The Circular No. 3 of 2023 was issued by the Egyptian Electric Utility & Consumer Protection Regulatory Agency (the “EgyptERA”), setting out specific rules and regulations for self-consumption projects (off-grid). The provisions of the circular came into force on 3 January 2023 (the “New Circular”).
In line with the Electricity Law No. 87 of 2015, the New Circular differentiates between connected and isolated installations as follows:
Connected Installations /On-Grid (“Net Metering”):
These installations allow surplus energy to be exported to the transmission and distribution grid. Users can also sell the energy onto the grid. In such cases, the electricity produced primarily goes to self-consumption while the remaining amount is transferred onto the national grid.
Net Metering is an exchange electricity mechanism whereby the producer benefits from selling such excess. On the other hand, if the amount of energy consumed exceeds the amount produced, then the consumer pays the net amount.
Isolated Installations / Off-Grid:
These installations are not connected to the grid (i.e. the consumers will produce their electricity through a solar plant which will not be connected to the national grid). A service provider will install the power plant, which will feed electricity directly to the consumer. Batteries may be added to such installation to store excess energy (please see below the Batteries’ Regulation section).
- Projects under 500 kW: In line with the Electricity Law No. 87 of 2015 and its Executive Regulations, projects with generation capacity under 500 kW shall be exempted from licensing requirements upon submitting a request to the EgyptERA. Such projects must obtain the qualification certificate issued by the New and Renewable Energy Authority (the “NREA”) in line with Article 2 of Law No.102 of 1986 regarding the establishment of the NREA. It is worth noting that a photovoltaic power station (“PV plant”) that is developed and owned by a qualified developer entering into a power purchase agreement must be licensed.
- On-Grid Projects over 500 kW and under 30 MW: Such projects require the Egyptian Electricity Transmission Company (the “EETC”) to conduct a preliminary study in relation to the effect of connecting the PV plants to the grid in line with Article 48 of Decree No. 230 of 2016 as well as obtaining the generation license from the EgyptERA prior to construction.
- Isolated Projects over 500 kW: Such projects are also required to obtain the generation license from the EgyptERA in line with Article 4 of the Electricity Law No. 87 of 2015.
Note on the NREA Qualification Certificate: To implement the off-grid project, and according to the regulations of NREA, companies must obtain a qualification certificate to install renewable energy plants. These qualification certificates are valid for three years and renewed for similar periods. This obligation will be on the service provider and not the consumer; however, these qualification certificates shall be obtained even for renewable energy projects of capacities under 500 kW exempt from obtaining permits.
In general, PV plants shall not exceed the capacity of 30 MW.
According to the New Circular, the total generation capacity of solar projects (under both systems) in Egypt shall not exceed 1000 MW, including existing projects.
The consumer shall pay a merger fee for the integration of electricity produced onto the national grid under the Net Metering system (“Merger Fee”). The Merger Fee is as follows:
- 32.9 Piasters/kWh for ultra-high voltage;
- 32.6 Piasters/kWh for high voltage; and
- 25.7 Piasters/kWh for medium voltage.
The PV plants under Net Metering (on-grid) projects with a capacity of up to 10 MW shall be exempted from paying the Merger Fee as of the effective date of the New Circular.
The New Circular includes a requirement for periodic reporting to monitor the network connection and compliance with the applicable rules and contractual terms.
The New Circular specifies three periodic reports:
- Monthly report to be prepared by the network operator (the EETC) to be submitted to the EgyptERA at the start of each month covering the aggregated capacity of all projects with generation capacity above 500 kW.
- Quarterly report to be prepared by the EgyptERA uploaded on the EgyptERA’s website, which includes the aggregated capacity of all the companies.
- Comprehensive annual report to be prepared bythe EgyptERA covering the details of all projects with generation capacity above 500 kW.
The New Circular determines the cost and fees for projects with generation capacity under and above 500 kW, along with meter fees based on capacity.
Please note that the network operator shall not be entitled to other fees.
The New Circular sets out certain regulations for battery use on the self-consumption system. Batteries shall be integrated into the plant only for the consumer to reduce generation and use intermittence. The battery’s maximum capacity should not exceed 20% of the plant’s generation capacity.
In case of network disconnection, the entire electricity system must be isolated through appropriate circuit breakers equipped with voltage sensors, smoke detectors and firefighting equipment in compliance with the (IEC 62619) code at the battery location.
For batteries with a capacity exceeding 100 kWh, an additional safety system shall be installed.