Egypt has set its sights on becoming a regional manufacturing hub for wind energy despite delays in the country’s renewable energy targets.
Multinational companies such as Siemens and General Electric are looking to develop wind energy manufacturing plants in Egypt while a local company, El Sewedy Electric, is keen to revive pre-revolution plans.
The North African country wants to install 2,000 megawatts of wind energy by 2022, as part of its 4,300MW total goal of renewables that also include 2,000MW of solar and 300MW of hydropower. Egypt had planned to have renewables make up 20 per cent of its total energy mix by 2020, but that target has been pushed back.
Yet the country remains attractive for investors after it signed deals totalling more than US$138 billion in March.
“GE is really excited about Egypt as an investment,” Timothy Richards, the head of government affairs at General Electric, said last week at the World Future Energy Summit in Abu Dhabi. He pointed to the company’s deal signed in March to build a $200 million facility, which will have manufacturing and training facilities.
“As we develop more wind projects in Egypt, we will be manufacturing components while also training field engineers and others interested in developing technical skills,” he said.
Siemens has also signed deals totalling €8bn (Dh31.72bn). “We see great potential for wind energy as a significant source of electricity generation in the Middle East. Egypt, Morocco and Jordan are currently driving this development,” said Emad Ghaly, the senior executive vice president of wind and renewables at Siemens Middle East.
Siemens will build up to 12 wind farms in Egypt – about 600 turbines.
“As part of this project we will also construct a rotor blade manufacturing facility in Ain Sukhna in Egypt, which will train and employ up to 1,000 people. This facility is part of our commitment to the Middle East’s renewable and sustainable energy development and will be a hub for Siemens wind technology and expertise for future projects in the region,” Mr Ghaly said.
However, this is not the first time companies have looked at Egypt to set up a wind components production industry.
El Sewedy had set its sights on setting up a subsidiary, Sweg, in 2009. It wanted to establish three factories within five years to manufacture towers and blades for export to Africa, the Middle East and Europe.
However, Sweg faced setbacks because of the political instability that followed in 2011. “Every business has its own risks,” said Wael Hamdy, vice president of El Sewedy. “We made big steps in the [right] direction, but unfortunately, it wasn’t good enough.”
He said that original expansion plans were put on hold, but are now being revived. “Fortunately under the current plans and policy with the development of the sector, we were able to meet some of our targets and are currently expanding our facility for wind towers,” Mr Hamdy said.
El Sewedy makes seven wind towers each month, with plans to increase that to 13 in the next four months. It plans to double the output in the next phase, but did not provide a time frame.
“I see big potential for this market in Egypt and for the region over the next few years, and therefore, we’re taking very seriously big plans for expansion.”
Mr Hamdy said that companies such as GE and Siemens coming into the sector is just another reason for faster development in the manufacturing sector. “The market will be too big in the future and there will need to be other players,” he said.
According to Mr Richards at GE, renewable energy is equivalent to an “energy insurance policy” because it avoids the whims of the marketplace over time.
Follow The National’s Business section on Twitter