New Merger Fee Imposed on Renewable Plants in Egypt
Renewable power generation plants with a capacity of more than 500 kW will be subject to a new grid merger fee in Egypt.
The Egyptian Electric Utility & Consumer Protection Regulatory Agency (EgyptERA) issued Circular No. 3 for 2022 (“Circular”) to apply a merger fee to renewable power generation plants under (1) the net-metering system and (2) the self-consumption system connected to the grid.
The merger fee will be at the following rates:
|Voltage||Merger fee (EGP/kWh)|
The fee will have an impact on new plants with a generation capacity larger than 500 kW. It will also apply retroactively on existing plants in case their generation license stipulated that the plant will be subject to merger fee upon its determination.
Isolated self-consumption plants as well as projects under the FiT program are not subject to the fee.
EgyptERA said previously that the fee is imposed to cover the cost of integrating the plants into the grid network. The Circular therefore provided that the payment of the fee will be made to the Egyptian Electricity Holding Company (EEHC) in settlement for the cost born by its affiliated distribution companies. The merger fee came few months after imposing 2% customs duty tariff on imports of components used on solar and wind projects. Renewable players believe that such increased fees affect the cost of renewable projects and come in contradiction with the governments’ expansion in renewable capacity ahead of this year’s COP27 climate summit in Sharm El Sheikh.