Cairo to tender first private wind farm

19 September 2008
Privately owned renewable energy plant will be built in the Gulf of Suez and have capacity of 2,500MW.

Egypt is to issue a tender for its first privately owned renewable energy project by 2011, according to Hafez el-Salmawy, managing director of the Egyptian Electric Utility & Consumer Protection Regulatory Agency, which regulates the country’s power sector.

It will involve the construction of a 2,500MW wind farm in the Gulf of Suez, south of Zaafarana, on a build-own-operate basis. The New & Renewable Energy Authority (NREA) is the client.

Independent consultants from Canada are advising NREA on the technical, legal and planning aspects of the project, and the consultancy work is being funded by the World Bank.

The bidding process for the power project will go ahead in two phases, with an invitation for prequalification expected in early 2009.

Once prequalified, companies will evaluate wind conditions, and carry out environmental impact assessments and soil tests at the site.

It is likely that the bidders will jointly hire an international consultant to carry out the studies on their behalf.

A competitive tender is then expected to be issued by the end of 2010 or in early 2011.

While only one bidding process is planned, the provision of the 2,500MW of capacity could still be divided up into several contracts, according to El-Salmawy.

A single consortium of deve-lopers could take on the entire project, or the work could be shared among individual bidders in a series of 500MW packages.

The initiative is Egypt’s first step towards allowing private firms to participate in the renewable energy sector. The country plans to produce 20 per cent of its electricity from renewable sources by 2020.

A new electricity law setting out the framework for private investment in the power market has been finalised and is being reviewed by the cabinet. It will be submitted to parliament for approval during the next session, which runs from November to June.

The law will also govern the transition to a competitive electricity market (MEED 28:5:08).

One of the first steps for the shift to the deregulated market will be the establishment of a new operator for the country’s transmission system, which will then facilitate the exchange of power between multiple producers and electricity consumers.

The existing Egyptian Electricity Transmission Company will be replaced by the new transmission system operator, which will initially guarantee to buy the power produced by the planned wind farm.

According to El-Salmawy, Cairo has also been approached by companies seeking to develop conventional power projects in the country. “We have started to get expres-sions of interest from developers for projects with a capacity of up to 3,000MW,” he says.

“It is still preliminary. One company is looking serious because it has already hired an international consultant.”

Key facts

  • 2,500MW: Capacity of wind farm to be built in the Gulf of Suez

  • 500MW: Capacity of project packages likely to be awarded to bidders

  • 20 per cent: Share of power to come from renewable sources by 2020

Source: MEED

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