Rising costs of fossil fuel prices in Egypt along with exemptions from customs duties on renewable equipment suggests a strong business case for Concentrating Solar Heat (CSH) in industrial processes.

But inflationary and currency pressures as well as space constraints at factory sites are impeding the growth of this promising market.

Figure 1. A view of Cairo

Egypt has slashed fossil fuel subsidies three times since 2014, the last of which was in June 2017, and the plan is to phase out energy subsidies completely by the end of 2022.


In late 2016, prices of mazut (a heavy fuel oil) reached EGP 1,500 per ton for food industries, EGP 2,100 per ton for brick kilns and other manufacturing industries, and EGP 2,500 per ton for cement producers. By mid-2017, mazut prices for the cement industry increased by 40% to EGP 3,500 per ton[i].


From an economic point of view, the hike in fossil fuel prices should create a more favorable environment for the deployment of CSH technologies in Egypt.



“Industries in Egypt mainly use gas, and sometimes diesel or electricity, depending on how large the factory is,” Mohab Hallouda, Senior Energy Specialist at the World Bank said.


Industrial production is a major contributor to Egypt’s economy, accounting for nearly 33% of GDP in 2017 and growing at an annual rate of 3.5%, according to the Central Intelligence Agency.


Additionally, Egypt has one of the highest levels of solar radiation in the world, receiving 2,000-3,200 kWh/m² per year. Despite that, not a single company uses CSH for its industrial processes, and a couple of small systems installed in the mid-2000s are no longer operational.


“I see a very good potential for CSH technology, especially in the pharmaceutical, chemical and food industries – these three are big energy consumers,” Hallouda said.


One of the issues for the private sector is space constraints, he added. “Usually when you consider these projects, you avoid putting the cost of land in the analysis. But land cost is a big factor compared to putting a gas boiler.”


In 2012, Egypt exempted all renewable equipment from customs duties, compared to 5% on conventional equipment. However, with the free fluctuation of the Egyptian pound, importing solar systems has become too expensive.


“After the currency devaluation 16 months ago, it has become very difficult for industry and investments in CSH are high. But Egypt is the biggest market in the region,” Martin Haagen, Business Development MENA at Industrial Solar said. The German company installed Jordan’s first CSH system and is currently commissioning a second one.

Figure 2. A parabolic trough-based solar steam generation plant (1.4 MW) at El Nasr Pharmaceutical Chemicals factory on the outskirts of Cairo, built by Lotus Solar Technologies in 2003 (currently not operational)


A lack of political will is also hindering the deployment of CSH technology. “Successive governments continue to see solar energy as imported or, at best, as locally assembled silicon photovoltaics. Furthermore, they are happy to burn natural gas and as soon as shortages prevail, they issue permits to cement and other industries to import coal,” Amr Mohsen, Founder and CEO at Cairo-based Lotus Solar Technologies said.


Moreover, while Egypt has a solid industrial and technical knowledge base, it lacks a skilled workforce in the CSH field, both in manufacturing and services.


“We have a robust glass industry, mechanical companies, and we can manufacture pipes locally. I would assume you could manufacture 60-70% of a CSH system domestically. That’s why the Egyptian National Cleaner Production Center (ENCPC) is adopting this technology because they feel it can be easily localized,” Hallouda said.


ENCPC, which was established by the Ministry of Trade and Industry in cooperation with UNIDO, initiated a project in 2014 to spur local manufacture of solar energy systems for industrial process heat.


The project, which continues until 2019, has a budget of USD 6.5 million through a grant from the World Bank’s Global Environment Facility. The objective is to develop the market environment for solar technology to be used in the food, textile and chemical industries, as well as to mobilize financing and build the capacity of technical staff.


Hallouda believes the payback on CSH investments for industrial processes in Egypt could range from three to five years. “As electricity and gas prices continue to rise, the payback period will become shorter and the prices of CSH technology will fall,” he said.



[i] 17.6 Egyptian pounds (EGP) are equivalent to 1 US dollar, according the prevailing exchange rate on March 20th 2018