28 March - 3 April 2002
Issue No.579
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Al-Ahram Weekly Online 28 March - 3 April 2002 Issue No.579 |
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Tilting at windmills
Delegates at a recent conference in Cairo all agreed that Egyptian renewable energy would be a wonderful thing. Would it? Jasper Thornton is not so sure.
Imagine a world powered by water-wheels, whizzing windmills and good old-fashioned sunlight. That was the vision painted at a recent workshop held in Cairo and hosted by Egypt's New and Renewable Energy Authority and America's National Renewable Energy Lab.
(photo:Amr Gamal)
The perfect curve
HELD on the margins of the renewable energy workshop was a conference on Technology Advances for Sustainable Development. The conference let academics show off their ideas, and some of the research was as aesthetically lovely in form as it was in thought. Ahmed El-Seraghi, a PhD student at the School of the Built Environment in the UK's Nottingham University, is seeking the perfect curve. Inspired by traditional Islamic designs and the ideas of legendary architect Hassan Fathi, he is using computers to discover which curve parabolas in a roof best keep a house cool. He and his wife are both architects, and they want to apply their ideas in the unforgiving desert sere of Southern Egypt. El-Seraghi's aesthetic has a firm economic foundation. Curved roofs, he thinks, will save on energy bills, and obviate the need for air-conditioning, as well as present a built-landscape that gently undulates with the dunes.
But the elegant delight of his ideas may look a little scuffed after rubbing up against reality. Roofs in desert dwellings tend to be flat because building like that is easy. It will be quite a task for El-Seraghi to persuade masons to build bendy. But he is hopeful: he told Al-Ahram Weekly, "We want to make a positive contribution to the future by learning from the traditional ideas of the past."
Unfortunately, renewable energy often seems to power more talk than action. The workshop, as well as explaining why this is, was itself an expression of renewable energy's biggest affliction.
The principal bane for those who advocate the adoption of non-traditional energy sources (wind power, solar energy, water power, biomass power) is that, clean, cheap to run and elegant though they may be, the set up costs for renewable energy projects are formidably high.
Renewable energy has some obvious benefits. Sunlight, for example, is not going to run out any time soon. Using it leaves a small pollution footprint; and in Egypt it is found everywhere, all of the year. Turning sunlight into energy has some other, less obvious, benefits, especially for the poor. It is effective in the small-scale farming common to remote rural areas, where extension of the national grid is unfeasible. It can power irrigation pumps, run lights used to distract pests from crops, or provide heat for hatching eggs. Wind also has its uses, and Egypt's "wind profile'" is among the best in the world, with a huge irrigation project already powered by wind and water operating in East Oweinat. Use of sunlight, water or wind to turn turbines also prevents wooded areas being denuded.
These advantages, though, are also the source of problems. Renewable energy is most helpful in poor, remote areas, but the poor, being poor, lack the means to make the initial capital investment. As Engineer Rafik Gorgy at the workshop explained, renewable energy has higher set-up costs, but lower running operational and maintenance costs than traditional energy sources like oil and gas. But, "unfortunately, developing countries prefer to pay less upfront." This leads to a "vicious circle." Lower costs require economies of scale in production. But these require a "bigger market," unlikely to come about until the energy is made cheaper.
On the look of the "vicious circle," most speakers at the workshop agreed; they divided, though, on how things could change.
Gorgy suggested cunning accounting. He pointed out that in 1999, Egypt produced 102 million tons of carbon dioxide from traditional fuels. This pollution is costly. Acid rain destroys buildings; the health of the public worsens; crops wither. Some of these costs could be factored in when the advantages of renewable energy are calculated. There are two problems with this. The first is that there is still no internationally accepted standard for modelling non-balance sheet pollution costs. The other difficulty is that private sector firms are concerned, de facto, only with their balance sheets. To take a wider view would require government involvement, and that is something that scares private firms.
Luckily, renewable energy, as well as being cheap to run, tends to be earth-friendly. Activists in rich countries see the climate, particularly, as a global concern; as a result, they will often pay for climate improvement projects beyond their borders. Various financing facilities to help bridge the cost gap between traditional and renewable energy systems exist: some devised after the World Earth Summit in Rio in 1991; some after the 1997 Kyoto protocol.
Nzabanita Emmanuel, principal operations expert for the African Development Bank, outlined some of the funding facilities available to developing countries. These were the usual suspects: UNDP, the World Bank, Western bilateral donors. He also described his own bank's lending policy (of which Egypt is the second largest shareholder), which offers zero-interest loans to very poor countries for projects which speed the "economic development and social progress of its members." Emmanuel was happy to report that renewable energy is a priority for his bank; it qualifies for all these criteria. Less happily, he noted that Egypt was no longer on the bank's list of very poor countries, having graduated in 1999. It therefore no longer enjoys the best lending rates. The bank is, however, financing a two-million dollar solar thermal study.
The most discordant notes were struck when the delegates came to discuss policy choices. Many involved in the assembly of solar energy components complained bitterly at the tax regime. Currently, parts for a photovoltaic cell are hit with three times as much tax as the completed item, according to Yehia Bahns, an industrialist. This is strangling a domestic industry in assembling solar products. Oddly, no one mentioned ways of paying for a domestic solar industry, like setting up an export scheme for solar power. Solar can be used to create liquid hydrogen, which is then shipped abroad for use in fuel cells. Analysts who spoke to Al-Ahram Weekly felt this was the best way ahead.
Other delegates demanded government help in developing macro renewable energy products, one delegate suggesting that energy providers be forced to source a percentage of their energy from renewable. Another wanted the government to contribute to projects. This drew scorn from David Kline, of the US's National Renewable Energy Lab, who said, "We in the US tend to prefer market solutions." He argued for an end to diesel subsidies and a credit scheme "like we have in the US." (In the US, a company gets a credit against tax paid on profits if some of that profit is ploughed back into research and development for renewable energy. This is considered more efficient than the government taking the money and spending it on research itself). Others also poured forth about the ills of central involvement, one delegate fuming that it had been the bane of Egypt since the Pharaohs. Another delegate said that solar energy should not be aimed at the poor first, as the market was too small and it was a waste of time. Better, he said, to build up the market with big projects, and then cheaper products could trickle down to the poor.
In general, optimism was scant. An Egyptian representative of Daimler- Chrysler said his company had tried to launch a water management system at East Oweinat, but that the authorities had kept them waiting for over a year and approval had still not come. As he spoke, there were titters from the audience. "And you'll never get it!" observed one man. Another delegate complained that solar energy in Egypt was going nowhere.
All these difficulties are big. The main challenge facing the apostles of renewable energy, though, is that the case for it is not particularly good. Elham Mahmoud of Egypt's National Renewable Energy Authority listed the barriers to entry, and they fell on the vision of renewable energy like dead leaves - high investment costs, inadequate legislation, subsidies for conventional energy, lack of spare parts, the nervousness of financiers.
The problem with these obstacles is that several of them make sense. Suddenly to stop subsidies on diesel fuel would be ruinous to the poor and politically perilous. Financiers are shy, because renewable energy often does not repay. Egypt, both publicly and privately, hardly has the money to go throwing after glamorous projects. Other factors like the lack of trained engineers means that the set-up costs for renewable energy are even greater than the capital costs of equipment. If renewable energy's advocates are keen to factor in non- balance sheet savings, they should also be fair about reporting non-balance sheet costs. Predictably, other possibilities, like spending available money on making traditional energy production cheaper, cleaner, more efficient and more widely available, as the UK has done with gas, were not discussed at the workshop. But that is likely to be a far better option for Egypt. Certainly there are some instances when renewable energy makes the most sense. Foreign-funded projects are a good idea. And the tax regime surely needs unknotting. But in many cases the obstacles, be they market-based or institutional, are very great. In all, though the workshop on renewable energy threw up some interesting ideas, all the old frustrations were still gnawing away. In the end, it began to resemble one of the windmills at Zarafrana: plenty of air was blown, and ideas circulated round and round -- but ultimately, they did not travel too far.
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