Cairo Solar chairman Hesham Tawfik became the first Egyptian to benefit from the feed-in tariff approved in 2014 when he sold solar energy produced in his home to the government for LE1,800 in the beginning of November.
The feed-in tariff sets guaranteed rates for private users to sell the energy they produce from wind or solar energy to the government’s energy grid. Home energy producers, like Tawfik, get LE0.848 for every kilowatt hour they produce, while commercial set-ups get roughly LE1 per kilowatt hour.
“This is a very good price,” said a pleased Tawfik, “and it could get better.”
Getting the equipment for solar energy panels can be pricey. Without any state support, Tawfik invested approximately LE65,000 into four solar energy panels. At first he produced energy for personal use, but ultimately decided to turn his solar panels into a business, with the government as his first customer.
But some producers are concerned that due to the hefty cost of solar energy panels, the feed-in tariff might only benefit large and wealthy investors who can afford to install them on their own dollar.
In the long term, solar will be the cheapest form of energy production, said Ahmed al-Droubi, a representative of the Egypt-based Arab Green Space. You don’t need to pay for the sun, he noted, and it’s an endlessly renewable energy source.
Droubi is confident the start-up costs will decrease over time, but said to facilitate that, the government needs to invest in developing solar technology.
And he isn’t sure if the energy laws currently on the books will encourage development in the sector.
“It is necessary for there to be political will and a clear strategy for the transition to renewable energy,” Droubi told Mada. “Unfortunately, the law doesn’t encourage that. It encourages big investors, not small ones.”
Part of the problem is that communities have no awareness about solar energy initiatives, asserted Khaled Gasser, a co-founder of the Solar Energy Development Association. On top of that, there is no real engagement from civil society groups to help promote green and renewable energy, he said.
Nonetheless, Gasser believes solar energy is a highly valuable investment for Egypt. “Solar energy is very promising for Egypt, brighter than in most places,” he told Mada. “It could be a great leap forward for Egypt.”
Echoing Droubi, Gasser argued that in order to make the move to renewable energy, “the first thing we need is political will.” In part, that would involve creating financing mechanisms for small investors to produce solar and wind energy.
Unfortunately, political parties have not engaged voters on the subject of renewable energy, or even brought it up as an issue, Gasser said. “I haven’t seen a single political party program that takes renewable energy seriously,” he said.
When the feed-in tariff was first announced, officials said they were hoping to produce 4,300 megawatts of renewable energy over three years. Investors were cautiously optimistic about the tariff, but worried that it could give too much power to government bodies.
While the feed-in tariff prices are good, they’re only in place for three years, which makes big investors wary of investing in the long term.
When the tariff was first confirmed in 2014, Ahmed Zahran, the founder and CEO of Karmsolar — Egypt’s largest off-grid solar installation company — told Mada Masr that “we are not betting on the feed-in tariff. We don’t how the price is going to change in the future. There are many things that are still dependent on government decisions, and that’s the problem. When you create a business model that is dependent on political and government decisions, then you’re taking a risk that it can be reversed.”
But if the prices of solar energy panels remain steep and unsubsidized, it may be difficult for the government to get the big investors it needs to achieve its 4,300-megawatt goal.