October 29, 2024

Egypt’s New Trade and Settlement Rules for Private-to-Private (P2P) Projects – A Pathway to Private Investment in Electricity

Egypt, in alignment with its Vision 2030, is actively promoting renewable energy investment through the Egyptian Electricity Utility and Consumer Protection Regulatory Authority (EgyptERA). In support of this goal, EgyptERA has introduced Trade and Settlement Rules (Rules) for Private-to-Private (P2P) Projects, designed to facilitate private sector involvement in electricity production. Operating without state-backed guarantees, these projects represent an opportunity for private investors to contribute directly to Egypt’s evolving competitive electricity market.

Eligibility Requirements for P2P Projects

To participate in P2P projects, EgyptERA has set forth specific eligibility criteria for consumers and producers:

For Eligible Consumers:

The consumption site must be newly established and directly connected to the transmission system.
Applicants must not operate as electricity distributors.
No outstanding debts (over three months) should be owed by the applicant or its affiliates to the Egyptian Electricity Transmission Company (EETC) or other utility partners.

For Eligible Producers:

Producers must possess a valid production license for a facility connected to the transmission grid.
Financial capability to fund the construction and operation of the production facility must be demonstrated.
Comprehensive details about the new facility are required.

Participation Guidelines

Registration Process

Both producers and consumers must register with EgyptERA and provides documentation such as application forms, production licenses, financial records, and an EETC non-objection declaration. This registration process certifies them as eligible participants.

Key Registration Conditions

  • Total P2P project capacity is capped at 500 MW.
  • Production facilities must be newly constructed, capped at 100 MW per facility, and powered by wind or solar energy.
  • No existing power purchase agreements with EETC or other authorities are allowed.
  • Consumption sites must also be new, and EgyptERA reserves the right to impose zonal restrictions based on grid stability and technical considerations.

Contractual Framework for P2P Projects

Producer Contracts

Producers are permitted to contract with up to three qualified consumers and can sell electricity to these consumers directly. Additionally, they can arrange to sell excess energy to the EETC through:

  • Private-to-Private Agreements: Direct agreements with consumers.
  • Connection Agreements: For connecting new production facilities.
  • Use of System Agreements: Applicable to existing or new facilities.
  • Residual Sales Agreements: Covering excess energy for day-ahead trading.

Consumer Contracts

Qualified consumers can secure power through:

  • Private-to-Private Agreements: Direct purchase arrangements with eligible producers.
  • Connection Agreements: For transmission access.
  • Residual Supply Agreements: For covering any shortfall energy provided by EETC.

Selection Criteria for P2P Projects

EgyptERA has implemented a rigorous scoring system to evaluate and rank P2P projects based on a combination of project characteristics, proximity, and operational milestones.

Scoring Components

  • Base Scores: 10 points each for new production facilities and consumption sites.
  • Modifiers:
    • Grid Connection Penalties: Up to 5 points deducted for projects connecting to certain transmission areas.
    • Proximity and Bonus Adjustments: For example, consumption sites within 100 km of the production facility earn a 3-point bonus, while those beyond 1,000 km incur a 5-point penalty.
    • Desalination and Green Hydrogen Production: Projects incorporating these facilities receive additional points.
    • Timeliness Bonus: Additional points awarded if project milestones are achieved within a 2-3 year timeframe.
    • Project Ranking and Selection: Projects are prioritized based on total aggregate score. In case of ties, lower installed capacities and shorter transmission distances are favored. Projects below capacity thresholds may also be considered to fulfill the 500 MW project cap.

Participant Obligations

Producers and Consumers: Must submit their physical nominations and contract details to EETC.
Adhere to EgyptERA’s regulatory framework governing P2P projects.

Egyptian Electricity Transmission Company (EETC):

  • Verifies and approves project nominations and contract details.
  • Determines day-ahead and residual energy requirements, collects metering data, and conducts financial settlements.
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