Introduction

The Circular No. 02 of 2024 issued on 28 March 2024 by the Egyptian Electric Utility and Consumer Protection Regulatory Agency (the “EgyptERA”) sets out the framework for private sector participation in the transitional phase of Egypt’s competitive electricity market in line with the electricity law no. 87 of 2015 (the “Electricity Law”),  and its Executive Regulations No. 230 of 2016.

General Provisions

As part of Egypt’s strategic focus on promoting private sector investment in the electricity industry and in alignment with the country’s 2030 Vision, the EgyptERA has prepared, in accordance with the Electricity Law, the development and operation rules for the preliminary commercial projects aimed at enhancing private sector involvement in renewable energy-based electricity production. These guidelines, referred to as Private Sector to Private Sector schemes (“P2P Schemes”), represent the first phase of transitioning towards a competitive electricity market. It is worth noting that these projects do not receive state guarantees.

To establish a regulatory framework for P2P Schemes, the EgyptERA mandates the submission of 6 (six) key documents: trade and settlement rules, network connection agreements for eligible producers and consumers, network usage regulations, surplus energy sale agreements, and energy deficit purchase agreements.

Eligibility Criteria for the P2P Schemes

A. Qualification Criteria for Consumers:   

• the consumption site identified in the application must be newly established and will be connected to the transmission grid;
• the applicant must not be engaged in electricity distribution activities; and
• neither the applicant nor any of its affiliated companies should have any outstanding payments exceeding 3 (three) months to the Egyptian Electricity Transmission Company (the “EETC”) or any other entities within the electricity system. For clarity purposes, any unpaid amounts arising from a full or partial billing dispute governed by the energy supply agreement’s terms and conditions will not be considered an overdue payment for this rule.

B. Qualification Criteria for Producers:

• the producer must have a valid production license for the production plants connected to the transmission grid;
• the producer must prove his financial stability and his ability to finance the establishment of the new production plant; and
• the producer must provide information regarding the station, the intended installed capacities, and the technology planned for the new energy production plant intended to supply 1 (one) or more qualified consumers.

C. Registration Process as a Qualified Producer or Consumer in Egypt:

To participate in a P2P Scheme, producers and consumers are required to register with the EgyptERA as qualified producers or consumers by submitting the necessary documentation. The registration process entails: 

• filling out an application form, providing a valid production license and information about the location, the proposed capacity, the technology of the power plant, and the submission of a feasibility study; 
• a series of declarations shall be collected for registration, such as (i) a declaration of no objection from the EETC for connecting the production plant/consumption site, (ii) a declaration of non-involvement in electricity distribution activities, and (iii) a declaration stating that there are no financial dues to the EETC that are overdue by more than 3 (three) months; and
• upon fulfilling all the requirements above and signing all agreements with the EETC, the qualified producer may register the P2P Scheme with 1 (one) or more qualified consumers on behalf of the contracting consumers at the EgyptERA in accordance with the established rules.

The EgyptERA shall select, approve and register all P2P Schemes, subject to the following conditions:

• the total capacity of P2P Schemes is limited to 500 MWs (five hundred megawatts);
• registration of renewable energy facilities is restricted to those with a maximum capacity of 100 MWs (one hundred megawatts) that rely on wind or solar energy and have not signed electricity supply agreements with the EETC, New and Renewable Energy Authority, or Electricity Distribution Company;
• registration of consumption sites is limited to newer sites; and
• without prejudice to obtaining approval from the EgyptERA, the EETC may impose geographical restrictions and exclude production plants connected to certain parts of the transmission network from participating in a P2P Scheme after providing justification.

Contractual Relationships

The conditions for private qualified producers to contract are as follows: 

• qualified producers can enter into contracts with up to 3 (three) qualified consumers;
• qualified producers are allowed to sell electricity to qualified consumers via the EETC transmission grid, and sell the surplus of energy produced to the EETC, by concluding the following agreements:

• Private to Private Agreement: a contract between the qualified producer and the qualified consumer(s) receiving the electricity supply;
• Separate Interconnection Agreement: a separate agreement is concluded for each new production plant registered in the P2P Scheme;
• Separate Network Use Agreement: a separate agreement is concluded for each existing or new production plant registered in the P2P Scheme; and
• Surplus Energy Sale Agreement: this agreement governs the delivery and sale of surplus energy produced each day and balances energy surplus with the transmission system operator. It shall also cover the energy deficit purchased by the transmission system operator.

Qualified consumers may purchase part or all of their consumption from a qualified producer by concluding the following agreements:

• Private Contract: a contract concluded with the qualified producer;
• Separate Interconnection Agreement: a separate agreement shall be concluded for each existing or new consumption site registered in the P2P Scheme; and
• Agreement for the Supply of Energy Deficit: the agreement involves the receipt and purchase of an energy deficit 1 (one) day in advance, the purchase of the energy deficit from the transmission system operator, and the delivery and sale of surplus energy to the transmission system operator.

Parties Obligations Under P2P Schemes:

Qualified producers and qualified consumers shall be responsible for the following:

• providing energy quantities: qualified producers and qualified consumers must provide the EETC with the specified energy quantities for all production plants and consumption sites of the P2P Scheme;
• submitting contractual notifications: they must also submit contractual notifications for all effective P2P Schemes; and
• adhering to trading and settlement rules.

The EETC shall be responsible for the following:

• verifying compliance: the EETC is responsible for verifying compliance and, where applicable, correcting and approving the specified energy quantities and contractual notifications;
• determining energy surplus and deficit;
• collecting metering data; 
• carrying out settlement calculations;
• the EETC and the qualified producers shall be responsible for issuing invoices;
• effective P2P Schemes must be terminated in accordance with the qualification criteria; and
• all grid connection, transmission network use, consumed energy deficit supply, and surplus of produced energy sale agreements must be undertaken in accordance with the contract templates approved by the EgyptERA.