What:
Following the shifting of the EGP to a flexible exchange rate regime in early March, the Ministry of Electricity’s bill for renewable energy soared by EGP 700 million monthly, reaching a total of EGP 2 billion, a government official told “Asharq Business” under anonymity.
The Exchange Rate Effect:
Here’s the deal — the Egyptian Ministry of Electricity buys green energy like wind and solar in hard currency (think dollars) from investors. When the Central Bank of Egypt (CBE) decided to let the EGP slide against the USD this March, the cost of these purchases shot up.
Numbers Game:
Before the EGP’s devaluation, wind energy purchases alone cost about USD 10 million (roughly EGP 310 million) each month. After making the EGP’s price flexible, this figure leaped to EGP 480 million. That’s a pretty sizable jump for wind stations owned by both private investors and the New and Renewable Energy Authority.
Who Owns the Power?
Egypt’s plan so far involves buying all the energy from two wind power stations built by investors under a build-operate-own (BOO) model. One, powered by 250 megawatts and owned by Lekela Power (now under Infinity Power), kicked off in Q1-22. The other, a 250-megawatt station by a consortium including Orascom Construction, Toyota, and Engie, started in late 2019.
Claps Class:
Build-Operate-Own (or BOO) is a model that’s become a cornerstone in the development of big infrastructure projects, like wind and solar power stations. In the BOO model, an investor or a company takes on the task of constructing the project, running it, and they get to keep it too. For Egypt’s renewable energy ventures, BOO means investors build these giant projects, operate them to generate power, and own the whole setup, selling the electricity to the government.
