MENA: Feed-in tariffs in Egypt

• United Kingdom
• UAE

• Energy and infrastructure - Clean energy

30-09-2014

Egypt has recently announced it will be introducing feed-in tariffs (FIT) and offering reduced interest rates to encourage renewable energy production in the private sector. This ties in with the Government’s plans for new and renewable energy to account for 20% of Egypt’s total energy mix by 2020.

The announcement follows a period where the country has experienced continuous power shortages and large scale power outages. In response, the Egyptian Ministry of Electricity and Energy has announced feed-in tariffs for electricity generated by solar and wind sources as part of the Government’s efforts to increase the country’s energy capacity. The FIT will guarantee a fixed price for energy producers which should encourage investment into the renewable energy sector.

The ministry have capped the maximum production level at 50MW however; the cabinet will be able to consider requests for increased production. To give some perspective, Egypt currently produces 547MW of wind energy and a mere 20MW of solar energy.

Prices under the FIT (to be reviewed after 2 years)

Tariff rates for large scale projects have been calculated in USD because they will likely be developed with foreign financing. The tariffs will be paid in domestic currency according to the exchange rate at the time of payment.

Other benefits accompanying the new tariff include a reduction in customs on new and renewable energy production supplies (by 2%) and reduced interest rates for financing these projects:

• 4% for production under 200kW;
• 8% for commercial producers between 200-500kW; and
• the proportion of bank financing has been set at 40-60%.

The Government is also preparing a law that would allow state-owned lands to be made available for renewable energy projects in exchange for 2% of the energy produced.

The Eversheds team based in MENA has over 15 years projects experience in Egypt. Please feel free to contact us for any guidance or help you may need.

For more information contact

• Michelle T Davies
• Partner
• +44 292 047 7553
• +44 292 047 7553
• Connect with Michelle T Davies on LinkedIn

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