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Achieving energy independence is vital for Egypt''s national security, economic stability, and environmental sustainability. This ambitious goal involves reducing reliance on imported energy by increasing domestic production and diversifying energy sources. The journey to energy independence is complex, encompassing various technical, economic, and legal dimensions.
Energy independence means Egypt can meet its energy needs without depending on external sources. This objective requires developing a comprehensive legal and regulatory framework that encourages domestic energy production, promotes renewable energy, and ensures sustainability. From a legal perspective, achieving energy independence involves addressing multiple issues, including legislation, regulation, international trade, and environmental protection.
Renewable energy plays a crucial role in achieving energy independence for Egypt. The country has abundant solar and wind resources, and the government has set ambitious targets for renewable energy production. The Feed-in Tariff (FiT) program, launched in 2014, aims to attract investment in solar and wind energy projects by guaranteeing fixed prices for the electricity produced. One of the most notable examples of this initiative is the Benban Solar Park, one of the largest solar parks in the world, which illustrates Egypt''s commitment to expanding its renewable energy capacity. Such projects not only foster the growth of the renewable energy sector but also contribute to long-term energy security and sustainability.
Measuring energy independence involves assessing the extent of reliance on domestic versus imported energy. Key metrics include the energy balance, which accounts for production, imports, exports, and consumption; the energy self-sufficiency ratio, indicating the percentage of total consumption met by domestic production; import dependency, measuring the share of energy needs met through imports; and the diversity of energy sources, which reduces supply disruption risks and enhances resilience. Legal frameworks should promote a mix of renewable and non-renewable sources to achieve a diversified energy portfolio.
Several countries have made significant progress toward energy independence through effective legal frameworks and policies. Egypt, too, has made considerable strides in this direction. The development of the Zohr gas field, supported by the government''s strategic vision and regulatory measures, has reduced reliance on imported natural gas. Investments in renewable energy projects, such as the Benban Solar Park, supported by the FiT program and international partnerships, further diversify Egypt''s energy portfolio. Additionally, the new investment law and environmental regulations ensure a balanced approach to energy development, considering both economic and environmental factors.
In summary, achieving and measuring energy independence from a legal perspective requires a multifaceted approach encompassing domestic energy production, renewable energy regulation, international trade, environmental protection, and robust metrics for assessment. A comprehensive legal framework supporting investment, innovation, and sustainability is essential to ensure long-term energy security. By adopting and enforcing effective legal measures, Egypt can reduce its reliance on external energy sources, promote economic growth, and protect the environment. As the global energy landscape evolves, the role of law in shaping and securing energy independence remains critical for Egypt’s future.
By Mohamed El Haythem, M.phil., DBA, MBA
Strategic Planner & Business Consultant
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Amid a profound economic crisis, the power outages experienced by Egypt in recent months are becoming aevident signof the fading promises of development made by President Abdel-Fattah el-Sisi almost ten years after he came into power. Indeed, since mid-July, heatwaves and increasing electricity consumption coupled with chronic dysfunctions of the energy sector have led to lengthy and repeated power cuts. In some areas, power cuts occurred multiple times per day and lasted for hours, disrupting industrial activities and citizens'' daily lives.
In the context of the early presidential elections, a closer look at the Egyptian energy sector over the past years is crucial for two main reasons. First, it helps shed light on the country''s ambition to emerge as a regional energy hub and implement the energy transition; second, it allows us to assess the latest decade of el-Sisi''s power and to understand what the coming months may hold for the country.
These days power cuts are a reminder of the last energy crisis that occurred in Egypt around ten years ago. Indeed, while episodes of power cuts and blackouts were also recurrent under Hosni Mubarak''s regime, they became more frequent after the 2011 revolution, primarily caused by aninefficient and inadequate electricity gridand a chronic lack of investment in maintenance. Additionally, a shortage of natural gas due to stagnant production, the halting ofnew exploration contracts, and rising domestic consumption affected electricity generation. Hence, in 2012-2013, the energy crisis contributed to catalyse criticism and popular malaise against Egypt''s first democratically elected president, Mohamed Morsi, symbolising the disorder of the "post-Mubarak era".
When el-Sisi assumed office in June 2014, creating a surplus of power generation capacity andrebuilding the decaying power gridwere among his first objectives. For almost a decade, the new president seemed quite successful in this respect.A key element in the strategy to tackle the energy crisis was the construction ofthree 4.8 GW gas-fired combined-cycle plants. Once completed in 2018, the Beni Suef, New Capital, and Burullus power plants, all operated by the German group Siemens, accounted for approximately 40% of Egypt’s power capacity and supplied electricity to around 40 million Egyptians. In 2015, Egypt also startedimporting LNGfor the first time in its history, mooring two floating storage and regasification units (FSRU) at Ain Sukhna, in the Gulf of Suez.
Despite the longstanding fragilities of the Egyptian energy sector, recent improvements have seemingly raised hopes of transforming the country into a regional energy hub. However, nearly a decade after the last major energy crisis, and with 15 million more citizens, Egypt is once again grappling with blackouts and power cuts. The resurgence of these energy issues threatens to diminish the promising prospects of Cairo’s energy ambitions.
Generalised blackouts began in late July 2023 and were caused by the combination of increasing domestic gas consumption due to prolonged heatwaves and failing domestic output. The reasons behind such decline in production include, among others, infrastructure failures and water infiltration issues at the Zohr gas field (productionat Zohr was 2.3 bcfd in July, down from 2.7 bcfd in 2019). According toFitch Solutions, Egypt''s gas output in 2023 will fall to 64.9 bcm, a three-year low, while annual natural gas exports will decline from 11.3 bcm in 2022 to 10.8 bcm this year. Even before the blackout crisis, shipments to Europe had ground to a halt inJune.
Against this backdrop, LNG exports are crucial to securing foreign currency in a phase when Egypt desperately needs it. Besides, the crisis risks getting even worse, as the lack of dollars complicates the import ofmazutfuel, which, mixed with gas, is required to keep the country''s power plants running.
The war in Gaza risks further deteriorating the precarious situation of the Egyptian electricity system, having a significant impact on "Cairo''s ability to keep the lights on". Indeed, natural gas imports from Israel satisfy Egyptian internal demand and guarantee exports from the country''s liquefaction terminals. The Hamas attacks on southern Israel on 7 October have raised concerns that a prolonged conflict could stop Israeli gas flows to Egypt.
Egypt receives Israeli gas from two pipelines: the East Mediterranean Gas offshore pipeline (EMG), which links Ashkelon in southern Israel to el-Arish in Egypt and is located only some miles off the coasts of the Gaza Strip, and the Arab Gas Pipeline, thanks to a connection between Israel and Jordan. After the beginning of the conflict, Israeli authorities decided to completely shut down the gas flows from the EMG pipeline. The interruption has led to significantimmediate effects, including an increase in the duration of daily power cuts from one to two hours and the decision to temporary resume LNG imports for the first time in five years. However, both measures were reversed when gas imports from Israel saw a partial recovery.
After a monthlong outage, the Israeli Tamar gas field (which supplies the EMG pipeline)restarted production on 9 November. The Israeli gas output has rapidly rebounded, and the EMG pipeline resumed operation five days later. The Israel-Egypt gas volumes now hit 800mn cfd, just below pre-conflict levels. However, while LNG exports resumed (on 21 November, the LNG export terminal at Idku exported its first cargo since the outbreak of the war in Gaza), power cuts have continued.
Electricity generation in Egypt is highly reliant on natural gas (66%). To reduce this dependency, prevent blackouts due to gas shortages, make more gas available for export, and diversify the energy sources that power its grid, the country decided to invest in the development of renewable sources of energy. Until last year, when Sharm-El-Sheikh hosted the twenty-seventh Conference of the Parties (COP27), the ambition to become a "climate champion" seemed to permeate many dimensions of Egyptianinternal and foreign policy, ranging from energy policies to relations with European, African, and Gulf countries as well as with international donors.
Indeed, Egypt is among the most advanced countries in the MENA region regarding energy transition implementation. With6.2 GW, Egypt ranks first in North Africa in terms to installed electricity capacity (solar, wind, and hydrogen). A wide set of documents supports its energy transition, such as Egypt''s Vision 2030, the National Climate Change Strategy 2050, and the Integrated Sustainable Energy Strategy 2035, which set a 42% renewable energy target for the electricity mix by 2035. However, the renewable energy share of electricity capacity attained10.6%in 2022, well below last year''s target, set at 20% of generation capacity.
Despite the building of remarkable solar and wind farms, the implementation (albeit slow) of the energy transition, and the optimistic expectations regarding the construction of green hydrogen facilities, it seems highly improbable today that Egyptian renewable energy sources might contribute to alleviating the energy crisis in the short-term.
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