Egypt’s solar power sector hotting up but 'businesses still need to make profit'

Egypt’s use of one of its most abundant resources – sunlight – has increased markedly over the past decade as concerns rise over global carbon emissions.

A shift towards generating more of the country’s energy through solar power stations is taking place with the participation of both the public and private sectors.

“Solar power is definitely becoming more visible and more possible for many Egyptians. But we must not forget that when it comes to reducing carbon emissions, solar power is just one piece of the pie,” Maryam Omar, co-director of Cairo sustainability NGO Greenish, told The National.

“Much more needs to be done in other areas if we hope to mitigate our carbon emissions,” she said.

Since 2011, several solar power companies have established themselves on the Egyptian energy scene. These companies fall into two main categories, those installing large-scale power grids for companies, factories and farms, and those working with people who want to convert their households to solar power.

Two of Egypt’s most prolific solar energy players are Karm Solar, which works mainly on large-scale installations, and The Solar Company, which has a focus on smaller-scale, residential projects.

“Five years ago, if we went to a business owner and told him to convert his factory to solar, he would have called us crazy,” Sami El Awa, communications director at Karm Solar, told The National. “Today things are much, much different.”

International sustainability mandates such as the UN’s Sustainable Development Goals programme and the 2015 Paris Accords, both of which were signed by Egypt, have been the main driving force behind the shift in attitude towards renewables in Egypt, said Mohamed Abdel Fattah, sales manager at The Solar Company.

“I would definitely attribute it to a trickle-down effect of sustainability mandates put in place by international organisations or multinational corporations with an arm in Egypt,” he said.

Mandates such as this have helped persuade the Egyptian government to incentivise the switch to solar power – and has even made it venture into the sector for its own business interests.

“A harsh reality in the sustainability sector in Egypt is that most people we work with, particularly corporations, don’t really care about the environment or the state the Earth will be left in after they die. If it’s not profitable, they are simply not interested,” Ms Omar said.

This has made most of Egypt’s solar power players adopt a cost-driven business model which prioritises profitability for its clients, said Mr El Awa.

“We must not forget that even solar power companies are businesses, which need to make a profit in order to stay open. I would caution against championing anyone as an environmentalist hero. The main interests of the sector are still very much corporate in nature,” said Ms Omar.

A major impediment to wider-scale implementation of solar power in Egypt is the high upfront costs of installing a solar grid. Ms Omar said this was always the biggest deterrent for businesses before government mandates began to play a role.

In Karm Solar’s case, power purchase agreements were introduced to mitigate these costs for their clients. PPAs are financing mechanisms used for larger-scale solar stations, whereby a company pays to build a station on the client’s premises, the station is owned by that company and the client pays it monthly electricity bills instead of paying them to the government.

“On average, companies that make the switch end up paying around 25 per cent less in electricity bills to us than they would have done while using the national grid,” Mr El Awa said.

On a residential level, converting households to run on solar power remains a luxury affordable mainly to the country’s upper classes, said Mr Abdel Fattah.

“It costs between EGP 150,000 and EGP 200,000 ($9,525 to $12,700) to convert one household to solar power, which is not a sum that many people have to spare,” he said.

For upper-class residents of Cairo’s gated communities, the space required to install solar panels is not such an issue – Mr Abdel Fattah said The Solar Company is often contracted by upscale compounds with open spaces for panels to be installed. For people living in more densely populated areas, this becomes infinitely more difficult.

However, through financial schemes set up in partnerships with a number of banks, the cost to convert a household to solar power is much lower than it was when the company opened in 2011, he said.

“We have found that entrepreneurs in Egypt have a lot of faith in the government’s business sense, so when they started building Benban and investing billions into the solar sector, many others began to see solar as an industry worth venturing into,” he said, referring to the Benban solar park just outside the province of Aswan in Upper Egypt, one of the country’s sunniest areas.

Completed in 2019, Benban has been touted as the largest solar park in the world.

The city will be fitted with solar panels on the majority of its roofs, a representative for Egypt's New Administrative Capital told The National.

For large-scale power generation, solar power is a step in the right direction, said Ms Omar. But on a individual level, she feels other priorities should come into play.

"Solar power is definitely more sustainable than generating power through fossil fuels, but it’s simply not enough to reduce the country’s carbon footprint alone,” she said. “When you consider that a large portion of the Egyptian population lives below the poverty line, it doesn’t seem viable that they can afford to install solar panels in their homes.

“Smaller things like unplugging your appliances when we’re not using them, sorting our trash before throwing it out or setting our air conditioners to 25°C instead of 16°C could accomplish much more with regards to reducing the country’s carbon footprint."