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Is Egypt’s Poor Management of Biomass Squandering an Opportunity for Renewable Energy?

6 April, 2017
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Millions of tons of biomass are inefficiently managed in Egypt, thereby casting away numerous opportunities for economic and environmental benefits. Biomass can be used to produce biofuel, such as biogas, that could be utilized to generate bioenergy in terms of heat and electricity and high quality organic fertilizer. This promising renewable energy resource could significantly add to Egypt’s energy mix. However, while its global share is already 10%, bioenergy takes up only 1% in Egypt, thereby leaving a vast potential untapped.

Under the title "Biomass in Egypt: Win or Waste?", the 46th 
Cairo Climate Talks tackled whether Egypt is losing out on an opportunity. The Cairo Climate Talks is an Egyptian-German public platform to exchange experiences, raise awareness and foster cooperation between policymakers, the business community, the scientific community as well as civil society

“It’s very interesting to have dialogue and what’s even more interesting is to shift this dialogue into action,” said Egyptian Minister of Environment Khaled Fahmy. “We should have a vision and a well coordinated plan between all the concerned ministries for the waste management incentivizing mechanisms in Egypt, one of which is the feed in-tariff,” believes Fahmy.

In an effort to utilize Egypt’s biomass usage to generate bioenergy, the Egyptian Ministry of Environment, in co-operation with the Ministry of Electricity, has submitted to the Cabinet all the necessary studies for the feed-in tariff for electricity generated from waste. In return, the Cabinet issued a decree in 2015 to form a ministerial committee to study all electricity from waste projects. A feed-in tariff will allow the private sector to feed electricity generated by any kind of waste to the grid in exchange for money. Also, the Ministry of Environment, in cooperation with the United Nations Development Programme (UNDP), has taken an off-grid approach to biogas production under the “Bio-energy for Sustainable Rural Development” project, which founded 30 startups that built 1.300 small-scale biogas units.

“After a nationwide study, we’ve proposed the feed-in tariff to the cabinet and got nine ministries on board for an out-put based tariff. The final purchasing price has not been announced yet, but to give you some figures, we’re targeting a 13% Internal Rate of Return over 10 years, a payback period of 4 years, a Return on Investment of 150% and a PPA (power purchase agreement) that can reach up until 20 years. This is all very profitable and attractive to investors,” Fahmy explained.

The minister emphasized the importance of German-Egyptian cooperation to support NGOs working on bioenergy in Egypt.

“Germany initiated a process called ‘Energiewende’ several years ago,” announced Germany’s Ambassador to Egypt Julius Georg Luy at the beginning of his speech.

“It amounts to a radical transformation of our energy sector. By 2050, we want to cover 80% of our electricity demands with renewable energy,” the ambassador said. He elaborated further on the importance and versatility of biomass as a renewable energy source in Germany with its usage in solid, liquid and gaseous forms for the generation of electricity and heat as well as for the production of biofuels.

Luy also encouraged bioenergy investment in Egypt and expressed his conviction over the country’s potential in biomass, especially when looking at the large amounts of agricultural waste being produced every year.

 

Challenges of the industry in Egypt

Speaking at the event, Eid Megeed, Director of the Technology Transfer Office at the ARC (Agriculture Research Center) of Egypt, said: “There’s a lot of diverse information on how much biomass Egypt produces per year. We’ve been going center by center to know exactly how much biomass or crop byproducts are produced. Our conservative conclusion is 19 million tons per year.”

“When planning for a project, you must base your calculations on the conservative data to always guarantee the continuity of supply,” the professor said.

Presenting challenges facing bioenergy actors, especially with the inconsistency of supply, Megeed said: “In the same village, we can have a farmer growing only a certain crop on a certain number of acres and the neighboring farmer growing a different crop on a different number of acres. So if you want to have a business, you have to go far away to places that have specific intensive crops that fit your technology.”

He also addressed the government’s role in setting the right environment to increase the demand for bioenergy projects. “Once the demand increases, there will be an economic incentive for the farmers to collect their crops and transport them to the project location,” he explained.

Megeed added that the center wants to make biomass data as accessible as possible to encourage more businesses to grow: “Our study will be available to the public very soon on our website and we will have a ‘biomass map’ that locates all biomass resources in Egypt.”

Also present at the Cairo Climate Talk was Engineer Ahmed Medhat, Executive Director of the Association for Bioenergy for Sustainable Rural Development. “We chose the most proper technologies that fit Egyptian conditions and rural areas by helping farmers replace their liquefied petroleum gas with biogas and their chemical fertilizers with organic fertilizers, and we will be reducing our greenhouse gas emissions at the same time,” he explained. “In co-operation with the Egyptian Environmental Affairs Agency, United Nations Development Program and the Global Environment Facility, we were able to found 30 start-ups that built 1,300 biogas units in 18 governorates.” He stressed the importance of capacity building trainings, especially with a market as fresh as the Egyptian biomass market: “We consider this project successful [given] that it had a positive impact on the farmers since a lot more have shown interest in having biogas units as well. Now, the new challenge is to make those projects more sustainable, which is why we founded the association.”

A company called Empower Group was there to narrate its journey with biomass. The group kicked off their 100 KW Biogas project in Moshtohor village and now has a 6 MW project in the pipeline in Kafr El Sheikh. For the 100 KW project, they worked with Municipal Solid Waste.

“But then we realized that the supply was fluctuating so we had to move to something more sustainable. We found that sludge is relatively cheaper and more secure. In order for the project to succeed, we had to choose the cheapest way of generating energy from waste and it has to be below the average cost of generating energy in the country,” recalled Hatem El Gamal, Chairperson of Empower Group.

Despite the complicated and rather irritating procedure of getting a PPA for a waste-to-energy feed-in tariff, the Empower Group team were able to get the PPA for their Kafr El-Sheikh project so that they can sell electricity generated from waste to the Egyptian electricity grid.

“The problem is that no one owns the waste,” El Gamal added. “We had to go to 9 authorities and get 20 approvals from 38 committees.

Nevertheless, the chairperson noted that one of the keys to a successful business model is to always have an added value from a byproduct. For example, organic fertilizers can add a lot of hard cash to the project. He also stated that a manual for PPA acquisition is being developed in order to make the process easier for future companies and investors.

“Germany is the number one country with biogas digesters and it has the highest feed-in tariff so it’s definitely a key to their success,” reasoned Tawfik El Kheshen, Head of the National Solid Waste Management Programme at the Gesellschaft für Intenationale Zusammenarbeit (GIZ), in support of the feed-in tariff as a financial incentivizing mechanism for waste management solutions in Egypt.

Giving an overview on the fuel prices, he explained that with the degradation of the Egyptian pound, alternative energies have a chance to compete in the market when compared to high fuel prices. He further suggested picking the low hanging fruits of waste-to-energy modeling by bringing in an example of the use of alternative fuels in the cement industry: “In cement factories, you don’t need to build anything. You only need to see how you can link things together. I see waste becoming very economically attractive for cement factories in the next years.”

 

El Kheshen then suggested that people look at the biomass from a socio-economic perspective: “Small biomass businesses create jobs in villages. If villagers are given the technology to utilize their biomass resource to create jobs and a promising future, this might help solve the city immigration problem.”

Tags Cairo Climate Talks biomass Renewable energy