The Executive Director of the Energy Development Association "Sida" in Egypt, Eng. Ayman Heiba, warned of threats facing renewable energy in Egypt.
He also warned of the danger of my decision in exchange for merging or "sun tax", and imposing a 5% customs tax on the import of solar panels on investments in the field of clean energy.
He explained that such decisions are incompatible with the government's plan to expand in this sector, and that the contribution of renewable energy reaches 42% of the energy mix by 2035.
Haiba stressed that despite the obstacles facing the renewable energy sector in Egypt, the state has succeeded in experimenting, and it is currently qualified - to be a platform for exporting electricity produced from fossil fuels or clean energy.
This came in an interview conducted by "Energy" with the Executive Director of the Energy Development Association "Sida", during which he shed light on the challenges facing renewable energy investors and companies in Egypt, and his proposals to expand in this important sector, and the text of the dialogue:
A state of anxiety has spread among the solar investors and companies about what was called "sun tax" or for merging..So why?
In April 2020, a decision issued by the periodic book for the year 2020 was issued, this administrative publication issued by the Electricity Facility and Consumer Protection Authority, which stipulated several decisions from the perspective of the agency according to its vision to organize the linking process on the network.
Renewable power plants or solar energy are connected to the national electricity network through several connection mechanisms. Among these mechanisms is the mechanism of net measurement or self -consumption mechanism.
This decision stipulated in its last provisions to apply fees called in exchange for the integration of electricity that pumped into the national electricity network, and the value of these fees did not specify, and despite the passage of two years since this decision, solar energy companies and investors were waiting for the value of these fees to be determined and the issuance of licenses is disruptedPending the issuance of a decision in exchange for the merger.
And the periodic book contained several points. Solar energy investors and their companies - represented by the Energy Development Association "Sida" - believed that it has a lot of defects, and causes freezing of investments in the solar energy market.
How was your reaction to the items of the periodic book?
The Sida Association and Solar Energy Investors saw that the periodic decisions of the period.
Indeed, several meetings were held with the former head of the facility, Dr. Muhammad Abdulaziz Abdel -Rahman, and the current head of the facility, Dr. Muhammad Musa Imran, since 2020, and we presented proposals in written notes that it is necessary to separate the mechanisms of linking on the network.
We recorded our objection to the merger decision, and we continued dialogue with the responsible authorities, until we met with the Minister of Electricity in 2021, and we reached a decision to exempt solar stations under 500 kW of paying fees for the merger..
A decision was issued by the Minister of Electricity to exempt these stations from in exchange for the merger for a temporary period renewed every year, and this was a good gesture.
But we were surprised on the first of February 2022, with the issuance of a decision from the Electricity Facility in the periodic book No. 3 of 2022, which provides for the application of fees for merging on the stations above 500 kilowatt watts tied to the average and higher voltage and the super effort, with fees ranging between 25.7 for 30 piasters per kilowatt.
What is the problem with this decision?
The problem is that the decision stipulated the application of mergers to all electricity generated by solar power plants, and here there is a very large mystery, which is how the government obliges companies to pay every kilo produced from a solar power plant, while it is supposed to pay -only -On the electricity that is pumped to the network?
Hence, this is a defective decision that contradicts logic, so these fees are supposed to be applied to electricity that is pumped to the network only, and not fully produced from solar power plants..
The decision also includes the stations that work with net measurement and self -consumption, and this is surprising -also -how to impose fees for mergers on a station linked to self -consumption, and the customer does not pump one kilowatt on the network?!
The third thing that is fooling Resolution 3 is to impose a very large merger fee ranging between 25.7 and 30 piasters, and this value empties the concept of renewable energy from its main advantages, which is that it is a clean low -cost energy.
Thus, the price of electricity generated from renewable energy in Egypt, especially the solar energy tied to the network, has become close to the price of electricity produced from fossil fuels..
I believe that this decision is inconsistent with the government's plan to encourage electricity generated by renewable energy sources.
Also, among the reasons written in the decision is that this is in exchange for support that pays the Holding Company for Electricity, and the most important question: Does renewable energy companies have to pay support to electricity production companies from fossil fuels, or is the opposite that is required?
This decision is unconstitutional;Because it forces companies to support other companies in another sector, in addition to the irrational interpretation that was published to the Minister of Electricity on the seventh day of February 6, that these fees are paid in exchange for the use of the electricity network;Because the customer himself has paid an electricity delivery fee, as he pays for his consumption per kilowatt hour, or is these fees pay in exchange for not taking electricity from the network?!
Thus, the government demands the customer to pay fees in exchange for the production of electricity from renewable energy, and here there is confusion in the matter, and we must dialogue, and we sent to the Minister of Electricity and the Council of Ministers requests to discuss these decisions in favor of the industry, and this is in relation to the issue in exchange for the integration that caused to be covered these days..
The new decision also included in the second item that this interview provides the Holding Company for Egypt Electricity.
The payment for support represents the imposition of a new tax, and a tax may only be imposed by the law that must be presented to the House of Representatives, while this decision has not passed any of these stages..
The decision came after the solar panel tax..Do you think that these decisions undermine the expansion of solar energy?
The solar cells were exempt from customs duties under the President’s decision, but the decision to amend the value of the customs tax was issued, and it rose to 5% in response to a complaint from some companies that collect solar panels from flooding the market with imported cells.
The President’s Decree No. 558 of 2021 was issued to amend some of the customs tariff categories, including the solar cells that became 5% after it was exempt from customs, and this is an unconstitutional decision.
Also, this is a very important question, how these decisions are taken in light of the government and the Egyptian state in all its spectrums, led by President Abdel Fattah Al -Sisi, towards increasing the contribution of renewable energy sources to the energy mixture produced in Egypt by 42% by 2035, and the entire state is directedTo the green economy and to clean energy.
Of course, these decisions are inconsistent with this trend;Because the imposition of 5%customs duties, which is supposed to aim to protect the local industry was not correct.
During our meeting with the Cabinet and Information Support Center based on the Prime Minister’s instructions for dialogue with companies and discussing their objection to the decision, we explained what is not doubtful that this decision is not in its place.
Why was this decision not in its place, although it protects local production?
Now these companies are not sufficient in any way, and it does not cover up to 10% of the required in the local market.
Also, these companies produce unsuccessful solar cells, while the world is heading to produce solar panels ranging between 500 and 550 watts at the very least, these companies still produce panels with a capacity of 325 watts with ancient and ending technology in light of the rapid development witnessed by the solar cell market in the world;Because the value of the budgets allocated to research and development in solar cell production companies abroad is very huge.
Hence, the development that occurs very fast, and is required of the factories that manufacture and collect solar panels to keep pace with this development quickly, and the factory must speak itself every two years, and this is impossible to happen in local factories, so they suffer from two problems, they are: The technology used is delayed, and its inability to cover the volume of production required in the market.
All these factories have produced over the past 5 years 50 megawatts, while the market has entered about 750 megawatts, unlike major national projects, such as Benban Solar Energy Complex and others.
In addition to the presence of protection for the local industry through the auctions and tenders law that allows the local product to sell by 15% higher than the imported product.
Hence, protection exists, and there was no need to impose the tax these days, because it added more costs to the solar energy industry..
The decision to amend customs duties is not the only crisis, but it came in conjunction with several consecutive disasters: the first to increase the prices of products and raw materials associated with silicon and chips industries in the world, and the rise in shipping prices for products, and all these factors have burdened the solar stations, in addition to the decision to impose merging fees,That is, as the proverb says: "The calamities do not come individually.".
What other challenges facing the solar energy sector in Egypt?
The biggest challenges are in the periodic book No. 2, which provides for the imposition of fees for the merger, along with the decision to amend the value of the customs tax.
We demand innovative financing firmness to support the solar energy sector, so that we can reach the desired goal by the government to increase the renewable energy share in the energy mix, and to keep pace with President Sisi's vision.
Innovative financing packages, not only for investors, but also - for the final consumer who wishes to establish solar energy stations, in addition to overcoming obstacles represented in the regular procedures.
For example, the procedures for the distribution companies assigned to give licenses and linking on the National Electricity Network from one company to another vary.
That is, the investor or the renewable energy company in Egypt must deal with 9 governmental electricity distribution companies, each company has different procedures and decisions from the other.
We have demanded the unification of these procedures, especially since this process is not difficult, it is assumed that the electricity facility organizing device is that it is the regulatory authority to set these standards and laws, and to meet with distribution companies and private sector investors to discuss unifying the linking procedures on the network and giving licenses.
What is your assessment of the experience of renewable energy in Egypt?
Despite the obstacles that still face clean energy companies, Egypt's experience is very leading and distinguished, starting with President Abdel Fattah Al -Sisi and his interest in this file through the issuance of Law 203, the distinctive tariff law, and giving him a great boost to this field.
According to the President's orientation, a great renaissance has been established from 2014, until the release of the periodic book No. 2 of 2020.
But the renewable energy sector still needs more and more to keep pace with the government's vision in this field.
Are clean energy projects threatened with stagnation during the next stage?
I think that, if the dialogue and access to a mechanism for a modification in exchange for merging, renewed energy projects will witness a state of stagnation, especially the projects above 500 kW.
A report on the United Nations was issued last year, describing the investment in solar energy as "smart investment"..Does this apply to Egypt?
Because it is an investment for a supplier of free natural energy resources. Most commercial wars and investments between countries revolve around energy, the energy is the main wheel to advance industrial and agricultural development, and without energy there is no development.
Today, after the era of oil and fossil fuel, the era of the green economy and renewable energies comes, and Egypt is one of the countries that God has blessed with a bright sun and strong winds, and then it is qualified to lead the entire region in renewable energy sources.
This is smart investment, the exploitation of natural and sustainable resources in electricity production.
How do you evaluate the position of Arab countries in the field of renewable energy?
I see that Jordan and Tunisia excelled in this regard, and Saudi Arabia takes steady and wide steps in the field of renewable energy, although it is one of the leading Arab countries in the field of oil, as it has disciplined legislation in this field, as well as Jordan, the Emirates, Tunisia, then Morocco.
While Egypt still needs to control the legislation.
There are criticisms directed at Benban Solar Energy Complex that it is better to be a thermal station, not a photovoltaic..How do you see that?
This is a technical disagreement between a number of experts and those concerned with the matter, but the thermal stations are very expensive adopted by states and not companies, but the photovoltaic stations can invest in them next to the state, and I believe that Baban is a great project, especially since he put Egypt in the list of countries that have projects with thisSize and in this way.
Is solar energy the most suitable for the nature of the Arab countries?
Yes, solar energy is one of the best options, and wind energy is found in Egypt with a belt of the Red Sea and the Eastern Desert, and Egypt has very huge investment opportunities in this field, especially with its weight in North Africa - now - in the energy field and head towards linkingElectricity with Europe, Saudi Arabia and Africa.
I believe that Egypt is eligible to be a platform for exporting electricity produced from fossil fuels or renewable energy.
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