Egypt

Showcasing the potential of efficient motors and solar thermal technologies

Like many emerging economies, Egypt faces the challenge of maintaining industrial growth, keeping costs competitive and safeguarding the environment. Adding to this complexity is the country’s dependence on energy imports. Although Egypt is among the top 25 largest oil producers in the world, and generates a significant amount of natural gas, the country still imports much of its energy needs.

Furthermore, as Egypt completely phased out electricity subsidies in 2019, electricity prices have increased significantly. This has put financial pressure on numerous industrial sectors throughout the country. Egypt also maintains one of the most energy intensive industrial sectors in the MENA region. Energy consumption per unit of output in Egyptian industries is up to 50 per cent higher in Egypt compared to the international average.

Industrial energy efficiency offers a variety of solutions for Egypt’s predicament. Investing in solar technologies and efficient motors, is among the highest impact opportunities for energy efficiency, which will help to promote industrial productivity while reducing carbon emissions.

Why is industrial energy efficiency important for Egypt?

While Egypt’s electrification rate is among the highest in Africa, ageing infrastructure and rising demand for energy have led to intermittent blackouts. Industrial energy efficiency is a proven solution to reduce overburdened grids and improve energy security, which is essential for poverty alleviation and sustainable development.

Egypt is a resource rich country with untapped renewable sources, especially solar. The country also boasts a considerable reputation for producing world class engineering talent. As a result, Egypt has significant potential to diversify its economy by capitalising on its solar potential and industrial innovation. Investments in energy efficient technologies and equipment will help to strengthen the industrial sector against global increases in energy prices.

Egypt’s electricity consumption is increasing much faster than capacity expansions. The increase in energy demand has been met primarily by intensifying the use of fossil fuels which have led to a high energy and carbon intensive economy. In fact, Egypt’s greenhouse gas (GHG) emissions have been growing exponentially, placing the country among the 11 fastest GHG emitters in the world. Just by upgrading to energy efficient motors in the country’s industrial sector, 10-20 per cent of direct GHG emissions can be avoided.

Accelerating industrial energy efficiency and SOLAR THERMAL Technology in Egypt

Until recently, energy efficiency was not a priority for Egyptian industries due to subsidised energy prices and a preference for second-hand equipment. However, after major energy subsidy reforms, Egypt’s historically energy intensive industries are starting to seek alternative solutions to maintain their profit margins. This shift could potentially open a window of opportunity for the energy efficiency market and an emergence of solar thermal technologies in the local value chain.

UNIDO aims to capitalise on this emerging interest in solar thermal power and energy efficient technology. The project focuses on a series of policy initiatives to create an enabling market environment for innovation. Through a series of demonstration projects, UNIDO is introducing the viability and benefits of investing in energy efficient motors and quality components for solar systems.

ADVOCACY AND POLICY SUPPORT

On the regulatory front, the Egyptian Government is already working with the support of major donors, such as the EU, to develop policies and regulations that enable energy reform in Egypt. This includes establishing targets for renewable energy, reducing subsidies, introducing feed-in tariffs and other financial incentives that promote renewable technologies and energy efficiency. The Accelerator is building on these efforts by working with the government to improve the enforcement of these policy mechanisms. This includes assisting the government to implement a roadmap and related action plan for utilizing solar energy in industrial heat processes as well as promoting quality standards for solar components and motors. Additional support is being provided for the creation of solar thermal systems certification scheme. 

Industry know-how

While there is an existing pool of national energy efficiency technicians, Egyptian industries often do not have adequate expertise to identify and address opportunities related to efficient motors or solar systems. UNIDO is therefore helping to improve national capacity through detailed training targeting numerous stakeholders including systems operation practitioners, local vendors and industrial staff. UNIDO’s training modules on system optimization for industrial motors will be translated into Arabic and adapted for local conditions and target groups.

FINANCING FOR EFFICIENCY

Most Egyptian industrial companies either do not know or are sceptical about existing technical and financial opportunities related to energy efficient motors and solar thermal applications. To combat this, UNIDO is delivering a series of demonstration projects to generate awareness and showcase the investment potential of energy efficient motors and solar technology throughout Egypt.

One of the other major barriers to replacing old motors and installing solar systems in Egyptian industrial companies, is the inherent costs incurred during the identification, purchase and shut down period required. Without financial support, energy efficient motors cannot be widely adopted as few industries have the financial means to do so. Currently, financial mechanisms to support a wide-scale deployment of energy efficient motors is significantly limited. Meanwhile, the finance available for industrial renewable energy projects maintain high interest rates and collateral requirements.

UNIDO is working to overcome these challenges through 1) the creation of a revolving fund to finance eligible projects, 2) a dedicated bank of staff training on evaluating industrial renewable energy proposals, 3) an analysis of the feasibility of Energy Service Companies (ESCOs) as a sustainable mechanism to deliver upfront financing support of energy efficiency projects.

Targets

  • 1240 experts
    engineers, energy managers, suppliers, finance managers, entrepreneurs and policymakers trained in a variety of areas including the diffusion of solar energy systems, motor driven systems and financing.
  • $19 million
    invested in solar energy in the industrial sector.
  • 1.3 million tons
    carbon emissions avoided.
  • 115 thousand MWh
    energy saved through the replacement of industrial motors.