Publication: Scaling Up Distributed Solar in Emerging Markets: The Case of the Arab Republic of Egypt
Date
2017-06
ISSN
Published
2017-06
Author(s)
Sakr, Dalia
Huenteler, Joern
Matsuo, Tyeler
Khanna, Ashish
Abstract
Like many emerging markets, the Arab
Republic of Egypt is keen to promote distributed solar,
defined here as systems below 500 kilowatts, but has
struggled to create conditions for growth in the sector. The
aim of this paper is to identify policy actions to unlock
the distributed solar market for on-grid and off-grid
applications, using Egypt as a case study. The paper
calculates the rate of return on investment for different
distributed solar applications, identifies nonfinancial
barriers to scaling up distributed solar, and derives policy
implications. For on-grid applications, the analysis finds
that neither net metering nor the feed-in tariff makes
distributed solar financially attractive, despite recent
reductions in electricity subsidies and adjustments of
feed-in tariff levels in October 2016. For off-grid
applications, the profitability of distributed solar depends
highly on the local price of diesel: distributed solar is
viable only in areas where diesel is not available at the
official (subsidized) price. In addition, several
nonfinancial barriers limit the scalability of the
distributed solar market. These findings indicate that the
distributed solar market in Egypt will remain a niche market
in the next few years without strengthened government
support. First, for on-grid applications, the net metering
scheme should be kept in place until a bankable feed-in
tariff has been established. Second, for off-grid
applications, the government should explore interventions to
unlock opportunities in the agriculture and tourism sectors.
Third, the government should strengthen private-sector
activity in the sector, including by addressing nonfinancial
barriers, such as transaction costs and gaps in the
availability of data, and by building capacity among users,
suppliers, and financial institutions.
Citation
“Sakr, Dalia; Huenteler, Joern; Matsuo, Tyeler; Khanna, Ashish. 2017. Scaling Up Distributed Solar in Emerging Markets: The Case of the Arab Republic of Egypt. Policy Research Working Paper;No. 8103. © World Bank, Washington, DC. http://hdl.handle.net/10986/27301 License: CC BY 3.0 IGO.”
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