Egypt has recently intensified its efforts to transform itself into a regional energy hub, exchanging electricity with the Arab, African and European countries. Having hosted the 27th Conference of Parties (COP27) of the United Nations Framework Convention on Climate Change in November 2022, the Afro-Arab nation is poised to take on the climate challenge with the help of international partners. During COP27, the US, the European Union (EU) and Germany announced a package of $500 million to finance and facilitate Egypt’s transition to clean energy, and accelerate the country’s ambitious goal of reaching 42 per cent of electricity generation from renewable energy sources in 2030, five years ahead of the previous target of 2035. This translates into about 61 GW of renewable energy capacity. To begin with, the programme will deploy 10 GW of new wind and solar energy while decommissioning 5 GW of inefficient natural gas generation. Egypt’s Vision 2030 aims to achieve a diversified, competitive and balanced economy within the framework of sustainable development. Egypt has also committed to adopting an ambitious 2050 strategy to explore a net zero greenhouse gas (GHG) emissions target, and launch green hydrogen development. During the COP27 summit, Egypt signed 10 MoUs for green hydrogen, for capacities of up to 50 GW.
That said, the country missed achieving its 2022 target of having 20 per cent of its electricity sourced from renewable energy sources, partially on account of the influx of natural gas due to the discovery of the Zohr natural gas field, the largest field in the eastern Mediterranean region. In fact, the country has taken concrete steps over the past few years to reverse its electricity deficiency into surplus, mainly through the installation of giant gas-powered plants (successfully moving away from the more carbon-intensive coal and oil). Egypt doubled its installed power capacity over the past six to seven years to over 59 GW by 2021, which is close to double the country’s maximum consumption of about 33 GW, creating a huge power surplus. Given its strategic location in the eastern Mediterranean, Egypt is well placed, for the long term, to play an important role in servicing electricity markets on three continents.
Hence, the country intends to strengthen its regional cross-border links as well as build new high capacity lines connecting to European, African and Middle Eastern countries. The country’s high voltage grid developer, the Egyptian Electricity Transmission Company (EETC), is taking steps to modernise and expand transmission networks in order to accommodate new interconnectors and renewable energy capacity addition, as well as energy storage. Several new high voltage overhead lines and transformer stations have been launched. EETC spent a capex of EGP 12.3 billion in 2022 towards the implementation of planned works during the year.
EETC’s parent company, the Egyptian Electricity Holding Company has adopted new policies aimed at constructing infrastructure for energy trade at the regional and global levels. It aims to establish electrical interconnections with neighbouring countries through existing projects between Jordan, Libya, Syria, Lebanon and Sudan, as well as projects to be implemented with Saudi Arabia, Cyprus, Greece, Italy and the Gulf Cooperation Council Interconnection Authority (GCCIA), which owns and manages the Gulf electrical interconnection network. Investments in interconnectors are expected to rise to at least $2 billion during the next four years (up to 2026) in addition to investments in the domestic network. Further, in January 2023, EETC signed two contracts with Belgium’s Elia Grid for the provision of consulting services for Egypt’s electricity sector. Under the first contract, Elia Grid will review Egypt’s dynamic model of the unified electrical network, as well as its planning for upcoming interconnection projects with neighbouring nations and Europe. Under the second contract, Elia Grid will offer consulting services related to studying the needs of the unified network in order to accommodate renewable energy for green hydrogen projects. Egypt is also collaborating with its African counterparts. Earlier this year, Egypt signed an MoU with Nigeria to enhance bilateral cooperation in various areas, including technical support for electricity production, development of electricity networks and promotion of renewable energy systems.
Egypt’s efforts to transform its power sector have been supported by financial assistance from multilateral lending institutions such as the European Investment Bank, the World Bank, the Arab Fund for Economic and Social Development, Age-nce Française de Dévelopment, the Kuwait Fund for Arab Economic Development (KFAED) and the Islamic Development Bank (IsDB).
Existing infrastructure
As of 2021, Egypt’s electricity sector has an installed capacity of around 59 GW. The majority of this capacity is powered by the country’s large natural gas resources, with gas-fired plants – like the Siemens/Orascom Construction/Elsewedy Electric combined cycle power plants – accounting for about 60 per cent. During the period 2017-21, the country witnessed a significant rise in its renewable-based generation capacity, from 0.88 GW in 2017 to 3.01 GW in 2021, registering a compound annual growth rate (CAGR) of 35.79 per cent.
As of 2021, Egypt’s transmission network comprised about 31,084 ckt. km of transmission lines and 112,208 MVA of transformation capacity between the 132 kV and 500 kV levels. Between 2017 and 2021, Egypt’s transmission line network grew at a CAGR of 6.6 per cent, with net additions of about 7,000 km. By 2021, Egypt sold 1,591 GWh of energy by means of electrical interconnections with the neighbouring countries of Libya, Jordan and Sudan.
Future investments in interconnectors
Egypt is currently working on several key interconnections, including those with Saudi Arabia, the GCCIA Grid (a 400 kV system connecting the six countries of Kuwait, Saudi Arabia, Bahrain, Qatar, Oman and the UAE), Jordan, Sudan, Cyprus, Greece and Italy. These projects are expected to enhance energy security and enable the exchange of surplus renewable energy among these countries. Recently, in February 2023, Hitachi Energy deployed its SVC Light static synchronous compensators in EETC’s grid in the strategic Owainat development area in southwest Egypt, to help improve grid stability and expand transmission capacity. It is also part of the government’s plan to make the country a regional hub for electricity exchange with Africa and Europe.
Egypt-Saudi Arabia Grid Interconnection Project: EETC and National Grid SA, a subsidiary of the Saudi Electricity Company, are developing a ±500 kV multi-terminal high voltage direct current (HVDC) link from Badr in Egypt to Al-Madinah Al Munawara via Tabuk in Saudi Arabia. Three converter stations will be built as part of the project – two in Badr, Egypt, and one in Saudi Arabia. The 3 GW interconnector will allow Egypt and Saudi Arabia to capitalise on the differences in their peak power demand times, facilitate trade, and enable cost savings of around $3.7 billion. Of the project cost of $1.6 billion, 40 per cent will be paid by Egypt and 60 per cent by Saudi Arabia. KFAED and IsDB are supporting Egypt for its part of the project. The project is expected to be completed by 2028.
EuroAfrica Interconnector Project: The 2 GW project, which is being developed by EuroAfrica Interconnector Limited, a unit of Cyprus-based Quantum Energy, will connect the electricity grids of Egypt, Cyprus and Greece through a 1,396 km HVDC subsea interconnector and three converter stations – one each in Egypt, Cyprus and Crete – with multi-terminal operations. It is divided into two parts – the 498 km Damietta (Egypt)-Kofinou (Cyprus) and the 898 km Kofinou (Cyprus)-Korakia (Crete) connections. The two parts are expected to be commissioned in 2023 and 2024 respectively. Following the completion of the project, Egypt will export electricity to Greece and Cyprus, turning it into an energy hub for Africa and a transporter of electricity for Europe.
GREGY-Green Energy Interconnector, Egypt-Greece: Being developed by Elica SA, a part of Greece’s Copelouzos Group, this 1,472 km double-circuit subsea cable connects Wadi-El-Natroon (Egypt) and the Attica region of Greece. It will transmit low-cost green energy, of which one-third will be provided to local industries and the balance exported to EU countries. The 3 GW HVDC project is a part of the European Network of Transmission System Operators for Electricity’s draft Ten-Year Network Development Plan 2022. The project is expected to be completed by 2028.
Egypt-Italy Interconnector: In January 2023, Italy submitted a proposal to EETC for working on joint electricity interconnections across the Mediterranean with a capacity of 2.5 GW to 3 GW. This proposed $2.8 billion project is expected to be funded by Italian banks and European financing agencies.
Egypt-Sudan Interconnection Project: The first phase of this project involved the construction of a 220 kV line connecting Toshka, Egypt, to Wadi Halfa, Sudan. It was energised in April 2021, facilitating 80 MW of power exchange between the two countries. Phase II is expected to increase the exchange capacity to 300 MW by upgrading the operating line voltage to 500 kV. Of the total line length, about 70 km is in Sudan and 100 km is in Egypt. In the longer term, the aim is to further boost the power exchange capacity between the two countries to 1,000 MW.
Egypt-Jordan-GCCIA Interconnection Project: Egypt and Jordan are working together to double the exchange capacity from the existing 550 MW. It is expected to be further increased to 3 GW subsequently, and is proposed to be extended up to Iraq. Meanwhile, a new interconnection is planned as part of the interconnected 400 kV electric grid. This will link the GCCIA Grid with the systems of Jordan and Egypt, with the aim of enhancing system reliability, improving quality of supply and paving the way for the creation of an electrical energy market in the Arab region.
Egypt is looking to fully utilise its surplus generation capacity and exploit its strategic geographical location to develop various grid interconnections with North African, Arab and Mediterranean countries and facilitate power trade, thereby boosting the country’s economic growth and development. However, to reap the benefits of its upcoming generation capacity by establishing interconnectors, the country’s future transmission investments should be directed towards developing grid infrastructure to evacuate power from generation plants, including renewable energy projects.
