New rules issued by EgyptERA for self-consumption solar PV plants

In addition to allowing mobile telecommunications companies to source part or all of their power consumption from renewable power plants owned by the New and Renewable Energy Authority (NREA) by Circular no. 2/2023, the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) issued new rules in relation to self-consumption solar photovoltaic plants, by Circular no. 3/2023 of 03 January 2023, effective as of the same date (accessible here).

Plants addressed by the Circular. The Circular is applicable to the following plants intended for self-consumption, and which may be connected to the medium voltage electricity network of the Egyptian Electricity Transmission Company (EETC) or to the medium or low voltage electricity networks of any permitted distribution company:

  1. Gird-connected PV plants (irrespectively of their capacity); and
  2. Off-grid PV plants with a capacity exceeding 500 kW.

Definition of self-consumption plants. According to the Circular, self-consumption is the “scheme according to which a solar PV plant is connected to the internal loads of the customer in whose name the final power generation license is issued, subject to there being no exchange of power between the PV plant and the national electricity grid”.

Self-consumption plants are also subject to the below qualifiers, which are worth noting in the Circular:

  • The self-consumption PV plant must be located within the premises of the consumer, as evidenced by the license obtained by the consumer for carrying out its activities (eg as indicated in the consumer’s operating license).
  • The installed capacity of the PV plant may not exceed the aggregate electricity consumption of the consumer during the year preceding the commercial operation date of the self-consumption PV plant, and in all cases may not exceed 30 MW.
  • The total capacity of all self-consumption and net-metering solar plants across Egypt may not exceed 1,000 MW, including the existing installed capacities.

Exemption from integration fees. The Circular has exempted existing and future grid-connected self-consumption PV plants with a capacity of up to 10 MW from paying integration fees as of 03 January 2023. However, this does not apply retroactively, and existing plants are expected to pay any outstanding integration fees already due at the time of issuance of the Circular.

Self-consumption PV plants exceeding 10 MW of capacity will continue to be subject to integration fees, per EgyptERA’s previous Circular no. 3/2022 (accessible here), payable to the Egyptian Electricity Holding Company (EEHC) according to the voltage on which the consumer is connected to the national grid (which is equivalent to EGPp 32.9/kWh for extra high voltage; EGPp 32.6/kWh for high voltage; and EGPp 25.7/kWh for medium voltage).

Licensing regime for self-consumption PV plants. The licensing requirement for self-consumption PV plants differs according to each plant’s capacity:

  1. PV plants up to 500 kW owned by the consumer directly are exempt from obtaining a power generation license. The exemption is not granted automatically, and must be sought by a formal request submitted by the consumer to EgyptERA. However, if the plant’s production is subject to a power purchase agreement, a power generation and sale license is required.
  2. Grid-connected PV plants with a capacity exceeding 500 kW up to 30 MW are required to obtain a power generation license from EgyptERA.
  3. Off-grid PV plants with a capacity exceeding 500 kW are also required to obtain a power generation license.

EgyptERA has also introduced timelines for construction completion of the PV plants: 6 months for PV plants with a capacity up to 500 kW, and 1 year for PV plants with a capacity exceeding 500 kW, expected to run starting from the issuance date of the preliminary interconnection approval by the network operator.

Interconnection procedures and fees. The Circular also sets out the procedures to obtain the preliminary interconnection approval, which is required prior to the construction of the PV plant, and the fees payable to EETC or the competent distribution company for carrying out the relevant studies to issue such interconnection approval, in addition to the applicable timeline for the completion of construction set out above.

Companies must ensure that the timeline is observed, failing which the preliminary approval obtained from the network operator will no longer be valid, and a new interconnection request would have to be submitted at the cost of the consumer. The network operator is also bound by the timeline provided for the examination and issuance of the approval, and is subject to a penalty of EGP1,000 for every week of delay. The amount of the penalty payable will be deducted from any amounts due by the consumer to the network operator.

Battery use for self-consumption plants. The Circular explicitly allows the use of batteries in self-consumption PV plants for the storage of any unused power produced by the PV plant, provided that certain conditions are fulfilled, including: (i) batteries having to be integrated in the PV plant; (ii) a cap being set for the capacity of the batteries up to 20% of the PV plant’s capacity, (iii) the requirement to install smoke detectors in the area where the batteries are set up, and (iv) the requirement to install monitoring, detection and protection systems for batteries with a capacity exceeding 100 kW/h.

While the Circular has generally been lauded by the market as a positive development for commercial and small industrial sector consumers, encouraging them to adopt sustainable clean power sourcing, the larger consumers, especially industrial manufacturing facilities, are still unable to fully benefit from incentives to the self-consumption model of renewable power production. The lack of wheeling options (given that, according to the Circular, the self-consumption PV plant must be installed within the perimeter of the consumer premises), and the capping of the plant capacity at 30MW without due consideration for the consumer load profiles and the intermittent nature of solar PV plants (except for the 20% battery allowance) prevent large consumers from benefiting to the fullest extent from these new rules.

If you have questions regarding the licensing or exemption procedures for self-consumption solar PV plants, or would like to discuss the C&I market potential in Egypt, you can reach out to our Energy & Power team.