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07 October 2020Anna ShpitsbergElsa KienerRaul Timponi
Egypt's power demand faced steep declines from March to
July 2020
According to the Egyptian energy regulator, EgyptERA, the
steepest declines happened in March and April 2020, when the
average daily peak and base load fell by about 10% and 9%,
respectively, compared with the same period in prior years.
In July 2020, as COVID-19 lockdown measures eased and the
Egyptian economy started to show early signs of recovery in non-oil
industry and in tourism, peak and base loads started to increase.
Nonetheless, the highest daily peak load in July 2020 was 29.2 GW,
about 9% below the highest daily peak load in fiscal year 2019/20
(from July 2019 to June 2020), which reached 32 GW in July 2019.
Given that peak demand was already slowing—the annual peak load
grew at less than 2% in 2018/19 and 2019/20 fiscal years, compared
with around 5% in previous years—it may not see much growth in
2020/21.
Double jeopardy: Declines in power demand pressure
fossil-fuel generation and highlight overcapacity in power and gas
sectors
Generation reacted to power demand declines with average monthly
power generation from March to July 2020 falling by 5% to 9%,
compared with the same months in 2019. However, renewable energy
and hydropower generation increased between March and July
2020.
Gas-fired power stations, on the other hand, saw a year-on-year
decline in generation of about 10%, between March and May 2020.
Similarly, oil-fired units reduced their generation by 68% on a
year-on-year basis, between May and July 2020. As a result of
natural gas and fuel oil acting as balancing fuels, recent
state-owned thermal power projects face underutilization risks.
The likely slowdown of the annual peak load in 2020/21 will
exacerbate the power system's overcapacity situation and further
diminish the need for new capacity additions in the short term.
Additionally, falling gas demand in the power sector underscores
the oversupply of the Egyptian gas sector, since power has been a
key anchor for the gas market.
The production of large offshore gas fields ramped up following
the shortage in gas supply in 2012-14. This ramp-up was initially
absorbed by growth in the industry and the power sector, mostly
through oil substitution. However, since 2019 growth in gas demand
has virtually stagnated, with natural gas demand from the power
sector declining by almost 4% in the first half of 2020 (compared
to the same period in 2019). This oversupply of gas puts pressure
on upstream developers looking to recover heavy investments made
over the past five years, all the while facing record low gas
prices, lower industrial gas demand, and oversupplied export
routes.
Elsa Kiener,senior
researcher,global power and renewables at IHS
Markit,specializes in global power markets,
including Middle East and North Africa.
Raul Timponi, associate director, IHS Markit,
specializes in global power markets.
Anna Shpitsberg is a director of global power and
renewables at IHS Markit, specializing in power market development
and conducts research and consulting on emerging trends, the
evolution of regulation, and industry strategy as it relates to the
power sector, globally.
