Science Monitor
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Science Monitor
The German Egyptian Science Monitor Issue 2 - March 2016 Dwz Energy -- Conference Report “Rethinking Energy: Scientific Input – Social Output” Dear Readers, Sebastian Helgenberger Social Benefits of Renewable Energies Michael Stephan Business Models for the Diffusion of Solar Technologies in Egypt Ahmed Zahran KarmSolar R&D Investment Experience Yaseen Abdel-Ghaffar, Rana Alaa The Solar Energy Start-Up Scene in Egypt Thomas Schlegl The Benefits of Solar Energy in Egypt Majeed Abdul-Hameed Abdul-Hussain Integration of Renewable Power Resources into National Transmission Grid Bernhard Wille-Haussmann Smart Grid Technologies and Grid Planning Mohammad Reza Farzanegan, Gunther Markwardt Economic Development and Air Pollution in the Middle East and North Africa: Democracy Matters In the second edition of the German Egyptian Science Monitor we have the pleasure to follow up on last year’s annual conference of the German Science Centre (DWZ) which took place in November 2015: „Re-thinking Energy: Scientific Input – Social Outcome”. This year’s German Egyptian Science Monitor thus serves as a collection of selected conference contributions in order to document the findings in a sustainable manner and make them accessible to the broader public. Responding to the complexity of the multidimensional subject of energy, the conference was structured in line with the diverse expertise of the DWZ members and followed this year’s annual theme „Moving Science – Energy for the Future”. Throughout the conference the entire range of topics concerning energy was analyzed within five different working sessions. Ranging from the expansion of renewable energies, to socio-economic implications and the necessity of awareness raising within the educational sector. A summary of the major outcomes can be found within this publication. Prof. Dr. Miranda Schreurs from Freie Universität Berlin opened the conference with a keynote speech offering insights into the German energy transition. She advises the German government on issues of energy and sustainability and is further the elected chairwoman of the “European Environment and Sustainable Development Advisory Council”. Focusing on Egypt‘s tremendous potential in using renewable energy sources Prof. Schreurs pointed out that besides environmental and health benefits a sustainable transition away from fossil fuels will have positive effects on the employment and innovation potential in the green economy sector. The first reduction of energy subsidies in July 2014 and the introduction of a feed-in tariff constitute a promising and important step towards the Egyptian goal of increasing the share of renewable energies up to 20% of the national energy mix by 2020. To intensify and further support this strategy a coherent development and implementation of energy efficiency measures and application-oriented research is of crucial importance. These are needed in order to identify and adapt feasible means to Egypt‘s case specific climate conditions and will open up the full potential of renewables energies in Egypt. The German Science Centre in Cairo gladly supports this endeavor by bridging the gap between academia and industry. Therefore, the second Science Monitor not only provides a platform for scientists but also addresses young entrepreneurs and experts with a background of practical experiences in the market. Ahmed Sedky The goal of the conference and this publication is to deepen and impart the understanding of renewable energies and the opportunity they constitute for an Egyptian German scientific and economic cooperation. The Geopolitics of Renewable Energy Roman Luckscheiter The One Stop Shop for information about the German research landscape and funding sources. Responding to the continuous rise in cooperation projects between Egyptian and German universities and research institutes, the German Science Centre Cairo, supported by the German Federal Foreign Office, serves as a platform for German-Egyptian exchange in the fields of science, technology and research. In order to strengthen the synergy of scientists in Germany and Egypt, the DWZ acts as a service provider bringing together experts from academic institutions, researchers and representatives of industry and government. Moreover, it aims to showcase German science in Egypt in addition to promoting Germany as a research location. The DWZ, founded in 2012, has successfully established its own event formats, such as the “German Science Day”. It addresses young scientists, and regularly organizes exhibitions, scientific events and conferences discussing current issues in science and innovation. The DWZ seeks to establish thematic links between various academic disciplines ranging from natural sciences and applied sciences to humanities and social sciences. Main focal areas include but are not restricted to food, water and renewable energy. Within this framework, the DWZ also emphasizes interdisciplinary topics and collaborates with other esteemed organisations to promote international knowledge transfer and scientific exchange. The DWZ represents the many facets of research in Germany and provides information about the German research landscape and funding sources following the principle of the “one-stop shop”. Our Service - interdisciplinary events on current issues in science and innovation - contacts to German and Egyptian research institutions and companies - information and reference materials on German research and development - up-to-date research news from Germany and Egypt - individual consulting on potential cooperation opportunities - furnishes profiles, activities and services of its partner organizations The Egyptian German Science Monitor Issue 2 - March 2016 “Rethinking Energy: Scientific Input – Social Output” DWZ Energy Conference Report November 8, 2015 Providing a secure national energy supply, which includes the balanced, sustainable use of the available resources coupled with continuous development of the highest energy efficiency levels, is at the core of a nation’s socio-economic development. In Germany, as well as in Egypt, the sustainable energy production and its larger inclusion in the energy mix are vibrantly debated. This debate is being mirrored by numerous Egyptian-German research collaborations, which are fostered through multiple projects by the partners of the German Science Centre (DWZ). Questions surrounding the interdisciplinary topic of energy cannot be answered from an economic perspective alone, but need strong input from the research sector. Simultaneously, it is indispensable to include the political context of the energy agenda in social discourse in order to do justice to the holistic demand for sustainable socio-economic development. The goal of the conference was to impart and deepen the understanding of the complexity of the multidimensional nature of energy through five different working groups. Through an interdisciplinary approach, as is represented by the DWZ’s network, complex interrelations were emphasized and discussed with Egyptian partners. From the expansion of renewable energies, to socio-economic implications and the adoption of energy consciousness within the education sector, the entire range of the topic was analyzed and recommendations for action developed. Among the key action points were the development of a clear, committed plan for Egypt’s energy mix that would inspire longer term investment, better finance mechanisms for renewable energy projects, more human resource development, technical training at universities to meet RE industry needs, improvement of Egypt’s recently implemented Feed-in-Tariff system to encourage on-grid solutions, more attention and assistance for SME projects and increased energy efficiency. In her keynote address, Dr. Miranda Schreurs, Director of Environmental Policy Research at Freie Universität Berlin, discussed Germany’s energy transition “Energiewende” and goal to reduce greenhouse gases 80-95% by 2050. That transition has primarily been driven by private citizens, who produce over 35% of the renewable energy. They have created energy coops, and communities are coming together to establish biomass, PV or wind en- © Michael Asaad © Michael Asaad ergy projects. The transition toward renewable energy has created 371,000 new jobs in Germany alone, Schreurs said. Renewable energy does not have to be more expensive if coupled with energy efficiency measures like changing appliances, insulating windows and not running air conditioning all the time, she said. The costs of small PV installations in Germany are approaching the cost of coal, Schreurs noted. “Germany is not the sunniest country; we have 900 hours of sunshine a year, but here in Cairo you have 3,000 per year. On beautiful days, at the peak of the day, 50% of Germany is powered by the sun. Imagine the potential in Egypt,” she said. In Egypt, said Laura Oexle, Head of the Science Department at the German Embassy “the energy crisis, which is still ongoing — but maybe less noticeable than last year — virtually forces us to rethink the current system of energy supply. I can partly understand that the energy crisis requires urgency measures alleviating the situation in the short-run. Investments in coal and nuclear energy are examples of this. A long-term strategy, an energy scenario for the next decades, taking into account the rapid population growth and the severe consequences of climate change are, however, indispensable.” Session 1: Innovative Business Models Enabling Establishment of Renewable Energies in Developing Countries Egypt has pledged to have a 20% share of renewable energy in its energy mix by 2020. While setting up goals is a very encouraging first step for Egypt, the actual implementation of this target will need to be accompanied by supporting policies and by the creation of an attractive market for private investors. To encourage the growth of the sector, Egypt’s Minister of Electricity Mohamed Shaker introduced a Feed-in-Tariff (FiT) scheme for renewable energy in September 2014, de facto opening up the energy market to private entrepreneurs, who have since rushed to apply to the new scheme. There remains the question as to what kind of business model could support such a policy, as the session chairman Rainer Herret, CEO of the German-Arab Chamber of Commerce, pointed out. Ø 3 The Egyptian German Science Monitor Issue 2 - March 2016 The “Benefits of Solar Energy in Egypt” were presented by Dr. Thomas Schlegl, the head of the Energy System Analysis Group at Fraunhofer Institute for Solar Energy Systems ISE. According to him, the Photovoltaic (PV) market is bound to become a market of hundreds of billion dollars per year in the near future, driven by the drastic price reduction of the technology. “The price drop will continue, and we expect prices of PV to be reduced by 40% to 70% in the next 35 years,” he said, convinced that PV will offer the lowest electricity cost in the future. In order for a PV project to take off, two issues need to be clustered: the quality of the product and its low price, all integrated into the state’s existing energy system and legislation. In order for a country to efficiently and successfully integrate RE into its energy mix, it needs to consider local conditions very carefully, including what resources are available and the state of the infrastructure before giving a framework to investors. The potential for job creation is very real in the PV market, since parts of the value chain can be done locally, like the installation, and solar cells could be produced using desert sand. The part of balance-of-systems (BOS), including for example ground works, mounting structure, cables and installation can be realized locally rather easily. Fraunhofer ISE has developed a full integrated industrial cluster for the development, production and application of PV power in Egypt that covers the entire value chain from the feedstock to the wafer, PV cell and PV module. The concept for silicon-based PV modules leads to highly competitive costs for PV modules and solar electricity. PV offers each country a high potential for local penetration, and its decentralized nature creates pockets of energy and employment in off-grid areas. © Michael Asaad Figure 1: Planting the DAAD and the DWZ tree on the premises of OASIS Renewable Energy during the Fieldtrip ahead of the conference Yassin Abdel el-Ghaffar, the Founder and Managing Director of the company SolarizeEgypt, gave an insightful presentation into the hurdles of starting a solar business in Egypt. It is very difficult to enter the market as a start-up, since this sector is so capital-intensive, he said. It took nine months before he found his first client, the American University in Cairo, which wanted to install a decentralized 17kW system on the campus in New Cairo. The AUC agreed to let SolarizeEgypt use this project as a demonstration site to show the technology’s potential to future clients, which was the company’s platform to emerge as a serious actor in what has become a very competitive market since the FiT scheme was introduced. To this day, wind and solar energy comprise less than 1% of energy production in Egypt, which is still largely based (at 91%) on fossil fuels. “The solar radiance in Egypt is one of the highest in the world, with an average of 2500kW/square meter per year, and 300 sunny days per year,” he said. Before the FIT scheme was introduced, it did not make sense for RE companies to compete with energy sold by the government at artificially low, subsidized prices, according to Abdel el-Ghaffar. The FiT, accompanied by the announcement of the gradual phase-out of all fuel subsidies over the next five years, has changed the situation, even though the scheme as it currently stands is more beneficial for large-scale applications. Since the FIT gives better prices to larger systems over small-scale and decentralized systems, it remains a challenge for SMEs to compete. This is why Abdel el-Ghaffar is trying to reintroduce the net-metering system which was abandoned when the FIT started. “We want to create a lobby group to reenact the net-metering scheme, which gives much more attractive tariffs to small applications of PV,” he said. He also believes banks have a role to play in streamlining the finance process of RE start-ups. Since the FIT introduction, 95 (solar energy) companies compete on the market in Egypt, this level of competition has driven some of them to sell at a loss just to secure clients. According to him, there should be increased consumer awareness on the quality of the system, rather than favoring the cheapest system per kilowatt. Also, in order to encourage more citizens to erect PV modules on their rooftops for self-consumption and to feed into the national grid, the government should respect its commitment to purchase the excess power produced. “We were delighted when the first check was received by our customer last week, this gives a very positive signal,” he says. Moving forward and integrating more solar into Egypt’s energy mix, requires the country to build a megawatt scale track record and provide Independent Power Producers (IPP) financing options, Abdel el-Ghaffar said. Energy experts should exist in banks to facilitate the launch of off-grid projects, and the process to obtain a license to produce electricity should be made easier. During the rich conversation which followed the two presentations, experts in the assembly expressed what they see as a major hurdle to the large-scale deployment of solar systems in Egypt. The main concern remains the upfront cost of the technology. In the Western Desert, which has land in abundance and groundwater resources, farmers still rely on diesel generators to pump water for irrigation. Hybrid solar/diesel pumps remain expensive, and farmers don’t get any support from banks to acquire those systems, which would considerably lower their reliance on diesel. The Agricultural Development Bank has a plan that was declined by the Central Bank of Egypt for such projects. Storage is also an issue, and batteries are still very expensive and only last two years in Egypt due to the extreme heat, so they haven’t proved economically competitive thus far. Session 2: Social Commitment Towards Ambitious Energy Transformation Goals Dr. Florian Kohstall, Head of FU Berlin Cairo Office, led the session on society’s role in spurring the shift toward renewable energy and the barriers to ambitious energy transformation goals, which often include lack of acceptance for the feasibility and economics of renewable energy, vested interests in business as usual and so called NIMBY (not-in-my-backyard) resistance to RE projects. Germany’s civil society has had a particularly active role in influencing the energy mix of the country, primarily resulting from resistance 4 The Egyptian German Science Monitor Issue 2 - March 2016 to other forms of energy. Outcry against nuclear energy for example was extremely strong following the disaster in Chernobyl and renewed after Fukushima. Coupled with that societal pressure also came financial investment and ownership from the citizens themselves, which was fostered by the formation of citizen cooperatives under a legal framework that guaranteed long-term investments in RE would be beneficial. Thus, German citizens became the game changer in the country’s shift to renewable energy, according to Dr. Sebastian Helgenberger, head of the Transdisciplinary Panel on Energy Change at the Institute for Advanced Sustainability Studies e.V.. Egyptian citizens would be more likely to engage if existing RE projects and potential applications were made more visible, rather than being hidden at secure and remote desert locations, said Sarah El Battouty, architect, Presidential Advisor and Founding Chairman of ECOnsult. Her firm has worked with a variety of companies to convince them that greener buildings and energy efficiency are an integral part of the long-term health of their businesses. She compared renewable energy investment with a country by country happiness index, suggesting that those countries that are already engaging in RE development are more innovative and also happier societies. Session 3: Securing Policy Measures the Future of Clean Energy by In order to secure the large-scale deployment of renewable energy sources, the Egyptian government needs to make its support clear by adopting policies to build investors’ and end-users’ trust in the market. As Dr. Mohamed El Sobki, Executive Chairman of the New and Renewable Energy Authority (NREA) pointed out, Egypt has shown an increased commitment in the past year to enact legislation that would benefit the expansion of this market. Law 203 of 2014 focused on schemes to develop RE. This law introduces the IPP public competitive bidding scheme, which refers to the process where a government identifies and reserves a site for private development. This scheme has committed projects for the next seven years for a capacity that exceeds 3,200MW, for which the licenses have already been granted. The second scheme introduced by Law 203 is the merchant scheme, which puts the suppliers and the end users in direct relation. Dr. El Sobki explained that there are currently two service providers under this scheme: the Italgen group, which is a consortium of cement industries who will produce 200MW of wind energy by 2019, and Elsewedy group which will produce 600MW of wind. The third scheme is the Feed-in-Tariff, which should expand over the next few years to incorporate 1,750MW of wind by 2018, 500MW of PV by 2017, and 150MW of rooftop applications by the same year, which amounts to a total of 4,300MW. © Michael Asaad Figure 2: Sarah El-Battouty‘s presentation during the session „Social Commitment Towards Ambitious Energy Transformation Goals“ Mitigating not-in-my-backyard resistance and engaging citizens could also be accomplished by fostering more small-scale RE projects, said Senior EcoConServ Consultant Amr Sobhy. Though Egypt’s RE market and framework is currently geared toward largescale projects, smaller projects are better able to address citizen complaints and concerns through the planning and implementation phases. Dr. El Sobki also stressed the importance of energy efficiency and conservation: “It is a key factor to develop energy efficiency, and our target is to achieve an 8% reduction in our anticipated energy use from our expected usage of renewable energy by year 2022,” he said. The additional energy needs will be covered by interconnectivity with neighboring countries and renewable energy. Egypt’s target is to produce 20% of electricity from renewable energy by 2020, and though other experts in some of the sessions were not as confident Egypt was on track to meet its goals, El Sobki believes the country could reach 30-40% of its electricity production from RE by 2035. Engineer Ahmed Sedky, a senior consultant at EIM-Energy, gave a presentation on the geopolitics of renewable energy, asking whether they would be similar or vastly different from the current geopolitics of conventional energy sources. For a region like the Middle East and North Africa, where the energy sector produces 49% of Ø Citizenry and industry are only two components in the energy shift, but without a supportive government, durable legal frameworks and rule of law, any meaningful change is significantly hampered. Prof. Dr. Mohammad Reza Farzanegan from Center for Near and Middle Eastern Studies (CNMS) of Philipps-Universität Marburg presented his study of the moderating role of political institutions in the air pollution-economic development nexus in the MENA region, according to which the MENA countries can significantly deal with the negative externalities of economic growth for environment by investing in their democratic institutions. The discussion also tackled how we can connect best practice models and that foreign aid in Egypt is not always conducive to building an RE framework because it leads to a scattered landscape of different projects funded by different groups. © Michael Asaad Figure 3: Inspecting the solar panels on the roof of OASIS during the Fieldtrip ahead of the conference 5 The Egyptian German Science Monitor Issue 2 - March 2016 the world’s oil and 41% of the gas used worldwide, the large-scale deployment of renewables is bound to reshape regional politics. Saudi Arabia’s role is likely to diminish on the international scene with the integration of a large RE component in the region’s energy mix. Sedky believes that Germany, the country of the most revolutionary energy transition ‘Energiewende’, is the most advanced in terms of RE geopolitics. He also believes that Desertec, a program promoting large-scale deployment of wind and solar energy in the world’s deserts, has been canceled due to geopolitical issues, namely that a growing number of European States and stakeholders lost confidence in the Middle East’s ability to provide a large chunk of its energy in a reliable way. The recent discovery of the immense gas fields in the Mediterranean will also present a challenge to the adoption of RE in the region. On Egypt, Sedky expressed confidence that the country could become a massive producer of clean energy since very few other countries benefit from such large, vacant swathes of cheap land and excellent sun radiation. Also, at the core of RE sources is their decentralized quality, which means that the periphery would have an opportunity to develop — which in turn will grant them more independence. Sedky thinks we need to spur a conversation on the adoption of RE, and to stress that the current transition is much more than that: “It is an energy and technological revolution, nothing less,” he said. The reason why investments have been lagging behind is mostly due to the risks. For example, 64% of banks are reluctant to invest in the MENA region. Banks or any financial institutions face risks like machinery obsolescence, building and technical risks, operational risks, environmental risks, political and regulatory risks, market risks and weather-related volume risks. According to Badr, “If we want to ensure sustainability and increase the penetration of RE in the region, governments will need to work with the private sector to deal with the risks associated and encourage investments.” Session 4: Bridging the Gap: Academia Collaboration in Energy Efficiency and Industry Several obstacles are hindering academic-industry collaboration in Egypt, including the economic downturn and political instability, which shrunk R&D budgets at many companies as well as investor confidence, according to Dr. Adel Khalil of Cairo University’s Faculty of Engineering. Financial instruments, legislation, market enhancement and infrastructure development are all needed to encourage industry and investors in renewable energy, he said. Investors also have complaints about the Feed-in-Tariff scheme introduced earlier this year and how it will be implemented and guaranteed. Rebuilding trust between the government and large and small investors is a crucial first step, which would be supported if Egypt made a clear, official vision for the energy mix and development over the next few decades, said Wael El-Nashar, CEO of Onera Systems, a need also reiterated by several other experts. When those barriers to investment are removed, industries will be more likely to invest in research with universities and projects like the Egyptian Renewable Energy Cluster Initiative, which Dr. Khalil coordinates. The cluster is still in its conception and planning phase. © Michael Asaad Figure 4: the audience of the conference chose between parallel sessions Dr. Ahmed Badr, Director of the Regional Center for Renewable and Energy Efficiency (RCREEE) gave an abundance of information in his presentation about how various countries in the MENA fare in terms of RE integration and the schemes that are being used to foster RE projects. “Overall, the current installed capacity in the MENA countries is far below the targets defined by the governments,” said Badr. Nonetheless, several countries have adopted ambitious policy frameworks to encourage the deployment of renewable energy projects in the region, which Badr sees as a promising development. Morocco now uses IPP public competitive bidding, Algeria just introduced a FiT, Egypt uses different mechanisms (FiT, merchant scheme and IPP public competitive bidding), and Jordan started a direct proposal submission and initiated its competitive bidding process. According to Badr, almost 50% of Arab countries have public financing channels for RE projects. Algeria, Egypt, Jordan, Morocco and Tunisia have created public funds for RE development, and two countries created state-backed private sector companies to invest in RE projects: the UAE with Masdar city and SIE in Morocco. 6 Technical University Munich already benefits from a geographic cluster of many businesses and research institutions surrounding the university’s several campuses and has developed strong partnerships in recent years. However, even at German universities such robust industrial-academic cooperation is a recent development, according to Dipl. –Ing Kordula Schwarzwalder, Project Coordinator of “The NeXus of Water, Food, Energy” at the university. She suggested one way to foster trust and stronger ties is to recruit industry professionals to supervise masters’ degree candidates. In addition to advanced degrees, more technical training programs are needed in Egypt, where there is an abundance of engineers but a shortage of technicians to meet industry needs. Prof. Dr. Ehab Abdel Rahman presented the drawbacks and advantages of various forms of energy including financial and environmental costs, concluding that concentrated solar power is the most advantageous and efficient form of renewable energy to invest in for the future, however he stressed that each country should maintain a diverse energy mix to guarantee supply continuity. Session 5: Innovative Concepts Despite Variable Energy Infeed for Network Stability On the technical side, experts addressed the challenges of integrating RE into the grid without overburdening the system. Prof. Dr. Ahmed Hamza H. Ali, Mechanical Engineering Department of Assiut University, emphasized the importance of solving issues that will arise from the variable nature and unstable frequency/ voltage of wind and solar power before installing large RE projects. The Egyptian German Science Monitor Issue 2 - March 2016 © Michael Asaad Figure 5: Summarising their sessions, the chairs conclude the conference with an overview of the speakers‘ statements. He is working on a master plan which considers the extension of power capacity mix and distribution to ensure the quality of the power supply. Dr. Bernhard Wille-Haussmann, head of Energy Management and Grids Group at Fraunhofer Institute for Solar Energy Systems, said smart grid technology and grid planning also needs to be modified when RE is incorporated. A master plan provides the umbrella framework and then other things need to be incorporated like a smart grid system. Another issue he addressed was that battery system installation is already competitive but will not necessarily be welcomed by grid operators because they cannot control a distributed supply system. Focusing on the demand side, transmission and distribution, one of the biggest challenges for Egypt and MENA is the dust in the air. Despite the wealth of solar radiation, panel efficiency is significantly decreased when coated by dust, and technical or HR solutions need to be developed to local conditions to deal with such complications. Technical solutions can be costly and adaptation is a challenge because it is a learning process that involves a lot of testing in local conditions. Even with investments in time and money to create viable solutions, market technology will likely change after a few years, requiring new trials and adjustments. Focusing on the transmission grid side, Dr. Majeed Adul-Hameed, Power System Engineering Specialist for Siemens S.A.E, presented the challenges faced by the Electrify Grid when required to integrate large renewable power stations. Mainly these challenges are attributed to the variability, availability of energy and controllability. These problems affect the network stability in different ways. Manufacturers are developing new technologies and solutions to alleviate the stability problems associated with integrating large-scale renewable resources into the grid. These technologies and solutions required the grid operator and manufacturer to carry out various studies to define optimum solutions comply with the Grid Code. When it comes to grid codes, which are already in place in Egypt, the issue becomes application. Regulation is complicated when you have several power suppliers and becomes even more so if you have supply, transmission and distribution separated as in Egypt. The country’s regulatory authority has a qualified team, but one action point suggested in the discussion about grid management was that the authority needs more power to act and apply the capacity of its staff, said Session Chairman and MED-ENEC Team Leader for the EU/GIZ Dr. Kurt Wiesegart. Conclusions Several countries in the MENA region have recently adopted ambitious policy frameworks to encourage the deployment of renewable energy projects for residential, commercial and industrial applications. The introduction of the Feed-in-Tariffs in many Arab countries has opened the renewable energy market to the private sector, which is further encouraged to invest in light of a regional tendency to phase out fuel subsidies, which have previously hampered RE competitiveness. The price of RE technologies continues to go significantly lower, and experts believe that PV should provide the cheapest energy in the future and become a multi-million dollar industry. It was widely agreed that energy efficiency must go hand-in-hand with RE development and energy strategies. There are still many challenges to achieving a large-scale penetration of RE technologies on the market: high initial investment cost, the variable quality of the technology locally available, the lack of demonstration sites and the less attractive tariffs for smaller scale applications. A clear energy mix target is also needed, as well as strong and durable legislative support and policy frameworks, and cooperation between governments and the private sector to reinforce trust and lift the risks associated with investing. RE also would benefit greatly from more collaboration between academics and industry professionals, particularly in Egypt where the economic downturn and political instability has reduced the budget in R&D. On the technical side, one of the biggest challenges at hand is to cope with the large amount of sand in the air, which enormously reduces solar panel efficiency, and site-specific solutions need to be found. Experts concurred that Egypt is making progress, but many questioned whether increasing the RE energy share from less than 1% of the energy mix to the 20% by 2020 national goal is feasible. Renewable energy growth and development is inevitable, but countries need to maintain a diverse energy mix to guarantee continuous and stable supply from a variety of sources. 7 The Egyptian German Science Monitor Issue 2 - March 2016 Social Benefits of Renewable Energies Dr. Sebastian Helgenberger heads the Transdisciplinary Panel on Energy Change (TPEC) at IASS (Institute for Advanced Sustainability Studies e.V.). Throughout his activities Sebastian Helgenberger has been committed to advancing and experimenting with the transdisciplinary and transformative potential of science and research to accompany societal change. Creating the Environment for Societal Ownership – Lessons learned from Germany’s Energiewende by Sebastian Helgenberger Boosted by impressive technological innovation and cost reductions, renewable energy in a growing number of countries is now primarily considered for its social and economic benefits. Among these benefits are opportunities for local value creation, for responding to growing energy demands and for reducing conflicts over scarce water, which are aggravated by fossil power generation. Allowing for distributed electricity generation, the rapidly expanding renewable energy world is opening up business models for many, including citizens and citizens’ cooperatives. Domestic energy policy can shape the enabling environment to seizing the social benefits of renewable energy in countries like Egypt. Renewable Energies – A Multi-benefit Opportunity Rapid technological innovation and substantial cost reduction, particularly for photovoltaic (PV) systems and wind power over recent years are opening up new opportunities for countries like Egypt. Renewable energy has been developing as a true multi-benefit system, offering economic, social and ecological advantages, as the Intergovernmental Panel on Climate Change (IPCC) in its most recent assessment report has pointed out on numerous occasions (for an analysis see Jänicke et al. 2015). The costs for solar PV panels have dropped by an impressive 75% in less than 10 years (Wirth 2015). For wind power the cost decrease already started earlier, making it the cheapest renewable energy source in many regions, with costs continuing to drop. As a result, fossil energy sources are losing their cost advantage over solar and wind, making renewable energy the cheapest source for electricity generation in an increasing number of countries worldwide (BNEF 2015, IEA 2015), even without accounting for the considerable external long-term costs of climate change and environmental degradation. The old energy world, dominated by conventional power plants and based on fossil energy sources (coal, lignite, gas and oil) or nuclear, is characterized by large-scale projects with substantial planning horizons, not least regarding meeting security standards in nuclear power generation. In the emerging new energy world, renewable energy production is characterized by distributed power generation and smaller-scale projects with typically much shorter planning horizons (Quitzow et al. 2015), which allows for quicker responses to growing energy demands in countries like Egypt. 8 In Germany, as well as in other countries, renewable energy innovations have opened up an entirely new job sector based on technology development, production, installation and maintenance (IRENA 2015, for a case study on Egypt see Vidican 2012). Also in this regard, distributed power generation, through smaller-scale projects, is closely connected to a regionally distributed economic value creation and job sector development. An additional aspect of local value creation is linked to the emergence of citizens as renewable energy producers and energy providers. About 47% of the overall installed renewable energy capacity in Germany as of 2013 — adding up to an installed capacity of 33.5 GW, roughly comparable to Egypt’s overall installed power generation capacity — is in the hand of citizens, mainly through privately owned solar rooftop systems and citizens’ wind farm cooperatives (trend.research / Leuphana 2013). Those projects provide approximately 1.6 million Germans with additional income or reduced spending for external electricity. In the face of increasing resource conflicts over water, the high water demand of fossil and nuclear power generation for essential cooling systems are a severe threat to sustainable and secure power generation (Röhrkasten et al. 2015). Against this background, particularly solar PV and wind power offer water-saving electricity supply and reduce local water stress. Given the projected climate change impacts on particularly vulnerable regions like Egypt, this social benefit of renewable energy might even become more important in the decades to come. Creating the Environment for Societal Ownership Citizens, local businesses and bottom-up initiatives for local renewable energy production have been game changers in the domestic energy economies of countries including Germany and Denmark (cf. Gotchev 2015). In contrast to established energy companies and their prevailing business models, these new players were much quicker to make use of the emerging economic opportunities presented by renewable energy. As a result, renewable energies in these countries enjoy a broad financial ownership, which not only drives the Renewable Energy market but also distributes economic returns across society (Jacobs et al. 2014). Adding to sustainability motivations, such as preserving a livable and nurturing environment with a good quality of life for current The Egyptian German Science Monitor Issue 2 - March 2016 and future generations, rapid innovation and cost reductions in renewable energy technology resulted in many new players entering and shaping the energy market. In retrospect, this impressive development in Germany and other countries, was facilitated by a number of enabling factors that created the environment for societal ownership of Renewable Energy. Creating investment security, developing financing routines and building trust with respect to renewable energy were among the key factors of creating an enabling environment (cf. IRENA 2015). With its Renewable Energy Act in the year 2000, Germany opened up the electricity market and created investment security and business opportunity for many through two main facilitating factors; first, it assured that Independent Power Producers (IPP) would be able to sell all their generated electricity to the market by guaranteeing grid access and granting grid priority for these new producers. Second, the combination with fixed Feed-in tariffs for power produced, guaranteed for 20 years, made the return of investment calculable and reliable. This, in turn, also motivated financial institutes to provide IPP with loans to start their businesses. Long-term national targets for renewable energy capacity also sent important signals about the scope of this new sector and its expected growth. In 2015, providing loans for solar PV rooftop facilities and other renewable energy projects have become routine for German banks, based on the investment security granted. These financing models and routines, however, certainly did not emerge overnight (see e.g. Degenhart & Schomerus 2008). Furthermore, they are closely connected to the specific characteristics of the national banking sector and require active learning processes on the side of the financial institutes and on the side of the IPP as client. Trust building with respect to renewable energy not only as a reliable energy source, but as a business model is a key component in this process of developing financing routines. A strong political backing of this process through the creation of investment security and support for small businesses and private households as IPP and key players of renewable energy deployment can contribute to trust building. Concluding Remarks: Seizing Renewable Energy the Social Benefits of Renewable energy has emerged as a multi-benefit system, combining ecological necessities like climate change mitigation with social and economic opportunities. Local value creation based on technology development, production, installation and maintenance, increasing energy access in a timely manner and reducing resource conflicts in a water-constrained world are among these opportunities. An increasing number of countries are showing awareness of these opportunities and are amending their national energy policies to reflect that and redirecting efforts to actively pursue and shape the new energy world based on renewable energy. As a consequence, an increasing number of countries, including Egypt, have started to phase out considerable fossil energy subsidies, which not only releases national energy markets from economically and ecologically unsound cost distortions, but also allows governments to reallocate spending to other areas. References: BNEF, “New Energy Outlook 2015 - Powering a changing world”. Bloomberg New Energy Finance, 2015 Degenhart, H. & Schomerus, T., “Business opportunities through the financing of renewable energy installations in Germany”. Leuphana Working Paper Series in Business and Law, Lüneburg, 2008. Gotchev, B., “Market integration and the development of wind power cooperatives in Denmark. Lessons learned for Germany”, Institute for Advanced Sustainability Studies, Potsdam, 2015. IEA, “Projected costs of generating electricity” International Energy Agency – OECD, Paris, 2015. IRENA “Renewable energy prospects: Germany”, REmap 2030. A renewable energy roadmap, International Renewable Energy Agency, 2015, http://www. irena.org/remap/, Access: December 15, 2015. Jacobs, D. et al., “Civic participation and cost efficiency”, IASS Study, Institute for Advanced Sustainability Studies, Potsdam, 2014. Jänicke, M., Schreurs, M. & Töpfer, K., “The Potential of Multi-Level Global Climate Governance”. IASS Policy Brief. Institute for Advanced Sustainability Studies, Potsdam, 2015. Quitzow, R. et al. “The Future of Africa’s Energy Supply: Potentials and Development Options for Renewable Energy”, IASS Study, Institute for Advanced Sustainability Studies, Potsdam, 2015. Röhrkasten, S., Schäuble, D. & Helgenberger, S. “Secure and Sustainable Power Generation in a Water-Constrained World”, IASS Policy Paper, Institute for Advanced Sustainability Studies, Potsdam, 2015. trend.research / Leuphana, “Definition und Marktanalyse von Bürgerenergie in Deutschland”, Report to Agentur für Erneuerbare Energien, 2013. Vidican, G., “Building Domestic Capabilities in Renewable Energy. A case study of Egypt.”, German Development Institute, Bonn, 2012. Wirth, H., “Recent facts about Photovoltaics in Germany, October 2015 Update”, Report from Fraunhofer Institute for Solar Energy Systems, Germany, 2015. DAAD Kairo Akademie Further Training Opportunities for Egyptian Academics Established in 2011 the DAAD Kairo Akademie is an interdisciplinary training academy, offering a cluster of training modules to postdocs, alumni, scholarship holders as well as for academics in general. Module topics range from traditional areas like “Proposal Writing”, “international Networking” to soft skills like “Effective Time Management” or “Teambuilding”. During the one day modules, groups of about 25 participants receive intensive training on the selected subject. Modules take place in the DAAD Cairo Office in Zamalek, or directly in universities and research institutions; participation is free of charge. Visit us at http://dka.daadcairo.org Meet the DWZ Members The German Academic Exchange Service The German Academic Exchange Service (DAAD) is the world’s largest funding organisation for the international exchange of students and researchers. Since it was founded in 1925, more than 1.9 million scholars in Germany and abroad have received DAAD funding. It is a registered association, its members are German institutions of higher education and student bodies. Its activities go far beyond simply awarding grants and scholarships. The DAAD supports the internationalisation of German universities, promotes German studies and the German language abroad, assists developing countries in establishing effective universities and advises decision makers on matters of cultural, education and development policy. Fraunhofer Gesellschaft The Fraunhofer-Gesellschaft is the leading organization for applied research in Europe. Its research activities are conducted by 67 institutes and research units at locations throughout Germany. The Fraunhofer-Gesellschaft employs a staff of 24,000, who work with an annual research budget totaling more than 2.1 billion euros. Of this sum, more than 1.8 billion euros is generated through contract research. More than 70 percent of the Fraunhofer-Gesellschaft’s contract research revenue is derived from contracts with industry and from publicly financed research projects. International collaborations with excellent research partners and innovative companies around the world ensure direct access to regions of the greatest importance to present and future scientific progress and economic development. Zentralstelle für das Auslandsschulwesen With about 90 employees and 50 consultants, Zentralstelle für das Auslandsschulwesen (ZfA) supervises school-related work abroad. Worldwide about 1000 schools are being supported financially and staff-wise. These include over 140, mostly private, German schools abroad. Alexander von Humboldt Foundation The Alexander von Humboldt Foundation promotes academic cooperation between excellent scientists and scholars from abroad and from Germany. Its research fellowships and research awards allow scientists and scholars from all over the world to come to Germany to work on a research question they have chosen themselves together with a host and collaborative partner. The Foundation’s network embraces well over 26,000 Humboldtians from all disciplines in more than 130 countries worldwide - including 49 Nobel Prize winners. Freie Universität Berlin Freie Universität Berlin is one of Germany’s universities of excellence and an international network university. Among its 29.000 students and 4800 doctoral candidates roughly 17% come from abroad. The Latin words veritas, justitia, and libertas, which frame the seal of Freie Universität Berlin, stand for the values that have defined the academic ethos of Freie Universität ever since it was first founded, in December 1948. In order to support the university’s researchers and students in reaching out internationally, Freie Universität maintains a worldwide network of liaison offices.. Technical University of Munich The Technical University of Munich (TUM) is one of Europe’s leading research universities, with more than 500 professors, around 10,000 academic and non-academic staff, and 39,000 students. TUM acts as an entrepreneurial university that promotes talents and creates value for society. In that it profits from having strong partners in science and industry. Nobel Prize winners and inventors such as Rudolf Diesel, Carl von Linde, and Rudolf Mößbauer have done research at TUM. In 2006 and 2012 it won recognition as a German “Excellence University.” In international rankings, TUM regularly places among the best universities in Germany. Philipps-Universität Marburg Philipps-Universität Marburg stands for close involvement with recognized research groups, a student body that graduates faster than average, and exemplary support of young scholars and researchers. The university, which has been established more than 500 years ago, today counts around 26,500 students offering 21 faculties for 29 bachelor and 49 master study programs next to programs with state examination like medicine, dental medicine, pharmacy, law, and religious studies. Philipps-Universität Marburg is top-ranked in various disciplines and with its 11 Leibniz prize winners it is the leading institution for research in central Germany. Technische Universität Berlin With almost 31 000 students, circa 100 course offerings and 40 Institutes, the historic Technische Universität Berlin is one of Germany’s largest and most internationally renowned technical universities. Located in Germany’s capital city – at the heart of Europe – outstanding achievements in research and teaching, imparting skills to excellent graduates, and a modern service-oriented administration characterize TU Berlin. The range of services offered by our seven Faculties serves to forge a unique link between the natural and technical sciences on the one hand, and the planning, economics and social sciences and humanities on the other. Orient-Institut Beirut The Orient-Institut Beirut (OIB) is an academic research institute focusing on the Arab region and the wider Middle East. The OIB was established in Lebanon on the initiative of the German Oriental Society in 1961, and has been part of the Max Weber Foundation – German Humanities Institutes Abroad since 2003. It is funded by the German Federal Ministry of Education and Research. Since 2009, the OIB also has an office in Cairo. The OIB publishes three series, Bibliotheca Islamica (BI), Beiruter Texte und Studien (BTS), and Orient-Institut Studies (OIS). BI is dedicated to the critical edition of mostly Arabic manuscripts, while BTS and the online series OIS are dedicated to the study of the history, society, politics and literature of the region. The Egyptian German Science Monitor Issue 2 - March 2016 Business Models for the Diffusion of Solar Technologies in Egypt by Michael Stephan Introduction Egypt has a privileged degree of solar irradiation and offers indisputably high potential for the generation of solar energy. However, currently far less than 1% of the energy supply in Egypt is generated from solar sources. The vast majority of energy supply comes from conventional, fossil fueled power generation systems. Many regulatory barriers prevent the diffusion of renewable energy technologies in Egypt, including fossil fuel subsidies and market entry barriers for non-public power producers. Instead of calling for policy measures and regulatory reforms, the present paper takes the non-favorable regulatory environment for renewable energy supply in Egypt for granted. The paper portrays strategies and business models for the diffusion of renewable energy technologies within the existing infrastructure and regulatory environment. The focus is on solar technologies including photovoltaic systems (solar PV) and solar thermal systems (TS) for water and space heating. Given the regulatory conditions mentioned above, the paper centers on a selected lead market for the diffusion of solar technologies that offers scale economies and mass market potentials for commercialization of off-grid solar power supply, which is not affected by the regulatory environment. The focus is on solar energy in the built environment, which covers private housing, industrial facilities, and private and public office buildings. The underlying hypothesis of the present paper is that the built environment in Egypt, especially in metropolitan areas like Alexandria, Cairo, Giza, Port Said, Shubra el-Kheima and Suez, as well as in holiday areas and tourist resorts like Hurghada, Sharm el-Sheikh or El Gouna, offers rich opportunities for decentralized and offgird implementation of solar energy generation capacities. Background: The Energy Market in Egypt Egypt represents the biggest energy market in the MENA region. Although the natural preconditions for using renewable energy are promising, 94% of total primary energy consumption in Egypt still comes from fossil fuels, according to the Regional Center for Renewable Energy and Energy Efficiency (RCREEE 2013). Similarly, the current situation in energy supply is focused on fossil fuel; 89.2% of the installed capacity for energy generation (in total 32,293 MW) comes from conventional, fossil fueled power stations (NREA 2015). Only 10.8% (3,488 MW) of the energy Prof. Dr. Michael Stephan is Professor for Technology and Innovation Management at Philipps-University Marburg where he is also managing director of the Marburg Center for Entrepreneurship and Innovation Research. Prof. Dr. Michael Stephan studied Management and Economics in Germany and Switzerland. supply is generated by renewable sources. More than 80% of the renewable energy generation is contributed by hydro power plants (2.809 MW) and 16% by wind energy (550 MW). Currently, only 129 MW of solar energy generation capacities are installed, which accounts for 3.7% of the renewable energy sources and 0.4% of all installed energy supply sources in Egypt (NREA 2015; RCREEE 2013). The vast majority of those solar energy sources in Egypt are small-scale off-grid PV systems. However, the government aims to diversify the energy mix in favor of renewable energy resources and has set a target to achieve 20% of generated electricity from renewable energy by 2020. Part of the plan in this context is to increase the installed PV and TS capacities to 220 MW by the end of the decade (NREA 2015; RCREEE 2013). Regulatory Environment and Barriers for Renewable and Solar Energy Production in Egypt The shift toward renewable energy in Egypt is still hindered by fossil fuel subsidies and the dominance of the public sector in energy generation that focuses on conventional fueled power generation systems. However, in recent years a number of measures have been adopted to help diffuse renewable energy production. The major public institution for renewable energy affairs is the New and Renewable Energy Authority (NREA) of the Egyptian Ministry of Electricity and Energy. NREA is both the project developer in the public sector and the regulator of renewable energy projects in the private sector. The vast majority of Egypt’s power generation (about 93% of the installed base) is from public sources. Private power producers — so-called “Independent Power Producers (IPP)” — account for only 7% of the total energy supply (RCREEE 2013). Most IPPs generate electricity from conventional sources. Only 120 MW (3.5%) of the power generation capacities of IPPs are based on renewable energy. In principle, the Egyptian legal framework does allow private self-generation of renewable energy and allows private renewable energy producers to feed in excess electricity to the grid with possibility of taking it back later when needed. The surplus electricity generated is discounted from the balance through the net-metering process. IPPs have to be certified by NREA, which allows for on-grid PV and other solar technology systems less than 500 kW. Ø 11 The Egyptian German Science Monitor Issue 2 - March 2016 The installers of PV and other solar technology systems have to prove their capabilities to design, install, operate and maintain solar energy generation systems to NREA (NREA 2015). NREA is supporting investments in solar energy generation systems by private power producers through incentives such as customs duty exemptions on imported equipment needed to set up RE facilities (RCREEE 2013). Given the regulatory constraints and incentives, there is obviously commercial potential for investment in off-grid and on-grid solar power systems on a small scale. Built Environment: Lead Market Solar Energy Systems in Egypt for the Diffusion of Which markets and business models are appropriate for the diffusion of solar technologies in Egypt? Given the regulatory framework for solar energy generation, off-grid and excess-only-feed-ingrid solutions mark a frictionless and feasible way to diffuse solar technology in Egypt. Which areas of application offer scalable opportunities for such a frictionless installation of these solutions? In other developed and developing countries the built environment has proven to be such a lead market, especially under similar regulatory conditions. The built environment covers residential, public, commercial and industrial building infrastructure. The built environment presents a large opportunity for reducing CO2 emissions in a cost-effective manner using decentralized solar energy generation systems. About 40% of the national final energy consumption takes place in existing buildings, and buildings account for about 24% of global CO2 emissions (ECN 2012). In Egypt, the metropolitan areas of Alexandria, Cairo, Giza, Port Said, Shubra el-Kheima and Suez, as well as holiday areas and tourist resorts in Hurghada, Sharm el-Sheikh and El Gouna, offer enormous potentials for the installation of offgrid and small scale on-grid solar power generation systems in both existing and scheduled building projects. From an economic value chain-perspective the built environment is a multifaceted ecosystem with various actors and stakeholders who may be directly involved in investing in solar energy systems: building developers, investors (i.e. building owners), occupiers, suppliers and manufacturers; architects; construction engineers; contractors and craftsmen (ERCN 2012; RCREEE 2013). In many developed and developing countries (solar) energy service companies have takenresponsibility for the set-up and management of solar energy power generation systems in the built environment (ERCN 2012). Renewable energy service providers can act as system integrators that offer integrated services for all kinds of stakeholders involved. Renewable Energy Services Energy Systems in Egypt for the Diffusion of Solar of Renewable Energy Service Renewable energy services represent a new category of business models that help to diffuse solar energy systems in the built environ12 1) RE Information Service Providers: RE Information service providers are consultants that conduct feasibility studies and support the clients — notably architects, building developers, and investors (i.e. building owners) — in finding and selecting appropriate solar power generation and storage systems. The revenue of the information service provider can either be a lump-sum or variable payments (e.g. as a percentage of the savings of the client). 2) Financial Service Providers for Renewable Energy Investments: Financial service providers can either be banks or leasing firms that specialize in the financing of solar power generation and storage systems. 3) RE Installation and Maintenance Service Provider: By order of the client the service provider installs the solar power generation and storage system. In addition to turn-key solutions, the service offer also includes maintenance and repair services throughout the product life-cycle of the solar power system. 4) RE Supply Contractors: A solar energy service contractor supplies solar energy, in particular electricity, hot water or steam to building owners (ERCN 2012). The supply contractor is owner and operator of the solar power and storage infrastructure. The client pays per use. The business model of supply contractors is particularly well-suited for large residential and recreational areas or industrial zones, where several buildings can be connected to a local grid in which solar power is generated and stored on various but connected sites. 5) RE Performance Contractor: The energy service offer by the RE performance contractor is similar to the business model of conventional supply contractors. However, the revenue model is different. The energy performance contractor guarantees the client energy cost savings in comparison to a historical (or calculated) energy cost baseline. In addition to a cost-efficient (pay-per-use) fee, the performance contractor receives a performance-based remuneration for its savings guarantee. This business model is especially attractive for RE clients since it guarantees cost savings over the conventional power supply. These business models are to be considered as archetypes. In practice, service companies can combine and bundle the various service packages according to their (technical) competencies and according to the needs of the clients. Business models for renewable energy services are appropriate for both start-ups and established firms in the energy, engineering and consulting industry. Demand Side Perspective Renewable energy service companies are service providers for the relevant stakeholders in the built environment that offer integrated energy services ranging from the provision of information and consulting, to identifying potential renewable energy efficiency measures, building and implementing them, and undertaking operation and maintenance services and financing (see also ERCN 2012). Supply Side Perspective: Business Models Providers ment. In recent years, a number of energy service business models have proven to be both commercially viable (competitive) and ecologically productive. of Renewable Energy Supply in Buildings The crucial question in a country with a regulatory and physical environment like Egypt is which advantages do solar power systems offer for building owners and operators over conventional power supply? At least three “unique selling propositions” can be identified: 1) Financial advantages: Despite the current subsidies for fossil fuel in Egypt, energy from solar sources is costless and the investment costs for the set-up and maintenance of a local solar power system will balanced in the long-run by cost savings from cheaper energy by PV and other solar technology systems. The prices for PV and ST systems have been falling over the last years due to heavy global The Egyptian German Science Monitor Issue 2 - March 2016 competition and low-cost producers of PV/ST equipment in China. Since imports for renewable energy facilities enjoy customs duty exemption in Egypt, the favorable world market prices for power generation and storage hardware also benefit the Egyptian market. Business models like RE performance contracting could help to make the financial advantages of power supply from solar sources transparent. 2) Robustness and autonomy of solar powered systems: Given the frequency of power outages in Egypt’s current supply system, standalone or complementary solar energy supply systems for the built infrastructure offer continuity and security in power supply for the users. 3) Reputational effects: Although “green technology” in energy supply has not become a prevalent label in Egypt’s economy and markets, so called “lead users” might take a reputational advantage from employing solar power systems. Lead users can be found in various categories of building owners including: International organizations which are present in Egypt including the various embassies Hotels in metropolitan areas and tourist resorts like Hurghada, Sharmel-Sheikh or El Gouna role. For them, ‘green’ building offers could create a unique selling proposition in the market. In this business model a property developer or architect designs and constructs buildings certified according to a voluntary ‘green’ certification scheme, expecting to realize a sales price premium compared to conventional buildings (ERCN 2012). Conclusion: Incentives and Opportunities and Imperatives for Lead Users for Start-ups Given the non-favorable regulatory situation for solar technology in Egypt, the current paper has drafted archetypes of business models for renewable energy service providers. These business models may help to diffuse solar technologies in Egypt, as they make the green energy market more transparent and reveal the (competitive) advantages of solar energy. The demand-side perspective has revealed the benefits of solar power systems for building owners, which encompass more than just financial advantages. Lead users in particular could benefit from the reputational effects of green, solar technology. Finally it should be kept in mind that renewable energy services and the corresponding business models offer large economic and employment potential for both start-up companies and established firms. Subsidiaries of foreign multinational companies in Egypt Innovation/technology-oriented Egyptian companies References: Home owners in premium residential areas Energy Research Centre of the Netherlands, “Business models for renewable energy in the built environment”, Petten (NL), 2012. Lead users and catalysts for the diffusion of solar technologies in Egypt must also be identified in the construction value chain, particularly architects and building developers who can play a crucial New and Renewable Energy Authority, “Renewable Energy in Egypt”, Cairo, 2015. Regional Center for Renewable Energy And Energy Efficiency, “Egypt Country Profile”, Cairo, 2013. The Dialogues on Social Innovation (DSI) aim to provide a platform to debate the importance of different scientific disciplines and institutions in shaping our understanding of the world. In particular, we aim to highlight the contributions of the Humanities and Social Sciences to assess and reflect processes of social innovation. Each talk will be animated by contributions from two scholars and will leave sufficient time for debate. Scholars from Egypt and Germany will present new developments in specific disciplines and institutions. DSI are jointly organised by the Cairo offices of the German Academic Exchange Service (DAAD), Freie Universität Berlin, and the Orient-Institute Beirut (OIB). DSI are open to students, researchers, and the wider public. Light refreshments are served after the talks to continue the debate in a more convivial setting. The Egyptian German Science Monitor Issue 2 - March 2016 KarmSolar R&D Investment Experience by Ahmed Zahran The prevalent business models for local companies in Egypt focus on premiums related to trading, installations, assembly and sometimes minimal manufacturing. Those business models almost constantly avoid premiums that are based on research and development (R&D). In general, R&D is regarded as among the riskiest business activities and there is not a lot of business experience around R&D monetization. During my work for one of the major business groups in the Arab World, the group CEO told me that he did not wish to see a R&D expense line on the income statement of the renewable energy subsidiary I was managing. After explaining that R&D is not necessarily an expense and could be capitalized if a proper product comes out of it and is successfully monetized, I was told that this is not a priority for the group. I subsequently left that group with the conviction that a new business model needed to be introduced to the market, one that manages to successfully monetize a patent through proper R&D and product design. In 2011, we established KarmSolar with the intention of designing and implementing a R&D-based business model and we started with solar water pumping. We monetized our first patent, from which we created a strong stream of cash. We cannot say yet that it is a success story because we still need to repeat our business cycle for three or four more years to confirm that it is a successful model. However, we could safely say that from our initial work over the past four years that Egypt is an attractive place for R&D investment for the following reasons: KarmSolar is a solar technology and integration company that delivers innovative solar solutions to the agricultural, industrial, tourism and business sectors. Since its founding in 2011, KarmSolar has been Egypt’s largest private off-grid solar energy integrator, with exceptional experience in developing its award winning high-capacity solar pumping stations, including the region’s largest off-grid Hybrid Pumping & Irrigation System (147 kW). KarmSolar also offers MW-scale off-grid solar energy stations and grid-connected utility-scale installations. Committed to R&D and innovation, its goal is to commercialize sustainability, enabling businesses to gain from an increase in productivity whilst benefiting from, and protecting, the environment. Availability of highly skilled engineers: The main component of any successful R&D investment is talent. Some of the engineering schools in Egypt are among the best in the region and this makes the recruitment process easier. 14 Ahmed Zahran holds a Master of Science in Economics from the University of London, a Bachelor of Arts in Business Administration & Finance from the American University in Cairo and a Diploma from the European College of Liberal Arts in Berlin in Philosophy & Literature. He is the CEO and Co-Founder of KarmSolar. Cost Competitiveness (salaries & equipment): The salary level in Egypt is not high, which enhances a company’s ability to make good use of its investments and enhance the value creation. Entrepreneurs usually look for the cheapest locations globally to base their startups to make sure their resources can last longer until they are able to scale. Abundance of problems to be solved: The Egyptian economy is currently going through a lot of efficiency problems which had a substantial effect on public services. Each and every problem is an economic opportunity for those who are able to solve it. It is, however, saddening how limited the investment in R&D is in Egypt. It seems that most businesses do not realize the opportunity and those who are aware of the opportunity are sometimes afraid of the associated risk. The problem with R&D is the ability of a company to monetize it, in other words, its ability to change the R&D investment into a product that it can sell in the market with a premium. An observation that I gathered from the market over the past eight years about the companies I dealt with who do invest in R&D is that their teams are mainly composed of talented engineers with limited or no participation of commercially experienced people to take the product to the market. It is usually this imbalance in team structure that makes it difficult for brilliant engineers to produce great products that fill a market need from their R&D. The important question to ask now is how to revitalize the role of R&D within the private sector in Egypt? And for that purpose I came up with the following list, which I think could provide a reasonable starting point: Founders should make sure that their initial team structure covers the main needs of the company (technical, commercial, financial). It is important to have founders covering the three backgrounds to minimize the possibility of failure. Companies embarking on R&D work should establish strong relationships with academia to enhance their R&D abilities. Universities have labs and resources that are not used in a market-driven manner in Egypt. It is the private sector that can provide universities with a unique opportunity to capitalize on their available resources in a way that can constitute a new source of income. The Egyptian German Science Monitor Issue 2 - March 2016 Business modeling should be given a priority while the company is growing. The role of R&D should be very clear within the business model. Success and failure Key Performance Indicators should be indicated clearly to make sure a threshold for the model revision can be established. Higher premiums are associated with greater risk, and countries that are interested in adding more value to their economies will have to encourage their private sector to venture into R&D investment. There are currently no government incentives for R&D investment in Egypt, however, this should not be a deterrent to private companies to invest in R&D, because the reward is worth it. It is unfortunate that the investment climate in Egypt generally favors more risk-averse businesses that are restricted to low value-adding sectors; it is our role as entrepreneurs, however, to make it easier for new market entrants to understand what it takes to have a viable R&D strategy. Technische Universität Berlin Campus El Gouna Technische Universität Berlin, Germany, established a satellite Campus in El Gouna to act as an academic hub and research center at the Red Sea in Egypt. TU Berlin Campus El Gouna currently conducts the following advanced Master’s degree programs in Energy Engineering, Urban Development, Water Engineering, IT for Energy (coming soon) and Business Engineering (coming soon). TU Berlin Campus El Gouna was founded as a nonprofit Public-Private-Partnership. Teaching and research are conducted by staff of TU Berlin and international experts under German regulations for higher education. The exceptional location of TU Berlin Campus El Gouna provides a state-of-the-art environment for studying and research, while serving as a bridge for scientific and intercultural exchange between Europe, the MENA region, and the other parts of the world. For more information, please visit www.campus-elgouna.tu-berlin.de and follow us on facebook.com/CampusElGouna or twitter.com/CampusElGouna © ZIEG The Egyptian German Science Monitor Issue 2 - March 2016 The Solar Energy Start-Up Scene in Egypt Insides from an Entrepreneur by Yaseen Abdel-Ghaffar, Rana Alaa The Energy Crisis The word “energy” derives from the Greek words “en” and “ergon” which mean “in” and “work.” The meaning of the word fits perfectly with the nature of energy as a phenomenon. As humans trot this globe contributing to its technological advancement and urbanization, they increase in number and work more. The larger the number of people, the more energy they consume, for energy is a vital commodity as essential as food and water. Furthermore, energy is no stranger to the stress nexus where energy, food and water resources are at a risk of falling short of rising demand. Hence, it is without doubt that energy is and will always be in demand, and a lot of high-density spots on Earth are suffering from the downsides of an energy crisis. Egypt, being a developing country with a notable population spurt, heads the curve of locations that suffer from an energy deficit. The peak energy demand in Egypt is currently around 30,000MW and the supply is a little over 26,000MW, leaving us with an energy deficit of 4,000MW, which results in frequent power cuts in peak demand seasons. This deficit is not a mere hiccup but a substantial problem, given the continuous increase in population of around 1.6% intertwined with the inevitable rise in power demand. Not to mention, Egypt’s energy supply mix is heavily reliant on unsustainable energy resources; about 88% comes from fossil fuels while the remaining 12% is mainly hydropower from the high dam. The country’s energy mix has not really earned the title of mix as it is solely focused on conventional power sources despite the abundance of other resources such as solar and wind. Solar Energy Comes to Egypt One of the most basic concepts in science is that the sun is the ultimate source of energy for planet Earth. It took humanity quite some time to land upon the Photo Voltaic (PV) technology, which is a raw application of converting solar energy to usable electricity. It took the Egyptian government even longer to finally realize 16 Yaseen Abdel-Ghaffa holds a BSc in Chemistry from The American University in Cairo and founded SolarizEgypt in 2013 where he currently holds the position of Managing Director. Rana Alaa holds a BSc in Electronic Engineering and an MSc in Environmental Engineering from the American University in Cairo. She is the Co-Founder of SolarizEgypt where she currently holds the position of Technical Director. that the only way to attend to the energy crisis is to capitalize on its renewable energy resources. Egypt has an average solar irradiance of over 2,000 KWhr/m2, which is double the energy produced from the sun in a square meter in Germany. This means that installing a solar plant in Egypt would result in slightly less than double the power production of a plant installed in most places around the world. The Egyptian government’s realization has prompted it to introduce the Feed-In-Tariff (FiT) program, encouraging investors and entity owners alike to install solar power plants to sell electricity to the government in return for fixed rates. The FiT program is targeting production of up to 2,300MW in the next two years. The solar potential of the country begs the question why we didn’t turn to solar energy from the start.d It was a common misconception that solar energy was too expensive and therefor infeasible. This, however, is no longer the case since the Chinese found ways to bring down the unit cost. The actual problem lies in the fact that conventional electricity is almost free in Egypt because it isheavily subsidized by the government. This subsidy system, although created for noble reasons, is unsustainable due to the massive financial losses, not to mention the nation-wide energy crisis taking its toll on the country’s productivity. The energy crisis finally pushed the government to enact a subsidy removal plan in July 2014, causing an increase in both electricity and fossil fuel prices meant to prompt electricity and fossil fuel consumers to seek alternative energy sources. Subsidy removal is focused on higher groups of electricity consumers in the residential, industrial, and commercial sectors who rely on grid electricity or diesel generators, both of which would suffer from price increases. The Birth of an Industry The announcement of the FiT and the subsidy removal programs in late 2014 were perfectly synchronized to give birth to the long-awaited solar energy industry in Egypt. Up until 2014, in- The Egyptian German Science Monitor Issue 2 - March 2016 dustry was underdeveloped with only a few companies focused on off-grid technologies for remote areas and telecommunication towers as well as solar water pumping applications. In September 2014, the FiT program prompted the creation of many new local solar companies. The New and Renewable Energy Authority (NREA) required companies to qualify for certification in order to operate in the local market. Between November 2014 and May 2015, over 80 companies qualified for the certification, most of which had just been created the month before. These companies range from start-ups to established corporations that decided to enter a rising and lucrative industry. Businessmen created other companies, with a quick exit strategy in mind. A Case Study: SolarizEgypt Given the local solar industry climate, you could say a solar energy start-up in Egypt bears at least twice the weight of one elsewhere. To put things in perspective, SolarizEgypt — founded by the authors — would be a good case study to portray the challenges and appeals of operating in the ripe solar industry in Egypt. On the international arena, the Egyptian FiT program attracted flocks of international solar companies and investors that were more equipped to cater to mega-watt scale projects. Unfortunately, the local market can not yet handle these large-scale projects alone; it simply has not had enough time to grow and develop, not to mention that the capital needed to build such large plants is not supported by local banks, investors, or solar companies. SolarizEgypt was established in July 2013 by a couple of university graduates who worked in the oil and gas industry and wanted to go green. The team decided to focus on grid-tie solar systems in hope that the subsidy removal rumors were true. They were also strongly against off-grid solutions as they are over-priced and the batteries give the system only a quarter of the lifetime of a grid-tie system. SolarizEgypt was reliant on the government’s net-metering program, in which a consumer would install a plant to consume the power produced from the solar system and feed the extra into the grid, ultimately using the gird as its battery bank. The first eight months were spent learning, approaching clients and drafting proposals in an attempt to introduce the market to an alien energy concept that had always been perceived as unfeasible. It is also worth mentioning that the Egyptian FiT program is an inverted pyramid going against international norms in the sense that a mega-watt scale project sells electricity to the government at higher rates than the rates at which smaller solar installations would sell a KWhr. This is absurd from an economic standpoint since larger plants have lower unit costs as they benefit from economies of scale. However, the government’s intention was to attend to the energy deficit as soon as possible and, accordingly, it put very attractive rates for mega-watt scale projects to attract foreign investment and know-how to build solar plants. SolarizEgypt targeted a three-part customer base: the luxury seekers who are willing to pay a little extra in order to gain energy independence and uninterrupted power supply; visionaries who see a future in more sustainable sources of energy and understand the cost and dangers of relying on unsustainable fossil fuels for energy; and practical people who understand the effect of the subsidy removal program on their bills and are hence looking for solutions to cut their bills. The first two projects were built for visionaries, one of whom used the plant for self-consumption and the other intended to use it for the net-metering program. Integrating solar energy into the energy mix does have its limits. A country cannot rely solely on solar to survive because storing solar energy for night-use is still not technically or economically feasible or efficient. Furthermore, the FiT programs are incentive programs, which make them unsustainable i.e. they have a short life cycle. The existing grid can also only handle a certain percentage of solar input and remain stable. With these facts on the table, a considerable number of developed countries have no further room for solar energy systems that are financially viable. Given limitations in markets that are approaching or have already reached their capacity to incorporate solar for now, Egypt’s potential and solar irradiance which is unparalleled in most places across Europe, makes the Egyptian FiT program a magnet for international solar companies. Ultimately, this makes it hard for a local industry to grow organically, which is a shame especially since the solar industry does not require unique technical capacities. Then came the government’s FiT program, which brought the practical customer segment and with it the possibility of building mega-watt scale projects. Not to mention, the flood of local and international competitors who have more capital, employees and resources than the start-ups. International competitors have the capacity and know-how to reduce unit costs due to the advantage they have in gaining most of Egypt’s mega-watt scale projects. The real threat would be that once they are established as mega-watt scale plant providers, they would hunt down the local companies and put them out of business with their massive capital, which allows them to operate at a loss for longer periods of time. Creating a start-up in Egypt is in itself an ordeal. One lacks the knowledge on how to run a business, the investment capital, the headquarters, the facilities, and in some case the technical knowhow. Start-ups in Egypt begin with an idea in the bag and the weight of obstacles pulling them back. The paperwork and bureaucracy to start a legitimate entity, file taxes, rent an office, manufacture material, or import goods are tedious, vague and plagued with administration. Very few start-ups make it through and those that do are mostly food outlets or food support services. SolarizEgypt tried approaching banks for funding and commercial products to finance the capital-intensive solar systems. However, they were met with resistance; the banking sector lacked the technical capacities required to evaluate the feasibility of the projects. Additionally, the banking sector is extremely risk averse when it comes to financing start-ups and usually requires at least financial statements for three years of operation. Another hardship (shared by many small businesses in Egypt) is the lack of availability of U.S. dollars to secure payments for the components required from abroad; which are an essential part of solar systems. Despite the obstacles and hurdles that face a start-up in the solar energy industry in Egypt, one must envision a future where solar panels are as vital to a household as an air conditioner. The governmental systems are finally on the right track but the local industry must never fail to lobby its suggestions and concerns to ensure more effective legislations and an enabling ecosystem that supports local businesses, opportunities, and talents. 17 The Egyptian German Science Monitor Issue 2 - March 2016 The Benefits of Solar Energy in Egypt by Thomas Schlegl The global PV market reached a yearly installation of approximately 40 GW in 2014. Although the PV market is transitioning from government subsidies to market-based asset financing, all forecasts project significant and long-term growth. Primarily driven by the increasing competitiveness of PV in electricity generation costs, the PV market will undoubtedly grow to hundreds of billion dollars per year in the near future. Even in Germany, not known as an eminently sunny country, the levelized cost of electricity (LCOE)1 of PV has become more and more competitive. Today, the LCOE of ground-mounted PV systems in southern Germany can be comparable to those of onshore wind turbines with less than 2,000 full load hours because wind carries higher generation costs. Today, they are already comparable to the LCOE of combined cycle gas turbines (CCGT) and of the CO2 intensive technologies for hard coal. As a semiconductor technology has a similar, strong learning curve and cost development like computer chips or TV flat panel displays. Therefore, PV has the largest potential for significant further cost reductions of all the existing energy technologies. By 2030 PV will be the cheapest option for electricity generation in Germany along with onshore wind and lignite power plants, the option that creates the most pollution. In sunnier countries the situation is even more favorable for PV. Today, in sunny countries lie Egypt LCOE can be as low as 6 eurocents per KWh. Fraunhofer ISE has assessed the learning rates of PV modules and inverters and the situation of balance-of-systems (BOS) costs up until 2015 to evaluate how PV system costs will develop in coming years (they currently range from 930-1050 €/kWp). As the progress of PV modules and inverters in the learning curve depends on market development, different market scenarios are given, from very pessimistic to very optimistic. It should be noted that in the past, even the most optimistic market forecast was too low. The range of PV system cost is derived by combining minimal and maximal assumptions regarding the market development, learning 1 The method of levelized cost of electricity (LCOE) makes it possible to compare power plants of different generation and cost structures with each other. The basic thought is that one forms the sum of all accumulated costs for building and operating a plant and comparing this figure to the sum of the annual power generation. This then yields the so-called LCOE in Euro per kWh. It is important to note that this method is an abstraction from reality with the goal of making different sorts of generation plants comparable. The method is not suitable for determining the cost efficiency of a specific power plant. For that, a financing calculation must be completed taking into account all revenues and expenditures on the basis of a cash-flow model. 18 Dr. Thomas Schlegl is head of the strategic planning at the Fraunhofer Institute for Solar Energy Systems ISE since 2005 and head of group “Energy System Analysis”. He is physicist with professional experience in the fields of semiconductor and solid state physics with the focus on photovoltaics. rate and BOS costs, resulting in a cost reduction of 270-600 €/ kWp by 2050, which represents a 40-70% decrease. Fraunhofer ISE has developed a concept for a full integrated industrial cluster for the development, production and application of PV power in Egypt. With such a The concept for silicon based PV modules leads to highly competitive costs for PV modules and solar electricity. Depending on the assumed discount rate, PV power plants made in Egypt could generate electricity for 5.0-5.9 €cent/kWh in 2018, with an additional decline in prices to 3.8-4.5 €cent/ kWh in the late 2020’s. No other technology is able to offer this cost range. For building up a successful PV ecosystem in a country, the installation of manufacturing facilities is just one part. There are many essential stakeholders in PV who fulfill different tasks and have different requirements; manufacturers of PV components need to be competitive, banks want security to guarantee a return on loans, investors and insurance companies want to maximize the ROI (yield) at minimal risk. PV system operators ask for high performance ratio and low maintenance efforts, grid operators for easy grid integration, consumers want low costs at secured electricity supply and the state seeks economic benefits and job creation. Understanding the needs of stakeholders means the creation and protection of jobs and leads to requirements which are related to quality and system. Quality-related requirements include high quality at competitive costs, highly efficient and reliable PV systems, long-term stability with minimal degradation and maintenance efforts and state-of-theart and bankable designs. To meet these requirements, Fraunhofer ISE offers its customers quality assurance for utility-scale PV plants. Even minimal performance losses at a multi-megawatt PV power plant can lead to a significant loss of yield over its 20-30 year lifetime. Hence, banks, investors and insurance companies insist during the planning and design phase on a detailed solar resource and yield assessment, a manufacturer quality benchmarking as well as a module power and energy rating. During the installation of the plant the modules have to be checked regarding their performance, reliability and material quality. During commissioning, system and grid operators also require a final acceptance test, the initial performance and safety verification and the PV plant certification. Continuous, long-term performance reporting is es- The Egyptian German Science Monitor Issue 2 - March 2016 sential to a smooth operation, including on failures, optimization and re-powering. System-related requirements include optimal system integration of PV power plants and an optimized grid expansion planning. The optimization of the electricity system development has to comprise local resources like solar insolation and wind speed, the existing infrastructure of power plants and transmission capacities as well as technical and economic data like demand forecasts, fossil fuel prices, specifications of the individual technologies and the energy efficiency potential. The objective of states is at given security of supply the most economic energy system. Taking into account national value creation and positive job effects, not necessarily only the cheapest energy technologies will considered. Ideally the establishment of a local energy industry e.g. PV manufacturing is fine-tuned with a long-term energy strategy. Local value creation from BOS, including ground works, mounting structures, cables and installation, can be realized rather easily. As the PV module will amount to at least 50% of a PV system also in the distant future high investments are necessary to create value over most parts of the value chain. A national energy strategy can increase the security of such investments and attract investors. In a growing number of countries the electricity generation costs from PV are lower than end-consumer prices. The attractiveness of producing electricity will increase more and more, not only in off-grid areas, and will be reinforced by increasing end-consumer prices. In some countries with high electricity prices like Germany, there is a trend toward a combination of PV systems with an energy storage component. By using batteries the degree of self-consumption can be increased. For countries with more frequent grid outages this is an option to avoid power shortages and increase security of supply. Photovoltaics is already today a highly competitive technology for generating electricity, especially in sunny countries like Egypt. As PV still has by far a larger potential for further cost reduction than any other of the power generation technologies it will have a major share in the electricity system of each country. Egypt will be able to benefit from PV by producing electricity from national resources instead of importing fossil fuels. Besides that, Egypt has the opportunity to create jobs along the whole value chain of PV manufacturing not only for the local market but also for the export. AREACORE – The Arab-European Association for Media and Communcation Researchers © Amin Louden AREACORE aims to strengthen co-operation and expand horizons among Arab and European scholars in the field of communication. In particular, it strives to facilitate communication research across Arab countries and between Arab and European scholars. AREACORE organizes academic conferences, professional trainings and teaching workshops. Join an expanding academic network! Find more information at: www.areacore.org The Egyptian German Science Monitor Issue 2 - March 2016 Integration of Renewable Power Resources into National Transmission Grid: Required System Studies and Solutions by Majeed Abdul-Hameed Abdul-Hussain Introduction Generation of electricity on a large scale or in bulk is mainly based on conventional fuels such as fossil fuel, water and uranium, with the largest share being fossil fuels (mainly coal, oil and natural gas). Fossil fuel-based power stations share two distinct characteristics; Firstly the fossil fuel is a constantly depleted resource and secondly the fuel negatively impacts the environment by producing harmful gases. © Michael Asaad Dr. Majeed Abdul-Hameed worked with Parsons Brinkerhoff as a Power System Specialists where he participating in the rehabilitation of Iraq Electricity Network and developing the electricity master plan in 2010. In 2015, Dr. Majeed joined Siemens-Egypt as a power system specialist to manage and develop a Transmission Master Plan for the Electrical Energy Transmission Company of Egypt. The Grid Code, among various rules, lists the requirements for connecting dependent or independent new power plants to the network. These new power plants could be conventional or Renewable Energy (typically wind or solar) Depending on the capacity (MW), the connection voltage can be decided and larger wind or solar plants will be connected to the transmission network as connecting them to the distribution network may necessitate prohibitive and large reinforcements. Challenges In addition to the above, fuel comes with a high price tag. These difficult problems prompted energy scientists and engineers to search for alternative sources of energy that could produce electricity at lower costs and were more environmentally friendly, which led to the study and development of renewable energy sources including solar radiation, wind, water, geothermal energy and biomass. Water has been utilized for a long time in hydropower plants on a large scale, but is limited by the availability and continuity of water flow from rivers and rain. Other resources have been utilized but at varied scales, with solar and wind power proving to be the most feasible and promising resources for power generation. Connecting large-scale wind and solar power generation to the transmission network poses many challenges to the TSO: The main drivers for the development of renewable energy are energy system decarbonization, long term energy security and expansion of energy access to new consumers in the developing world. Stability of the RE plants when disturbance on the network occurs. National Electricity Network A national electricity network is normally structured in three different interconnected sectors: generation, transmission and distribution to customers. The generation is based on large power plants for economic reasons, and these are connected to the transmission network at higher voltages to transmit to the distribution network at lower voltages and finally supplied to customers. The generation and transmission is normally operated by the Transmission System Operator (TSO) who is equipped with rules and regulations on how to operate the system reliably and safely. These rules and regulations are contained in a utility document called “Grid Code”. Further Reading http://www.energy.siemens.com 20 Wind and solar power are subject to natural variability in their energy sources (variable wind speed and variable solar radiation due to cloud cover, for example). Varying availability and lack of predictability in some places can pose difficulties for TSO in dispatching power plants. Non-linearity of the connection to the grid due to the use of power electronic devices such as inverters and converters; these electronics produce harmonics which can be harmful to the network. Required System Studies The TSO requires that the transmission network be stable and controllable as well as achieving an acceptable quality. The definition of a stable network is to have both voltage and frequency vary within acceptable limits when a disturbance or change is applied to the network. Conventional power plants have well-established control systems to regulate both voltage and frequency. Voltage is controlled by an Automatic Voltage Regulator (AVR,) which manages the electric field inside the generator which in turn controls the stator output voltage and reactive power produced. Frequency control is achieved by controlling the steam input to the turbine, which in turn controls the speed of the generator and effectively the output active power. Both of the above control facilities are not available with most RE plants such as wind or solar generation. These deficiencies pose a challenge to connect large RE plants to The Egyptian German Science Monitor Issue 2 - March 2016 Figure 1: Reactive Power Capability Figure 2: Fault Ride Through transmission grids as new technologies and solutions still need to be developed to control voltage and frequency. Transient and Dynamic Performance: These studies cover assessment of RE (wind) plant dynamic behavior under system disturbances as well as the effectiveness of the control system ranging from voltage (reactive power) control to pitch and power factor controls for active power modification. Normally, grid compliance studies are carried out prior to granting a connection license. Reactive Power Capability: The RE plant shall cover or exceed the system reactive power requirement (Figure 1). The RE plant is normally equipped with a static reactive power compensator (SVC) capable of fulfilling the requirements of the grid code. Harmonic Performance and Flicker: Harmonics are generated by the electronics used in the connection devices such as inverters or converters. If any of the harmonics generated by the RE coincides with a resonance in the system at the connection point this harmonic current can penetrate the network, causing problems. Resonances are typically mitigated by incorporating a filter into the connection. Energization and Voltage Fluctuations: Voltage control can be achieved by SVC (Static Var Compensator). Fault Ride Through: This study is carried out to establish that the RE plant will remain online during a fault in the network (Figure 2). Further Studies: Other studies may be required by grid compliance which may affect stability of the system, including dispatching and forecasting of RE generation plants Mitigations For large and distant RE plants, utilizing High Voltage Direct Current (HVDC) links to connect to the grid has been proven to be the best solution for stability and other issues associated with large-scale plants. Industry has made many advances in this field of technology. The use of a Full Scale Frequency Converter offers many advanced technologies which contribute to enhancing the stability and controllability of the grid connected RE (wind) plants. Voltage control and reactive power compensation can be achieved by SVC Plus® Since late 2011, the Cairo Climate Talks (CCT) has been bringing together experts from Egypt, Germany and abroad to discuss current issues related to the environment, energy and climate change. Every month, leading experts in the fields of either agriculture, climate negotiations, food, energy, tourism, water, biodiversity, urban planning, transportation or waste convene for a day-long capacity-building workshop rich in presentations and discussions. A public panel with a selection of experts is also organised, to bring awareness to a wider public of academics, students, and professionals. The CCT has been initiated by the German Embassy, in cooperation with the Egyptian Ministry of Environmental Affairs (EEAA), the German Science Centre (DWZ), the German Academic Exchange Service (DAAD), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the Egyptian German High Level Joint Committee for Renewable Energy, Energy Efficiency and Environmental Protection (JCEE). For the past three years, a total of 35 high-end CCT discussions have been held, and the popularity of this platform keeps growing. For more information please visit our Facebook page “Cairo Climate Talks” our website www.cairoclimatetalks.net. The Egyptian German Science Monitor Issue 2 - March 2016 Smart Grid Technologies and Grid Planning NEMO: An Integrated Approach for Grid Management & Planning by Bernhard Wille-Haussmann Motivation In modern Smart Grids new consumers such as heat pumps (HP) or electric vehicles (EV) change load behavior in combination with decentralized generators. Often these new components are combined with either electricity or heat storages which offer new flexibility options for grid operation. The key question for grid planning is which demand and generation profiles should be used. While generation profiles for photovoltaic and wind are just defined by weather conditions, heat pumps and EV could be operated in many different ways. Here several scenarios to what extent demand side management (DSM) should be applied are possible. Alternatively grid extension and reinforcement is necessary in order to fulfill all loading conditions. Reinforcement of the grid can be carried out traditionally by replacement of cables and transformers. With the availability of modern Smart Grid solutions, such as on load switchable transformers on the low voltage side or reactive power control, further possibilities must be taken into account. Uncertainty on the load and generation side as well as the wide variety of potential solutions available mean there are many possibilities to consider when grid planning. Hence, there is a need for innovative modeling tools such as the NEMO tool suite (http://nemo-project.eu), which is designed for integrative planning and operation of electricity grids regarding behavior of local loads, generators, and charging technologies. Figure 1: Workflow of the NEMO Suite showing interaction between the tools. 22 Since 2010 Dr. Bernhard WilleHaussmann is head of the group energy management and grids. His main working field is the integration of distributed generators and loads into grids. The span reaches from grid planning, control and operation management. For scheduling predictive optimization algorithms are applied to use thermal and electric storage capacities for local and grid usage. The NEMO tool suite starts with a new approach that combines three existing simulation software instruments for market scheduling, efficient grid simulation, and grid extension. These tools enable the user to identify weak grid segments and to look for smart and cost-effective measures to counteract such problems. Nemo Tool Suite: An Integrated Modelling Tool Grid Operators, Planners and EV Stakeholders for The simulation and optimization tool suite NEMO (Novel E-MObility grid model) is a combination of three professional tools: one targets a combined techno-economic design, primarily modelling plants on contracts or the spot market, at the same time participating in balancing markets (Fragaki/Andersen, 2011). The second one is designed for simulation of grid components and technical operation (van der Burgt et al 2010), while the third one is meant to quickly discover potential conflicts of grid operation approaches through R-based load flow analysis (Wille-Haussmann 2011). Figure 1 shows the workflow of NEMO starting with market-driven operation of the single components. After applying grid analysis, the solutions, demand side management and grid reinforcement can be evaluated. The comparison of costs and effects on the grid can be used to make decisions regarding upgrading the network. The simulation flow will be controlled by the graphical user interface shown in figure 2. Here, the main settings are shown together with the voltage range visualized using a heat map. Figure 2: Graphical user interface of the NEMO-Suite showing the voltage range in the grid using a heat map. The Egyptian German Science Monitor Issue 2 - March 2016 Nemo -- the project EU professionals combining the expertise of Within the European research project NEMO (www. nemo-project.eu), part of the ERA-NET Plus program “Electromobility+”, five project partners from The Netherlands (DNV KEMA), Germany (Fraunhofer ISE) and Denmark (EMD, RAH, RFVV) aim to manage the power grid in combination with electro mobility. References: Fragaki/Andersen, “Conditions for aggregation of CHP plants in the UK electricity market and exploration of plant size”, Applied Energy, Volume 88, Issue 11, November 2011, Pages 3930-3940. van der Burgt et al., “PLATOS – Planning tool for optimised storage”, 5th International Renewable Energy Storage conference IRES, Berlin, 22-23 November 2010. Wille-Haussmann, B., “Einsatz der symbolischen Modellreduktion zur Untersuchung der Betriebsführung im ‘Smart Grid’“, Dissertation, Fernuniversität in Hagen, 2011. Kick-Off for the Egyptian German Water Cluster © Michael Asaad Under the auspices of the German Science Centre and its partners, up to 30 water experts from Germany and Egypt gathered in 2015 to launch the Egyptian German Water Cluster. The interest of building an issue driven network focusing on water related research topics arose from the diversity of scientific projects and initiatives located in the German Egyptian Research Landscape. The need for interdisciplinary exchange in the field of water research becomes apparent through gained experience in the past and prompted the establishment of an infrastructure that allows communication, cooperation and increased visibility of the projects and people partaking. The cluster’s experts have continually pointed out the importance of a joint database that simplifies exchange and future cooperation. Thus, the German Science Centre (DWZ) has created a common database for the representation of all the water cluster’s members in order to ensure visibility and offer a platform for information and research exchange. A website for the Egyptian German Water Cluster will enable a reliable research- and expertise-oriented search engine to match potential cooperation partner with one another and cluster mutual research interests and questions. Furthermore, the website will be used to communicate upcoming events, publications and funding opportunities. With the Egyptian German Water Cluster its members and the German Science Centre hope to reach out to new and established stakeholders, keep key players informed and jointly organise Capacity Building for fellow researches and students. For more information please visit our website http://water.dwz-kairo.de The Egyptian German Science Monitor Issue 2 - March 2016 Prof. Dr. Mohammad Reza Farzanegan received his PhD in Economics in TU Dresden 2009 and became a Junior-Professor of Economics of the Middle East in Marburg from 2012 to 2015. Currently he is a full professor of Economics of the Middle East at the Center for Near and Middle Eastern Studies (CNMS) at the Philipps-Universität Marburg. Economic Development and Air Pollution in the Middle East and North Africa: Democracy Matters by Mohammad Reza Farzanegan, Gunther Markwardt The Middle East and North African (MENA) countries have had high pollution records since 1965, exceeding the world average from 1995 onwards [WDI (2014)]. The MENA region has around 57% of the world’s proven oil reserves and 41% of natural proven gas reserves. About 85% of all greenhouse gas (GHG) emissions in this region come from energy production and consumption. The associated environmental problems are worsened through heavy subsidies on petroleum products which encourage excessive and inefficient use of fossil energy. According to the International Energy Agency (2008), energy subsidies in the 20 largest non-OECD countries reached US$310 billion in 2007. Eleven of 20 countries in the world that subsidized the gasoline consumption were from the MENA region [Brown (2011)]. The high energy intensity of the production and the wasteful consumption of fossil fuels is a natural consequence of such subsidies. The existence of cheap energy hampers investments in clean technology and energy efficient means of transportation [see Ellis (2010) and von Moltke et al. (2004)]. The IEA (2010) emphasizes that phasing out fossil fuel subsidies is a crucial part of the climate change mitigation package for the MENA region. The economic costs of environmental degradation in the MENA region are significant. According to the World Bank studies, these costs range from 2.1% of GDP in Tunisia to 7.1% of GDP in Iran. The important policy question is “... whether economic growth should continue to be the main priority, with protection of the environment a secondary consideration to be addressed mainly in the future, or whether explicit policies to control environment degradation at the local, national and global level are urgently required today.” [see Barbier (1997)]. Another distinguishing feature of MENA countries in comparison to developed countries is the stage of development of democratic institutions. In general, the political and democratic institutions in MENA countries are less developed. Many of the MENA countries are governed by autocratic regimes and the democratic participation of the people is rather low. This prevents the people from exercising their preference for environmental quality and may result in insufficient environmentally oriented policies. However, in the last two decades a number of MENA countries have significantly improved their democratic institutions. We measure political institutions by using Polity2 index (Marshall et al., 24 2014). Polity2 scores are between -10 and +10. A +10 refers to a ‘‘strongly democratic” state and -10 to ‘‘strongly autocratic”. For example, Algeria improved its Polity2 score from -8 in 1965 to -2 in 2005, Iran from -10 to 1.2 and Jordan from -9 to -2 for the same time span. More significantly, since the end of 2010 we are observing an ongoing political movement and revolutions in several countries in the MENA region known as the “Arab Spring”. Some countries in the MENA region such as Morocco, Tunisia and Algeria have begun to modernize their political structure and open themselves to democratic ideas. This modernization increases demand for more political engagement on the side of civil society. Our research objective is to analyze the relationship between economic development, the stage of democratic development and environmental degradation in the MENA region. Our sample consists of 17 countries during the period from 1980 to 2005. We take five years’ average from the data to control for missing values and data heterogeneity, which yields five periods. To explore the income-pollution-institutions nexus in the MENA, we estimate the following log-linear specification: where countries are indicated by i; time is indicated by t; ED is References: Barbier, E. B., “Introduction to the Environmental Kuznets Curve”, Special Issue, Environment and Development Economics 2, 1997, p. 369-381. Brown, L.R., “World on the Edge: How to Prevent Environmental and Economic Collapse”, W. W. Norton and Company, New York, 2011. Ellis, J., “The Effects of Fossil-Fuel Subsidy Reform: A Review of Modelling and Empirical Studies”, International Institute for Sustainable Development, Winnipeg, Canada, 2010. IEA, “World Energy Outlook 2008, International Energy Agency (IEA)”, OECD, Paris, France, 2008. IEA, “World Energy Outlook 2010, International Energy Agency (IEA)”, OECD, Paris, France, 2010. Marshall, M. G., Gurr, T. R., Jaggers, K., “POLITY™ IV Project Political Regime Characteristics and Transitions”, Center for Systemic Peace, 2008, p.18002013 Available at: http://www.systemicpeace.org/inscr/p4v2014.xls Access: December 15, 2015. von Moltke, A., C. McKee, and T. Morgan, “Energy Subsidies: Lessons Learned in Assessing their Impact and Designing Policy Reforms”, Sheffield: Greenleaf Publishing, 2004. World Development Indicators, “Word Development Indicators Online Database”, World Bank, Washington D.C., 2014. The Egyptian German Science Monitor Issue 2 - March 2016 the local or global indicator of air emissions, GDP is real GDP per capita, DQ is the quality of democratic institutions, (GDP*DQ) is the interaction of real GDP per capita and the quality of institutions, Z is a vector of control variables which may affect the pollution. Our main findings can be summarized as follows: We find evidence for the Environmental Kuznets Curve (EKC) hypothesis for both CO2 and SO2 emissions. We notice that increasing the quality of democratic institutions can moderate the increasing negative externalities of economic development for environment in the MENA region. The moderating role of political institutions is in particular valid for the case of local pollution (SO2). For global pollution (CO2), the democratic development of countries seems to play only a minor role. The improvement of democratic institutions and higher accountability of the government affect local environmental problems more significantly than global environmental issues. Eng. Ahmed Sedky is currently the general manager of eim-energy, a company focusing on designing, developing and implementing sustainable energy generation systems, predominantly focusing on solar and hybrid technologies for off-grid applications. The Geopolitics of Renewable Energy by Ahmed Sedky Geopolitics is the scientific field of study belonging to both political geography and international relations, which investigates the interaction between politically acting men and women and their surrounding territoriality (in its three dimensions; physical-geographical, human-geographical and spatial). The field of geopolitics has always been very interested in energy questions since conventional energy sources such as oil, natural gas and coal constitute physical-geographical variables of strategic importance. Within geopolitics, it is recognized that the energy regime of the global system and the energy relations between producer countries, transit countries and consumer countries are important variables which can influence international relations. The location factor — where the energy resources are, and via which routes they can be brought to (potentially rival) consumer countries — constitutes an important area of study within the field of geopolitics. The ‘Geopolitics of (Conventional) Energy’ entails a whole literature in itself. Exploring and developing conventional energy (oil, natural gas, coal) requires huge capital investments and a military machine to control. Today, in an age of increasing scarcity, producer, transit and consumer countries are positioning themselves geopolitically so as to safeguard their energy security. Of course, energy and location in themselves do not explain everything in international relations, otherwise one would lapse into geographic or energetic determinism. But the way in which © Michael Asaad societies shape their energy mix is central to both their chances for development and survival. Countries and areas which have energy and energy-related technologies at their disposal potentially have better cards compared to other countries. Nevertheless all countries, regions and areas are interconnected when it comes to the complexity of energy relations, which translate into international-political relations and power dynamics. We know what the geopolitics of conventional energy entails, and how it becomes more prominent in times of resource scarcity. But as countries move toward more renewable energy, their developing energy mixes will dictate their behavior and thus have a profound effect on geopolitical relations. This leads us to try and understand the relational patterns and behavior of these various processes and find answers to the following important questions: What trends and developments in countries‘ energy mixes or energy relations can we see today? To what extent is the geopolitics of renewable energy different or similar to that of conventional energy? Renewable energy sources are often hailed as the universal solution for a large number of challenges associated with the use of fossil fuels — and partly for good reason. However, while largescale utilization of renewables diminishes energy scarcity and lowers various kinds of pollution, its potential to address energy-related geopolitical tensions among producer, consumer, and transit countries remains to be seen. Whereas the political implications 25 The Egyptian German Science Monitor Issue 2 - March 2016 of the geographic and technological specificities of fossil fuels are well known, there exists a great deal of uncertainty regarding the economic and political implications of renewable energy systems. Renewable energy has come into the picture in recent years as a result of a number of combining factors and trends. First, the previous decades have clearly shown that the burning of non-renewable, fossil fuels leads to CO2 emissions, the exhausting of resources, local environmental degradation and climate change. Second, population growth of a couple of billion people, particularly in Asia, structurally impacts energy demand, as a result of which (conventional) energy scarcity could become a real possibility in the coming decades. Markets impact these processes, although this has evolved sporadically in the past few years. When the stock markets reflect the belief that a situation of scarcity and need is developing — as was the case in the summer of 2008 when a barrel of oil reached the staggering record price of US$147 — then fossil energy prices in specific and energy prices in general can multiply quickly, creating a volatile market. As a result of this, renewable energy becomes more interesting and economic in comparison to traditional forms of energy. A few months later in 2008, when energy prices collapsed due to the economic crisis, a reverse process seemed to develop in the market, ultimately resulting in decreasing investments in renewable energy. Such dynamics make the study of renewable energy within a broader geo-economical and geopolitical context extremely difficult. Many variables are at play. Nevertheless, humanity will have to make the transition toward more renewable energy if we are to survive the century. The stakes could not be higher. Who will be the winners, who will be the losers? And how will renewable energy reshape the global and macro-regional geopolitical landscape? Considerations The great pitfall in a discussion on the geopolitics of renewables is that the discussion can go in any directions; What considerations are to be taken into take into account? Which steps to undertake to move from the geographical factors of renewable energy sources to their geopolitical implications in a structured and reproducible fashion? What is the guiding reasoning behind any conclusions? The insights which we have to develop should be based upon the most recent studies and findings of the geopolitics of renewable energy. We will need to make some important assumptions and considerations and study the following in detail; Define ‘renewable energy’ and illustrate the difference between ‘renewable’ and ‘sustainable’ Lay out some internal and external geopolitical consequences of the energy transition Explain that the transition toward renewable energy in fact entails an “energy technology-revolution” or ET-revolution Provide a global, regional and national overview of the latest developments in renewable energy Study the geopolitics of renewable energy in more detail — We need to look at the global control over patents and 26 knowledge and investigate the potential of renewable energy sources and their geopolitical consequences Analyze some current “mega-dossiers” in renewable energy in the world and in particular Europe — Desertec and the North Seas Countries Offshore Grid Initiative Last but not least, we must try to formulate some conclusions on the specificity of the geopolitics of renewable energy. Conclusions Countries which enjoy dominant positions in the conventional energy world (e.g. Saudi Arabia). will not necessarily enjoy the same in a world in which renewables grow in importance. Eventually, geopolitical relations across the globe could be affected. On the other hand, the geopolitical dynamics could be similar with increased RE and large projects will eventually suffer from very similar security issues as traditional energy projects. One issue will be where certain pivotal power lines will run and who will control them. What about the physical security of these power lines? In addition, the geopolitics of renewable energy will also create certain geo-technical opportunities and limitations. One of the major problems countries will face concerns the rare earth materials that are needed in the technological advances of renewable energy. Rothkopf (CEO and editor of FP magazine) convincingly wrote that the green geopolitical crises might look similar to those of the conventional energy domain. There might be green protectionism in the western world, but also the condition of oil producing countries might be problematic in a world where renewable energy is growing fast, Rothkopf wrote in 2009. In all probability, the geopolitics of conventional energy and that of renewable energy will exist next to each other for a period of several decades. Decision makers will have to be creative in trying to cancel out the drawbacks of one source of energy with the advantages of the other. In that sense, the geopolitics of energy will become more complex, and will have to deal with a variety of foreign policy, diplomacy and international security issues. Instead of approaching this issue in inconsistent terms, one should rather try to pursue more related approaches in the study of geopolitics, power transitions and energy. References: Daniel Scholten, Rick Bosman “The Geopolitics of Renewable Energy” a Mere Shift or Landslide in Energy Dependencies? White Paper; 2013; David Criekemans, “The Geopolitics of Renewable Energy”, Exploring Geopolitics Online Magazine, Accesible at: http://www.exploringgeopolitics.org/pdf/ Criekemans_David_Geopolitics_Renewable_Energy.pdf, Access: December 15, 2015. © Scharger, Albert / TUM TUM to introduce Massive Open Online Courses for future Master’s students from around the world Preparing for a Master’s degree with MOOCs The Technical University of Munich (TUM) is introducing Massive Open Online Courses (MOOCs) to help prospective international students prepare for a Master’s degree at TUM. MOOCs for Masters are designed so that participants can test their knowledge before applying for their preferred Master’s course and close knowledge gaps they may have. Two years ago, TUM became one of the first German universities to introduce its own MOOCs, which have already been completed by over 100,000 participants in around 160 countries. Massive Open Online Courses (MOOCs) offer participants from all over the world free access to tuition from outstanding academics. TUM’s popular MOOCs consist of several individual units, incorporating a number of video elements, each lasting a few minutes. Participants can also complete interactive tasks, access additional learning materials and discuss topics in online forums. They can then take an exam at the end of each course. TUM is now expanding its offering by producing an initial new series of up to ten MOOCs, each designed as preparation for a specific Master’s program (although they are not mandatory for applicants). The MOOCs will give participants the opportunity to test their knowledge and if necessary close any significant gaps before they apply for their preferred course. They will also get a good idea of what the study program will entail. For more information, please visit: http://go.tum.de/398478 Published by: German Science Centre 11, Saleh Ayoub Street Zamalek, Cairo, Egypt http://www.dwz-kairo.de [email protected] Deutscher Akademischer Austauschdienst (DAAD) German Academic Exchange Service Kennedyallee 50 53175 Bonn (Germany) www.daad.de V.i.S.D.P.: Dr. Michael Harms, DAAD Director Communications Concept and Coordination: Christian Melchert Editing: Lindsey Parietti Layout and typesetting: Rebekka Daubenberger Printed by: Prohouse -- www.pro-house.net Edition: 2016 -1,000 All rights reserved © DAAD and the authors
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