3 scenarios expected, including reduction of capacities, postponement
Negotiations with Siemens on the establishment of 2,000 MW wind farms have stopped for the second time. The project was amongst the ventures agreed upon at the Sharm El-Sheikh economic summit in 2015.
Government sources said that the meetings and negotiations over the past two months have not resulted in new developments or agreements, hence, stopping the negotiation until reaching a satisfying one between the government and the German company.
Sources explained that the main reason is the desire of officials of the New and Renewable Energy Authority (NREA) and the Egyptian Electricity Transmission Company (EETC) to reduce the purchase price of electricity produced from the project because of the high cost compared to other projects.
According to the sources, the electricity officials proposed to Siemens to contract at the same price that was contracted with the Toyota alliance to establish a wind station in the Gulf of Suez with the price set at 3.8 US cents per kW. The proposal was turned down by Siemens.
During its negotiations, Siemens stressed the need to increase the value of the tariff, especially as the project was negotiated two years ago with the price at 5-7 cents per kW.
Moreover, Siemens highlighted its implementation of three traditional power plants outputting a total of 14,400 MW at a cost of €6bn, which is considered low compared to the technology used and the fuel-saving the plants offer.
The sources revealed three scenarios expected for the proposed Siemens wind stations. The first is to reduce the planned capacity from 2,000 MW to only 200 MW. In this scenario, EETC will buy the electricity produced at the same offered price of 3.8 cents per kW.
The second scenario is the temporary postponement of the implementation of the wind stations, especially since the prices of the production capacity of the stations are decreasing, which means that the value of the purchase of capacity will be appropriate and may decrease slightly.
The sources explained that the third scenario includes completely stopping the project, which sources have ruled out, especially as the cabinet approved the contract and agreed on buying 2,000 MW from the plant.
The sources said the government has good relations with the German company, but refused to pay more to buy the energy from Siemens compared to the purchase price of the same energy type from a different company.