Where is Egypt from the Energy Market Transformation
The global energy landscape is experiencing a huge transformation. Countries are exploring sustainable substitutes to current energy generation methods, diversifying their investments, and pouring funds into renewable technology development. Also, governments are putting energy security at the forefront of their agendas. While this has meant efforts to diversify the energy mix away from fossil fuels and towards renewable energy, it has also driven countries to diversify the sources of their energy imports. This has placed Egypt in a good position to make a significant contribution to energy security regionally & globally.
Why Egypt is a Potential Regional Energy Hub
Abundant Natural Resources
Egypt has abundant natural resources which makes it a potential regional energy hub. Egypt is a country with one of the world’s largest reserves of natural gas and oil. It also has significant solar and wind power potential, with the capacity to generate around 20% of its electricity from renewables.
Egypt has been able to use this resource to provide cheap energy for the region. Egypt has an ambitious plan to increase its gas production and exports, which would allow it to become a regional energy hub.
Regarding the leaps that have been taken in nuclear power, the GoE, in partnership with the Russian Company Rosatom, is working on the construction of a nuclear power plant in Al-Dabaa in Matrouh Governorate (northwest). The first unit of this project is planned to enter force in 2026. The plant will contain four nuclear units and be able to produce 4,800 MW of electricity if plans proceed. To provide further support for its nuclear ambitions, Egypt is set to establish a nuclear power industry regulatory agency.
Global Energy Changes are in our Favor
Global Energy Crisis
Following the Russian-Ukrainian war, European countries have been facing an energy crisis, with Russia dropping supply by up to 60% in gas deliveries since June 2021. Europe is now in a race against time to find a replacement for Russia’s natural gas. Europe is planning to replace the natural gas it exports from Russia with gas from alternative exporters such as Azerbaijan, the US, Canada, Norway, Israel, and, more importantly, Egypt.
The current trends in global energy changes are going in a green direction. As we move towards a greener future, we will also reap the benefits of cleaner air, water, and soil. Although Fossil fuels still account for more than 80% of global energy production, cleaner energy sources are gaining ground. The International Renewable Energy Agency (IRENA) estimates that 90% of the world’s electricity can and should come from renewable energy by 2050.
Renewable energy is actually the cheapest power option in most parts of the world today. Prices for renewable energy technologies are dropping rapidly. According to a UN report, the cost of electricity from solar power fell by 85% between 2010 and 2020. Costs of onshore and offshore wind energy fell by 56% and 48% respectively. Falling prices make renewable energy more attractive – including to low- and middle-income countries, where most of the additional demand for new electricity will come from. Thus, Egypt could benefit from emerging synthetic fuel markets and profit from energy carrier exports to neighboring countries.
How Could Egypt Export More & Make Sustainable Gains From The Current Changes In The Energy Markets?
Focus on Domestic Gas Supply
Egypt needs to focus on domestic gas supply, displacing the use of the still widely used diesel, which is putting a heavy burden on the government as Egypt imports about 25 –30% of its needs of petrol and diesel fuel. The Zohr field has been producing less than initially expected, and fresh offshore exploration is slowing down. Also, Egypt appears set to rely on re-exporting gas imported from its regional neighbors, leaving it with the possibility to profit only from transit and liquefaction fees.
Attract Investments In Gas Exploration, Renewables & Green Hydrogen Facilities
There is now huge importance in attracting foreign investment in green hydrogen as Egypt is seeking to attract more cooperation and investment in green transformation projects, particularly in light of the country’s presidency of COP27. Renewable energy projects need to obtain permits and licenses to operate in Egypt. These include different power plant construction permits, a request from the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egypt) for power generation, and an environmental and social impact assessment (ESIA).
Develop a Strong Infrastructure
Countries with infrastructure for oil and gas, like Egypt, could build on their experience in handling gas and liquid fuels. With the support of power-to-X (PtX) technologies, energy-exporting countries could switch smoothly from a fossil fuel phase to a renewables-based energy system. However, to achieve this goal, the infrastructure would have to be retrofitted on a large scale for transmission and storage.
Also, Egypt needs to maximize the efficiency of its liquefaction complexes so that they better process additional Egyptian gas or surplus gas from Egypt’s regional partners such as Israel and Cyprus.