres south of Cairo. When operational, the integrated solar combine cycle (ISCC) facility will generate 150 MW of electricity from a gas turbine and 20 MW solar field. A low solar fraction undermines the project's viability as a commercial model, say critics, but its operation should provide valuable expertise for other solar energy projects.

Egypt is also among candidates for a 550 billion dollar project to build solar collectors in North African deserts to supply 15% of Europe's energy by 2020. Interest in the project has many Egyptians thinking that if European energy users see the commercial viability of generating solar energy in Egypt and transporting it thousands of kilometres, surely Egyptians can do it in their own backyard.

Article published courtesy of IPS Africa