» Current Consumption and Prospects
» Renewable Energy & Energy Efficiency potentials in Egyptian industry
» Rationale and behavior of investors and consumers
» Energy prices
» Framework conditions, incentives and support schemes
» International cooperation projects
» Current Consumption and Prospects
Industry is the most important final energy consuming sector in Egypt. In 2006 it consumed approximately 16.8 Mtoe, not including energy for feedstock. Natural gas has, after a fast growth period since 2000, reached a share of 40% since 2005, surpassing oil products (the statistics for 2005 to 2007 show a confusing backlash of gas consumption in 2006). Electricity is approaching 20%. Renewable energy in the form of solid bio-energy account for about 4%. Coal, with 1%, is used only for producing oven coke in the iron and steel industry. Egyptian projections expect high growth of industrial energy consumption following rapid expansion of industrial production. In such high growth scenario, energy consumption could arrive at some 48 Mtoe by 2030. Agriculture is consuming approximately 2 Mtoe (2005), 1.7 Mtoe petroleum products and the remainder as electricity. Renewables in agriculture are still insignificant.
» Renewable Energy & Energy Efficiency potentials in Egyptian industry
Energy productivity in Egyptian industry is below international average. Final energy consumption per unit of output (i.e. specific energy consumption) in the most important industries is, in comparison, 10 to 50% higher in Egypt than the international average. Energy saving potentials can therefore be considered relatively high, in view that the international average is still far less efficient than the top runners with the best available technologies in the particular industries. It is estimated that industry could have produced the same output with 20% less energy in 2005, i.e. 3.2 Mtoe. The Energy Commitee reporting to the Policy Group of the National Democratic Party has proposed to set the goal to achieve this reduction in existing plants by 2020. The new plants should achieve world class energy productivity.
Energy intensive industries in Egypt with significant potential to reduce fossil fuel and electricity consumption (in brackets the %age of energy intensity above world average according to the cited Energy Commitee and the Industrial Modernization Center) are the chemical and fertilizer (21%) industries, the iron & steel (34%) and aluminum industry (10%), paper and pulp industry, the cement (11%) and building materials industry, the glass and ceramics industry and the food industry, closely related to the agricultural sector. The textile industry (31%) is less intensive but to be considered because of its importance in Egypt. There are numerous obvious possibilities to improve energy productivity, hand in hand with overall productivity and product quality. Studies to specify and quantify cost efficient of economic energy efficiency and RE potentials in industry are still scarce. Operating power and drives is the most widespread energy service in industry and agriculture, accounting for 60 to 80% most of the electricity consumption. Saving potentials are significant in the motor systems, including the electrical drives and the second conversion devices like pumps, compressors, conveyors, and the networks through which the water, air, processed materials flow, as well as the control of the operation according to requirement. In agriculture, the irrigation and pumping systems have significant potentials for energy and water efficiency. In addition, solar photovoltaic pumping in combination with high efficient drip irrigation systems, increasingly used in remote locations, can be applied much more widely. Light and ambient cooling are the other ubiquitous electricity uses: Efficient lighting including use of daylight, efficient and solar assisted HVAC systems offer options to reduce electricity consumption from the grid. Where heat processes are involved, steam or heat system efficiency, heat recovery and also solar assisted heat and drying or shift to biogas or other bio-residues are wide areas of reducing fossil fuel requirements substantially. In the production of energy services on site, increasing efficiency of the multitude of boiler reduces fossil fuel input. Wherever sufficient heat, cooling and power demand is given or where a residue can be used as fuel, cogeneration, i.e. combined heat and power (CHP) generation reduces overall energy generation efficiency and can be combined with cooling services. Renewables can, and should, replace fossil fuels as a source of heat. The high solar irradiation in Egypt could be used for solar heat, but specifically from biogenic residues within the food industry as well as in the paper and pulp industries. Good wind resources are available in Egypt, but can more effectively be provided to the industry and other users through the grid, as with concentrated solar power and hydropower. In the specific processes of iron and steel, cement, ceramic and other industries, various EE and EE opportunities exist.
» Rationale and behavior of investors and consumers
Energy consumers in the industry sector are businesses and operate with business rationality, i.e. are economically rational and take into consideration revenues and costs, in particular when competition is strong. However, energy is one of several cost factors and, except in a few industries like aluminum, iron & steel, cement or food is not receiving priority attention. Energy efficiency and RE-relevant investment is decided at the installation of a new plant or at the occasion of a comprehensive modernization investment. Within existing plants, smaller adjustments like exchange of defective motors or light are made, in addition to controls of processes to avoid spilling. Investors and consumers are identical. Operating personnel is operating according to guidelines by the management. Larger energy consuming companies (should) have a specialized energy manager. The (internal) energy manager is one of the agents type for energy efficiency, in addition to (external) energy auditors, and energy service providers or energy service companies (ESCOs). They can however only be effective, if either a mandatory rule requires them and/or sufficient incentives exist in the framework conditions and prices.
» Energy prices
The GoE has led a policy of substituting petroleum products with natural gas with relatively low prices even if substituted petroleum products are low priced, in industry similar to that in electricity generation. Different from the electricity production, there is not yet a policy aiming to increase the share of renewable energy technologies in industry/ Electricity prices for industrial customers used to be comparatively low in international comparison, particularly when compared using official exchange rates (1 EGP ~ 0.18 USD) . In June 2008, GoE has announced a new simplified price scheme and price increases for industrial and commercial electricity and natural gas users. This includes significant increases in natural gas prices for industry and other large users. (see list below) The principle petroleum product for industry, heavy fuel oil No 6 (mazout) at 350 ppm sulphur, is in October 2008 prized at 500 EGL/ton. The price for fuel oil No 2 (solar) with 50 ppm sulphur is 1100 EGL/1000 l, used extensively in agriculture but also industry. Thus the GoE is following up its commitments to increase price levels for the large consumers and to phase out electricity and gas subsidies for Egypt's 40 top energy intensive industries representing 70% of industrial energy consumption over a three-year period. By 2010, all energy-intensive industries are expected to pay prices which cover cost of service and subsidies for non-energy-intensive industries.. In 2008, the free zone status of energy-intensive industries has been revoked, which submits them to general tax regimes with effect on energy input cost.
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» Framework conditions, incentives and support schemes
There are effectively few obligatory norms with relation to energy efficiency for industrial plants, equipment or devices in Egypt. Some emissions or security regulations as well as technical guidelines have indirect effects on efficiency standards. Mandatory regulations and technical guidelines exist for boilers, electrical motors, lighting and others. Effective standards are determined often by the standard in international market for these aggregates. However, some equipment markets are protected by import duties, which may lead to lower efficiency of the standard equipment. Entirely new industry plants are generally built according to international standards. There is not yet a policy aiming to achieve defined energy efficiency targets in industry. Neither are there voluntary agreements between industry associations and the GoE nor has the industry committed itself to achieve improvements. Industrial Combined Heat and Power (CHP) are on a very low level in Egypt, as is the auto production of electricity in general. The framework conditions for feeding electricity back into the grid or wheeling electricity through the grid from one plant to another are, in 2008, still unfavorable but significant improvements by the new electricity law are expected from 2009. In view of this change, some industrial companies are planning to build their own wind farms. IMC has supported energy audits with grant program and intends to implement The MoTI is organizing support schemes for energy efficiency and renewable energy. Since 2007, support is given through Industry Modernization Center (IMC) to finance energy audits by certified auditors including ENCPC. It is planned to introduce (2010) grants via the IMC as incentives for investment in energy efficiency and renewable energy, under conditions that audits have been performed: An incentivefinancing 15% or 20% of an investment in Energy Efficiency or Renewable Energy respectively, limiting ut to 15000 or 20000 EGL in each case.
Other support schemes are providing credit subsidies to energy service companies (ESCO) , who invest in improving efficiency in industry plants. Up to 2008, ESCOs have not become a significant business in Egypt, due to unfavorable framework and price conditions. There are schemes under preparation to combine ESCO business with financial support e.g. soft loans and loan guarantees.
» International cooperation projects
USAID has supported Egypt already in the 1990 with energy efficiency and environment programs which helped reducing industrial pollutants and promoting energy conservation and the use of cleaner fuels. These efforts ceased years ago but had an important capacity development effect. The UNDP program EEIGGR Program implemented by UNDP and financed by GEF carried on until 2008 with components targeting industrial energy consumption, in particular connecting CHP to the grid and promoting audits, ESCOs and financing schemes. The new UNDP GEF program to be started foresees to expamnd the investment guarantee scheme. Also financed by GEF a new UNIDO program is planned which concentrates on capacity building for auditors, in cooperation with Ministry of Trade and Industry. The Industrial Modernisation Center of the Ministry of Trade and Industry, supported by the EU-Egypt Modernisation Programme supports energy audits in industry and other energy efficiency activities. GTZ with funds from the German Federal Government, provides technical assistance to small and medium industry for ressorces efficiency. A new inancial assistance facility of KfW also financed by the German Government is also oriented towards energy efficiency in industry. KfW with funds from the German Government is financing important environmental protection programs in industry, in partnership with the Egyptian Environmental Affairs Agency (EEAA).
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