Competitive Bidding for Wind Energy Development in Egypt
Natural gas and hydro power meet the majority of Egypt’s electricity demand, but the country is looking to meet future energy needs with a greater share of renewables, particularly wind, due to its commercial viability and the excellent wind resource in the Gulf of Suez. To meet its future wind energy targets, the Egyptian government has pursued government-led and commercially-led strategies, including competitive bidding for large and small independent power producers (IPPs) to build, own, and operate plants. Notable actions and good practices associated with this competitive bidding strategy, and profiled in this case study, are highlighted below.
- A joint wind measurement campaign requiring bidders to co-finance wind measurements as part of their bids ensured that all bidders and the electricity transmission company relied on common, high-quality, wind baseline data to evaluate bids.
- To ease the competitive bidding process, Egyptian authorities obtained all land permits, prepared environmental impact assessments, and exempt renewable energy equipment from sales tax and custom duties.
- To incentivize project development, long-term power purchase agreements were established and financially guaranteed by the Central Bank of Egypt. In addition, project developers were given the opportunity to generate carbon credits.
- Securing financing for site preparation and transmission lines from development banks further enabled expansion of renewable energy development.