For many decades, fossil fuels were the main
source of electricity generation. Although for decades renewable energy had
been identified as a source of renewable energy, its usage to generate
electricity was limited and it was viewed as costly and cannot compete with
fossil fuels. However, sources of renewable energy continued to fight for a
share of the market, even if only a limited share, with much support of
environmentalists. Indeed, in recent decades, renewable energy carved a place
for itself on the world energy map, then the 2008 global financial crisis
happened and increased pressure on the renewable energy sector which was
predicted to regress dramatically, but that did not happen.
In the past few years, renewable energy
sources have scored prominent successes which in past decades were viewed as
science fiction. Wind energy generated 40 per cent of Denmark’s electricity
last year, and sometimes peaked to 140 per cent of the grid’s needs which made
it possible to export excess electricity to neighboring countries. In other
countries, renewable energy accounted for 100 per cent of usage at times, such
as Iceland by relying on geothermal energy and Norway using hydroelectric
energy. Germany, the largest producer of renewable energy in Europe, was able
to rely on renewable energy sources to meet 30 per cent of its electricity
needs last year. One day this month, renewable energy provided all of Germany’s
electricity needs.
Meanwhile, renewable energy in Portugal met
all demand on electricity for four consecutive days last year, thanks to a
blend of wind, solar and hydroelectric energy. This month, Britain celebrated
an entire week of generating electricity without relying on coal thanks to a
variety of renewable energy sources. Relying on renewable energy is not
exclusive to Europe or developed countries. In Costa Rica in South America, the
electricity grid relied solely on renewable energy sources – especially
hydroelectric – for an entire 75 days last year. These great achievements make
relying on renewable energy an indispensable move for countries that want to
expand their capability of generating electricity in a sustainable and
environment-friendly fashion.
Although countries that were able to largely
rely on renewable energy have smaller populations and extensive territories or
natural resources that generate renewable energy, other countries in Europe
with larger populations are also seeking to increase reliance on renewable
energy for power generation. This confirms there is a general global trend to
encourage renewable energy based on two main reasons. First, government support
in Europe and countries interested in creating multiple sources of energy
without relying on fossil fuels in order to establish sustainable power
generation that reduces the impact of fluctuating oil prices on the economy,
and cutting down the environmental harm of fossil fuels and nuclear power
plants. The government of German Chancellor Angela Merkel is planning to
decommission coal and nuclear plants in the coming years. All signs indicate
this ambitious goal is on its way to becoming a reality.
Government support is not just in the form of
slogans but must be translated into economic incentives that encourage
renewable energy sources and make them financially profitable, which would
encourage investors to pour their money into this sector.
Second, the decrease of cost of building and
operating renewable energy power plants as the number of such plants increases
and the energy they generate grows, as well technological advances. This
reduces the cost of the electricity generated and makes renewable energy more
attractive.
Egypt suffered repeated electrical blackouts
between 2011-2014 which agitated the public, but a quick and extensive plan to
raise power output increased supply and outages dropped. The fast action plan
included a major deal that could be viewed as historic, with a giant German
company to increase the capacity of the power grid by nearly 50 per cent
through power plants that primarily run on natural gas, as well as several
plants using wind energy at a cost of $10 billion. The government also made a
priority of supplying natural gas to power plants instead of factories, which
negatively impacted some industries but explains the remarkable improvement in
the performance of the electricity grid.
Although the government launched an ambitious
plan to bolster the use of solar energy with the promise to buy the generated
power at rewarding prices from investors, this programme has not yet started to
generate electricity, and its overall capacity is limited. What is new is the
nuclear plant in a deal with the Russians at a cost of $25 billion, which will
mostly be funded by borrowing from Russia.
One cannot deny the recent vast improvement in
electricity supply compared to repeated outages in past years, but the overall
outlook raises many key questions. What is the point of greatly increasing the
output of the power grid? Will the economy grow at unprecedented rates and thus
requires this excess power that is under contract today? On the other hand, at
a time when European countries are cutting down their reliance on nuclear
energy and fossil fuels, why do not we do the same instead of building a
nuclear plant and gas and coal plants? As for the type of contract, the largest
deals were for purchases not investments which increases the government’s
burden. More importantly, will Egypt be able to pay back its foreign debts
which are rising dramatically? Even if the average foreign debt is still small
today, the latest increase in foreign debt as hard currency resources recede,
makes some of these deals an economic risk. While we acknowledge improvements
in electricity supply, we should look at the details to avoid negative
repercussions in the future.
Omar El-Shenety
27 May 2016
This article was published in "Al Ahram Online"
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