MIDDLE EAST AND NORTH AFRICA (MENA) | ENERGY AND EXTRACTIVES GLOBAL PRACTICE | THE WORLD BANK GROUP M E N A E N E R G Y S E R I E S | R E P O R T N O . 9 5 1 4 4 - E G Local Manufacturing Potential for Solar Technology Components in Egypt MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP Local Manufacturing Potential for Solar Technology Components in Egypt M E N A E N E R G Y S E R I E S | R E P O R T N O . 9 5 1 4 4 - E G MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP Copyright © 2015 The International Bank for Reconstruction and Development/THE WORLD BANK GROUP 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing July 2015 This is a publication by the Middle East and North Africa Energy and Environment Unit (MENA). 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Araya, ESMAP Designer: Studio Grafik Reproduction: The World Bank Group Contents Acronyms an Abbreviations............................................................................................................................................. ix Acknowledgments...........................................................................................................................................................xii Context and Objectives....................................................................................................................................................1 Chapter 1 | Executive Summary........................................................................................................................................3 1.1 Rationale............................................................................................................................................................3 1.2 Project Pipeline and Demand.............................................................................................................................3 1.3 Industrial and Technical Background..................................................................................................................5 1.4 Existing Industrial Sector....................................................................................................................................6 1.5 Production Factors.............................................................................................................................................6 1.6 Status of Global Solar Component Value Chain..................................................................................................8 1.7 Solar Industries That Have a Potential to Be Developed in Egypt......................................................................10 1.8 Market Volume.................................................................................................................................................20 1.9 Aggregated Economic Costs and Benefits Associated with an Enlarged Solar Sector in Egypt.........................22 1.10 Recommendations for the Development of Solar Industries in Egypt...............................................................25 1.11 Synergistic Actions to Build on Kom Ombo CSP Project..................................................................................28 Part A | Summary Assessment of International Solar Component Manufacturing Value Chains and Outlook for Their Robustness......................................................................................................31 Chapter 2 | Solar Component Manufacturing Value Chains.............................................................................................32 2.1 Introduction......................................................................................................................................................32 2.2 Concentrated Solar Power (CSP) Value Chain..................................................................................................34 2.3 Photovoltaic (PV) Value Chain...........................................................................................................................45 2.4 Current Status of Manufacturing Value Chains..................................................................................................52 Part B | Detailed Assessment of Egypt’s Existing Manufacturing Base and Its Potential to Participate or Dominate the Solar Component Manufacturing Value Chains...........................................................................55 Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains...........56 3.1 Country Context...............................................................................................................................................56 3.2 Egyptian Industrial Sector.................................................................................................................................61 3.3 Egypt’s Manufacturing Competitiveness...........................................................................................................69 Chapter 4 | Potential Value Chains in which Egypt’s Manufacturing Sector Could Participate..........................................79 4.1 Attractiveness of Egypt As a Country...............................................................................................................79 4.2 Entry Barriers and Key Factors in the Value Chains...........................................................................................81 4.3 Industries Suggested.......................................................................................................................................93 4.4 Insight of the Suggested Value Chains: CSP Industries....................................................................................93 4.5 Insight Into the Suggested Value Chains: PV Industries....................................................................................97 Chapter 5 | Demand Forecast.......................................................................................................................................100 5.1 Installed Capacity...........................................................................................................................................100 5.2 Market Share.................................................................................................................................................101 5.3 Market Volume...............................................................................................................................................102 Contents | i Part C | Existing and Potential Applications of Solar Technology, Solar Components, and/or Solar Energy in Residential, Commercial, Governmental, and Industrial Sectors..............................................107 Chapter 6 | Existing and Potential Application for CSP Technologies.............................................................................108 6.1 Existing Applications......................................................................................................................................108 6.2 Potential Applications.....................................................................................................................................108 Chapter 7 | Existing and Potential Application for PV Technologies...............................................................................120 7.1 Existing Applications......................................................................................................................................120 7.2 Potential Applications.....................................................................................................................................122 Part D | Potential Economic Costs and Benefits Result from Enlarging Solar Component Manufacturing in Egypt.127 Chapter 8 | Potential Economic Costs and Benefits......................................................................................................128 8.1 Methodology..................................................................................................................................................128 8.2 Assumptions..................................................................................................................................................130 8.3 Main Economic Costs and Benefits Associated with CSP and PV – Structures..............................................132 8.4 Main Economic Costs and Benefits Associated with CSP – Mirrors................................................................135 8.5 Main Economic Costs and Benefits Associated with CSP – Pumps................................................................137 8.6 Main Economic Costs and Benefits Associated with CSP – Heat Exchangers................................................140 8.7 Main Economic Costs and Benefits Associated with CSP – Storage Tanks....................................................143 8.8 Main Economic Costs and Benefits Associated with PV – Solar Glass............................................................146 8.9 Main Economic Costs and Benefits Associated with PV – Inverter..................................................................148 8.10 Aggregated Economic Costs and Benefits Associated with an Enlarged Solar Sector in Egypt.......................151 Part E | Solar Component Manufacturing Case Studies........................................................................................155 Chapter 9 | Solar Component Manufacturing in China..................................................................................................156 9.1 Executive Summary and Key Findings............................................................................................................156 9.2 Policies and Activities of the Country to Support Local Solar Component Manufacturing................................157 9.3 Extent of In-country Demand Versus Demand for Exports of the Country’s Solar Component Manufacturing Capacity, and its Evolution and Correlation with Policies and Markets Development....................162 9.4 In-country Research and Development Capacity in Solar Component Manufacturing.....................................165 9.5 Partnership Arrangement with International Solar Technology Expertise..........................................................167 Chapter 10 |Solar Component Manufacturing in Brazil..................................................................................................170 10.1 Executive Summary and Key Findings............................................................................................................170 10.2 Policies and Activities of the Countries to Support Local Solar Component Manufacturing............................170 10.3 The Extent of In-country Demand Versus Demand for Exports of the Countries’ Solar Component Manufacturing Capacity and its Evolution and Correlation with Policies and Markets Development.....................172 10.4 In-country Research and Development Capacity in Solar Component Manufacturing.....................................172 10.5 Partnership Arrangement with International Solar Technology Expertise..........................................................173 ii | Local Manufacturing Potential for Solar Technology Components in Egypt Part F | Recommendations for a Road Map for Development of Solar Industry in Egypt..................................175 Chapter 11 | Recommendations for the Development of Solar Industries in Egypt........................................................176 11.1 Introduction...................................................................................................................................................176 11.2 Issue 1: Visibility of the Pipeline.....................................................................................................................180 11.3 Issue 2: Capital Availability............................................................................................................................183 11.4 Issue 3. Qualified Labor Requirements..........................................................................................................185 11.5 Issue 4. Technology Transfer.........................................................................................................................187 11.6 Issue 5. Clustering........................................................................................................................................189 11.7 Issue 6. Materials Supply..............................................................................................................................191 11.8 Issue 7. Exports............................................................................................................................................193 11.9 Issue 8. Certification and Accreditation.........................................................................................................195 11.10 Actions Related to Kom Ombo...................................................................................................................197 Appendix 1 | Solar Industries Datasheets......................................................................................................................198 CSP Industries......................................................................................................................................................198 PV Industries.........................................................................................................................................................210 Appendix 2 | Suggested CSP Industries Description.....................................................................................................219 Heat Exchangers...................................................................................................................................................219 Mirror ...................................................................................................................................................................223 Storage Tanks.......................................................................................................................................................225 Structure and Tracker............................................................................................................................................226 Appendix 3 | Suggested PV Industries Description.......................................................................................................229 Support Structure..................................................................................................................................................229 Solar Glass............................................................................................................................................................230 Appendix 4 | Industry on Kom Ombo............................................................................................................................233 Introduction...........................................................................................................................................................233 Key Assumptions..................................................................................................................................................233 References ...................................................................................................................................................................237 Contents | iii Figures Figure 1. Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages ......................................3 Figure 2. Forecasted Demand for CSP Applications, Either Electric (Bars) or Thermal (Lines), 2013–27............................4 Figure 3. Forecasted Demand for PV Applications, Either Electric (Bars) or Area (Lines), 2013-27.....................................4 Figure 4. Map of Stakeholders Involved in Egypt’s Solar Energy Sector.............................................................................5 Figure 5. Egyptian Employee Wage Average by Industry, 2009 (US$/mo)..........................................................................6 Figure 6. Main Raw Material Industries in Egypt................................................................................................................7 Figure 7. Market Share of the Different CSP Technological Approaches, Both Operating (left) and under Construction (right), 2012 (%).....................................................................................................................9 Figure 8. Market Share of the Different PV Technological Approaches, 2011 (%).............................................................10 Figure 9. Solar Components Considered in This Study...................................................................................................13 Figure 10. Forecasted Demand and Annual Proposed Production for CSP and PV Structure, 2013–27..........................20 Figure 11. Forecasted Demand and Annual Proposed Production for CSP Mirror, 2013–27............................................20 Figure 12. Forecasted Demand and Annual Proposed Production for CSP Pumps, 2013–27.........................................21 Figure 13. Forecasted Demand and Annual Proposed Production for CSP Heat Exchangers, 2013–27..........................21 Figure 14. Forecasted Demand and Annual Proposed Production for CSP Storage Tanks, 2013–27..............................21 Figure 15. Forecasted Demand and Annual Proposed Production for PV Solar Glass, 2013–27.....................................22 Figure 16. Forecasted Demand and Annual Proposed Production for PV Inverter, 2013–27............................................22 Figure 17. Labor Creation in the PV Solar Sector, 2013-27.............................................................................................23 Figure 18. Labor Creation in the CSP Solar Sector, 2013-27..........................................................................................23 Figure 19. Contribution to GDP from the Solar PV Sector, 2013–27................................................................................23 Figure 20. Contribution to GDP from Solar CSP Sector, 2013–27...................................................................................24 Figure 21. Material Requirements for PV Industries, 2013–27 (metric tons).....................................................................24 Figure 22. Material Requirements for CSP Industries, 2013–27 (metric tons)...................................................................24 Figure 23. Energy Intensity of Solar Component Manufacturing Industries......................................................................25 Figure 24. Market Share of the Different CSP Technological Approaches, Both Operating (left) and under Construction (right), 2012.........................................................................................................................33 Figure 25. Market Share of the Different PV Technological Approaches, 2011.................................................................33 Figure 26. Parabolic Trough Collectors Installed at Plataforma Solar de Almería, Spain...................................................35 Figure 27. Schematic of a Parabolic Trough Collector.....................................................................................................36 Figure 28. General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage.......................................37 Figure 29. Schematic of a Linear Fresnel Collector..........................................................................................................38 Figure 30. Functional Scheme of a Power Tower System, Using Molten Salt as HTF, with TES.......................................40 Figure 31. Main Components of a Heliostat....................................................................................................................41 Figure 32. Main Components of a Dish/Engine System...................................................................................................43 Figure 33. Schematic Showing the Operation of a Heat-Pipe Solar Receiver..................................................................44 Figure 34. PV Solar Energy Value Chain..........................................................................................................................46 Figure 35. Polysilicon Manufacturing Value Chain............................................................................................................47 Figure 36. Ingot/Wafer Manufacturing Value Chain..........................................................................................................48 Figure 37. c-Si Cell Structure..........................................................................................................................................49 Figure 38. Types of Solar Glass.......................................................................................................................................50 Figure 39: Egypt’s Population Pyramid, 2012.................................................................................................................56 Figure 40. Evolution of GDP (left) and Rate per Capita (right) in Egypt, 2003-11..............................................................57 Figure 41. Egyptian Electricity Generating Capacity Sources (%).....................................................................................57 Figure 42. Total Oil Production and Consumption in Egypt, 2001-10..............................................................................58 Figure 43. Existing and Future Renewable Projects in Egypt ..........................................................................................58 Figure 44. Solar Energy Egyptian Target, 2012-27..........................................................................................................59 Figure 45. Map of Stakeholders Involved in the Solar Energy Sector...............................................................................60 Figure 46. GDP Composition by Sector (%)....................................................................................................................61 Figure 47. Production Value and Investment Costs According Activities..........................................................................62 Figure 48. Industrial Sector Production Value by Egyptian Governorate (US$).................................................................63 Figure 49. Egypt’s Total Imports, Exports, and Trade Balances, 1997–2011 (US$bil).......................................................64 Figure 50. Egyptian Import Tariffs, 2010 (%)....................................................................................................................65 Figure 51. Examples of Relevant Raw Material Industries in Egypt..................................................................................69 Figure 52. Competitiveness Parameters in Egypt Compared to Benchmark and MENA Averages...................................70 Figure 53. Egyptian Employee Wage Average by Industry, 2009 (US$)............................................................................71 Figure 54. Lending Interest Rate in Egypt (%)..................................................................................................................74 iv | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 55. Egyptian Solar Energy Target, 2012-27 (MW).................................................................................................75 Figure 56. Schematic of a U-Tube Heat Exchanger.........................................................................................................94 Figure 57. Schematic of a CSP Mirror Structure..............................................................................................................94 Figure 58. Schematic of CSP Structure and Tracker Manufacturing................................................................................96 Figure 59. Types of Solar Glass.......................................................................................................................................98 Figure 60. Global and European CSP and PV Annual Installed Capacity in Different Scenarios, Average 2008-20, (US$ mil)......................................................................................................100 Figure 61. MENA CSP and PV installed Capacity in 2020 for 3 Scenarios.....................................................................101 Figure 62. CSP Annual Installed Capacity (2013-27), Base Case..................................................................................101 Figure 63. PV Annual Installed Capacity (2013-27), Base Case.....................................................................................101 Figure 64. Market Share Evolution for Target Industries until 2027, Hypotheses (%)......................................................102 Figure 65. CSP Market Volume Base Case, 2012-27....................................................................................................102 Figure 66. PV Market Volume Base Case, 2012-27......................................................................................................103 Figure 67. Market Volume Sensitivity Analysis for CSP (MW).........................................................................................103 Figure 68. Market Volume Sensitivity Analysis for PV (MW)............................................................................................103 Figure 69. Sales Forecast Sensitivity Analysis for CSP Heat Transfer Equipment, 2013-27 (US$ mil).............................104 Figure 70. Sales Forecast Sensitivity Analysis for CSP Mirrors, 2013-27 (US$ mil)........................................................104 Figure 71. Sales Forecast Sensitivity Analysis for CSP Pumping Equipment, 2013-27 (US$ mil)....................................104 Figure 72. Sales Forecast Sensitivity Analysis for CSP Storage Tanks, 2013-27 (US$ mil).............................................105 Figure 73. Sales Forecast Sensitivity Analysis for PV Inverter, 2013-27 (US$ mil)...........................................................105 Figure 74. Sales Forecast Sensitivity Analysis for PV Solar Glass (US$ mil)....................................................................105 Figure 75. Sales Forecast Sensitivity Analysis for PV and CSP Structures, 2013-27 (US$ mil).......................................105 Figure 76. Installed Capacity Needed to Supply Demand Estimates, and Estimated Solar Boost of New Plants, 2013-27 (MW).........................................................................................................................................................110 Figure 77. Installed Capacity Needed to Supply Demand Estimations, and Estimated Solar Boost of Existing Plants, 2013-27 (MW)..........................................................................................................111 Figure 78. Shares of Total Final Energy Consumption in Egypt, 2005 (%)......................................................................112 Figure 79. Potential Demand for CSP in Egypt, 2013-27 (equivalent MW).....................................................................128 Figure 80. Potential Demand for PV in Egypt (MW).......................................................................................................128 Figure 81. Methodology Followed for the Model...........................................................................................................129 Figure 82. Cost Breakdown for CSP Structure..............................................................................................................132 Figure 83. Cost Breakdown for PV Structure (US$ mil)..................................................................................................132 Figure 84. Sales Price for CSP Structure (US$/Kg)........................................................................................................133 Figure 85. Sales Price for PV Structure (US$/Kg)..........................................................................................................133 Figure 86. Forecasted Demand and Annual Proposed Production for CSP and PV Structure, 2013-27........................133 Figure 87. Forecasted Demand and Annual Proposed Production for Structure, CSP Alternative Applications, 2013-27....................................................................................................................133 Figure 88. Forecasted Demand and Annual Proposed Production for PV Alternative Applications, 2013-27.................133 Figure 89. Investment Requirements for CSP and PV Structure, 2013-27 (US$)...........................................................134 Figure 90. Labor Requirements for CSP and PV Structures, 2013-27 (required workers)..............................................134 Figure 91. Energy Requirements for CSP and PV Structures, 2013-27.........................................................................134 Figure 92. Description of Material Requirements for CSP and PV Structure by Weight and Cost per Plant (%)...................134 Figure 93. Cost Structure Breakdown for CSP Mirrors (US$ mil)...................................................................................135 Figure 94. Sales Price for CSP Mirrors (US$/m2)...........................................................................................................135 Figure 95. Forecasted Demand and Annual Proposed Production for CSP Mirror, 2013-27..........................................136 Figure 96. Investment Requirements for CSP Mirrors, 2013-27 (US$ mil)......................................................................136 Figure 97. Labor Requirements for CSP Mirrors, 2013-27 (%)......................................................................................136 Figure 98. Energy Requirements for CSP Mirrors, 2013-27...........................................................................................136 Figure 99. Description of Material Requirements for CSP Mirrors by Weight and Cost per Plant (%)..............................137 Figure 100. Cost Structure Breakdown for CSP Pumps (US% mil)................................................................................138 Figure 101. Sales Price for CSP Pumps (US$ MW).......................................................................................................138 Figure 102. Forecasted Demand and Annual Proposed Production for CSP Pumps, 2013-27......................................138 Figure 103. Investment Requirements for CSP Pumps, 2013-27 (US$ mil)...................................................................139 Figure 104. Labor Requirements for CSP Pumps, 2013-27..........................................................................................139 Figure 105. Energy Requirements for CSP Pumps, 2013-27........................................................................................139 Figure 106. Description of Material Requirements for CSP Pumps by Weight and Cost per Plant (%)............................140 Figure 107. Cost Structure Breakdown for CSP Heat Exchangers (%)..........................................................................141 Figure 108. Sales Price for CSP Heat Exchangers (US$/MWh).....................................................................................141 Contents | v Figure 109. Forecasted Demand and Annual Proposed Production for CSP Heat Exchangers, 2013-27......................141 Figure 110. Investment Requirements for CSP Heat Exchangers, 2013-27...................................................................142 Figure 111. Labor Requirements for CSP Heat Exchangers, 2013-27 (required workers)..............................................142 Figure 112. Energy Requirements for CSP Heat Exchangers, 2013-27.........................................................................142 Figure 113. Description of Material Requirements for CSP Heat Exchangers by Weight and Cost per Plant (%).....................143 Figure 114. Cost Structure Breakdown for CSP Storage Tanks.....................................................................................143 Figure 115. Sales Price for CSP Storage Tanks.............................................................................................................144 Figure 116 Forecasted Demand and Annual Proposed Production for CSP Storage Tanks, 2013-27............................144 Figure 117.Investment Requirements for CSP Storage Tanks, 2013-27 (US$ mil)........................................................144 Figure 118. Labor Requirements for CSP Storage Tanks, 2013-27 (required workers)..................................................144 Figure 119. Energy Requirements for CSP Storage Tanks, 2013-27.............................................................................145 Figure 120. Description of Material Requirements for CSP Storage Tanks by Weight and Cost Per Plan (%).................145 Figure 121. Cost Structure Breakdown for with PV Solar Glass....................................................................................146 Figure 122. Sales Price for PV Solar Glass (US$/Kg).....................................................................................................146 Figure 123. Forecasted Demand and Annual Proposed Production for PV Solar Glass (%)...........................................146 Figure 124. Investment Requirements for PV Solar Glass, 2013-27..............................................................................147 Figure 125. Labor Requirements for PV Solar Glass, 2013-27 (required workers)..........................................................147 Figure 126. Energy Requirements for PV Solar Glass Source, 2013-27 (MWh)..............................................................147 Figure 127. Description of Material Requirements for PV Solar Glass by Weight and Cost per Plant (%)........................148 Figure 128. Cost Structure Breakdown for PV Inverters (US$ mil).................................................................................148 Figure 129. Sales Price for PV Inverters (US$/MW).......................................................................................................149 Figure 130. Forecasted Demand and Annual Proposed Production for PV Inverter, 2013-27........................................149 Figure 131. Investment Requirements for PV Inverter, 2013-27 (US$)...........................................................................149 Figure 132. Labor Requirements for PV Inverter, 2013-27 (required workers)................................................................149 Figure 133. Energy Requirements for PV Inverter, 2013-27...........................................................................................150 Figure 134. Description of Material Requirements for PV Inverters by Weight and Cost per Plant (%)............................150 Figure 135. Labor Creation in the PV Solar Sector, 2013-27.........................................................................................151 Figure 136. Labor Creation in the CSP Solar Sector, 2013-27......................................................................................151 Figure 137. Contribution to GDP from the Solar PV Sector, 2013-27............................................................................152 Figure 138. Contribution to GDP from the Solar CSP Sector, 2013-27..........................................................................152 Figure 139. Material Requirements for PV Industries, 2013-27......................................................................................152 Figure 140. Material Requirements for CSP Industries, 2013-27...................................................................................153 Figure 141. Energy Intensity of Solar Component Manufacturing Industries..................................................................153 Figure 142. China Solar PV, Domestic Installation vs | Export, 2005-10.........................................................................162 Figure 143. China Solar PV Capacity, 2002-10.............................................................................................................163 Figure 144. Trade, Investment, and Contribution to China’s Balance of Payments Surplus, 2005-11.............................169 Figure 145. Visibility of Pipeline Action Plan...................................................................................................................180 Figure 146. Capital Availability Action Plan....................................................................................................................183 Figure 147. Qualified Labor Requirements Action Plan..................................................................................................185 Figure 148. Technology Transfer Action Plan.................................................................................................................187 Figure 149. Clustering Action Plan................................................................................................................................189 Figure 150. Materials Supply Action Plan......................................................................................................................191 Figure 151. Exports Action Plan....................................................................................................................................193 Figure 152. Certification and Accreditation Action Plan.................................................................................................195 Figure A2.1. Schematic of a U-tube Heat Exchanger....................................................................................................220 Figure A2.2. Schematic of a Plate Heat Exchanger.......................................................................................................221 Figure A2.3. Schematic of a CSP Mirror Structure........................................................................................................223 Figure A2.4. Schematic of CSP Structure and Tracker Manufacturing...........................................................................227 Figure A3.1. Types of Solar Glass.................................................................................................................................230 Figure A4.1. Plant Diagram Showing Location of Main Equipment That Could Be Supplied by Egypt’s Local Industry...234 vi | Local Manufacturing Potential for Solar Technology Components in Egypt Tables Table 1. Criteria Used for the Qualitative Assessment........................................................................................................8 Table 2. Qualitative Assessment of Manufacturing Value Chains for CSP..........................................................................8 Table 3. Qualitative Assessment of Manufacturing Value Chains for PV.............................................................................9 Table 4. Normalized Attractiveness Index for CSP Component Industries (I)....................................................................11 Table 5. Normalized Attractiveness Index for CSP Component Industries (II) ..................................................................11 Table 6. Normalized Attractiveness Index for Crystalline PV Component Industries ........................................................12 Table 7. Normalized Attractiveness Index for Thin Film and Common PV Component Industries ....................................12 Table 8. Issue Definition and Objectives..........................................................................................................................26 Table 9. Action Plan and Timeline...................................................................................................................................27 Table 10. CSP Solar Fields..............................................................................................................................................34 Table 11. Conversion Efficiencies of Different PV Commercial Modules (%).....................................................................45 Table 12. Criteria Used for the Qualitative Assessment....................................................................................................52 Table 13. Qualitative Assessment of Manufacturing Value Chains-CSP...........................................................................52 Table 14. Qualitative Assessment of Manufacturing Value Chains-PV..............................................................................53 Table 15. Examples of Relevant Steel Manufacturers in Egypt (MT).................................................................................65 Table 16. Examples of Relevant Float Glass Manufacturers in Egypt...............................................................................66 Table 17. Examples of Relevant High Technology Components Manufacturers in Egypt..................................................67 Table 18. Examples of Relevant Pumps Manufacturers in Egypt.....................................................................................68 Table 19. Examples of Relevant Conventional Material Manufacturers in Egypt...............................................................68 Table 20. Incentive Mechanisms for Renewable Energy..................................................................................................75 Table 21. Normalized Attractiveness Index for CSP Component Industries (I)..................................................................79 Table 22. Normalized Attractiveness Index for CSP Component Industries (II).................................................................80 Table 23. Normalized Attractiveness Index for Crystalline PV Component Industries.......................................................80 Table 24. Normalized Attractiveness index for Thin Film and Common PV Component Industries...................................81 Table 25. Barriers to Entry and Key Factors for CSP Component Industries....................................................................82 Table 26. Barriers to Entry and Key factors for PV Component Industries.......................................................................88 Table 27. Market Share Hypotheses for Egypt (%)........................................................................................................102 Table 28. Actual Sale Prices Range Considered for Components (US$/kW of installed solar power) ............................104 Table 29. Electricity Sold during Fiscal Years 2006/2007 to 2010/2011, by Purpose.....................................................109 Table 30. Annual Additional Demand Due to Potential Applications in Power Generation, 2015-27 (MW)......................111 Table 31. Annual Thermal Energy Consumption Estimates 2010 (GWh)-I......................................................................112 Table 32. Annual Thermal Energy Consumption Estimates 2010 (GWh)-II.....................................................................113 Table 33. Annual Additional Demand Due to Potential Applications in Process Heat for Distillation, 2015-27 (MW)......................114 Table 34. Annual Additional Demand Due to Potential Applications in Process Heat for Steam Production, 2015-27 (MW)..............................................................................................................115 Table 35. Annual Additional Demand Due to Potential Applications in Process Heat for Drying, 2015-27 (MW)......................116 Table 36. Planned Installation or Expansion of Desalination Plants until 2027 (000s of m3/day).....................................117 Table 37. Annual Additional Demand Due to Potential Applications in Process Heat for MED desalination, 2015-27 (MW).........................................................................................................................117 Table 38. Annual Additional Demand Due to Potential Applications in Process Heat for Residential AC, 2015-27 (MW)............................................................................................................................119 Table 39. Annual Additional Demand Due to Potential Applications in Rooftop PV, 2014-27 (MW).................................121 Table 40. Annual Additional Demand Due to Potential Applications in LCD Screens, 2014-27 (MW).............................121 Table 41. Annual Additional Demand Due to Potential Applications in Water Pumping for Irrigation, 2014-27 (MW).......123 Table 42. Annual Additional Demand Due to Potential Applications in Standalone Power Generation, 2014-27 (MW)...........................................................................................................................124 Table 43. Annual Additional Demand Due to Potential Applications in PV Powered Reverse Osmosis Desalination, 2014-27 (MW)......................................................................................................................125 Table 44. Annual Additional Demand Due to Potential Applications in Standalone Power Generation, 2014-27 (MW)...125 Table 45. Economic Assumptions.................................................................................................................................130 Table 46. Labor Wage Assumptions.............................................................................................................................130 Table 47. Energy Prices Assumptions (US$/MWh)........................................................................................................131 Table 48. Material Price Assumptions...........................................................................................................................131 Table 49. Major Policy Instruments in China’s 2006 Renewable Energy Law.................................................................159 Table 50. Golden Sun Demonstration Program, 2009-12..............................................................................................160 Table 51. Chinese Government Policy Support for Renewable Energy Industry, 2005-11..............................................164 Contents | vii Table 52. Renewable Energy Industry and Market Entry Dynamics...............................................................................166 Table 53. Chronological Overview of Key Research and Innovation Policy Programs, 1982-2003.................................167 Table 54. Issue Definition and Objectives......................................................................................................................177 Table 55. Action Plan and Timeline...............................................................................................................................179 Table 56. Detailed Recommendations for Immediate Actions Regarding Issue 1...........................................................181 Table 57. Detailed Recommendations for Medium-Term Actions Regarding Issue 1......................................................182 Table 58. Detailed Recommendations for Long-Term Actions Regarding Issue 1..........................................................182 Table 59. Detailed Recommendations for Immediate Actions Regarding Issue 2...........................................................183 Table 60. Detailed Recommendations for Medium-Term Actions Regarding Issue 2......................................................184 Table 61. Detailed Recommendations for Long-Term Actions Regarding Issue 2..........................................................184 Table 62. Detailed Recommendations for Immediate Actions Regarding Issue 3...........................................................185 Table 63. Detailed Recommendations for Medium-Term Actions Regarding Issue 3......................................................186 Table 64. Detailed Recommendations for Long-Term Actions Regarding Issue 3..........................................................186 Table 65. Detailed Recommendations for Immediate Actions Regarding Issue 4...........................................................187 Table 66. Detailed Recommendations for Medium-Term Actions Regarding Issue 4......................................................188 Table 67. Detailed Recommendations for Long-Term Actions Regarding Issue 4..........................................................188 Table 68. Detailed Recommendations for Immediate Actions Regarding Issue 5...........................................................189 Table 69. Detailed Recommendations for Medium-Term Actions Regarding Issue 5......................................................190 Table 70. Detailed Recommendations for Long-Term Actions Regarding Issue 5..........................................................190 Table 71. Detailed Recommendations for Immediate Actions Regarding Issue 6...........................................................191 Table 72. Detailed Recommendations for Medium-Term Actions Regarding Issue 6......................................................192 Table 73. Detailed Recommendations for Long-Term Actions Regarding Issue 6..........................................................192 Table 74. Detailed Recommendations for Immediate Actions Regarding Issue 7...........................................................193 Table 75. Detailed Recommendations for Medium-Term Actions Regarding Issue 7......................................................194 Table 76. Detailed Recommendations for Long-Term Actions Regarding Issue 7..........................................................194 Table 77.Detailed Recommendations for Immediate Actions Regarding Issue 8............................................................195 Table 78. Detailed Recommendations for Medium-Term Actions Regarding Issue 8......................................................196 Table 79. Detailed Recommendations for Long-Term Actions Regarding Issue 8..........................................................196 Table 80. Sales Price Comparison in Mirror Industry.....................................................................................................236 Table 81. Sales Price Comparison in Structure Industry................................................................................................236 Table 82. Sales Price Comparison in Heat Exchanger Industry......................................................................................236 Table 83. Sales Price Comparison in Pumps Industry...................................................................................................236 viii | Local Manufacturing Potential for Solar Technology Components in Egypt Acronyms and Abbreviations ABB Asea Brown Boveri Ltd. ABINEED Brazilian Electrical and Electronics Industry Association ADEREE National Agency for the Development of Renewable Energy and Energy Efficiency (Morocco) AGADIR Arab Mediterranean Free Trade Agreement AISI American Iron and Steel Institute ANME Agence Nationale pour la Maîtrise de l’Énergie (Tunisia) APEC Asia Pacific Economic Cooperation API American Petroleum Institute ASEAN Association of Southeast Asian Nations ASME American Society of Mechanical Engineers BIPV Building integrated photovoltaic BNDES Brazilian Development bank BOP Balance of plant BoPET Biaxially oriented poly-ethylene terephthalate CCGT Combined cycle gas turbine CDM Clean Development Mechanism CdS Cadmium sulfide CdTe Cadmium telluride CEEE State Electrical Utility Rio Grande do Sul CHEC China Huadian Engineering Company CIC Climate Innovation Center CIGS Copper/indium/gallium di-selenide CIS Copper/indium sulfide CNY Chinese Renminbi Yuan COP Coefficient of performance CoSPER Committee for Rural Electrification Program (Morocco) CPV Concentrated photovoltaic CSEM Centre Suisse d’Electronique et Microtechnique CSP Concentrated solar power DNI Direct normal irradiation DSG Direct steam generation EEHC Egyptian Electricity Holding Company EgyptERA Egyptian Electricity Regulatory Agency EIB European Investment Bank EN European Standard EPC Engineering, procurement and construction contract; occ., the contractor EPIA European Photovoltaic Industry Association ESMAP Energy Sector Management Assistance Program EU European Union EVA Ethylene vinyl acetate E&Y Ernst & Young FAO Food and Agriculture Organization of the United Nations FAPEMIG Gerais State Research Foundation FDI Foreign direct investment FINEP Studies and Projects Financing Agency FIT Feed-in tariff GAFTA Greater Arab Free Trade Area GCR Global Competitiveness Report GDP Gross domestic product Acronyms and Abbreviations | ix GHG Greenhouse gas(es) GHI Global horizontal irradiation GNP Gross national product GW Gigawatt GWe Gigawatt-electric GWEC Global Wind Energy Council GWh Gigawatt-hour HTF Heat transfer fluid ICT Information and communication technology IDA Industrial Development Authority (Egypt) IEA International Energy Agency IEE CAS Institute of Electricity Engineering of the Chinese Academy of Sciences IFC-WB International Finance Corporation (World Bank Group) IPF Investment Promotion Fund IPP Independent power producer IRENA International Renewable Energy Agency ISCC Integrated solar combined cycle ISO International Organization for Standardization kt kiloton kW Kilowatt kWe Kilowatt-electric KWh Kilowatt-hour LCD Liquid crystal display LCOE Levelized cost of energy LED Light-emitting diode MAD Moroccan Dirham MASEN Moroccan Agency for Solar Agency MED Multiple-effect distillation MEM Ministry of Energy and Mines (Ministere de l’Energie et des Mines) (Egypt) MENA Middle East and North Africa MG-Si Metallurgical grade silicon MIFT Ministry of Industry and Foreign Trade (Egypt) Mo Molybdenum MoE Ministry of Environment (Egypt) MoEE Ministry of Electricity and Energy (Egypt) MoI Ministry of Investment MoP Ministry of Petroleum (Egypt) MW Megawatt MWe Megawatt-electric MWh Megawatt-hour MWth Megawatt-thermal Na Sodium NAMA Nationally appropriate mitigation action NDRC National Development and Reform Commission (China) NREA New and Renewable Energy Authority (Egypt MoEE) NREL National Renewal Energy Laboratory (U.S. DOE) NTF-PSI Norwegian Trust Fund for Private Sector and Infrastructure NTM Nontariff measure OECD Organisation for Economic Co-operation and Development OEM Original equipment manufacturer O&M Operation and maintenance ONE Office National de l’Électricité (Morocco) PB Power block PER Plan de Energías Renovables (Spain) PERG Global Rural Electrification Program PGESCo Power Generation Engineering and Services Co. (Egypt) PRC People’s Republic of China PRODEEM Program for Energy Development of States and Municipalities x | Local Manufacturing Potential for Solar Technology Components in Egypt PROINFA Alternative Electrical Energy Support Program PSH Pumped-storage hydroelectricity PV Photovoltaic PVF Poly-vinyl fluoride PVPS Photovoltaic Power System Programme RD Royal Decree RE Renewable energy REC Renewable Energy Corp. ASA RCREEE Regional Centre for Renewable Energy and Energy Efficiency ROW Rest of the world R&D Research and development SF Solar field SME Small and medium enterprises SITC Standard International Trade Classification Si’Tarc Small Industries Testing and Research Centre (India) SGS Steam generation system STA Solar technology advisor STC Standard test conditions SWOT Strengths, weakness/limitations, opportunities and threats TCO Transparent conductive oxide TCS Trichlorosilane TES Thermal energy storage TF Thin film TF-Si Thin-film silicon ToT Training of trainers UAE United Arab Emirates UN United Nations UV Ultraviolet US United States of America US$ United States dollar WEO World Energy Outlook Acronyms and Abbreviations | xi Acknowledgments This study was undertaken by the World Bank in its initiative to support Egypt in its long term plans for development of solar energy mix in the country and a follow up of the study that assess the international competitiveness of five MENA countries—Algeria, Egypt, Jordan, Morocco, and Tunisia—to develop a local solar industry. This study concentrates on Egypt and attempts to identify strategic challenges and provide detailed recommendations for developing a local solar industry for selected concentrated solar power (CSP) and photovoltaic (PV) components. This study focuses on Egypt’s business potential from four main perspectives: production factors, demand factors, risk factors and business support factors. The purpose of the study is to identify the strengths, weaknesses, and opportunities of the industry context as well as the threats to it. The study carries out an (i) Assessment of Egypt’s existing manufacturing base, (ii) Analysis of the economic costs and benefits associated with the areas of the solar component manufacturing value chains with the greatest potential and finally; (iii) comes up with a set of Recommendations. This study was led by Fowzia Hassan, Energy Specialist, Middle East and North Africa, World Bank, and carried out by Solar Technology Advisors, team members Jorge Servert ( CEO and Team Leader) Eduardo Cerrajero (Solar energy expert), José Luis Servert (Energy policy expert) in collaboration with Accenture, team members José Ramón Alonso, Paz Nachón, and Irene Moya. The report was prepared under the direction of Jonathan Walters Director, Regional Programs and Partnerships, Middle East and North Africa and Patricia Veevers- Carter, Sector Manager, World Bank. Special thanks are due to Alicia Hertzner (Editor). National consultant from Regional Center of Renewable Energy and Energy Efficiency (RCREEE); Maged Mahmoud, Senior Renewable Energy Expert and Rana El-Guindy, Economic Research Assistant participated in the project. Peer reviewers for the study included Silvia Martinez Romero, Sr. Renewable Energy Specialist (SEGES), World Bank and Mario Ragwitz, Head of Renewable Energy Department, Fraunhofer ISI. Marjorie K. Araya (ESMAP) managed the final production of this report and Jeff Lecksell (World Bank, cartography) assisted the team with map design. This study also benefited from the valuable contributions from Dr. Hanan El Hadary, Director of Egyptian National Cleaner Production Center (ENCPC), Ministry of Industry and foreign trade; Dr. Mahmoud El Garf, Chairman of Industrial Development Authority, Ministry of Industry and Foreign Trade; Dr. Hafez Salmawy, Executive director of the Egyptian electric Utility Regulatory Agency; Eng. Omneya Sabry, Vice Chairman for studies, New & Renewable Energy Authority; Dr. Ahmed Kamal, Director of Environmental Compliance Office and sustainable Development (ECO SD), Egyptian federation for industries; Dr. Amin Moubarak, Dr. Mohamed El Sobky and Dr. Adel Khalil. Professors at Cairo University; Dr. Samir Darwish from the Arab Organization for Industrialization (AOI); Dr. Faisal Eissa, Business Unit Manager, ElSewedy Electric; Dr. Mohamed Banhawy, Deputy General Manager, PGESCo (Power Generation Engineering and Services Company); Dr. Ihab Mehawed, Director, Orascom; Dr. Nicolas Miegeville, General manager, Saint Gobain for glass; Dr. Magdy Khalil, BD Manager, National Steel Fabrication. The study was financed by the World Bank, Energy Sector Management Assistance Program and the Norwegian Trust Fund for Private Sector and Infrastructure (NTFPSI). xii | Local Manufacturing Potential for Solar Technology Components in Egypt Context and Objectives In 2012 the World Bank carried out a study to assess Two missions were carried out in Egypt during the the international competitiveness of five MENA study: countries—Algeria, Egypt, Jordan, Morocco, and Tunisia—to develop a local solar industry. 1. The first phase comprised a series of interviews with key relevant players in the sector in Egypt, In that study, Egypt appeared to have significant including, among others, policy makers, private potential to develop several key industries. The companies in different sectors, academic current study delves into the Egyptian case to institutions, and associations.2 identify strategic challenges and provide detailed 2. The second phase was a workshop with key recommendations for developing a local solar stakeholders to present preliminary results, validate industry for selected concentrated solar power (CSP) assumptions, and gather their suggestions and and photovoltaic (PV) components. recommendations.3 This study focuses on Egypt’s business potential These two missions in Egypt were key to identify from four main perspectives: production factors, strategic challenges, to gather main stakeholders’ demand factors, risk factors and business support opinion, to focus the analysis and to start the factors. The purpose of the study is to identify the dissemination. strengths, weaknesses, and opportunities of the industry context as well as the threats to it.1 This study presents an assessment of: Based on a bottom-up approach, this study involved • International solar component manufacturing three main analytical phases: value chains and the outlook for their robustness • Egypt’s existing manufacturing base and 1. Assessment of Egypt’s existing manufacturing its potential to participate or dominate the base international solar component manufacturing 2. Analysis of the economic costs and benefits value chain associated with the areas of the solar component • Update on the existing and potential applications manufacturing value chains with the greatest of solar technology, solar components, and/ potential or solar energy in residential, commercial, 3. Recommendations, governmental, and industrial sectors • Estimation of potential economic costs and A large solar photovoltaic (PV) park to produce up benefits—including job creation—that could result to 200 MWs is foreseen to be built in Kom-Ombo, from enlarging solar component manufacturing in Egypt. Egypt • Recommendations for a road map for the development of solar industry in Egypt. 1. The study is based on what Egypt could do based on its historical trajectory and business context. The study focuses on the country’s potential and conditions that facilitate and enable the development of an industry. However, the study does not consider the specific challenges that Egypt is facing at this 2. Carried out during a mission in Egypt in April 2013. moment, which transcend the solar sector. 3. Workshop carried out in May 2013. Context and Objectives | 1 The final objective is to make recommendations by which Egypt could enhance its competitiveness in the solar sector. The choice of recommendations within the entire solar sector or value chain should focus on the ones that would be most promising to pursue. In this vein, actions to enhance the local manufacturing potential of solar energy components in Egypt are proposed taking into account the link with the Kom Ombo project and the leverage that can be obtained through its development. 2 | Local Manufacturing Potential for Solar Technology Components in Egypt 1 CHAPTER 1: Executive Summary 1.1 Rationale The rationale behind Egypt’s ability to develop a solar component industry is that: In 2012 the World Bank carried out a study to assess the international competitiveness of five MENA • There are reasons to create a stable pipeline of countries—Algeria, Egypt, Jordan, Morocco, and solar projects in Egypt. Tunisia—to develop a local solar industry. Egypt • Egypt has a solid industrial and technical appeared to have significant potential to develop background. several key industries. • Basic materials and industries already exist. • Production factors have some competitive The analysis revealed that Egypt’s key strengths for advantages. solar industrial development are production factors. These strengths are (1) low cost of labor and low cost of energy for industrial consumers; (2) availability of 1.2 Project Pipeline material for solar industries, particularly glass, steel, and stainless steel; and (3) strong manufacturing and Demand capability. Due to Egypt’s planned deployment of solar energy up to 2020, its competitiveness A stable, visible, and credible pipeline of solar associated with demand factors also is strong.4 projects is a key element to create a sustainable solar component industry. Having such a pipeline is Figure 1 | Competitiveness Parameters a lesson learned from leading countries in the solar in Egypt Compared to Benchmark and component industry and a message received from MENA Averages the different stakeholders. On the demand side, Egypt has some clear drivers to become a market for solar components: • Egypt possesses land, a solar resource, and wind speeds that make suitable the development of renewable energies (RE) including wind, solar, and biomass. For solar energy development specifically, Egypt’s maximum annual global horizontal irradiation (GHI) and direct normal irradiation (DNI) are equal to 6.6 kWh/m2/day and 8.2 kWh/m2/day, respectively. World Bank 2012a. These numbers are the highest in the MENA Region, and Egypt is one of the areas with the best resource 4. Intermediate objective of the Egyptian solar plan, as globally (U.S. DOE NREL n.d.). communicated by the Ministry of Electricity and Energy, is 1,100 MW for CSP and 200 MW for PV. Chapter 1 | Executive Summary | 3 • In late 2012 the government announced new, Figure 3 | Forecasted Demand for PV more ambitious targets for the 2027 Plan to Applications, Either Electric (Bars) or increase total installed power by 2,800  MW of Area (Lines), 2013-27 CSP and 700 MW of PV.5 • Currently, a shortage exists in the capacity to supply the demand for both thermal and electrical energy. • The cost of solar-related technologies is reducing this gap with conventional solutions. • Once enough experience is gained in its national market, Egypt could export components to other markets. Figure 2 | Forecasted Demand for CSP Applications, Either Electric (Bars) or Thermal (Lines), 2013–27 Exports and alternative applications are expected to play a major role in PV components demand. Local developments, on the other hand, might become more important if the Egyptian PV target increases. Recent reports have highlighted that Egypt’s solar development program still lacks a targeted vision and incentive system, as well as a specialized agency with skills and experience, to make the plan a reality (AfDB 2012). Nevertheless, the solar sector in Egypt already has a significant number of active players (Figure 4). Although alternative applications can be significant, the main demand for CSP components is expected to come from large-scale solar power plants, especially local developments. 5. www.nrea.gov.eg. 4 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 4 | Map of Stakeholders Involved in Egypt’s Solar Energy Sector service sector is worth mentioning because of the 1.3 Industrial and Technical country’s important trajectory in plant engineering, Background developed largely through the Power Generation Engineering and Services Company (PGESCo) and construction services, through companies Unlike other African economies, Egypt has a low such Orascom. The presence of such companies dependency on agricultural production. The reason is a singularity in the Region and may help Egypt is its diverse industrial sector, which is dominated become a Regional supplier of services in the solar by the steel industry, automotive, construction, and industry, as well as a manufacturer of selected solar consumer goods. component industries. In 2012, 37.4 percent of GDP was due to the industrial Despite having little local capacity in the solar sector sector, almost 5.0 percent more than in Morocco and to date (20  MW Kuraymat plant), Egypt has the 8.0 percent more than in Tunisia. potential to develop local manufacturing for different components in the solar value chain, due partly to At the same time, Egypt has a developed service the availability of materials and related industries. sector. Although it is not the focus of this study, the Chapter 1 | Executive Summary | 5 1.4 Existing Figure 5 | Egyptian Employee Wage Industrial Sector Average by Industry, 2009 (US$/mo) Egypt’s industrial sector has the following capabilities linked to solar component manufacturing necessities: • Base steel manufacturing: over 8 million t/year6 • Float glass manufacturing: over 400 kt/year7 • Electric and power electronics: global sector leaders8 operate in the country • Pumps and metal fabrication: several local and international companies operate in the country. Source: Egypt, CAPMAS 2010. These capabilities could help Egypt’s industrial sector to overcome the entry barriers and take advantage The key barriers identified in the labor market are: of the key factors described above for some of the CSP and PV industries. The highly skilled workforce • Lack of technical knowledge of solar-energy- required for several of these industries could be related component design and manufacturing obtained through capacity building programs such • Upstream: Lack of preparation for solar projects as partnerships with technology providers and development; downstream: lack of qualification specialized training courses. for downstream operation and maintenance (O&M), which would be required for a pipeline of Assembly industries, such as automotive, have projects) proven their feasibility in Egypt, and some solar • Absence of specialized centers to train and components could do the same. develop specific skills • Low productivity. However, the labor market situation is seen more as 1.5 Production Factors an opportunity for Egypt rather than as an insoluble barrier, since Egypt already has a solid base of qualified 1.5.1 LABOR professionals. Cairo University, for example, is ranked as one of the top 500 universities globally [5]. In the Region, Egypt is competitive in labor cost—a significant advantage and opportunity (Figure 5) Steel and float glass manufacturing facilities exist in Egypt with enough capacity to supply the solar component industry. Regarding float glass, however, some additional investments would be required to fulfill CSP and PV market needs. Egypt’s current float glass production has an iron content that would not immediately comply with CSP or PV requirements. 6. Ezz Steel Rebars: 5.8; Suez Steel: 2.5. 7. Saint Gobain: 250; Sphinx Glass: 200. 8. ABB, Elsewedy, Schneider, Siemens. 6 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 6 | Main Raw Material Industries in Egypt IBRD 40943 Mediterranean Sea ARAB REPUBLIC OF EGYPT MAIN RAW MATERIALS INDUSTRIES CAIRO STEEL FLOAT GLASS Area of Map LIBYA CONVENTIONAL GOVERNORATES ARAB REPUBLIC Red IN NILE DELTA: Sea HIGH TECHNOLOGY OF EGYPT 1 KAFR EL SHEIKH Source: Manufacturers’ websites. 2 DAMIETTA 3 PORT SAID CITIES AND TOWNS 4 ALEXANDRIA 5 BEHEIRA GOVERNORATE CAPITALS 6 GHARBIYA NATIONAL CAPITAL 7 DAGAHLIYA RIVERS 8 MENOUFIYA 9 SHARGIYAH GOVERNORATE BOUNDARIES 10 QALIUBIYA INTERNATIONAL BOUNDARIES 11 ISMAILIA SUDAN M e d i t e r r a n e a n S e a Damietta 2 1 Kafr el Port Said El'Arish Alexandria Sheikh 3 Damanhur El Mansura 6 7 Tanta 9 4 Zagizig NORTHERN Shibin el Kom Ismailia 8 SINAI Benha 11 5 10 CAIRO Giza Suez MARSA MATRUH 6th of October Helwan HELWAN El Fayoum SUEZ EL FAYOUM SOUTHERN Beni Suef SINAI Gu lf 6TH OF BENI SUEF Abu Zenima of OCTOBER Su ez Ras Gharib AL MINYA El Tur Al Minya 0 50 100 Kilometers This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 0 25 50 Miles GSDPM Map Design Unit Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. JULY 2015 Source: Manufacturers’ websites. Re-created by World Bank Cartography, July 2015. In the past, electricity subsidies in Egypt have kept In the past year, industrial consumers have electricity prices artificially low. Although it brings experienced tariff hikes. For the most energy-intensive with it other risks,9 at first sight, the subsidies appear industries, these hikes have been accompanied by a to be a competitive advantage to private industrial 50 percent hike in the price of electricity consumed investors, particularly for energy-intensive industries. during a defined 4-hour peak period (EgyptERA n.d.). However, seeing subsidies as competitively Along the same lines, a plan by the Egyptian electricity advantageous is changing in Egypt because energy regulator to put in place a series of barriers to high- costs are increasing for industrial consumers. energy-consumption companies could hamper the future development of energy-intensive industries in 9 From the country’s point of view, subsidies to energy the country. consumption introduce tensions in the system, because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts. The sustainability of these artificially low costs therefore can be perceived as an investor risk. Chapter 1 | Executive Summary | 7 1.5.2 FINANCIAL COSTS 1.6 Status of Global Solar Component Value Chain For the last 5 years, Egypt’s interest rate has remained above 10 percent (World Bank 2008-2011), reaching 16 percent in 2012 for small/medium companies.10 To assess the value chains that could be developed This high interest level makes it difficult for small/ in Egypt, this study analyzed the current global solar medium companies to invest due to the high pay- component value chains. The goal is to obtain an back required. overview on their robustness and attractiveness to a potential investor. The following factors have been taken into account: TABLE 1 | CRITERIA USED FOR THE QUALITATIVE ASSESSMENT Technological Number of Upstream Geographicdispersion Demand-to- Robustness maturity competitors bottlenecks offer ratio ● Newcomer Oligopoly Shortage Few Shrinking Weak + Demo Several Alternatives Several Stable Medium ++ Established Many Unlikely Many Growing Strong TABLE 2 | QUALITATIVE ASSESSMENT OF MANUFACTURING VALUE CHAINS FOR CSP Technological Number of Upstream Geographical Demand- Robustness Maturity Competitors Bottlenecks Dispersion to-Offer Ratio Condenser ++ ++ ++ ++ ++ ++ Electrical ++ + ++ + ++ + Generators Heat ++ ++ ++ ++ ++ ++ Exchanger HTF Pumps ++ + ++ + ++ + HTF Oil + ? + ? ++ ? CSP Mirror + + ++ + ++ + Pumps ++ ++ ++ ++ ++ ++ Receiver + ? + ? + ? Solar Salt + ? ? ? ++ ? Steam ++ ? ++ + ++ ? Turbine Storage ++ ++ ++ ++ ++ ++ Tank Structure & + ++ ++ ++ ++ ++ Tracker 2. As detailed by several stakeholders during the mission carried out in Cairo in April 2013. 8 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 3 | QUALITATIVE ASSESSMENT OF MANUFACTURING VALUE CHAINS FOR PV Technological Number of Upstream Geographical Demand- Robustness Maturity Competitors Bottlenecks Dispersion to-Offer Ratio Cells ++ + ? ++ ? ? Ingots/Wafers ++ + ? ++ ? ? c-Si Modules ++ ++ ? ++ ? ? PV Polysilicon ++ + ++ + ? ? Solar Glass + + ++ ++ + + TF Materials + + + + ++ + TF Modules + ++ + ++ ++ ? Inverters ++ ++ ++ ++ ++ ++ Structures ++ ++ ++ ++ ++ ++ The market share of the different technologies (current and in construction) provides a lead on the tendency and markets. Figure 7 | Market Share of the Different CSP Technological Approaches, Both Operating (left) and under Construction (right), 2012 (%) Power Fresnel tower Fresnel Power 5% 3% 2% tower 26% Parabolic Parabolic trough trough 95% 69% Parabolic trough Power tower Fresnel Source: NREL Database Source: Authors based on U.S. DOE NREL 2013b. Chapter 1 | Executive Summary | 9 Figure 8 | Market Share of the Different PV Technological Approaches, 2011 (%) sc-Si TF-Si 40% 3% CIS/CIGS Thin film 3% 14% mc-Si Other Cd-Te 45% 1% 8% Other mc-Si sc-Si Cd-Te TF-Si CIS/CIGS Source: Authors based on Fraunhofer ISE 2012. 1.7 Solar Industries That demand factors, risk and stability factors, and Have a Potential to Be business support factors were used in an aggregation and weighting model to provide an Developed in Egypt “attractiveness index” for each country and industry studied. These indexes enable comparing how likely In an earlier stage of this project (World Bank 2012a), it would be for an investor to choose Egypt as the Egypt’s and some other countries’ competitiveness preferred destination to invest in a solar component for developing local solar industries was assessed. manufacturing industry. The results of this report are A series of metrics regarding production factors, summarized in Tables 4–7. 10 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 4 | NORMALIZED ATTRACTIVENESS INDEX FOR CSP COMPONENT INDUSTRIES (I) Condenser Electrical Heat HTF Pumps HTF Mirror Generator Exchanger Thermal Oil Egypt 0.5 0.5 0.5 0.5 0.5 0.5 Chile 0.6 0.7 0.5 0.6 0.6 0.6 China 0.9 0.7 1.0 0.8 0.7 0.9 Germany 0.9 0.9 0.8 0.9 0.9 0.9 India 0.7 0.7 0.7 0.7 0.7 0.7 Japan 0.9 0.9 0.9 0.9 0.9 0.8 South Africa 0.7 0.9 0.6 0.8 0.9 0.7 Spain 0.8 0.8 0.7 0.8 0.8 0.8 United States 1.0 1.0 1.0 1.0 1.0 1.0 Average 0.8 0.8 0.8 0.8 0.8 0.8 BENCHMARK TABLE 5 | NORMALIZED ATTRACTIVENESS INDEX FOR CSP COMPONENT INDUSTRIES (II) Pumps Receiver Solar Salt Steam Storage Structure & Turbine Tanks Tracker Egypt 0.5 0.5 0.4 0.5 0.5 0.7 Chile 0.6 0.6 0.9 0.7 0.5 0.5 China 0.9 0.8 1.0 0.7 1.0 1.0 Germany 0.8 0.9 0.5 0.9 0.8 0.8 India 0.7 0.7 0.4 0.7 0.7 0.9 Japan 0.9 0.9 0.4 0.9 0.9 0.9 South Africa 0.7 0.7 0.4 0.9 0.7 0.8 Spain 0.8 0.8 0.5 0.8 0.7 0.7 United States 1.0 1.0 0.5 1.0 1.0 0.9 Average 0.8 0.8 0.6 0.8 0.8 0.8 BENCHMARK Chapter 1 | Executive Summary | 11 TABLE 6 | NORMALIZED ATTRACTIVENESS INDEX FOR CRYSTALLINE PV COMPONENT INDUSTRIES Cells Ingots/Wafers Modules c-Si Polysilicon EGYPT 0.5 0.5 0.5 0.5 Chile 0.6 0.7 0.5 0.7 China 0.8 0.7 1.0 0.7 Germany 1.0 1.0 0.9 0.9 India 0.7 0.7 0.7 0.7 Japan 0.9 0.9 0.9 0.9 South Africa 0.7 0.9 0.6 0.9 Spain 0.8 0.8 0.7 0.7 United States 1.0 1.0 1.0 1.0 Average 0.8 0.8 0.8 0.8 BENCHMARK TABLE 7 | NORMALIZED ATTRACTIVENESS INDEX FOR THIN FILM AND COMMON PV COMPONENT INDUSTRIES Solar Glass TF Materials TF Modules Inverter Support Structure Egypt 0.5 0.5 0.5 0.6 0.7 Chile 0.7 0.6 0.5 0.5 0.5 China 0.7 0.9 1.0 1.0 1.0 Germany 0.9 1.0 0.9 0.7 0.9 India 0.7 0.6 0.7 0.8 0.9 Japan 0.9 0.9 0.9 0.9 0.9 South Africa 0.9 0.7 0.6 0.6 0.7 Spain 0.7 0.7 0.7 0.6 0.7 United States 1.0 0.9 1.0 0.9 0.9 Average 0.8 0.8 0.8 0.8 0.8 BENCHMARK 12 | Local Manufacturing Potential for Solar Technology Components in Egypt A set of “benchmark countries” was used as a Based on these results and the analysis of the reference in the analysis. The results show that Egypt circumstances of the different solar industries in has an attractiveness index closer to the average of the world, the following solar industries have been benchmark countries for the industries of structure and selected due to their attractiveness in Egypt. tracker (CSP) and inverter and support structure (PV). Figure 9 | Solar Components Considered in This Study Methodology Key solar industry components identified for the study: CSP PV HTF Structure & Mirror Receiver SOLAR FIELD Thermal Oil tracker TF Materials Solar glass TF Module THIN FILMS HTF Pumps Heat exchangers- Pumps Condenser CRYSTALLINE POWER BLOCK Polysilicon Ingots/wafers Cell c-Si Module SILICON Steam turbine Electrical generator Inverter Support Structure COMPONENTS Solar Salt Storage tanks COMMON STORAGE THERMAL A. CSP B. PV • Condenser • Inverter • Heat exchangers • Solar glass • HTF pump • Support structure. • Mirror • Pumps • Storage tanks • Structure and tracker Chapter 1 | Executive Summary | 13 A. CSP Technologies Condensers Barriers to Entry Key Factors • Guarantees of turbine manufacturer. The design • Stainless steel market. Availability, quality, and of the condenser is linked to that of the turbine, price of stainless steel condition the final price partly conditioning the condenser’s design and of the condenser. performance. Thus, turbine manufacturers might subcontract the condenser manufacture and include it in their own scope of supply. • Technical barrier. Complex design to achieve • High-precision manufacturing under performance. Condenser design must comply international standards. Welder certification, with more constraints than conventional heat quality control, and compliance with exchangers, such as a limited pressure drop in international manufacturing standards are the shell side, a complex heat transfer in phase- necessary to obtain compatibility with other change and vacuum conditions. equipment, safety, and performance in operation. • Highly skilled workforce required. Stainless steel welding and heavy duty machinery handling require specific training Heat Exchangers Barriers to Entry Key Factors • Highly skilled workforce required. Steel welding • Steel market. Availability, quality, and price of and heavy duty machinery handling require steel condition the final price of the condenser. specific training. • High-precision manufacturing under international standards. Welder certification, quality control, and compliance with international manufacturing standards are necessary to obtain compatibility with other equipment, safety, and performance in operation. • Adapt existing industries. Light duty heat exchangers or other metal fabrication industries likely exist in Egypt. Diversifying their production toward the solar sector would reduce initial investment cost and would profit from skilled workforce. 14 | Local Manufacturing Potential for Solar Technology Components in Egypt A. CSP Technologies HTF Pump Barriers to Entry Key Factors • Highly skilled workforce required. Carbon, • High-precision manufacturing under stainless steel and bronze casting, machining international standards. Welder certification, and welding, and heavy duty machinery handling quality control, and compliance with require specific training. international manufacturing standards are necessary to obtain compatibility with other equipment, safety, and performance in operation. • Motor and power electronics. Availability, quality, and price of motors condition the final price of the HTF pumps. Variable frequency drive controllers for some or all of the pumps frequently are included within a solar plant. Mirror Barriers to Entry Key Factors • Technical barrier: Complex manufacturing line. • Energy. Availability and price of thermal State-of-the-art parabolic shaping achieves energy condition the final price of the mirror. accuracy above 99 percent (measured as reflected light that would reach the focus) thanks to optimized design and high manufacturing quality. • Highly skilled workforce required. Glass • Transport. Transportation of float glass can processing, chemical reagents, and heavy duty raise the final costs by 15 perhaps (Glass Global machinery handling require specific training. The 2012). It is common practice to avoid road product itself is fragile. transportation of glass more than 600 km (Glass for Europe 2012). • Capital-intensive unless integrated in existing • Adapt existing industries. For an existing float float glass. Transportation of float glass can raise glass factory, diversifying production toward the final costs by 15 percent (Glass Global 2012). the solar sector would reduce initial investment Glass for solar applications is a minor fraction cost and profit from skilled workforce and of overall float glass market. Typical float glass developed logistics. factory produces 200,000 t/year and must maintain at least 70 percent utilization rate to be profitable (Glass for Europe 2012). Chapter 1 | Executive Summary | 15 A. CSP Technologies Pumps Barriers to Entry Key Factors • Technical barrier: complex design for molten • High-precision manufacturing under salt pumps. State-of-the-art molten salt pumps international standards. Welder certification, prevent the problems associated with the high quality control, and compliance with melting point of solar salt thanks to optimized international manufacturing standards are design and high manufacturing quality. necessary to obtain compatibility with other equipment, safety, and performance in operation. • Highly skilled workforce required. Carbon and stainless steel casting, machining and welding, and heavy duty machinery handling require specific training. Storage Tanks Barriers to Entry Key Factors • Technical barrier. Complex design of molten • Manufacturing under international standards. salt tanks, steam drum, and deaerator. State- Welder certification, quality control, and of-the-art molten salt hot tank design prevents compliance with international manufacturing damage to the foundations while avoiding the standards are necessary to obtain problems associated with the high melting compatibility with other equipment, safety, and point of solar salt thanks to optimized design performance in operation. and high manufacturing quality. Steam drum and deaerator design must comply with more constraints than conventional storage tanks, such as a complex mass transfer in phase-change conditions. 16 | Local Manufacturing Potential for Solar Technology Components in Egypt A. CSP Technologies Structure and Tracker Barriers to Entry Key Factors • Hot-dip galvanizing of large structures (>12 • Carbon steel market. Availability, quality, and m) can be a bottleneck. Torque-tube-based price of carbon steel condition the final price collector designs require the galvanizing of a of the structure. 12-m long piece (torque tube), and galvanizing baths with the required dimensions are not frequent (Galvanizers Association 2012). • Technical barrier. Complex design to achieve • Transport. Normal packing ratios can be stiffness. State-of-the-art collector design reached for transportation of collector achieves accuracy near 75 percent (measured as structures based on torque box or space frame reflected light that would reach the focus) thanks concepts. For torque tubes, packing ratio is to optimized design and high manufacturing lower due to their shape, so transport costs quality. This barrier can be overcome through can be higher. partnerships or license acquisition. • Technical barrier. Complex design of hydraulic • Galvanizing. Availability, quality, and cost of circuit and components. State-of-the-art tracker nearby galvanizing facilities condition the final design achieves a half-acceptance angle better price of the structure. than 0.1º thanks to optimized design and high manufacturing quality. This barrier can be overcome through partnerships or license acquisition. • Adapt existing industries. For an existing steel structure factory such as transmission tower factories, diversifying production toward the solar sector would reduce initial investment cost and profit from skilled workforce and developed logistics. Chapter 1 | Executive Summary | 17 B. PV TECHNOLOGIES TF Solar Glass Barriers to Entry Key Factors • High overall investment for manufacturing • Vertical integration or association with process due to scale. High investment increases existing float glass line. Integrated companies the exposure in case a competitor develops achieve competitive costs while ensuring a more efficient manufacturing process, or an raw materials supply and quality. A coupled alternative product for the same application manufacturing line would reduce initial enters the market. investment cost and profit from skilled workforce, as well as avoid intermediate handling costs. • Solar glass is usually <1 percent of total float • For CIS/CIGS: Stable sodium (Na) glass. Alternative demand (building, automotive) composition, integration of molybdenum (Mo) must exist to achieve at least 70 percent coating. Vertical integration would enable capacity factor. addressing both issues. • For CdTe and TF-Si: Integration of TCO deposition to access alternative markets (liquid crystalline displays, or LCDs). A coupled manufacturing line would reduce initial investment cost, profit from skilled workforce, and avoid intermediate handling costs. • Transport. Transportation of float glass can raise the final costs by 15 percent (Glass Global 2012). It is common practice to avoid road transportation of glass products more than 600 km (Glass for Europe 2012). • Energy. Availability and price of thermal energy condition the final price of solar glass. • Alternative markets: Crystalline modules. General requirements for solar glass also apply to glass covers for crystalline modules, so additional sales could be obtained for c-Si Modules manufacturers. 18 | Local Manufacturing Potential for Solar Technology Components in Egypt B. PV TECHNOLOGIES Inverter Barriers to Entry Key Factors • Technical barrier: Complex design to achieve • Distinguishing features, quality control. performance. State-of-the-art inverter design Strong competitors exist in the market. To gain achieves efficiency above 98 percent (SMA Solar market share, higher quality, pre- and/or post- Technology 2012) thanks to optimized design sales services should be offered. and high manufacturing quality. • Most inverter manufacturers are large power • Maximum power point tracking and anti- electronics companies that diversified into the islanding protection. These features are solar market. Diversified companies are less specific to solar inverters, and mandatory sensitive to oscillations in PV market. in cases in which Institute of Electrical and Electronics Engineers (IEEE) 1547 standard applies. Support Structure Barriers to Entry Key Factors • Technical barrier: Complex design to achieve • Carbon steel market. Availability, quality, and reliability and low maintenance for tracker. price of carbon steel condition the final price State-of-the-art tracker design achieves an of the support structure. average replacement ratio near 2 percent/ year thanks to optimized design and high manufacturing quality. • Transport. Normal packing ratios can be reached for transportation of support structures, but the cost can be significant in the final price. • Galvanizing. Availability, quality, and cost of nearby galvanizing facilities condition the final price of the support structures. • Adapt existing industries. For an existing steel structure factory such as transmission tower factories, diversifying production toward the solar sector would reduce initial investment cost and would profit from skilled workforce and developed logistics. Chapter 1 | Executive Summary | 19 1.8 Market Volume Figure 10 | Forecasted Demand and Annual Proposed Production for CSP The market volume for the various solar industries and PV Structure, 2013–27 has been estimated by aggregating the forecasted demand for: • Large-scale solar power plants both CSP and PV both in Egypt and abroad (base demand) • Other applications of solar energy in Egypt: – Power generation: Solar boost (for new facilities as well as for revamping existing ones) – Process heat (CSP): › High-temperature distillation › Steam production › Drying › Multiple-effect distillation (MED) desalinization › Cooling – Rooftop integrated PV – Solar glass in LCD screens – Water pumping for irrigation – Standalone power generation (PV) The combination of PV and CSP structures is expected – Reverse Osmosis desalinization (PV) to be demanded mainly by large-scale solar power – Inverters for small wind power plants (base demand). Alternative applications could – Light-emitting diode (LED) lampposts for street garner up to 30 percent of the total market volume. lighting (PV). Figure 11 | Forecasted Demand and Hypotheses on share and penetration of each Annual Proposed Production for CSP technology to cover total demand of each need have Mirror, 2013-27 been made, leading to forecasted demand for each component (Figure 10 to Figure 16). 20 | Local Manufacturing Potential for Solar Technology Components in Egypt Mirrors will be demanded mainly by large-scale Figure 13 | Forecasted Demand and solar power plants (base demand), especially local Annual Proposed Production for CSP developments. However, alternative applications could Heat Exchangers, 2013–27 garner up to 30 percent of the total market volume. Figure 12 | Forecasted Demand and Annual Proposed Production for CSP Pumps, 2013–27 t/year 100% 900 90% 800 80% 700 70% 600 60% 500 50% 400 40% 300 30% 20% 200 10% 100 0% - Solar cooling MED desalination Large-scale solar power plants (base demand), Drying Steam supply Crude distillation Hybrid, revamp especially local developments, can suffice for the Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production PUMP development of the first CSP heat exchangers factory. TOTAL demand PUMP Although the alternative demand from new hybrid power plants is significant, it has not been considered Large-scale solar power plants (base demand), enough for the development of a second factory. especially local developments, can suffice for the development of the first CSP pumps factory. Figure 14 | Forecasted Demand and However, the second factory shall be justified only Annual Proposed Production for CSP if the alternative demand from new hybrid power Storage Tanks, 2013–27 plants is present. 100% t/year 50 Millares 90% 45 80% 40 70% 35 60% 30 50% 25 40% 20 30% 15 20% 10 10% 5 0% - Solar cooling MED desalination Drying Steam supply Crude distillation Hybrid, revamp Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production TOTAL demand STORAGE TANKS Chapter 1 | Executive Summary | 21 Storage tanks will be demanded mainly by large-scale Figure 16 | Forecasted Demand and solar power plants (base demand), especially local Annual Proposed Production for PV developments. However, alternative applications can Inverter, 2013–27 garner up to 40 percent of the total market volume. t/year 100% 180 Figure 15 | Forecasted Demand and 90% 160 80% Annual Proposed Production for PV 70% 140 120 Solar Glass, 2013–27 60% 100 50% 80 t/year 40% 100% 30 60 30% x 1000 90% 40 20% 25 80% 20 10% 70% 20 0% - 60% 50% 15 LED autonomous lamppost Standalone wind power generation 40% PV powered Reverse Osmosis Standalone power generation Water pumping for irrigation LCD screens 10 30% Rooftop PV Base demand PV, EXPORT Base demand PV, LOCAL Proposed annual production INVERTER 20% TOTAL demand INVERTER 5 10% 0% - Inverters will be demanded mainly by large-scale LED autonomous lamppost Standalone power generation PV powered Reverse Osmosis Water pumping for irrigation solar power plants (base demand), especially for LCD screens Base demand PV, EXPORT Rooftop PV Base demand PV, LOCAL exports. However, alternative applications can garner Proposed annual production TOTAL demand SOLAR GLASS up to 30 percent of the total market volume. Solar glass will be demanded mainly by large-scale solar power plants (base demand), especially for 1.9 Aggregated Economic exports. However, alternative applications can garner up to 40 percent of the total market volume. Costs and Benefits Associated with an Enlarged Solar Sector in Egypt The development of the solar sector in Egypt will contribute to: • Labor creation • GDP increase • Upstream impacts: materials and energy consumption. 22 | Local Manufacturing Potential for Solar Technology Components in Egypt Besides lowering the cost of the solar plants to Figure 18 | Labor Creation in the CSP be built, a developed solar sector will increase the Solar Sector, 2013-27 country’s energy security and contribute to Regional 3,000 renewable energy development. 2,500 Required workers 2,000 Egypt has the opportunity to enlarge its solar 1,500 component manufacturing base, which, according 1,000 to the assumptions in this study, would create up to 500 3,000 jobs, most of them in installation activities. - High q., CSP components industries Medium q., CSP components industries Growing solar component manufactures also would Medium q., CSP installers, domestic Medium q., CSP installers, large plants increase GDP by over 300 million US$/year, and no shortages of materials supply are expected. Energy, on the other hand, might pose a problem, because some of the proposed industries are energy intensive 1.9.2 GDP INCREASE and depend strongly on heavy-duty, continuous production to achieve profitability. The following sources of GDP have been aggregated: 1.9.1 LABOR CREATION • Wages of workers in installation activities, in both large and small plants Direct high- and medium-qualification jobs will be • Local share13 of component manufacturing created in the component manufacturing industries, industries revenue, including: construction of large power plants (CSP or PV),11 and – Wages of local workers installation of small12 or domestic plants. The impacts – Expenditure in energy, both electric and are shown in Figure 17 and Figure 18. thermal – Material costs from local suppliers Figure 17 | Labor Creation in the PV – Profit Solar Sector, 2013-27 800 Engineering services provided by local companies for 700 the solar plants in the country. 600 Required workers 500 400 Figure 19 | Contribution to GDP from the 300 Solar PV Sector, 2013–27 200 90 100 GDP contribution, USD million 80 - 70 60 High q., PV components industries Medium q., PV components industries 50 Medium q., PV installers, domestic Medium q., PV installers, large plants 40 30 20 10 - Medium q., PV installers, large plants Medium q., PV installers, domestic PV engineering Local, PV industries Imports, PV industries 11. An average labor demand of 33 person-month/MW has been taken into account. 12. An average labor demand of 45 person-month/MW has been 13. The imported share is shown in Figure 19 and Figure 20 for taken into account. comparison. Chapter 1 | Executive Summary | 23 Figure 20 | Contribution to GDP from Figure 21 | Material Requirements for PV Solar CSP Sector, 2013–27 Industries, 2013–27 (metric tons) 350 GDP contribution, USD million 300 250 200 150 100 50 - Imports, CSP industries Local, CSP industries CSP engineering Medium q., CSP installers, large plants Medium q., CSP installers, domestic Figure 22 | Material Requirements for CSP Industries, 2013–27 (metric tons) The main long-term contribution to Egypt’s GDP from both PV and CSP would be the local share of component manufacturing industries revenue. 1.9.3 UPSTREAM IMPACTS MATERIALS REQUIREMENTS A variety of materials is expected to be consumed by the component manufacturing industries. These materials and the estimated amounts required for PV and CSP industries through 2027 appear in Figure 20 and Figure 21, respectively. Egypt’s expected consumption of local supplies is below 1 percent of its production capacity (Chapter 2.2), so no quantitative shortages are expected in the short term. The quality of the materials, on the other hand, could be troublesome, for example, in extra-clear float glass for mirrors or silicon wafers for inverters. 24 | Local Manufacturing Potential for Solar Technology Components in Egypt 2.1.3.2 ENERGY REQUIREMENTS 1.10 Recommendations for Egypt has expressed its intention to discourage the the Development of Solar installation of new energy-intensive industries. As a reference, to determine the relative energetic intensity Industries in Egypt of the component manufacturing industries, this study estimates the actual average energy consumption of Egypt has a good background for developing solar the Egyptian industrial sector in energy consumption component industries. However, the following issues per unit of GDP (MWh/US$ mil). have been identified as relevant for the sustainable development of solar industries in Egypt: Figure 23 shows that inverters and structures have a lower specific energy consumption of both thermal • Visibility of the pipeline and electric than the country averages. Solar glass, • Capital availability on the other hand, is above the averages for both. • Qualified labor • Technology transfer Figure 23 | Energy Intensity of Solar • Clustering Component Manufacturing Industries • Materials supply 7,000 • Exports 6,000 • Certification and accreditation. 5,000 kWh/kUSD 4,000 3,000 To create the necessary momentum, leading 2,000 countries have combined public support with private 1,000 initiatives: - • China: Five-year plans (focusing support) combined with strong private industry Thermal energy Electricity • Europe: Feed-in tariff to create a pipeline of Country average, thermal Country average, electricity projects, support to R&D combined with industry development and clustering Source: Authors based on Egypt EEHC 2012. • U.S.: Tax credits and loan guarantees to create a pipeline of projects, support to R&D combined with industry development • MNA Region, Morocco: Created a dedicated agency (MASEN). To focus the actions, it would be advisable for Egypt to identify a champion that can catalyze a cluster to develop the solar component industry. Taking into account the stakeholders’ opinions and the experience gathered in leading countries, Egypt’s private sector should lead the initiative. However, initial support from the public sector or multilateral organizations may be needed to catalyze the process. Chapter 1 | Executive Summary | 25 TABLE 8 | ISSUE DEFINITION AND OBJECTIVES Issue Stakeholders Definition Objective involved Visibility of Policy makers Private sector has little visibility of the Give visibility of pipeline pipeline developing pipeline, so it does not to private sector, so that it perceive demand (both public and perceives demand and can private) and does not react. react appropriately. Capital Financial Capital market is difficult to access (in Ensure enough capital availability institutions, both equity and loans) and expensive is available to develop policy makers, (two-digit zone). sector competitively, with private sector appropriate payback periods. Qualified Policy makers, Training is required to ensure that Develop training programs labor private sector international quality standards are to ensure that all necessary requirements met, including for skilled engineers capabilities are in place to and managers for the manufacturing develop sector. process and specific training for installation and maintenance. Technology Academia, Local industry is lacking some of the Identify know-how transfer private sector know-how required by manufacturing requirements, and acquire processes and solar market. know-how over shortest time. Clustering Policy makers, Company dispersion leads to lost Define, design, and develop private sector opportunities in synergies and clustering opportunities to economies of scale. maximize synergies in sector and encourage new entrants. Materials Private sector Increase in demand of local materials Monitor this phenomenon and supply caused by development of solar give visibility to upstream component industry could impact actors in sector so they can material supply and price. be prepared in quality and quantity. Exports Policy makers, Egyptian exports could be affected by Identify key export markets private sector internal customs duties, destination and develop future customs duties, or other requirements agreements to minimize this imposed by destination countries. risk. Certification Policy makers, Adoption of international quality Design and facilitate and private sector standards is necessary for exports and development of Egyptian accreditation internal market. standards, encouraging communication between national and international laboratories. 26 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 9 | ACTION PLAN AND TIMELINE Chapter 1 | Executive Summary | 27 1.11 Synergistic Actions to The following actions are proposed to be taken by Build on Kom Ombo CSP the national government in collaboration with the stakeholders. The purposes are to develop the Project capacity of both government and stakeholders to empower the solar cluster, to support its first The Kom Ombo CSP project, as well as the newly activities, and to enable the basic structures. The announced large-scale PV projects, can be the starting actions are: points for the solar component industry in Egypt. • In collaboration with public stakeholders, prepare To fully profit from the positive effect that these a plan to develop the cluster, including the projects may bring, this study suggests areas identification of the cluster champion of required technical assistance (TA) activities to • In collaboration with Egypt’s New and Renewable enhance the local potential to manufacture solar Energy Authority (NREA) and the Ministry of energy components. The World Bank could support Industry, identify the mechanisms to develop these TA activities under the preparation of the Kom a sustainable pipeline of projects in Egypt and Ombo CSP project. Suggestions to increase the their effect (cost and benefits), and prepare a proportion of local components in the project and to communication strategy for both Kom Ombo and facilitate Kom Ombo’s project implementation (from the plan. engineering through to operation) follow. • Disseminate among the local industry the possible business opportunities associated to Kom Ombo These TA actions cover preparatory actions and project support actions and are oriented toward local • Workshop on Kom Ombo project with the capacity development and enabling the necessary participation of national and international players. structures. • Promote contact among interested industrial parties and financial institutions or other sources A virtual cluster for the private sector and an of finance through workshops and dissemination interministerial committee for the public sector would activities be great supports to effectively implement capacity • In collaboration with the solar cluster, prepare development. A strong coordination between both workshops to exchange ideas, develop capacity, would further strengthen local ownership. and create a network of solar industries • Identify promising solar component projects and The preparatory actions focus on identifying the support the initial stages gaps and opportunities jointly with the involved • Identify pilot energy supply projects that could stakeholders. Examples are to: lead to solar component industry development, and support the initial stages • Identify the gaps in local manufacturing industry • Prepare and initiate a “training of trainers” (ToT) required to be filled to develop solar industries. technical capability development program • Identify possible international and national sources • Support the development of national, Regional, of financing for solar and international collaboration programs among • Identify and disseminate success stories R&D centers, universities, and academic • Identify industrial partners interested in clustering institutions and a champion to lead the cluster • Disseminate success stories • Analyze existing Egyptian technical standards • Catalyze the development of technical standards applicable to the industry for availability and and certifying bodies. quality. 28 | Local Manufacturing Potential for Solar Technology Components in Egypt This holistic institutional capacity development program, first, will ensure the sustainability of the Kom Ombo project. Second, the program will enable the growth of Egypt’s solar expertise, solar industries, and other key economic sectors supporting solar projects. Chapter 1 | Executive Summary | 29 30 PART A | Summary Assessment of International Solar Component Manufacturing Value Chains and Outlook for Their Robustness 31 2 CHAPTER 2: Solar Component Manufacturing Value Chains 2.1 Introduction In the thermal process, Concentrated Solar Power (CSP) technologies use mainly reflection and, in The following summary assessment analyzes some cases, refraction to concentrate the sunlight the value chains related to the manufacturing of energy, which is transformed into thermal energy components for Concentrated Solar Power (CSP), at medium (up to 300ºC) or high temperature. This described in Chapter 1.2, and Photovoltaic (PV) thermal energy can be used to produce electricity in Chapter 1.3; and the outlook and status of the through a thermodynamic cycle or as process heat. manufacturing value chains in Chapter 1.4. CSP electrical plants can be divided into three main subsystems: The status of the different solar applications is analyzed, and the result is the background used a. Solar Field, which collects solar energy and to analyze Egypt’s potential with, and using, an converts it to heat international holistic approach. Technology (maturity), b. Power block, which converts the heat energy to market, and risks are assessed to identify value chain electricity; and sometimes, between them robustness. c. Thermal Energy Storage (TES) system. Solar energy can be used to heat a medium to increase Four alternative technological approaches (Parabolic its internal energy to either produce electricity or heat Trough, Power Tower, Linear Fresnel, and Parabolic for a process, or to produce electricity though the Dish Systems) can be described (Figure 24). The photovoltaic effect. component industries included in Chapter 1.2 have been chosen for this study because they have a The present assessment focuses on the applications major share in the overall investment cost of CSP that use concentrated solar irradiation to produce projects. either heat or photovoltaic effect. 32 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 24 | Market Share of the Different CSP Technological Approaches, Both Operating (left) and under Construction (right), 2012 Power Fresnel tower Fresnel Power 5% 3% 2% tower 26% Parabolic Parabolic trough trough 95% 69% Parabolic trough Power tower Fresnel Source: NREL Database Source: Authors based on U.S. DOE, NREL 2013b. The basic building block of a PV system is the R&D and industrialization have led to a portfolio of PV cell. This cell is a semiconductor device that available PV technology options at different levels of converts solar energy into direct-current (DC) maturity. Commercial PV modules may be divided into electricity due to the photovoltaic effect. PV cells 2 broad categories: wafer-based crystalline silicon are interconnected to form a PV module, typically (c-Si) and thin films (TF). Chapter 1.3 describes the in the range of 50-200 Watts (W). The PV modules component industries selected for PV systems. For combined with a set of additional application- their market share, see Figure 25. dependent components (such as support structure, inverters, batteries) form a PV system. Figure 25 | Market Share of the Different PV Technological Approaches, 2011 sc-Si TF-Si 40% 3% CIS/CIGS Thin film 3% 14% mc-Si Other Cd-Te 45% 1% 8% Other mc-Si sc-Si Cd-Te TF-Si CIS/CIGS Source: Authors based on Fraunhofer ISE 2012. Chapter 2 | Solar Component Manufacturing Value Chains | 33 For each solar component industry, the international • A Power Block (PB), in which the heat contained value chain has been assessed, and an outlook of its in the HTF is used to generate electricity. The robustness is presented. most common approach is to produce high pressure steam, which is then channeled through a conventional steam turbine and generator in a Rankine cycle. The Dish/Engine systems, 2.2 Concentrated Solar however, use a Stirling engine. Power (CSP) Value Chain • A Thermal Energy Storage (TES) system, in which excess energy from the SF is stored for Strictly speaking, “Concentrated Solar Power” further use in the PB. The state of the art in this also could apply to Low- and High-Concentration field is to use molten salts stored in two tanks Photovoltaic systems. However, the term is more (one “cold” and one “hot”), and a reversible heat commonly used to describe technologies that use exchanger. However, other approaches exist the thermal energy from solar radiation to generate such as steam storage, direct use of molten salt electricity. These systems can be divided in three as HTF, and experimental prototypes. main subsystems: To sum up, actual CSP plants utilize four alternative • A Solar Field (SF), in which mirrors (or, in technological approaches: Parabolic Trough some new developments, lenses) are used to Systems, Linear Fresnel Systems, Power Tower concentrate (focus) the sunlight energy and Systems, and Dish/Engine Systems. convert it into high temperature thermal energy (internal energy). This heat is transferred using a 2.2.1 PARABOLIC TROUGH SYSTEMS heat transfer fluid (HTF), which can be synthetic oil (the most widely used), molten salt, steam, air, Today, the Parabolic Trough is considered a or other fluids. The point focus systems enable commercially mature technology, with thousands of higher concentration ratios and, therefore, higher megawatts already installed in commercial power temperatures and efficiencies; but they also plants, mainly in the US and Spain. In 2102, the require highly precise, two-axis tracking systems. Parabolic Trough approximated 95 percent of total On the other hand, linear focus systems are less CSP installed capacity (Figure 24). demanding, but less efficient as well. Either way, as for any concentrating solar technology, only the The Parabolic Trough (as well as the Linear Fresnel) beam (direct) component of the solar irradiation is is a two-dimensional concentrating system in which used, because the diffuse portion does not follow the incoming direct solar radiation is concentrated on the same optical path so will not reach the focus. a focal line by one-axis-tracking, parabola-shaped mirrors. The mirrors are able to concentrate the TABLE 10 | CSP SOLAR FIELDS solar radiation flux 30–80 times, heating the HTF Point focus Linear focus to 393 ºC. (A different approach, using molten salts Single Power Tower as HTF, can reach up to 530  ºC, but it is not yet focus systems commercially proven.) The typical unit size of these Multiple Dish/Engine Parabolic Trough plants ranges from 30–80 MWe (megawatt-electric). focus systems systems Therefore, they are well suited for central generation Linear Fresnel with a Rankine steam turbine/generator cycle for systems dispatchable markets. Note: Multi-tower Solar Fields are at a demonstration stage (a 5 MWe plant started operation in 2009). 34 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 26 | Parabolic Trough Collectors Installed at Plataforma Solar de Almería, Spain Source: Photo courtesy of PSA-CIEMAT. A Parabolic Trough Solar Field comprises a variable • Receiver or absorber tube: Consists of two number of identical “solar loops” connected in concentric tubes. The inner tube is made of parallel. Each loop can raise the temperature of a stainless steel with a high-absorptivity, low- certain amount of HTF from the “cold” to the “high” emissivity coating, and channels the flow of the operation temperature (typically, from 300 to 400 ºC). HTF. The outer tube is made of low-iron, highly The loops contain from 4 to 8 independently moving transparent glass with an antireflective coating. subunits called “collectors.” The main components The vacuum is made in the annular space. This of a Parabolic Trough collector are: configuration reduces heat losses, thus increasing overall collector performance. • HTF thermal oil: A synthetic oil is used as heat • Structure and tracker: Solar tracking system transfer fluid in all commercial Parabolic Trough changes the position of the collector following the CSP plants in operation. The most common oil apparent position of the sun during the day, thus used is a eutectic mixture of biphenyl and diphenyl enabling concentrating the solar radiation onto oxide. Other fluids (such as silicone-based fluids) the Receiver. System consists of a hydraulic drive are under development and testing. unit that rotates the collector around its axis, and • Mirror: Reflects the direct solar radiation incident a local control that governs it. The structure, in on it and concentrates the radiation onto the turn, must keep the shape and relative position of Receiver placed in the focal line of the Parabolic the elements, transmitting the driving force from Trough collector. The mirrors are made with a thin the tracker, and avoiding deformations caused by silver or aluminum reflective film deposited on a their own weight or other external forces such as low-iron, highly transparent glass support to give the wind. them the necessary stiffness and parabolic shape. Chapter 2 | Solar Component Manufacturing Value Chains | 35 Figure 27 | Schematic of a Parabolic only a limited number of companies around the Trough Collector world. Carbon steel, stainless steel, and special alloys are required for their manufacture, as well as copper and aluminum in smaller amounts. • Heat exchanger: Two different sets of heat exchangers are required in the Power Block. First, HTF-water heat exchangers (usually referred to as SGS, or Steam Generation System) are required to generate the high-pressure and high- temperature steam that will drive the turbine. Second, water-water heat exchangers are used to recover the heat from turbine bleeds, to preheat the condensate or feed water, thus increasing the Rankine cycle efficiency. If a TES system is included, a reversible, molten salt- HTF heat exchanger also is necessary. Carbon steel and stainless steel are required for their manufacture, as well as copper and aluminum in smaller amounts. • HTF pumps: The materials commonly used in The Power Block of a Parabolic Trough CSP plant joints for the range of temperatures and pressures resembles a conventional Rankine-cycle power plant. required for this application are not compatible The main difference is that, instead of combustion with the chemical composition of the HTF oil. or a nuclear process, the heat used to generate Thus, specific designs and materials, mostly superheated steam is collected in the Solar Field derived from the petrochemical industry, are and transferred using a heat transfer fluid. The main necessary. components of the Power Block are: • Pumps: Several sets of pumps are required within a Parabolic Trough CSP plant: feed water pumps, • Condenser: Although the condenser also is cooling water pumps, condensate pumps, and a heat exchanger, its design is more complex. other minor pumps for dosing, sewage, raw water, In addition, it affects the overall performance of and water treatment purposes. If a TES system is the plant more than the other heat exchangers included, molten salt pumps also are necessary. in the plant because it modifies the discharge Carbon steel and stainless steel are required for pressure of the turbine. Given the condenser’s their manufacture, as well as copper, aluminum, importance, the turbine manufacturer could try to and other materials in smaller amounts. limit the possible suppliers to give a performance • Steam turbine: The expansion of the steam guarantee, or even include the condenser in its inside the turbine will cause the motion of own scope of supply. the rotor blades, and this movement will be • Electrical generator: Within the generator, the transmitted to the electrical generator to produce rotary movement from the turbine is transmitted electricity. The design and manufacturing of a to a series of coils inside a magnetic field, thus turbine requires special materials and alloys and producing electricity due to electromagnetic a highly specialized workforce, available in only a induction. The design and manufacturing of a limited number of companies around the world. generator require special materials and alloys Carbon steel, stainless steel and special alloys are and a highly specialized workforce, available in required for their manufacture. 36 | Local Manufacturing Potential for Solar Technology Components in Egypt • Storage tanks: A large number of tanks and vessels, and other minor tanks for sewage, pressure vessels are required in a Parabolic water treatment intermediate steps, and others. Trough CSP plant. They include raw and treated If a TES system is included, molten salt “hot” and water storage tanks, the deaerator, the steam “cold” storage tanks also are necessary. Carbon drum, and the condensate tank for the Rankine steel and stainless steel are required for their cycle, the HTF storage, expansion and ullage manufacture. Figure 28 | General Schematics of a Parabolic Trough CSP Plant with Thermal Energy Storage Chapter 2 | Solar Component Manufacturing Value Chains | 37 The state of the art in the field of Thermal Energy 2.2.2 LINEAR FRESNEL SYSTEM Storage (TES) is to use molten salts. The most common mixture used for this purpose is referred to Linear Fresnel Systems are conceptually simple. They as “solar salt,” and is composed by sodium nitrate use inexpensive compact optics (flat mirrors), which (NaNO3) and potassium nitrate (KNO3). As described can produce saturated steam at 150 ºC –360 ºC with above, this salt is stored in two tanks (one “cold” and less than 1 ha/MW land use. Linear Fresnel systems one “hot”), and a reversible heat exchanger is used account for 2 percent of total CSP installed capacity to move energy from the Solar Field and to the Power (Figure 24). However, this amount is expected to Block. increase in the near future because this system’s share in the pipeline is higher than 2 percent. Other necessary elements include piping, insulation, and either flexible piping or rotating joints to connect The Linear Fresnel system uses flat or slightly curved adjacent collectors, as well as electric switchgear mirrors to direct sunlight to a fixed absorber tube and water treatment equipment. However, these positioned above the mirrors, sometimes with a elements are either not specific to CSP technology; secondary reflector to improve efficiency. With flat mirrors or, in the case of flexible piping or rotating joints, that are close to the ground, Linear Fresnel collectors are comprise a minor fraction of the investment costs cheaper to produce and less vulnerable to wind damage. and are a highly specialized component, and thus On the other hand, their efficiency is lower due to a lower have been omitted from this report. concentration ratio, and their intraday energy outflow variation is higher than in Parabolic Trough. Figure 29 | Schematic of a Linear Fresnel Collector 38 | Local Manufacturing Potential for Solar Technology Components in Egypt A Linear Fresnel Solar Field comprises a variable The Power Block of a Linear Fresnel CSP plant number of identical “solar loops,” connected in resembles a conventional Rankine-cycle power parallel. Each loop can raise the enthalpy of a certain plant. The main difference is that, instead of a amount of HTF. Most commercial applications use combustion or nuclear process, the heat used to water as HTF in a Direct Steam Generation (DSG) generate superheated steam is collected in the Solar configuration (U.S. DOE NREL 2013a). However, Field and transferred using a heat transfer fluid. The instead of raising the temperature, they increase the main components of the Power Block are: vapor fraction of the fluid. The main components of a linear Fresnel loop are: • Condenser: It is analogous to the equipment described for Parabolic Trough plants. • Mirrors: Reflect the direct solar radiation incident • Electrical generator: It is analogous to the on them and concentrate it onto the Receiver equipment described for Parabolic Trough plants. placed in the focal line of the linear Fresnel • Heat exchanger: Because most commercial loop. The mirrors are made with a thin silver or Linear Fresnel applications use water as HTF in a aluminum reflective film deposited on a low-iron, Direct Steam Generation (DSG) configuration, the highly transparent glass support to give them the need for heat exchangers is largely reduced when necessary stiffness. They are similar to the mirrors compared to a Parabolic Trough plant. The Solar for Parabolic Trough, differing in size and shape. Field will act as SGS, or Steam Generation System, Alternatively, aluminum foils are being tested by generating the high-pressure and high-temperature some leading companies (3M). steam that will drive the Turbine. On the other hand, • Receiver or absorber tube: Made of stainless water-water heat exchangers are still necessary to steel with a high-absorptivity and low-emissivity recover the heat from turbine bleeds to preheat coating, it channels the flow of the HTF. The tube the condensate or feed water, thus increasing the is placed inside a secondary reflector with a flat Rankine cycle efficiency. Carbon steel and stainless cover made of low-iron, highly transparent glass steel are required for their manufacture, as well as with an antireflective coating. This configuration copper and aluminum in smaller amounts. reduces heat losses and increases the half- • Pumps: Several sets of pumps are required within a acceptance angle,14 thus increasing overall Linear Fresnel CSP plant: feed water pumps, cooling performance. water pumps, condensate pumps, and other minor • Structure and tracker: Solar tracking system pumps for dosing, sewage, raw water, and water changes the position of the mirrors following the treatment purposes. Carbon steel and stainless steel apparent position of the sun during the day, thus are required for their manufacture, as well as copper, enabling concentrating the solar radiation onto aluminum and other materials in smaller amounts. the Receiver. The system consists of several • Steam turbine: It is analogous to the equipment drives that rotate the mirrors, and a local control described for Parabolic Trough plants. that governs it. The structure, in turn, must keep • Storage tanks: A large number of tanks and the shape and relative position of the elements, pressure vessels are required in a Linear Fresnel transmitting the driving force from the tracker, CSP plant. They include raw and treated water and avoiding deformations caused by their own storage tanks, the deaerator, the steam drum, weight or other external forces such as the wind. and condensate tank for the Rankine cycle and other minor tanks for sewage and water treatment intermediate steps. Depending on the DSG configuration, additional steam drums might 14. “Half-acceptance angle” is the angle of the maximum cone be required for the Solar Field. Carbon steel and of light that will reflect onto the focus; the term is used to characterize nonideal optic systems. stainless steel are required for their manufacture. Chapter 2 | Solar Component Manufacturing Value Chains | 39 The state of the art in the field of Thermal Energy 2.2.3 POWER TOWER SYSTEM Storage (TES) is to use molten salts. However, the use of water (phase change) in Linear Fresnel plants The Power Tower systems, also known as Central makes it difficult to use actual molten salts. Short-term Receiver systems, have more complex optics than the energy storage using steam is the usual approach in systems above because they are a 3-D concentration these plants, if any (U.S. DOE NREL 2013a). concept. A single solar receiver is mounted on top of a tower, and sunlight is concentrated by means of a large Other elements also are necessary, such as piping, paraboloid that is discretized in a field of heliostats. insulation, electric switchgear, and water treatment Multi-tower systems also are under development. equipment. However, these elements are either not Power Tower systems make up 3 percent of total CSP specific to CSP technology or comprise a minor installed capacity (Figure 24). However, this number is fraction of the investment costs, and thus have been expected to increase in the near future because their omitted from this report. actual share in the pipeline is higher. Concentration factors for this technology range between 200 and 1,000. Plant unit sizes could range between 10 and 200 MW and therefore are suitable for dispatchable markets. Integration in advanced thermodynamic cycles also is feasible. Figure 30 | Functional Scheme of a Power Tower System, Using Molten Salt as HTF, with TES 40 | Local Manufacturing Potential for Solar Technology Components in Egypt Although less mature than the Parabolic Trough • Receiver16: Collects the radiation reflected by the technology, after a proof-of-concept stage, the power heliostats and transfers it to the HTF in the form of tower is taking its first steps into the market with three heat. It is the real core of a power tower system. commercial plants in operation in southern Spain: It is the most technically complex component PS10 and PS20 (11 and 20  MWe, using saturated because it has to absorb the incident radiation steam as heat transfer fluid) and Gemasolar (17 under very demanding concentrated solar flux MWe, using molten salts as HTF). Sierra SunTower, conditions and with minimum heat loss. Receivers a 5-MWe plant in Lancaster, California (US), started can be classified either by their configuration, as operation in 2009 using a multi-tower Solar Field. flat or cavity systems; or by their technology, as tube, volumetric, panel/film and direct absorption To date, more than 10 different experimental power systems. Super Alloys or ceramics are the usual tower plants have been tested worldwide, generally material for receivers. small demonstration systems between 0.5 and • Structure and Tracker: The solar tracking 10 MWe. Most of them operated in the 1980s. system changes the position of the mirrors on the heliostats, following the apparent position of the A wide variety of heat transfer fluids such as sun during the day and allowing concentrating saturated steam, superheated steam, molten salts, the solar radiation onto the Receiver. Each atmospheric air, or pressurized air can be used. heliostat performs a two-axis tracking with a Temperatures vary between 200 ºC and 1,000 ºC. drive that rotates the mirrors, and a local control that governs it. The structure, in turn, must keep Falling particle receiver and beam-down receiver are the shape and relative position of the elements, other promising technologies but are further from the transmitting the driving force from the tracker, market. and avoiding deformations caused by their own weight or other external forces such as the wind. A power tower Solar Field comprises a variable number of identical heliostats, which reflect the Figure 31 | Main Components of a sunlight toward the receiver. The heat transfer fluid Heliostat temperature will reach 250 to 700 ºC, depending on whether the HTF used is air, steam, molten salt, or other. The main components of a power tower Solar Field are: • Mirrors: Reflecting the direct solar radiation incident on them and concentrating it onto the Receiver, they sometimes are referred to as “facets.” The mirrors are made with a thin silver or aluminum reflective film deposited on a low-iron, highly transparent glass support to give them the necessary stiffness. They are almost identical to the mirrors for Parabolic Trough, differing only in size and shape. Although small heliostats can be Source: Photo courtesy of PSA-CIEMAT. made of flat glass, a slight curvature is necessary15 for larger sizes. 16. The receiver has been included in the Solar Field to keep an analogous structure for all CSP technologies, although in Power 15. Due to nonideal optics, as the sun is not a point focus. Tower systems, it is physically within the power block. Chapter 2 | Solar Component Manufacturing Value Chains | 41 The Power Block of a Power Tower CSP plant Other elements also are necessary, such as piping, resembles that of a Rankine-cycle power plant. The insulation, electric switchgear, and water treatment main difference is that, instead of a combustion equipment. However, these elements are either not or nuclear process, the heat used to generate specific to CSP technology or comprise a minor superheated steam is collected in the Solar Field fraction of the investment costs, and thus have been and transferred using a heat transfer fluid. The main omitted from this report. components of the Power Block are: 2.2.4 DISH/ENGINE SYSTEM • Condenser: It is analogous to the equipment described for Parabolic Trough plants. These systems are small modular units with • Electrical generator: It is analogous to the autonomous generation of electricity. In other words, equipment described for Parabolic Trough plants. each Dish/Engine set has its own Solar Field and Power • Heat exchanger: Two different sets of heat Block, except for the power regulation switchgear. exchangers are required in the Power Block. First, HTF-water heat exchangers (usually referred to as These systems are parabolic three-dimensional SGS, or Steam Generation System) are required to concentrators (thus requiring 2-axes tracking) with generate the high-pressure and high-temperature high concentration ratios (600–4,000), and a Stirling steam that will drive the Turbine. This set will not be engine or Brayton mini-turbine located at the focal necessary if steam is used as HTF. Second, water- point, using hydrogen, helium, or air as working fluid. water heat exchangers are used to recover the heat Current Dish/  Engine systems range from 3 kWe from turbine bleeds to preheat the condensate or (Infinia) to 25 kWe (Tessera Solar). Their market niche feed water, thus increasing the Rankine cycle is both in distributed/on-grid and remote/off-grid efficiency. If a molten salt TES system is included, power applications. a reversible, molten salt-HTF heat exchanger also is necessary, unless the very molten salt is used as Because the design of Dish/Engine systems is HTF. Carbon steel and stainless steel are required modular, they can compete with PV to serve the same for their manufacture, as well as copper and applications. Typically, stand-alone PV systems are aluminum in smaller amounts. being used for rural electrification or electricity supply • Pumps: It is analogous to the equipment in remote water pumping stations. Power capacity in described for Parabolic Trough plants. these kinds of applications normally ranges from a • Steam turbine: It is analogous to the equipment few tenths to several hundred kilowatts. described for Parabolic Trough plants. • Storage tanks: It is analogous to the equipment However, besides the higher investment costs for described for Parabolic Trough plants. Dish/Engine compared to photovoltaic systems, other concerns need further technical development, The state of the art in the field of Thermal Energy for instance, engine reliability. Storage (TES) is to use molten salts. The most common mixture used for this purpose, “Solar salt” is Two decades ago, Dish/Engine Stirling systems, composed of sodium nitrate (NaNO3) and potassium with concentration factors of more than 3,000 suns nitrate (KNO3). As described above, this salt is and operating temperatures of 750 ºC, already had stored in two tanks (one “cold” and one “hot”), and demonstrated their high conversion efficiency at a reversible heat exchanger is used to move energy annual efficiencies of 23 percent and 29 percent from the Solar Field and to the Power Block. This peak (Stine and Diver 1994). However, Dish/Engine heat exchanger is not necessary if the molten salt is systems have not yet surpassed the pilot project used directly as HTF. plant operation phase. 42 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 32 | Main Components of a Dish/ sizes. A different approach can use a reflective Engine System layer coating a flexible film, which is given the parabolic shape through vacuum. • Receiver: Dish/Engine receivers can be smaller versions of those used in Power Tower systems. However, simpler versions exist adapting the heater tubes of a Stirling engine, although it is hard to integrate multiple cylinder engines (Adkins and others 1999). On the other hand, liquid- sodium, heat-pipe solar receivers solve this issue by vaporizing liquid sodium on the absorber Source: Photo courtesy of PSA-CIEMAT. surface, which condenses on the engine’s heater tubes. This system enables the receivers to reach more uniform temperatures, although complexity A Dish/Engine Solar Field comprises a variable and cost are higher as well. number, from one to dozens, of reflective elements or • Structure and Tracker: The solar tracking system “facets” in the shape of a paraboloid or “dish.” Each changes the position of the collector following the dish can rise the temperature of a certain amount of apparent position of the sun during the day, thus working fluid from the “cold” to the “high” operation allowing concentrating the solar radiation onto temperature (up to 850 ºC). The main components of the Receiver. Each collector performs a two-axes a Dish/Engine solar collector are: tracking with a drive that rotates both the dish and the Receiver, and a local control that governs it. • Mirrors: Reflect the direct solar radiation incident The structure, in turn, must keep the shape and on them and concentrate it onto the Receiver relative position of the elements, transmitting placed in the focal point of the dish. The mirrors can the driving force from the tracker, and avoiding be made with a thin silver or aluminum reflective deformations caused by their own weight or film deposited on a low-iron, highly transparent other external forces such as the wind. The high glass support to give them the necessary stiffness precision required, together with the weight of and parabolic shape. They are similar to the the set receiver plus engine, and the necessity mirrors for Parabolic Trough, differing in size and to prevent the “arm” holding the receiver from shape. Although small facets can be made of flat blocking too much light make this a demanding glass, a slight curvature is necessary17 for larger task. 17. Due to nonideal optics because the sun is not a point focus. Chapter 2 | Solar Component Manufacturing Value Chains | 43 Figure 33 | Schematic Showing the Operation of a Heat-Pipe Solar Receiver Source: Adkins and others 1999. The Power Block of a Dish/Engine CSP collector is • Turbine or engine: Design and manufacturing a compact set comprising the Receiver described of a turbine and compressor for a Brayton cycle above plus either a Stirling engine, or a Brayton requires special materials and alloys and a highly turbine and a compressor. The main components of specialized workforce. These are available to the Power Block are: only a limited number of companies around the world. In this case, however, the small size of • Electrical generator: Induction generators are the equipment required increases the range of used on Stirling engines tied to an electric utility possible manufacturers. Stirling engines are less grid. They are off-the-shelf items and can provide demanding, and the main expected issue (the single or three-phase power with high efficiency. high precision required in the piston fabrication) is For turbines, a different approach might be probably solvable if the country has motor vehicle advisable. The high-speed output of the turbine industries. Carbon steel, stainless steel, and can be converted to high frequency alternate special alloys are required for its manufacture. current in a high-speed alternator, converted to direct current by a rectifier, and then converted to Dish/Engine systems have not been conceived 50 Hz or 60 Hz power by an inverter. with Thermal Energy Storage as a guiding • Heat exchanger: No heat exchanger is necessary principle, although experimental approaches using per se because the heat transfer takes place at thermochemical energy storage have been made the engine heater tubes. (García Iglesias 2012). 44 | Local Manufacturing Potential for Solar Technology Components in Egypt Other elements also are necessary, such as wiring, An overview of the main PV technologies follows: insulation, and electric switchgear. However, these elements are either not specific to CSP technology • Crystalline silicon (cSi) modules or comprise a minor fraction of the investment costs, – Single-crystalline silicon (scSi) and thus have been omitted from this report. – Multi-crystalline silicon (mcSi) • Thin Film (TF) modules: – Amorphous (aSi) and Micromorph (µcSi) silicon – Cadmium-Telluride (CdTe) 2.3 Photovoltaic (PV) – Copper/Indium Sulfide (CIS) and Copper/ Value Chain Indium/Gallium di-Selenide (CIGS). This group of technologies converts solar energy Although thin films are relatively new to the PV directly into electricity using the photovoltaic effect. industry, they are reaching noticeable market share. When solar radiation reaches a semiconductor, the Their rise has been slowed in recent years due to electrons present in the valence band absorb energy a decrease in silicon prices, but they have kept a and, being excited, jump to the conduction band stable market share despite the PV market growth and become free. These highly excited, nonthermal (Fraunhofer ISE 2012). electrons diffuse, and some reach a junction in which they are accelerated into a different material by a Conversion efficiency, defined as the ratio between built-in potential (Galvani potential). This acceleration the produced electrical power and the amount of generates an electromotive force, thus some of the incident solar energy per second, is one of the main light energy is converted into electric energy. Unlike performance indicators of PV cells and modules. CSP, solar PV can use all radiation (direct and diffuse) Table 11 lists the current efficiencies of different PV that reaches the system. commercial modules.18 The basic building block of a PV system is the PV TABLE 11 | CONVERSION EFFICIENCIES cell, which is a semiconductor layer that converts OF DIFFERENT PV COMMERCIAL solar energy into direct-current electricity. PV cells MODULES (%) are interconnected to form a PV module, typically Crystalline silicon Thin film (TF) 50-200 Watts (W). The PV modules combined with (c-Si) a set of additional application-dependent system sc-Si mc-Si a-Si/ CdTe CIS/ µc-Si CIGS components (such as inverters, batteries, electrical components, and mounting systems), form a PV 14-20 13-15 6-9 9-11 10-12 system. PV systems are highly modular, that is, Source: Frankl and Nowak 2010. modules can be linked together to provide power ranging from a few watts to tens of megawatts (MW). R&D and industrialization have led to a portfolio of available PV technology options at different levels of maturity. Commercial PV modules may be divided into two broad categories: waferbased crystalline silicon (cSi) and thin films. 18. This is the range of optimum values. When selecting a technology influence of angle, temperature, and diffuse direct irradiation share must be compared. A one-year simulation of the system is recommended. Chapter 2 | Solar Component Manufacturing Value Chains | 45 The large variety of PV applications enables a range Chips for electronic devices share many of the of different technologies to be present in the market, resources and manufacturing processes with PV with a direct correlation between cost and efficiency. elements, especially if silicon-based. However, the Note that the lower cost (per watt) to manufacture purity level required for solar cells is “five nines” some of the module technologies, namely, thin films, (99.999 percent Si), whereas electronicgrade silicon is partially offset by the higher area-related system must be “nine nines.” costs (support structure, required land, and wiring, due to their lower conversion efficiencies). Figure 34 | PV Solar Energy Value Chain 46 | Local Manufacturing Potential for Solar Technology Components in Egypt 2.3.1 CRYSTALLINE SILICON In 2006 REC (Renewable Energy Corporation TECHNOLOGIES ASA) announced construction of a plant based on fluidized bed technology using silane. This 2.3.1.1 POLYSILICON process operates at lower temperature and does In the first step to make solar cells, the raw not generate by-products. Furthermore, unlike the materials—silicon dioxide of either quartzite19 Siemens Process, which is a batch process, this gravel (the purest silica) or crushed quartz—are first process uses fluid bed technology which can be run placed in an electric arc furnace, to which a carbon arc continuously. The purity is lower but is still enough is applied to release the oxygen. This simple process for solar applications. Other similar processes exist yields commercial brown Metallurgical Grade silicon with different advantages and drawbacks. Examples (MG-Si) of 97 percent purity or better, useful in many are the Vapor-to-Liquid Tokuyama deposition; or industries but in not the solar cell industry. even totally different chemical refinement processes starting with MG-Si that blow different gases through MG-Si is purified by converting it to a silicon the silicon melt to remove the impurities. compound that can be more easily purified by distillation than in its original state, and then converting that silicon compound back into pure silicon. Trichlorosilane (TCS, HSiCl3) is the silicon compound most commonly used as the intermediate, although silicon tetrachloride (SiCl4) and silane (SiH4) also are used. As an example, in the Siemens process (Schweickert 1957), high-purity silicon rods are exposed to trichlorosilane at 900 to 1,150  ºC. Electronic-grade purity silicon can be obtained; however, to do so, requires an expensive reactor as well as a great amount of energy. Figure 35 | Polysilicon Manufacturing Value Chain 19. Quartzite, not to be confused with the mineral quartz, is a metamorphic rock formed from quartz-rich sandstone that has undergone metamorphism. Chapter 2 | Solar Component Manufacturing Value Chains | 47 2.3.1.2 INGOTS/WAFERS The wafers are then polished to remove saw marks; Solar-grade purified polysilicon can be cast into state-of-the-art manufacturing processes try to square ingots and undergo the wafering process optimize light absorption by surface micromachining to directly produce mc-Si cells. For sc-Si cells of the polished wafer. manufacturing, the atomic structure of the silicon must be dealt with first. Doping the wafers is required for cell manufacturing.21 However, certain doping techniques must be In the more widely used (Bullock and Grambs 1981) undergone during ingot manufacturing. For crystalline Czochralski method, the pure polysilicon is melted silicon, some dopants can be added in the crucible again. Then a silicon seed single-crystal is put into a during the Czochralski process. The doping of Czochralski growth apparatus, where it is dipped in a polycrystalline silicon does have an effect on the crucible of molten silicon. The seed crystal rotates as resistivity, mobility, and free-carrier concentration. it is withdrawn, forming a cylindrical “ingot” or “boule” Nevertheless, these properties strongly depend on of very pure silicon with a singular crystal orientation. the polycrystalline grain size, which is a physical parameter that the material scientist can manipulate. The wafering process starts from the ingot, either Through the methods of crystallization to form single-crystal or poly-silicon. Wafers are sliced with a polycrystalline silicon, an engineer can control the multi-wire saw. A diamond saw produces cuts that size of the polycrystalline grains, thus varying the are as wide as the wafer—0.5 millimeter thick. About physical properties of the material. one-half of the silicon is lost20 from the ingot to the finished circular wafer—more if a single-crystal wafer is then cut to be rectangular or hexagonal. Figure 36 | Ingot/Wafer Manufacturing Value Chain 21. Doping means the introduction of impurities into the semiconductor crystal to deliberately change its conductivity 20. Silicon waste from the sawing process can be recycled into due to deficiency or excess of electrons.” Wikipedia, http://www. polysilicon, but a greater part of the energy is not recovered. halbleiter.org/en/waferfabrication/doping/. 48 | Local Manufacturing Potential for Solar Technology Components in Egypt 2.3.1.3 C-SI CELLS fine “fingers” and larger “bus bars” are screen-printed Single-crystal wafer cells tend to be expensive, and onto the front surface using a silver paste. After the because they are cut from cylindrical ingots, do not metal contacts are made, the solar cells are given completely cover a square solar cell module without connections such as flat wires or metal ribbons and a substantial waste of refined silicon. On the other encapsulated, that is, sealed into silicone rubber or hand, multicrystalline silicon or polycrystalline silicon ethylene vinyl acetate (EVA). (mc-Si or poly-Si) is made from cast square ingots, large blocks of molten silicon carefully cooled and Figure 37 | c-Si Cell Structure solidified. These cells are less expensive to produce than single-crystal silicon cells but also are less efficient. The single-crystal wafers usually are lightly p-type doped. To make a solar cell from the wafer, a surface diffusion of n-type dopants (boron and/ or phosphorus) is performed on the front side of the wafer. This forms a p–n junction a few hundred nanometers below the surface. One of the key processes in silicon surface 2.3.1.4 C-SI MODULES micromachining is the selective etching of a sacrificial The encapsulated solar cells are interconnected and layer to release silicon microstructures. Improving placed into an aluminum frame that has a BoPET the surface texturing is one of the factors required (Biaxially oriented Poly-Ethylene Terephthalate) or to increase the solar cell short-circuit current, and PVF (Poly-Vinyl Fluoride) back sheet and a glass hence the solar cell conversion efficiency due to the or plastic cover. Front and rear connections are enhanced absorption properties of the silicon surface channeled through the junction box. (Xiao and Xu 2011). 2.3.2 THIN-FILM TECHNOLOGIES Because pure silicon is shiny, it can reflect up to 35 percent of the sunlight. To reduce the amount of 2.3.2.1 TF MODULES sunlight lost, an anti-reflective coating is put on Three main types of thin-film modules can be the silicon wafer. The most common coatings used described: thin-film silicon22 (TF-Si), cadmium to be titanium dioxide and silicon oxide. However, telluride (CdTe), and copper-indium-(gallium) amphid silicon nitride is gradually replacing them as the anti- films (CIS/CIGS). reflection coating because of its surface passivation qualities. Actual commercial solar cell manufacturers Unlike crystalline modules, the manufacturing process use silicon nitride because it prevents carrier of thin-film modules is a single process that cannot recombination at the surface of the solar cell. be split. Two different manufacturing approaches can be considered: The wafer then has a full area metal contact made on the back surface. The rear contact also is formed by screen-printing a metal paste, typically aluminum. The paste is then fired at several hundred degrees Celsius to form metal electrodes in ohmic contact 22. Three different technologies lie within this term: amorphous silicon (a-Si), micromorph silicon (mc-Si), and tandem thin films with the silicon. A grid-like metal contact made up of (a-Si + mc-Si). The third is the most advanced development. Chapter 2 | Solar Component Manufacturing Value Chains | 49 • “Superstrate” approach: For CdTe and TF-Si CIS/CIGS and, in some recent developments, TF-Si modules, the manufacturing process starts on the can be manufactured on a transparent conductive front glass superstrate. organic film instead of on glass by means of low- • “Substrate” approach: For CIS/CIGS modules, temperature deposition techniques. The resulting the manufacturing process starts on the rear soda flexible modules are especially useful for building- lime glass substrate. integrated applications (BIPV). 2.3.2.2 SOLAR GLASS Solar glass can be defined depending on the final use (Figure 38). Figure 38 | Types of Solar Glass 50 | Local Manufacturing Potential for Solar Technology Components in Egypt General requirements can be defined for any of the • Indium precursors: Zinc ores are the primary following applications: source of indium, in which it is found in compound form. • Tight tolerances in overall dimensions, warp • Gallium precursors: Do not occur in nature, but • Surface quality, smoothness and planarity to as the gallium (III) compounds in trace amounts in avoid coating problems bauxite and zinc ores. • Edge shape and quality required for assembly • Durability and small loss of properties with aging 2.3.3 COMMON TECHNOLOGIES • Reliability and repeatability. 2.3.3.1 SUPPORT STRUCTURE 2.3.2.3 TF MATERIALS The structure must keep the shape and relative The main materials required for TF modules are: position of the modules, avoiding deformations caused by their own weight or other external forces • Transparent conductive oxides (TCO): Tin and/ such as the wind; and transmit the driving force from or zinc oxides, with dopants such as cadmium the tracker, if included. Welded, hot-dip galvanized or aluminum. Indium tin oxide (ITO, or tin-doped carbon steel frames are the usual choice, although indium oxide) yields a better performance, but its aluminum structures can be used in building- cost also is higher. integrated applications for which weight is an issue. • Molybdenum: Mined as a principal ore, and also is recovered as a byproduct of copper and 2.3.3.2 INVERTER tungsten mining. An electrical power converter changes direct current • Cadmium sulfide (CdS): Occurs in nature as to alternating current. Solid-state inverters have rare minerals, but is more prevalent as an impurity no moving parts. They are used in a wide range of substituent in similarly structured zinc ores, which applications from small switching power supplies in are the major economic sources of cadmium. computers to large electric utility high-voltage direct • Cadmium telluride (CdTe): Does not occur in current applications that transport bulk power. nature and is obtained from its base elements, cadmium and tellurium. Cadmium occurs as a Grid-tied inverters are designed to inject electricity minor component in most zinc ores and therefore into the electric power distribution system. Such is a byproduct of zinc production. The principal inverters must synchronize23 with the frequency of source of tellurium is from anode sludge produced the grid, and include safety features such as anti- during the electrolytic refining of blister copper. islanding protection. • Cadmium chloride (CdCl2): Does not occur in nature. Anhydrous cadmium chloride can be The manufacturing of the inverter is similar to prepared by the action of anhydrous chlorine or any electronic device based on semiconductor hydrogen chloride gas on heated cadmium metal. technologies. • Copper sulfide (CuS): Copper sulfides describe a family of chemical compounds and minerals with the formula CuxSy, both minerals and synthetic. • Selenium precursors: Selenium is found impurely in metal sulfide ores, in which it partially replaces the sulfur. 23. During the stakeholder interviews performed by the consultant group during the mission in Cairo, one stakeholder mentioned that European standard inverters could be troublesome when connected to the Egyptian grid and require reprogramming to comply with frequency tolerances. Chapter 2 | Solar Component Manufacturing Value Chains | 51 2.4 Current Status of value chain would be one in which the technology Manufacturing Value Chains is sufficiently mature and established to enable its commercial development; in which production takes place in different countries rather than being limited To assess the current status of the solar components to just 1 or 2 countries; in which there are enough value chains, five qualitative parameters have been competitors present to provide healthy competition considered: but not so many as to lead to over-competition; in which the upstream value chain is well structured • Technological maturity: Accumulated track record and unlikely to lead to bottlenecks; and in which the versus expectation of paradigmatic changes demand-to-offer ratio is stable or growing, rather • Number of competitors than shrinking and troubled by overproduction. • Upstream bottlenecks, either recent, current, or expected The detailed criteria used for the assessment are • Geographic dispersion of manufacturing facilities presented in Table 12. • coolDemand-to-offer ratio. These criteria have been applied to each of the solar The robustness of the value chain is constrained by the component manufacturing industries considered in lowest value obtained in the parameters. Under this this report. Results are shown in Table 13 and Table definition of robustness, the most robust component 14 for CSP and PV, respectively. TABLE 12 | CRITERIA USED FOR THE QUALITATIVE ASSESSMENT Technological Number of Upstream Geographic Demand-to- Robustness maturity competitors bottlenecks dispersion offer ratio ● Newcomer Oligopoly Shortage Few Shrinking Weak + Demo Several Alternatives Several Stable Medium ++ Established Many Unlikely Many Growing Strong TABLE 13 | QUALITATIVE ASSESSMENT OF MANUFACTURING VALUE CHAINS-CSP Technological Number of Upstream Geographical Demand- Robustness Maturity Competitors Bottlenecks Dispersion to-Offer Ratio Condenser ++ ++ ++ ++ ++ ++ Electrical ++ + ++ + ++ + Generators Heat Exchanger ++ ++ ++ ++ ++ ++ HTF Pumps ++ + ++ + ++ + CSP HTF Oil + ? + ? ++ ? Mirror + + ++ + ++ + Pumps ++ ++ ++ ++ ++ ++ Receiver + ? + ? + ? Solar Salt + ? ? ? ++ ? Steam Turbine ++ ? ++ + ++ ? Storage Tank ++ ++ ++ ++ ++ ++ Structure & + ++ ++ ++ ++ ++ Tracker 52 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 14 | QUALITATIVE ASSESSMENT OF MANUFACTURING VALUE CHAINS-PV Technological Number of Upstream Geographical Demand- Robustness Maturity Competitors Bottlenecks Dispersion to-Offer Ratio Cells ++ + ? ++ ? ? Ingots/Wafers ++ + ? ++ ? ? c-Si Modules ++ ++ ? ++ ? ? PV Polysilicon ++ + ++ + ? ? Solar Glass + + ++ ++ + + TF Materials + + + + ++ + TF Modules + ++ + ++ ++ ? Inverters ++ ++ ++ ++ ++ ++ Structures ++ ++ ++ ++ ++ ++ The following solar industries have been found to and a highly specialized workforce, available to a lack robustness: limited number of companies globally. • The Cells, Ingots/Wafers, and c-Si Modules • The HTF oil industry is dominated by a small industries suffer from similar problems. They number of competitors (large chemical companies have been constrained in the recent past by such as Dow Chemical and Solutia) that focus upstream bottlenecks due to silicon shortages. their manufacturing facilities in a few countries. The industrial sector overcompensated this issue. • The Receiver industry is in a similar situation, being Now the ratio Demand/Offer is shrinking, and in hands of a few companies (Schott, Siemens- there is overcapacity in the sector. Competitors Solel) with scarce manufacturing facilities (some are ready to cover actual and future demand Chinese companies are entering the market). without delay or incurring new investments. The manufacturing capacity grew rapidly, and • The Polysilicon industry also is suffering from the the market has slowed. However, these trends overcapacity in the c-Si sector. can change if new CSP markets (for example, in MENA, South America, or China) start developing. At the international level, the remaining component • The Solar Salt industry also is dominated by industries can, in different degrees and based on two main companies (SQM and Haifa) with differing strengths and weaknesses, be considered manufacturing restricted to their respective robust. The following chapter will evaluate Egypt’s countries. An additional drawback is that because manufacturing base and potential competitiveness solar salt is a mining product, it is not possible to to participate in solar component manufacturing change the manufacturing location in the medium value chains. By cross-checking Egypt’s assets with or long term. This restriction could cause an component industries’ needs, this report will suggest a upstream bottleneck if problems with production, set of component industries to be developed in Egypt. transportation, or any other issues occur. • The design and manufacturing of a Steam Turbine requires special materials and alloys Chapter 2 | Solar Component Manufacturing Value Chains | 53 54 PART B | Detailed Assessment of Egypt’s Existing Manufacturing Base and Its Potential to Participate or Dominate the Solar Component Manufacturing Value Chains 55 3 CHAPTER 3: Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains 3.1 Country Context Figure 39 | Egypt’s Population Pyramid, 2012 3.1.1 GEOGRAPHIC LOCATION Egypt is located in Northern Africa. It borders the Mediterranean Sea between Libya and the Gaza Strip, and the Red Sea north of Sudan; and includes the Asian Sinai Peninsula. This location permits Egypt to have control of the Sinai Peninsula and Suez Canal and dominance over Nile basin issues. 3.1.2 POPULATION AND ECONOMY Source: U.S. CIA 2012. Egypt is the third most populated country in Africa with more than 85 million people (U.S. CIA 2012) With a GDP of US$229.5 billion, Egypt is the third concentrated in 3 main areas: Cairo; Alexandria; and largest economy in North Africa and the Middle East, the Nile, the Nile Delta, and the Suez Canal. Egypt after Saudi Arabia and the United Arab Emirates has a young population, with a median age of 24.6 (World Bank 2012b). The Egyptian economy is years and 88.8 percent under 55 years old (U.S. CIA diversified. About half of its GDP (47 percent) 2012). Men make up 50.6 percent of the population, corresponds to the service sector, which includes the and women 49.4 percent (U.S. CIA 2012). public sector, tourism, and the Suez Canal. Tourism is highly dependent on political developments in the area, which have had a negative impact since 2011. On the other hand, Egypt also has a large industrial sector, which contributes 37.4 percent of GDP and attracts foreign direct investment (FDI) (U.S. CIA 2012). 56 | Local Manufacturing Potential for Solar Technology Components in Egypt The constant and significant growth of the Egyptian led to significant increases in GDP per capita. population has been an obstacle to increasing GDP However, due to the international financial crisis and per capita. However, the good performance of the to the country’s political context, the rate of growth, Egyptian economy over the fiscal years 2006-07 and while still positive, slowed to 1.8 percent in fiscal year 2007-08, during which growth exceeded 7 percent, 2010-11. Figure 40 | Evolution of GDP (left) and Rate per Capita (right) in Egypt, 2003-11 7000 90 8 90 6000 80 80 7 Rate of growth (annual %) Population (millions) Population (millions) 70 70 5000 6 60 60 4000 5 50 50 USD 40 4 3000 40 30 3 2000 30 20 2 20 1000 10 1 10 0 0 0 0 GDP per capita, PPP (current international USD) GDP per capita growth (annual %) Population, total GDP growth (annual %) Population, total 3.1.3 ELECTRICAL SECTOR Figure 41 | Egyptian Electricity Generating Capacity Sources (%) In 2009 Egypt had an electrification rate of approximately 99.6 percent (World Bank 2011). Although this is one of the highest rates in Africa, with 100 percent access to electricity in urban areas and 99.3 percent in rural areas, approximately 300,000 Hydroelectric people in Egypt still lack access to electricity. plants 11% Egypt is the largest oil producer on the continent that is not member of the OPEC (Organization of Other renewable Petroleum Exporting Countries). It also is the second (mainly wind) largest natural gas producer in Africa after Algeria. 2% In 2010 Egypt’s electricity generation reached 137 Fossil fuels billion kWh (U.S. EIA 2010). Nearly 90 percent of 87% its electricity derived from traditional fossil fuels, with the remainder coming mainly from hydropower (Figure 41). Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 57 Despite being a production leader, Egypt’s oil Figure 42 | Total Oil Production and consumption is increasing much faster than its Consumption in Egypt, 2001-10 production. Domestic oil consumption has grown by over 30 percent during the last decade, leading to an increase in Egypt’s imports of both crude oil and refined petroleum products. Egypt meets 95 percent (U.S. DOE NREA 2011) of its overall oil needs through production, importing the rest from third countries. Source: U.S. EIA 2010. Figure 43 | Existing and Future Renewable Projects in Egypt IBRD 40919 ARAB REPUBLIC OF EGYPT EXPERIMENTAL AND PILOT PROJECT SITES: EXISTING AND FUTURE 1 Rasgareb wind farm (1968) 2 Crushed ice manufacturing (1990) RENEWABLE PROJECTS 3 Pumping water for irrigation using PV (1990) CITIES AND TOWNS 4 Pilot project for solar heating industry (1990–2002) GOVERNORATE CAPITALS 5 Experimental wind project for double wind-diesel systems (1992) NATIONAL CAPITAL 6 Experimental wind farm in Hurgada (1992) RIVERS 7 Typical village electrification with solar generator using direct PV (1993) GOVERNORATE BOUNDARIES INTERNATIONAL BOUNDARIES 8 Power plant capacity of 5MW at Hurgada (1993) 9 Two lighting projects in the North Coast cells and photovoltaic arrays (2010) GOVERNORATES IN NILE DELTA: EXISTING SITES: 1 KAFR EL SHEIKH 2 DAMIETTA 10 Zafarana wind farm (2000–2010) 3 PORT SAID 4 ALEXANDRIA 11 Solar power station with combined cycle capacity 140MWW (2010) 5 BEHEIRA FUTURE SITES: 6 GHARBIYA 7 DAGAHLIYA 12 Gabal Et-Zeit wind station 8 MENOUFIYA 9 SHARGIYAH 13 North Gabal Et-Zeit wind station 10 QALIUBIYA 11 ISMAILIA 14 East Nile wind station This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information 15 West Nile wind station shown on this map do not imply, on the part of The World Bank GSDPM Map Design Unit Group, any judgment on the legal status of any territory, or any 16 Kom-Ombo station for generation electricity using solar concentrator 100MW endorsement or acceptance of such boundaries. 25°E 30°E WEST BANK 35°E AND GAZA M e d i t e r r a n e a n S e a Salum 9 Marsa Matruh Kafr el 2 Damietta Alexandria 1 Sheikh Port Said El'Arish Libyan Plateau 5 Damanhur El Mansura 3 ISRAEL 4 6 Tanta 7 9 JORDAN Zagizig Shibin el Kom 7 8 Ismailia NORTHERN 11 5 Benha 10 SINAI 30°N CAIRO 30°N Qattara Giza 3 10 Suez Depression 4 6th of October Helwan Taba Qara El Fayoum HELWAN Siwa 2 SUEZ EL FAYOUM SOUTHERN MARSA MATRUH 11 13 SINAI Aqaba Gu BENI SUEF Beni Suef Abu Zenima lf AL MINYA 12 of Gulf of Su 6TH OF OCTOBER SAUDI ez Al Minya Ras Gharib El Tur 15 1 ARABIA E a 14 LIBYA s t AL BAHR 8 N ile ASSIUT Assiut Al Ghurdaqah e r AL AHMAR 6 n Riv Bir Seiyala W e s t e r n e Sohag r SOHAG D e L i Qena Quseir . Desert s e b y QENA Red Luxor r t A L WA D I Mut . El-Kharga LUXOR (city) a n 25°N AL JADID Marsa 'Alam 25°N ASWAN D e Kom Ombo 16 Aswan Dam Aswan s e r Sea Lake 0 50 100 150 200 Kilometers t Nasser ARAB REPUBLIC 0 50 100 150 Miles OF EGYPT Halaib SUDAN 25°E 30°E 35°E JULY 2015 Source: Based on Egypt NREA 2011. Re-created by World Bank Cartography, July 2015. 58 | Local Manufacturing Potential for Solar Technology Components in Egypt Determined to diversify the energy mix and to improve Egypt aims to increase the share of RE to 20 percent the efficiency of electricity production, the Egyptian of the energy mix by 2020, which will include 12 government is planning to invest in its power sector percent through wind energy, 5.8 percent through over the next decade. Under existing plans, Egypt hydro, and 2.2 percent through solar (Egypt NREA hopes to produce 20 percent of its electricity from 2012). While the solar target was conservative until renewable energy by 2020, while also developing a last year, in late 2012 the government announced the nuclear power industry (U.S. EIA 2010). new, more ambitious targets of the 2027 Plan—2,800 MW of CSP and 700 MW of PV—as well as indicative 3.1.4 CURRENT SITUATION intermediate targets for both technologies by 2020. Egypt’s economy is facing tough hurdles characterized by the growing budget deficit—which has grown by Figure 44 | Solar Energy Egyptian 59 percent in the last 5 years from 6.8 percent of GDP Target, 2012-27 in 2008 to 10.8 percent of GDP in 2012—combined MW with the national currency devaluation, the drop in 3000 tourism and the reduction in foreign investment. 2500 3.1.4.1 STRUCTURE OF THE SOLAR 2000 Information provided by Ministry of Electricity during November ENERGY SECTOR 1500 Workshop CSP PV 1000 Egypt possesses land, solar resource, and wind Kom-Ombo project target 500 speeds that make suitable the development of renewable energies (REs) including wind, solar, 0 2012 2017 2020 2027 and biomass. For solar energy development Source: Egypt NREA 2012. specifically, Egypt’s maximum annual global horizontal irradiation (GHI) and direct normal irradiation (DNI) are equal to 6.6 kWh/m2/day and 8.2 kWh/m2/ Recent reports have highlighted that Egypt’s solar day, respectively. These rates are the highest in the development program still lacks a targeted vision MENA Region. In fact, Egypt is one of the areas with and incentive system, as well as a specialized the best resource globally (U.S. DOE NREL n.d.). agency with the skills and experience to make the However, REs in Egypt are still a new market, with plan a reality (AfDB 2012). Nonetheless, Egypt’s solar 550 MW of wind installed capacity and 20 MW24 sector already has a significant number of active of solar thermal installed capacity (Egypt NREA 2011). players (Figure 45). 24. As part of Kuraymat integrated solar combined cycle power plant. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 59 Figure 45 | Map of Stakeholders Involved in the Solar Energy Sector 60 | Local Manufacturing Potential for Solar Technology Components in Egypt Of these actors, the policy makers play particularly In 2012, 37.4 percent of Egypt’s GDP was due to key roles: the industrial sector, almost 5 percent more than in Morocco and 8 percent more than in Tunisia. • The Ministry of Electricity and Energy (MoEE) is responsible for electricity generation, transmission, At the same time, Egypt has a developed service and distribution. It also recommends the pricing sector. This sector, although it is not the focus of this of electricity to the cabinet for the pricing of study, is worth mentioning because of the country’s petroleum products to be recommended by the important trajectory in plant engineering. The latter Ministry of Petroleum (MOP). has been developed largely through companies • The New and Renewable Energy Authority (NREA) including PGESCo and EPS, and construction falls under the umbrella of the MoEE. NREA is a services through companies including Orascom. The specialized energy agency that has developed presence of such companies is a singularity in the solar energy projects in the past, including the Middle East and North Africa (MENA) Region so may hybrid plant, Kuraymat, which has capacity for 20 help Egypt become a Regional supplier of services MW solar and 120 MW natural gas. in the solar industry as well as a manufacturer of selected solar component industries. Figure 46 shows the key sectors of industrial activity 3.2 Egyptian Industrial in Egypt, whose total production value totaled Sector US$4,278,000 in 2009 (Egypt IDA 2009). Unlike other African economies, Egypt has a low Industrial sector production values in Egypt vary dependency on agricultural production. It has a widely by activity (Figure 46). The total production diverse industrial sector dominated by the steel values of the engineering and electronic and industry, automobile, construction, and consumer electrical industries double the investment costs. goods (Figure 46). In contrast, production values for the electricity and power production and distribution industry are Figure 46 | GDP Composition by Sector approximately five times less than the investment (%) costs of the same industry (Egypt IDA 2009). 100% 90% 80% 70% 60% Services 50% Industry 40% Agriculture 30% 20% 10% 0% Morocco Egypt Tunisia Source: U.S. CIA 2012. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 61 Figure 47 | Production Value and Investment Costs According Activities Source: Egypt IDA 2009. Geographically, in 2009, only 5 governorates––Cairo, Alexandria, Giza, Qalyubia, and Al Shariquia–– contributed more than 68 percent of the total production value for the industrial sector (Figure 48). 62 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 48 | Industrial Sector Production Value by Egyptian Governorate (US$) IBRD 40944 ARAB REPUBLIC OF EGYPT INDUSTRIAL SECTOR PRODUCTION VALUE BY EGYPTIAN GOVERNORATE ARAB REPUBLIC OF EGYPT CITIES AND TOWNS Industrial Sector Production Value: GOVERNORATE CAPITALS > $5,000 million NATIONAL CAPITAL RIVERS $2,000 – $5,000 million GOVERNORATE BOUNDARIES $1,000 – $2,000 million INTERNATIONAL BOUNDARIES $500 – $1,000 million GOVERNORATES < $500 million IN NILE DELTA: 1 KAFR EL SHEIKH 2 DAMIETTA 3 PORT SAID 4 ALEXANDRIA 5 BEHEIRA 6 GHARBIYA This map was produced by the Map Design Unit of The World Bank. 7 DAGAHLIYA The boundaries, colors, denominations and any other information 8 MENOUFIYA shown on this map do not imply, on the part of The World Bank 9 SHARGIYAH GSDPM Map Design Unit Group, any judgment on the legal status of any territory, or any 10 QALIUBIYA endorsement or acceptance of such boundaries. 11 ISMAILIA 25°E 30°E SYRIAN A.R. M e d i t e r r a n e a n S e a WEST BANK AND GAZA Marsa Matruh 2 Damietta Kafr el Alexandria 1 Sheikh Port Said El'Arish Damanhur El Mansura 3 ISRAEL 4 6 Tanta 7 9 JORDAN Zagizig 8 Ismailia Shibin el Kom NORTHERN 11 5 Benha 10 SINAI 30°N Giza CAIRO 30°N Suez 6th of October Helwan El Fayoum HELWAN SUEZ EL FAYOUM SOUTHERN MARSA MATRUH SINAI Aqaba Gu BENI SUEF Beni Suef lf AL MINYA of Gulf of Su 6TH OF OCTOBER SAUDI ez Al Minya El Tur ARABIA LIBYA AL BAHR N ile ASSIUT Assiut Al Ghurdaqah AL AHMAR Riv er Sohag SOHAG Qena QENA Red A L WA D I El-Kharga LUXOR (city) 25°N AL JADID 25°N ASWAN Aswan Dam Aswan Sea Lake Nasser 0 50 100 150 200 Kilometers 0 50 100 150 Miles SUDAN 25°E 30°E 35°E JULY 2015 Source: Egypt IDA 2009. Re-created by World Bank Cartography, July 2015. 3.2.1 IMPORTS AND EXPORTS 21.7 percent each year, reaching US$59.3 billion in 2011, resulting in a trade deficit of US$28.5 billion A diversified industrial sector and strategic location (UN Comtrade n.d.). Figure 49 shows this shift in the that controls the Sinai Peninsula and Suez Canal trade balance. has enabled Egypt to become a major North African economic power. Egypt’s main exported commodities are petroleum products, petroleum oils (other than crude), Egypt’s economy depends on petrochemical exports petroleum gases and other gaseous hydrocarbons to European nations, which are a major source of its and petroleum oils, and oils obtained from bituminous foreign income. Since 2007, petroleum exports have minerals. Its top export partners are India, Italy, and increased by 17.5 percent per year, reaching US$30.8 Saudi Arabia. billion in 2011. However, total imports increased by Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 63 Figure 49 | Egypt’s Total Imports, Exports, and Trade Balances, 1997-2011 (US$ bil) Source: UN Comtrade n.d. Egypt has little local capacity in the solar sector to date 3.2.2 MATERIAL FOR SOLAR (20 MW Kuraymat plant). However, due partly to the COMPONENT: STEEL availability of materials and related industries, Egypt has the potential to develop local manufacturing for Egypt has the largest steel industry in Africa and different components in the solar value chain. In this Middle East. The country produces locally three context, the following industries are detailed below: main types of steel: carbon steel, stainless steel, and steel, float glass, high technology and inverters, heat special steel. After several years of strong demand exchangers, pumps, storage tanks, and condensers. growth, steel consumption in Egypt has decreased, leaving the potential supply higher than demand. Due to this situation in the steel market, and to protect the local economy, Egypt had reduced its import tariffs for most industrial products in 2004. Nevertheless, in 2012 the Ministry of Industry and Foreign Trade announced that protective tariffs of 6.8 percent would be applied temporarily on imported steel rebars (Ahramonline 2012). 64 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 50 | Egyptian Import Tariffs, 2010 (%) Source: AFI 2010. The market leader in Egypt is Ezz Steel. TABLE 15 | EXAMPLES OF RELEVANT STEEL MANUFACTURERS IN EGYPT (MT) Main Companies Factories Products Production Capacities in Egypt Ezz Steel Rebars (ESR) 4 factories: Alexandria, Rebar 5.8 million tons per year Sadat City, Suez, 10th Wire of Ramadan city Flat Suez Steel 3 factories; Attaka Billets 2.5 million tons per year (Suez) Rebars Wire rod in coils Spooled bars Cut and bend Other National Steel 1 factory Steel structure 120,000 tons annually Fabrication 6th of October factory Steel collector ( total combined elements (Solar energy production Egypt and applications) Algeria) Plate works Source: Manufacturers’ websites. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 65 3.2.3 MATERIAL FOR SOLAR Egypt’s three main float glass companies––Saint- COMPONENT: FLOAT GLASS Gobain, Sphinx, and Guardian–– have production facilities (Table 16). Egypt is one of the glass industry pioneers in the MENA Region and in the rest of Africa. Egypt has 3.2.4 MATERIAL FOR SOLAR an experienced labor force in the glass industry. It COMPONENT: CABLING, HIGH also has several mines producing high purity silica TECHNOLOGY AND INVERTERS sand used for different industries including glass production. In the high technology domain, Elsewedy Electric is the leading integrated cables and electrical products manufacturer in the Middle East and Africa. TABLE 16 | EXAMPLES OF RELEVANT FLOAT GLASS MANUFACTURERS IN EGYPT Company Factories Products Production Capacities Egyptian Glass One in El Sharkia InGlass Interior Glass Company (EGC) SunGuard Architectural -Guardian Glass ClimaGuard Residential Glass EcoGuard Energy Glass Technical Glass Sphinx Glass One factory in Sadat Clear Float Glass Annual capacity of City (Menofia) Tinted float glass 200,000 tons Pyrolytic Reflective Glass PPG products Saint-Gobain One factory in Ain El Clear glass Capacity of production Sokhna Tinted glass of 900 tons/day. Total area: 750,000 Reflective glass square meters Source: Manufacturers’ websites. 66 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 17 | EXAMPLES OF RELEVANT HIGH TECHNOLOGY COMPONENTS MANUFACTURERS IN EGYPT Company Factories Products Production capacities Elsewedy Electric More than 23 factories Wires and cables around the World Electrical products Energy measurement Telecom ABB Head office in Cairo Solar inverters Solar Power Solutions Solar Thermal Systems Siemens Branch office in Smart Grid Alexandria Transformers Energy automation Schneider 5 manufacturing Motor and motion facilities in 10th of control Ramadan City, 100,000 photovoltaic sq m power compensation and filtering power monitoring and control power protection and control Source: Manufacturers’ websites. 3.2.5 MATERIAL FOR SOLAR However, it is important to note here that, despite COMPONENT: HEAT EXCHANGERS, synergies, pump manufacturing for the conventional PUMPS, STORAGE TANKS, AND industry differs from pump manufacturing for solar CONDENSER industries. Egypt has a developed conventional pumps market. Total import value of all segments of water pumps rose by 7 percent in 2010, reaching US$100 million, which was still less than the value in 2008, when it reached US$142 million (BCI 2011). Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 67 TABLE 18 | EXAMPLES OF RELEVANT PUMPS MANUFACTURERS IN EGYPT Company Factories Products Production Capacities Egyptian Arab Pumps 1 factory, Cairo Vacuum pumps Loura Daoud pumps Water pumps Allweiler-Farid Pumps 6 branches distributed Power plants 280 employees geographically to cover Irrigation systems the whole area of Egypt Oil, gas, and mining Source: Manufacturers’ websites. Pressure vessels, storage tanks, piping work, and heat exchangers are being manufactured by Ferrometalco and other companies with experience in local manufacturing of steel such as the Orascom Group and the Egyptian Iron and Steel Co. TABLE 19 | EXAMPLES OF RELEVANT CONVENTIONAL MATERIAL MANUFACTURERS IN EGYPT Company Factories Products Production capacities DSD Ferrometalco Belbeis, total area of Pressure vessels 50,000 tons/year 320,000 sq m Storage tanks Piping work Heat exchangers Egyptian Iron and Steel Heliopolis Workshop, Manufacture spare parts 447,392 tons produced Company (HADISOLB) 20,000 square meters as requested in 2012 Steel structures Manufacturing Orascom Group Five in Egypt: Power plants Petrochemicals Industrial Source: Manufacturers’ websites. 68 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 51 | Examples of Relevant Raw Material Industries in Egypt IBRD 40945 Mediterranean Sea ARAB REPUBLIC OF EGYPT EXAMPLES OF RELEVANT RAW MATERIALS INDUSTRIES CAIRO STEEL FLOAT GLASS Area of Map LIBYA CONVENTIONAL GOVERNORATES ARAB REPUBLIC Red IN NILE DELTA: Sea HIGH TECHNOLOGY OF EGYPT 1 KAFR EL SHEIKH Source: Manufacturers’ websites. 2 DAMIETTA 3 PORT SAID CITIES AND TOWNS 4 ALEXANDRIA 5 BEHEIRA GOVERNORATE CAPITALS 6 GHARBIYA NATIONAL CAPITAL 7 DAGAHLIYA RIVERS 8 MENOUFIYA 9 SHARGIYAH GOVERNORATE BOUNDARIES 10 QALIUBIYA INTERNATIONAL BOUNDARIES 11 ISMAILIA SUDAN M e d i t e r r a n e a n S e a Damietta 2 1 Kafr el Port Said El'Arish Alexandria Sheikh 3 Damanhur El Mansura 6 7 Tanta 9 4 Zagizig NORTHERN Shibin el Kom Ismailia 8 SINAI Benha 11 5 10 CAIRO Giza Suez MARSA MATRUH 6th of October Helwan HELWAN El Fayoum SUEZ EL FAYOUM SOUTHERN Beni Suef SINAI Gu lf 6TH OF BENI SUEF Abu Zenima of OCTOBER Su ez Ras Gharib AL MINYA El Tur Al Minya 0 50 100 Kilometers This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 0 25 50 Miles GSDPM Map Design Unit Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. JULY 2015 Source: Manufacturer’s website. Re-created by World Bank Cartography, July 2015. production factors, demand factors, risk and stability 3.3 Egypt’s Manufacturing factors, and business support factors. Competitiveness The analysis showed that Egypt’s key strengths from 3.3.1 INTRODUCTION the point of view of solar industrial development are in production factors. The reasons are due The previous stage of this analysis is the particularly to the low cost of labor and energy “Competitiveness Assessment of MENA Countries for industrial consumers; the availability of to Develop a Local Solar Industry” (World Bank materials for solar industries, particularly glass, 2012a). The assessment made a benchmark analysis steel, and stainless steel; and the country’s high to identify the potential to develop different solar manufacturing ability. Due to Egypt’s planned component industries in the different MENA countries. deployment of solar energy up to 2020,25 its competitiveness associated with demand factors Egypt’s existing competitiveness for the solar also is strong. component manufacturing value chain was analyzed according to 12 competitiveness parameters 25. The intermediate objectives of the Egyptian solar plan, as communicated by the Ministry of Electricity and Energy, are 1,100 organized within 4 main competitiveness categories: MW for CSP and 200 MW for PV. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 69 Figure 52 | Competitiveness Parameters Data gathered during the mission carried out in in Egypt Compared to Benchmark and Cairo in April 2013 have been combined with desk MENA Averages review and bibliographic research to dive deeply into Egypt’s potential. The mission focused on four key types of stakeholders: policy makers, private companies in key sectors, institutions, academia, and associations. The results of the meetings have been kept confidential and have been aggregated to show relevant aspects. Source: World Bank 2012a. 3.3.2 PRODUCTION FACTORS 3.3.2.1 PRODUCTION FACTORS – LABOR MARKET 70 | Local Manufacturing Potential for Solar Technology Components in Egypt In the MENA Region, Egypt is competitive in terms of However, since Egypt already has a solid base of labor cost––a significant advantage and opportunity qualified professionals, the labor market situation (Figure 53). is seen more as an opportunity for Egypt than an unsolvable barrier. For example, Cairo University Figure 53 | Egyptian Employee Wage is ranked as 1 of the world’s 500 best universities Average by Industry, 2009 (US$) (Center for World-Class Universities of Shanghai Jiao Tong University 2012). It ranks above many relevant Australian, Canadian, and European universities. All stakeholders interviewed during the mission, including policy makers, industry representatives, associations, and institutions, stated that capacity can be built upon existing foundations through new trainings and specialization. It would be valuable to extend this training also to installers and other technical (nonengineering) positions. Source: Egypt CAPMAS 2010. Egypt also can become a knowledge exporter to The key barriers identified in the labor market are: address the challenge of unemployment, which increased by 3.5 percent in 2011. Implementing this • Lack of technical knowledge of solar-energy- strength is particularly important for youth, whose related component design and manufacturing. average unemployment lasts almost 3 years (34 • Upstream: Lack of preparation for solar projects months) (WEF 2012). development; downstream: lack of qualification for downstream operation and maintenance (O&M). Qualification would make possible a pipeline of projects. • Absence of specialized centers to train and develop specific skills. • Low productivity. 3.3.2.2 PRODUCTION FACTORS – MATERIAL AVAILABILITY Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 71 To date, Egypt’s local manufacturing for the solar Moreover, should demand for a particular material industry has focused on assembling imported (such as steel for CSP or PV structures) suddenly components. However, during the mission in Cairo, shoot up due to the development of a solar component local sector experts expressed their confidence in industry, current local availability might not be enough the local availability of almost all primary materials to meet the full additional demand. In such a case, and components required to manufacture solar some materials would have to be imported while components, including steel and float glass. local capacities were being developed. For float glass, additional investments would be required to fulfill CSP and PV market needs. Current Egyptian float glass production in Egypt manufactures glass with an iron content that would not be immediately compliant with CSP or PV requirements. 3.3.2.3 PRODUCTION FACTORS – RELEVANT MANUFACTURING ABILITY During the Cairo mission, different stakeholders development of different solar components from the brought up Egypt’s promising automotive industry value chain. The lack of quantification of the country’s as an example of a successful industrial sector and own potential was cited as a common concern by a possible opportunity to replicate. This sector is different stakeholders during the mission. Egypt of particular interest because of its synergies with already has begun demonstrating its ability in solar the solar CSP industry. At the same time, Egypt projects with the development of the Kuraymat already has a series of important industries for the Integrated Solar Combined Cycle Power Plant. 72 | Local Manufacturing Potential for Solar Technology Components in Egypt 3.3.2.4 PRODUCTION FACTORS – ENERGY (INDUSTRIAL PERSPECTIVE) In the past, electricity subsidies in Egypt have kept Industrial consumers have experienced tariff hikes in electricity prices artificially low. Although they bring the last year. In the case of the most energy-intensive other risks,26 at first sight, subsidies appear to be a industries, the tariff hikes were accompanied by a competitive advantage to private industrial investors, 50 percent hike in the price of electricity consumed particularly for energy-intensive industries. However, during a defined 4-hour peak period (EgyptERA n.d.). this picture is changing because energy costs are Along the same lines, a plan by the Egyptian electricity increasing for industrial consumers. regulator to put in place a series of barriers to high- energy-consumption companies may hamper the future development of energy-intensive industries. 3.3.2.5 PRODUCTION FACTORS – FINANCIAL COSTS 26. From the point of view of the country, subsidies to energy consumption introduce tensions in the system, because they veil the true price signal to electricity consumers and may lead to adverse economic and environmental impacts. In other words, the sustainability of these artificially low costs can be perceived as an investor risk. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 73 In the last 5 years, the Egyptian interest rate has Figure 54 | Lending Interest Rate remained above 10 percent (Figure 54), reaching in Egypt (%) 16 percent in 2012 for small/medium companies.27 This interest level makes it difficult for small/medium 18% companies to invest due to the high pay-back. 16% 14% 12% 10% 8% Information provided 6% by local stakeholders 4% 2% 0% 2008 2009 2010 2011 2012* Lending interest rate (%) Source: World Bank 2008-11. 3.3.3 DEMAND FACTORS 3.3.3.1 DEMAND FACTORS – COMPONENT DEMAND 27. As detailed by several stakeholders during the mission in Cairo in April 2013. 74 | Local Manufacturing Potential for Solar Technology Components in Egypt It is positive that Egypt already has targets in place of visibility and lack of a clear mechanism in place to until 2027, and intermediate targets until 2020, incentivize the projects were seen by all stakeholders showing the government’s engagement with solar as the clearest barriers to fulfilling demand. energy development in the country Policy makers are already considering different Figure 55 | Egyptian Solar Energy alternatives that could stimulate demand for renewable Target, 2012-27 (MW) energy (RE). Alternatives include both price-based and MW quantity-based instruments. Examples are Build Own 3000 and Operate (BOO), project bidding, the establishment 2500 of a feed-in tariff or premium, the implementation 2000 of quotas/Green Certificates, or the development CSP 1500 PV of a tender mechanism (Table 20). However, these 1000 mechanisms to guarantee demand and give visibility to 500 the pipeline are not in place yet. Some of the ideas that are being considered, such as net metering, require 0 2012 2017 2020 2027 local capabilities (certified installers) to be deployed Source: Egypt NREA 2012. before they can be applied on a large scale. Due to the limited electricity supply capacity, a market In the meetings with local industry experts during for off-grid solar energy may emerge, not only for the Cairo mission, the predominant opinion was that remote areas but also as back-up systems to face (a) current market conditions are substantially more possible supply cuts. risk-adverse than in the past. Therefore, (b) a higher degree of certainty of future demand (for 4-5 years, These opportunities notwithstanding, there is no at least) is required for the industry to invest. visibility into the pipeline to meet this target. This lack TABLE 20 | INCENTIVE MECHANISMS FOR RENEWABLE ENERGY Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 75 3.3.4 RISK AND STABILITY FACTORS 3.3.4.1 RISK AND STABILITY FACTORS – RISK ASSOCIATED WITH DOING BUSINESS If Egypt is able to develop local solar component On the other hand, multiple stakeholders during industries, there is an opportunity for the country to the mission in Cairo brought up the current lack become a main exporter to African countries. In this of promotion of foreign investment in Egypt. FDI sense, there is already some government support for will have to be encouraged to attract international such exports, which could represent an opportunity partners and technology providers and to more for the solar industry. One example of this support is rapidly develop solar energy. that Egypt assumes half of transport costs to African countries for all industries.28 3.3.4.2 RISK AND STABILITY FACTORS – FINANCIAL RISK 28. As detailed during the mission to Cairo in April 2013. 76 | Local Manufacturing Potential for Solar Technology Components in Egypt Due to current market conditions, access to credit is In terms of opportunities, it is worth highlighting tighter now than in the past. As mentioned by several that the industrial sector is showing creativity. Some stakeholders during the mission to Cairo, tighter credit industrial players are exploring the possibility of has resulted in high interest rates of up to 16 percent developing new relationships with banks as partners for small and medium industrial enterprises. Difficulty in projects rather than simply as lenders. There is at in accessing international currency also is proving a least one alternative to traditional bank: the Federation challenge because it makes importing materials and of Egyptian Industries (FEI), an association that offers components for different industries harder. soft loans with low administrative fees and a one- year grace period. 3.3.5 BUSINESS FACTORS 3.3.5.1 BUSINESS FACTORS – INDUSTRY STRUCTURE The most common barrier highlighted by In this sense, the opportunities lie in identifying stakeholders during the mission in Cairo was the and stimulating the synergies among the different lack of collaboration among different themselves, stakeholders to design a plan to achieve common specifically among policy makers, industrial players, goals. and research centers. Chapter 3 | Egypt’s Manufacturing Base and Potential to Participate in Solar Component Manufacturing Value Chains | 77 3.3.5.2 BUSINESS FACTORS – INNOVATION CAPACITY The common view presented by stakeholders during center would be (c) to function as the link between the mission was that Egyptian companies are not innovation and commercial or industrial opportunities prioritizing R&D. The result is that, to solve problems to ensure that the needs and interests of industrial when they arise, the stakeholders and the companies players are aligned with the work being done at the often must look for the support of foreign technicians. academic or institute level. This situation could be improved by strengthening the relationship and alignment between the industry It also would be of interest to promote university and research center/academic resources, which is agreements with international universities specialized the other common barrier cited. in solar energy and solar industry components. Departments could put in place collaborations with One opportunity specifically to improve R&D for international universities and invite international experts the solar sector is to develop a technical innovation and faculty members to become part of the panels. center specialized in solar energy or to set up collaborations with technology providers. This center Finally, there is the opportunity to launch local could support the development of the solar energy laboratories to certify local products manufactured industry in Egypt. Specifically, it (a) could target in the country to ensure that they meet international technology adaptations to meet grid, temperature, requirements and facilitate exports. and other requirements that are specific to the Region. Having these adaptations then (b) could strengthen Egypt’s position as an exporter of solar components to the Region when compared to other global manufacturers. Another role of this 78 | Local Manufacturing Potential for Solar Technology Components in Egypt 4 CHAPTER 4: Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate were used in an aggregation and weighting model 4.1 Attractiveness of Egypt to give an “Attractiveness” index for each country as a Country and industry studied. These indices would enable comparing, on a quantitative basis, how likely it The previous report (World Bank 2012a) assessed, would be for an international investor to choose among other countries, Egypt’s competitiveness to Egypt as the preferred destination to invest in a solar develop local solar industries. A series of metrics component manufacturing industry. The report’s regarding production factors, demand factors, risk results are summarized in Tables 21-24. and stability factors and business support factors TABLE 21 | NORMALIZED ATTRACTIVENESS INDEX FOR CSP COMPONENT INDUSTRIES (I) Condenser Electrical Heat HTF Pumps HTF Mirror Generator Exchanger Thermal Oil Egypt 0.5 0.5 0.5 0.5 0.5 Chile 0.6 0.7 0.5 0.6 0.6 0.6 China 0.9 0.7 1.0 0.8 0.7 0.9 Germany 0.9 0.9 0.8 0.9 0.9 0.9 India 0.7 0.7 0.7 0.7 0.7 0.7 Japan 0.9 0.9 0.9 0.9 0.9 0.8 South Africa 0.7 0.9 0.6 0.8 0.9 0.7 Spain 0.8 0.8 0.7 0.8 0.8 0.8 United States 1.0 1.0 1.0 1.0 1.0 1.0 Average 0.8 0.8 0.8 0.8 0.8 0.8 BENCHMARK Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 79 TABLE 22 | NORMALIZED ATTRACTIVENESS INDEX FOR CSP COMPONENT INDUSTRIES (II) Pumps Receiver Solar Salt Steam Storage Structure & Turbine Tanks Tracker Egypt 0.5 0.5 0.4 0.5 0.5 0.7 Chile 0.6 0.6 0.9 0.7 0.5 0.5 China 0.9 0.8 1.0 0.7 1.0 1.0 Germany 0.8 0.9 0.5 0.9 0.8 0.8 India 0.7 0.7 0.4 0.7 0.7 0.9 Japan 0.9 0.9 0.4 0.9 0.9 0.9 South Africa 0.7 0.7 0.4 0.9 0.7 0.8 Spain 0.8 0.8 0.5 0.8 0.7 0.7 United States 1.0 1.0 0.5 1.0 1.0 0.9 Average 0.8 0.8 0.6 0.8 0.8 0.8 BENCHMARK TABLE 23 | NORMALIZED ATTRACTIVENESS INDEX FOR CRYSTALLINE PV COMPONENT INDUSTRIES Cells Ingots/Wafers Modules c-Si Polysilicon EGYPT 0.5 0.5 0.5 0.5 Chile 0.6 0.7 0.5 0.7 China 0.8 0.7 1.0 0.7 Germany 1.0 1.0 0.9 0.9 India 0.7 0.7 0.7 0.7 Japan 0.9 0.9 0.9 0.9 South Africa 0.7 0.9 0.6 0.9 Spain 0.8 0.8 0.7 0.7 United States 1.0 1.0 1.0 1.0 Average 0.8 0.8 0.8 0.8 BENCHMARK 80 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 24 | NORMALIZED ATTRACTIVENESS INDEX FOR THIN FILM AND COMMON PV COMPONENT INDUSTRIES Solar Glass TF Materials TF Modules Inverter Support Structure Egypt 0.5 0.5 0.5 0.6 0.7 Chile 0.7 0.6 0.5 0.5 0.5 China 0.7 0.9 1.0 1.0 1.0 Germany 0.9 1.0 0.9 0.7 0.9 India 0.7 0.6 0.7 0.8 0.9 Japan 0.9 0.9 0.9 0.9 0.9 South Africa 0.9 0.7 0.6 0.6 0.7 Spain 0.7 0.7 0.7 0.6 0.7 United States 1.0 0.9 1.0 0.9 0.9 Average 0.8 0.8 0.8 0.8 0.8 BENCHMARK A set of “benchmark countries” was used as a 4.2 Entry Barriers and Key reference in the analysis. The results show that Egypt Factors in the Value Chains has an Attractiveness index closer to the average of benchmark countries for the industries of Structure and Tracker (CSP) and Inverter and Support Structure (PV). A paradigmatic manufacturing facility was outlined for each of the industries shown above, regarding average annual capacity, investment and operating costs breakdown, and material and energetic requirements. Perceived entry barriers were identified and have been updated to reflect actual market conditions. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 81 TABLE 25 | BARRIERS TO ENTRY AND KEY FACTORS FOR CSP COMPONENT INDUSTRIES CSP TECHNOLOGIES Condenser Barriers to Entry Key Factors • Guarantees of turbine manufacturer. The • Stainless steel market. Availability, quality, and design of the Condenser is linked to that of price of stainless steel condition the final price the turbine, partly conditioning its design and of the Condenser. performance. Due to this, turbine manufacturers could subcontract the condenser manufacture and include it into their own scope of supply. • Technical barrier: Complex design to achieve • High precision manufacturing under performance. Condenser design must comply international standards. Welder certification, with more constraints than conventional heat quality control, and compliance with exchangers, such as a limited pressure drop international manufacturing standards are in the shell side or a complex heat transfer in necessary to obtain compatibility with other phase-change and vacuum conditions. equipment, safety, and performance in operation. • Highly skilled workforce required. Stainless steel welding and heavy duty machinery handling require specific formation. Electrical Generator Barriers to Entry Key Factors • Technical barrier. Complex design to achieve • Copper market. Availability, quality, and price performance. State-of-the-art generators of copper condition the final price of electrical achieve a mechanical-to-electrical power generator. conversion factor above 99 percent thanks to optimized design and high manufacturing quality. • Fluctuations in copper market. During 2003- • Power electronics. Generator output must 12, the average world price of copper oscillated comply with specifications from the grid between 2,000 and 10,000 US$/t with frequent operator such as frequency, synchronism, variations of up to ±10 percent/month (Riley power factor, answer to power dips. 2012). • Highly skilled workforce required. Heavy duty machinery handling requires specific formation. 82 | Local Manufacturing Potential for Solar Technology Components in Egypt CSP TECHNOLOGIES Heat Exchangers Barriers to Entry Key Factors • Highly skilled workforce required. Steel • Steel market. Availability, quality, and price welding and heavy duty machinery handling of steel condition the final price of the heat require specific formation. exchangers. • High-precision manufacturing under international standards. Welder certification, quality control, and compliance with international manufacturing standards are necessary to obtain compatibility with other equipment, safety, and performance in operation. • Adapt existing industries. It is likely that light- duty heat exchangers or other metal fabrication industries exist in the country. Diversifying their production toward the solar sector would reduce initial investment cost and would profit from skilled workforce. HTF Pump Barriers to Entry Key Factors • Highly skilled workforce required. Carbon, • High-precision manufacturing under stainless steel and bronze casting, machining international standards. Welder certification, and welding, and heavy duty machinery quality control, and compliance with handling require specific formation. international manufacturing standards are necessary to obtain compatibility with other equipment, safety, and performance in operation. • Motor and power electronics. Availability, quality, and price of motors condition the final price of the HTF pumps. It is common to include variable frequency drive controllers for some or all of the pumps within a solar plant. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 83 CSP TECHNOLOGIES HTF Thermal Oil Barriers to Entry Key Factors • Byproduct in chemical industry (phenol) • Adapt existing industries. Diphenyl oxide with large productions (40-600 kt/year). recovery would reduce the waste in an existing Diphenyl oxide occurs in small quantities in phenol plant. Biphenyl can be isolated from phenol manufacturing processes as a mixture crude oil or natural gas, or synthesized in of different compounds that require further a process analogous to that of phenol and purifying. with similar raw materials. Diversifying their production toward the solar sector would reduce initial investment cost and would profit from skilled workforce. • Market dominated by a small number of competitors. Since it is associated with a commodity manufacturing process, only large chemical companies are currently offering this product. • Low market opportunities to sell this product to other industries and sectors. HTF oils currently used for solar applications have a clear niche; however, in other temperature ranges, competing heat transfer fluids exist. Mirror Barriers to Entry Key Factors • Technical barrier. Complex manufacturing line. • Energy. Availability and price of thermal energy State-of-the-art parabolic shaping achieves condition the final price of the mirror. accuracy above 99 percent (measured as reflected light that would reach the focus) thanks to optimized design and high manufacturing quality. • Highly skilled workforce required. Glass • Transport. Transportation of float glass can processing, chemical reagents, and heavy duty raise the final costs by 15 percent (Glass Global machinery handling require specific training. 2012). It is a common practice to avoid road The product itself is fragile. transportation of glass longer than 600 km (Glass for Europe 2012). • Capital-intensive unless integrated in existing • Adapt existing industries. For an existing float float glass. Transportation of float glass can glass factory, diversifying production toward raise the final costs by 15 percent (Glass Global the solar sector would reduce initial investment 2012). Glass for solar applications is a minor cost and would profit from skilled workforce fraction of the overall float glass market. A and developed logistics. typical float glass factory produces 200,000 t/year and must maintain at least 70 percent utilization rate to be profitable (Glass for Europe 2012). 84 | Local Manufacturing Potential for Solar Technology Components in Egypt CSP TECHNOLOGIES Pumps Barriers to Entry Key Factors • Technical barrier. Complex design for molten • High-precision manufacturing under salt pumps. State-of-the-art molten salt pumps international standards. Welder certification, prevent the problems associated with the quality control, and compliance with high melting point of the solar salt thanks to international manufacturing standards are optimized design and high manufacturing necessary to obtain compatibility with other quality. equipment, safety, and performance in operation. • Highly skilled workforce required. Carbon, stainless steel and bronze casting, machining and welding, and heavy duty machinery handling require specific formation. Receiver Barriers to Entry Key Factors • Technical barrier. Highly specialized coating • Transport. It is a common practice to avoid process with high accuracy. Spraying the road transportation of glass products for longer absorptive coating on the inner stainless than 600 km (Glass for Europe 2012). Special steel tube of the receiver requires specialized packaging is required to prevent breakage machinery and a thorough tuning to achieve of the glass cover during transportation and repeatable and high performance and avoid the storage. waste of costly materials. • Technical barrier: Vacuum-tight glass to metal welding process and materials. State-of- the-art glass-metal joints withstand the high vacuum level of the annular space between the glass and the stainless steel tubes, as well as the thermal stress and fatigue of daily heating and cooling cycles, thanks to optimized design, material selection expertise, and high manufacturing quality. • High specific investment for manufacturing process. The high investment necessary increases the exposure in case a competitor develops a more efficient manufacturing process or an alternative product enters the market. • Low market opportunities to sell this product to other industries and sectors. Receivers currently used for CSP applications have a clear niche; however, in other temperature ranges, competing products exist. • Highly skilled workforce required. Stainless steel and glass welding and heavy duty machinery handling require specific formation. The product itself is fragile. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 85 CSP TECHNOLOGIES Solar Salt Barriers to Entry Key Factors • A mineral vein must exist within the territory. • Purity of the vein, valorization of byproducts. Synthetic salt can be manufactured through Nitrates show high solubility, so dissolution in chemical processes; however, current suppliers hot water and additional recrystallization is obtain it as part of a diversified mining industry. a possible way of obtaining them. Impurities with a similar solubility might contaminate the final product. Insoluble salts containing sodium, potassium, or nitrate will reduce overall production. On the other hand, other impurities such as lithium salts, rare earths, or noble metals could prove valuable. Steam Turbine Barriers to Entry Key Factors • Technical barrier: Complex design to achieve • Long-term service agreements and performance. State-of-the-art turbines for solar performance guarantee. A long-term service applications allow for a Rankine cycle thermal agreement is frequently included within the efficiency of nearly 40 percent despite the scope of supply of the turbine, granting the relatively low maximum temperatures, thanks customer technical assistance and original to optimized design and high manufacturing spare parts supply. The manufacturer will give quality. a performance guarantee on the turbine and therefore will suffer economic penalties if the rated values are not reached. • Highly skilled workforce required. Carbon and stainless steel casting, machining and welding, and heavy duty machinery handling require specific formation. • High specific investment for manufacturing process. High investment required increases exposure in case a competitor develops a more efficient manufacturing process, or an alternative product enters the market. Storage Tanks Barriers to Entry Key Factors • Technical barrier. Complex design of molten • Manufacturing under international standards. salt tanks, steam drum, and deaerator. State- Welder certification, quality control, and of-the-art molten salt hot tank design prevents compliance with international manufacturing damage to the foundations. Concurrently, standards are necessary to obtain compatibility it avoids the problems associated with the with other equipment, safety, and performance high melting point of the solar salt thanks to in operation. optimized design and high manufacturing quality. Steam drum and deaerator design must comply with more constraints than conventional storage tanks, such as a complex mass transfer in phase-change conditions. 86 | Local Manufacturing Potential for Solar Technology Components in Egypt CSP TECHNOLOGIES Structure and Tracker Barriers to Entry Key Factors • Hot-dip galvanizing of large structures (>12 • Carbon steel market. Availability, quality, and m) can be a bottleneck. Torque tube-based price of carbon steel condition the final price of collector designs require the galvanizing of a the structure. 12 m long piece (the torque tube itself), and galvanizing baths with the required dimensions are not frequent (Galvanizers Association 2012). • Technical barrier. Complex design to achieve • Transport. Normal packing ratios can be stiffness. State-of-the-art collector design reached for transportation of collector achieves an accuracy of nearly 75 percent structures based on torque box or space frame (measured as reflected light that would reach concepts. For torque tubes, the packing ratio is the focus) thanks to optimized design and lower due to their shape so the transport costs high manufacturing quality. This barrier can can be higher. be overcome through partnerships or license acquisition. • Technical barrier. Complex design of hydraulic • Galvanizing. Availability, quality, and cost of circuit and components. State-of-the-art tracker nearby galvanizing facilities condition the final design achieves a half-acceptance angle better price of the structure. than 0.1º thanks to optimized design and high manufacturing quality. This barrier can be overcome through partnerships or license acquisition. • Adapt existing industries. For existing steel structure factories such as transmission tower factories, diversifying production toward the solar sector would reduce initial investment cost and would profit from skilled workforce and developed logistics. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 87 TABLE 26 | BARRIERS TO ENTRY AND KEY FACTORS FOR PV COMPONENT INDUSTRIES PV TECHNOLOGIES c-Si Cells Barriers to Entry Key Factors • Technical barrier: Highly specialized surface • Vertical integration to achieve competitive treatment (etching). Multiple materials and costs. Integrated companies achieve processes exist for etching (wet, dry) as well as competitive costs while ensuring raw for the previous coating and patterning processes, materials supply and quality. leading to a surface reflectiveness below 5 percent. • High specific investment for manufacturing process. High investment increases exposure in case a competitor develops a more efficient manufacturing process, or an alternative product enters the market. • Overcapacity in the sector, downward pricing pressure, vertical integration in most cells manufacturing companies. Several silicon-related industries have been constrained in the recent past by upstream bottlenecks due to silicon shortages. The industrial sector over-compensated this issue. Now the ratio demand/offer is shrinking, and there is overcapacity in the sector. Competitors are ready to cover actual and future demand without delay and not incur new investments. Vertical integration can be a competitive advantage. • Highly skilled workforce required. Clean atmosphere working, reactive chemicals handling, and specialized machinery require specific formation. c-Si Ingots/Wafers Barriers to Entry Key Factors • High specific investment for manufacturing • Alternative market (electronics) requires process. High investment increases exposure higher purity than solar; additional in case a competitor develops a more efficient purification process required. To access this manufacturing process or an alternative product market, a flexible process could be installed; enters the market. or the higher purity wafers may be used for high performance cells and modules. • Overcapacity in the sector, downward pricing • Vertical integration to achieve competitive pressure, vertical integration in 75 percent of costs. Integrated companies achieve wafer manufacturing companies. Several silicon- competitive costs while ensuring raw related industries have been constrained in the materials supply and quality. recent past by upstream bottlenecks due to silicon shortages. Now the ratio demand/offer is shrinking, and there is overcapacity in the sector. Competitors are ready to cover actual and future demand without delay and not incur new investments. Vertical integration can be a competitive advantage. • Global demand in 2011 covered above 90 percent with already installed capacity of the 5 top suppliers. Newcomers have the burden of fixed costs on their products so they could be less competitive. 88 | Local Manufacturing Potential for Solar Technology Components in Egypt PV TECHNOLOGIES c-Si Modules Barriers to Entry Key Factors • Overcapacity in the sector, downward pricing • Distinguishing features, quality control. pressure, vertical integration in most module With overcapacity in the sector, prices are manufacturing companies. Several silicon-related already low. To gain market share, higher industries have been constrained in the recent past quality, pre- and/or post-sales services by upstream bottlenecks due to silicon shortages. should be offered. Now the ratio demand/offer is shrinking, and there is overcapacity in the sector. Competitors are ready to cover actual and future demand without delay and not incur new investments. Vertical integration can be a competitive advantage. • Vertical integration to achieve competitive costs. Integrated companies achieve competitive costs while ensuring raw materials supply and quality. c-Si Polysilicon Barriers to Entry Key Factors • Technical barrier. Highly specialized deposition • Alternative market (electronics) requires process with high purity. Metallurgical Grade higher purity than solar. Capability to reach silicon (MG-Si) is purified by converting it to a purity (Siemens, others in development). To silicon compound that can be more easily purified access this market, a flexible process could than in its original state, and then converting that be installed, or the higher purity wafers silicon compound back into pure silicon. Several could be used for high-performance cells processes yield solar-grade silicon; electronic- and modules. grade production is less flexible. • High specific investment for manufacturing process. This increases the exposure in case a competitor develops a more efficient manufacturing process, or an alternative product enters the market. • Overcapacity in the sector, downward pricing pressure. Several silicon-related industries have been constrained in the recent past by upstream bottlenecks due to silicon shortages. Now the ratio demand/offer is shrinking, and there is overcapacity in the sector. Competitors are ready to cover actual and future demand without delay and not incur new investments. Vertical integration can be a competitive advantage. • Global demand in 2011 could have been covered with already installed capacity of the 6 top suppliers. Newcomers have the burden of fixed costs on their product so they might be less competitive. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 89 PV TECHNOLOGIES Thin Film (TF) Materials Barriers to Entry Key Factors • Raw material supply depends on existing zinc • Vertical integration or association with zinc and copper industries. Importing is probably and copper industries. TF materials recovery uneconomic due to the low concentration in ores, would reduce the waste in an existing zinc which would lead to high unit transportation costs. and/or copper plant. Diversifying their production toward the solar sector would reduce initial investment cost and profit from skilled workforce. • Transport. Low concentration in ores probably makes unit transportation costs uneconomic. • Purity of final product. Presence of impurities would reduce the performance of the TF Module. • Valorization of byproducts. Traces of precious metals might, if recovered, improve the business model. • TCO: Alternative markets (LCD displays and others). Transparent conductive oxides have an alternative market in liquid crystalline displays manufacturing, with similar requirements. TF Modules Barriers to Entry Key Factors • High specific investment for manufacturing • Vertical integration or association with process. High investment increases exposure existing solar glass line. Integrated in case a competitor develops a more efficient companies achieve competitive costs while manufacturing process, or an alternative product ensuring raw materials supply and quality. enters the market. A coupled manufacturing line would reduce initial investment cost and profit from skilled workforce, as well as avoid intermediate handling costs. • Technical barrier: Highly specialized deposition • R&D to improve performance. Module processes with high purity and thickness control. efficiency is lower in thin films than in Several physical and/or chemical processes are crystalline products; R&D efforts might available. Each allows for different levels of control reduce or even reverse this situation. on thickness, surface properties, and speed; and is more or less suited for combinations of layer and substrate. 90 | Local Manufacturing Potential for Solar Technology Components in Egypt PV TECHNOLOGIES • Overcapacity in the silicon sector has led to prices • Niche market: Weight-constrained below thin films, with higher performance. This applications. Thin films are lighter than higher price may slow the penetration of thin films crystalline modules, both in kg/m2 and in in the PV market, except for niche markets. kg/kW. Wherever weight is an issue (such as mobile applications or nonreinforced rooftops), thin films can be chosen. • Niche market: Flexible substrates. Certain thin films can be deposited on organic flexible substrates. This quality enables their installation on curved surfaces and integration in waterproofing covers. TF Solar Glass Barriers to Entry Key Factors • High overall investment for manufacturing process • Vertical integration or association with due to scale. This high investment increases the existing float glass line. Integrated exposure in case a competitor develops a more companies achieve competitive costs while efficient manufacturing process, or an alternative ensuring raw materials supply and quality. product enters the market. A coupled manufacturing line would reduce initial investment cost and profit from skilled workforce, as well as avoid intermediate handling costs. • Solar glass is usually < 1 percent of total float • For CIS/CIGS: Stable Na composition, glass. Alternative demand (building, automotive) integration of Mo coating. Vertical must exist to achieve, at least, 70 percent integration would allow addressing both capitalization factor. issues. • For CdTe and TF-Si: Integration of TCO deposition to access alternative markets (LCD displays and others). A coupled manufacturing line would reduce initial investment cost and profit from skilled workforce, as well as avoid intermediate handling costs. • Transport. Transportation of float glass can raise the final costs by 15 percent (Glass Global 2012). It is a common practice to avoid road transportation of glass products longer than 600 km (Glass for Europe 2012). • Energy. Availability and price of thermal energy condition the final price of the solar glass. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 91 PV TECHNOLOGIES • Alternative markets: Crystalline modules. General requirements for solar glass also apply to glass covers for crystalline modules, so additional sales might be obtained for c-Si modules manufacturers. Inverter Barriers to Entry Key Factors • Technical barrier: Complex design to achieve • Distinguishing features, quality control. performance. State-of-the-art inverter design Strong competitors exist in the market; to achieves efficiency above 98 percent (SMA Solar gain market share, higher quality, pre- and/ Technology 2012) thanks to optimized design and or post-sales services should be offered. high manufacturing quality. • Most inverter manufacturers are large power • Maximum power point tracking and anti- electronics companies that diversified into the islanding protection. These features are solar market. Diversified companies are less specific for solar inverters, and mandatory sensitive to oscillations in PV market. in cases in which Institute of Electrical and Electronics Engineers (IEEE) 1546657 standard applies. Support Structure Barriers to Entry Key Factors • Technical barrier: Complex design to achieve • Carbon steel market. Availability, quality, reliability and low maintenance for tracker. State- and price of carbon steel condition the final of-the-art tracker design achieves an average price of the support structure. replacement ratio near 2 percent/year thanks to optimized design and high manufacturing quality. • Transport. Normal packing ratios can be reached for transportation of support structures, but the cost can be significant in the final price. • Galvanizing. Availability, quality, and cost of nearby galvanizing facilities condition the final price of the support structures. • Adapt existing industries. For an existing steel structure factory such as transmission tower factories, diversifying production toward the solar sector would reduce initial investment cost and profit from skilled workforce and developed logistics. 92 | Local Manufacturing Potential for Solar Technology Components in Egypt Egypt’s industrial sector has the following capabilities From an industrial point of view, certain component linked to solar component manufacturing necessities: manufacturing lines can be considered as a single development: • Base steel manufacturing: Over 8 million t/year .29 • Float glass manufacturing: Over 400 kt/year.30 • Condenser and heat exchangers: Heat transfer • Electric and power electronics: Global sector equipment leaders31 operate in the country. • Pumps and HTF pumps: Pumping equipment • Pumps and metal fabrication: Several local and • Structure and tracker (CSP) and support structure international companies operate in the country. (PV): Structures. These capabilities might help Egypt’s industrial sector to overcome the entry barriers and take advantage of 4.4 Insight of the the key factors described for some of the CSP and PV industries. The highly skilled workforce required for Suggested Value Chains: several of these industries might be obtained through CSP Industries capacity building programs such as partnerships with technology providers or specialized training courses. 4.4.1 HEAT TRANSFER EQUIPMENT 4.4.1.1 PRODUCTION PROCESS AND FACTORS Several different sets of heat transfer equipment are 4.3 Industries Suggested required in the Power Block. First, HTF-water heat exchangers (usually referred to as the SGS, or Steam Considering the above-mentioned information, the Generation System) are required to generate the high- following industries are suggested for development pressure and temperature steam that will drive the in Egypt: turbine. Second, water-water heat exchangers are used to recover the heat from turbine bleeds to preheat the • CSP: condensate or feed water, thus increasing the Rankine – Condenser cycle efficiency. Third, a condenser liquefies the exhaust – Heat exchangers line of the turbine, requiring a more complex design and – HTF pump affecting the overall performance of the plant. If a TES – Mirror system is included, a reversible, molten salt-HTF heat – Pumps exchanger also is necessary. Carbon steel and stainless – Storage tanks steel are required for their manufacture, as well as – Structure and tracker copper and aluminum in smaller amounts. • PV: – Inverter High temperature and pressure heat exchangers – Solar glass usually are shell-and-tube type. These exchangers – Support structure. comprise the following elements: • Tubes: Heat exchanger tubes often are manufactured to industry standard diameters. • Tube sheet: Tube sheets are constructed from a round, flattened sheet of metal. Holes for the tube 29. Ezz Steel Rebars: 5.8; Suez Steel: 2.5. ends then are drilled for the tube ends in a pattern 30. Saint Gobain: 250; Sphinx Glass: 200. 31. ABB, Elsewedy, Schneider, Siemens. relative to each other. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 93 • Shell: The shell is constructed either from pipe or 4.4.2 MIRROR rolled plate metal. • Head: Heads typically are fabricated or cast. 4.4.2.1 PRODUCTION PROCESS AND FACTORS • Baffles: Baffles usually are stamped/punched, or Mirrors are used to reflect the direct solar radiation machine drilled depending on size and application. incident on them and concentrate it onto the receiver placed in the focal line of the Parabolic Trough Figure 56 | Schematic of a U-Tube Heat collector. The mirrors are made with a thin silver or Exchanger aluminum reflective film deposited on a low-iron, highly transparent glass support to give them the necessary stiffness and parabolic shape. Additional layers protect the silver coating against corrosion and erosion. Figure 57 | Schematic of a CSP Mirror Structure Source: Public domain. 4.4.1.2 MAIN COMPETITORS The following companies have been identified 4.4.2.2 MAIN COMPETITORS as actual or potential suppliers of heat transfer The following companies have been identified as equipment for CSP projects: actual or potential suppliers of Mirrors for CSP projects: • Aalborg CSP: Danish company Aalborg CSP A/S has references of over 250 MWe installed since • AGC Solar: AGC Group, with the Asahi Glass 2008 and over 75 MWe expected for 2013 and Company at its core, is a global business group. 2014. Its main industries are flat glass, automotive • Alfa Laval: Alfa Laval AB is a Swedish company glass, display glass, electronics and energy, and producer of specialized products and solutions chemicals. used to heat, cool, separate, and transport • Flabeg: FLABEG Holding GmbH is a German different products. technology leader in the field of glass finishing. It • Foster Wheeler: Foster Wheeler AG is a global is among the leading global manufacturers of low- conglomerate focused on engineering, procurement, glare mirrors and cover plates for the automotive and construction (EPC) for power facilities. industry, as well as solar and high-tech glass • GEA: GEA Group Aktiengesellschaft focuses on applications. process technology and components for demanding • Guardian: Guardian Industries Corp. is a production processes in various end markets. diversified global manufacturing company • HAMON group: Hamon & Cíe International is with leading positions in float glass, fabricated an engineering and contracting company (EPC) glass products, fiberglass insulation, and other based in Belgium. building materials for commercial, residential, and automotive markets. 94 | Local Manufacturing Potential for Solar Technology Components in Egypt • Rioglass: Created in 1991 in Spain, Rioglass • Duro Felguera: Duro Felguera, S.A. is an has become a significant player in the European international company founded in Spain that automotive glass market. The solar division was specializes in turnkey projects for the industrial and created in 2007. power generation sector, as well as equipment • Saint Gobain: Saint-Gobain S.A. is a French manufacturing. multinational corporation that produces a variety of • IMASA: IMASA Ingeniería y Proyectos, S.A., with construction and high-performance materials. The its headquarters in Oviedo (Spain), is dedicated solar energy division, Saint-Gobain Solar Power, to the implementation of projects and the designs and manufactures mirrors for CSP. maintenance and erection of industrial plants. 4.4.3 STORAGE TANKS 4.4.4 STRUCTURES 4.4.3.1 PRODUCTION PROCESS AND FACTORS 4.4.4.1 PRODUCTION PROCESS AND FACTORS A large number of tanks and pressure vessels are The CSP tracking system changes the position of the required in a CSP plant. They include raw and treated parabolic collector (or the heliostats, in solar tower water storage tanks; the deaerator, steam drum, plants) following the apparent position of the sun and condensate tank for the Rankine cycle; and during the day, thus allowing it to concentrate the the HTF storage, expansion, and ullage vessels and solar radiation onto the receiver. The system consists other minor tanks for sewage and water treatment of a hydraulic (or electric, in solar tower plants) intermediate steps. If a TES system is included, drive unit that rotates the optical element around its molten salt “hot” and “cold” storage tanks also are axis, and a local control that governs it. PV tracking necessary. Carbon steel and stainless steel are systems follow a similar principle (with the PV module required for their manufacture. assuming the role of the receiver), but tolerances are less restrictive in manufacturing and assembly, Most of these tanks are small enough to be because no optical elements are included. manufactured in a workshop and transported, but others such as molten salt tanks must be erected The structure for both technologies must keep onsite. Both the hot tank and the cold tank will be the shape and relative position of the elements, manufactured from steel plates (stainless steel for transmitting the driving force from the tracker and the hot tank and carbon steel for the cold tank), avoiding deformations caused by their own weight or laminated, and curved. other external forces such as the wind. 4.4.3.2 MAIN COMPETITORS Galvanized structural carbon steel is the usual The following companies have been identified as material for the structures. Commercial beam profiles actual or potential suppliers of storage tanks for CSP are cut, welded, and hot-dip galvanized; the same projects: happens for plates. On-site assembly is done by bolting the different pieces together. • Aitesa: Aitesa S.L. is a Spanish company with over 25 years of experience in design and Rack- or crown-and-pinion electric drives are the manufacturing of heat transfer equipment over a most commonly used to move the heliostats and PV wide range of pressures, temperatures, and fluids. systems. For parabolic collectors, a hydraulic drive is • Caldwell Tanks: Caldwell Tanks designs, used due to the heavy loads that must be handled. fabricates, and builds tanks for the water, The shaft manufacturing can be a technical challenge wastewater, grain, coal, and energy industries. due to the tight tolerances required. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 95 Figure 58 | Schematic of CSP Structure and Tracker Manufacturing 96 | Local Manufacturing Potential for Solar Technology Components in Egypt 4.4.4.2 MAIN COMPETITORS plants. Senerthough is one of the most installed The following companies have been identified as collectors worldwide. actual or potential suppliers of structures or some of • Siemens: Siemens AG is a German multinational their key elements for CSP or PV projects: engineering and electronics conglomerate that has increased its solar portfolio including • Albiasa: Albiasa Gestión Industrial, S.L. is a most CSP components such as structures and Spanish group that has developed capital assets trackers, receivers, mirrors, and turbine. engineering, especially in the iron and steel • Other: Because the usual size of PV projects is industry. Albiasa Gestión entered the RE field smaller than for CSP, the market for PV structures through the company ALBIASA SOLAR, SL in is shared with many small and medium local 2004. companies. • Asturfeito: Asturfeito S.A. is a Spanish company specialized in structure and equipment manufacturing. Its subsidiary Asturmatic focuses 4.5 Insight into the in hydraulic, pneumatic, and electric equipment and control systems. Suggested Value Chains: • Gossamer: Gossamer Innovations is a structure PV Industries design company based in the US. Its designs are manufactured through a network of local 4.5.1 INVERTER workshops and suppliers, and have been used in approximately 200 MWe installed capacity. 4.5.1.1 PRODUCTION PROCESS AND FACTORS • Ideas en Metal: Ideas en Metal S.A. is a An electrical power converter changes direct current Spanish company specialized in the design and to alternating current. Solid-state inverters have manufacture of space frames, storage systems, no moving parts and are used in a wide range of and other metal products that are made mainly applications, from small switching power supplies in from sheet and pipe and manufactured in series. computers, to large electric utility high-voltage direct • MADE: Made Torres is part of the Invertaresa current applications that transport bulk power. Group and was established in 1940. It is now an industrial company of reference both nationally Grid-tied inverters are designed to inject electricity and internationally, and is one of the leaders in into the electric power distribution system. Such the manufacture of structures for the CSP sector. inverters must synchronize with the frequency of the Made Torres has supplied approximately 350 grid and must include safety features such as anti- MWe installed capacity. islanding protection. • SBP: Schlaich Bergermann & Partner, based in Stuttgart, is a structural engineering firm that The manufacturing of the inverter is similar to that manages the patent rights on the Parabolic of any electronic device based on semiconductor Trough designed by the EuroTrough consortium,32 technologies. Aside from the electronics, an inverter one of the most installed collectors worldwide. includes a controller to implement anti-islanding and • Sener: Sener Grupo de Ingeniería, S.A. is a maximum power point tracking features as well as Spanish engineering company that has extensive communication ports, harmonic filter, switchgear experience in the development of thermosolar and protections, heat dissipation and a protective enclosure. 32. The companies and research institutions in the EuroTrough consortium are Fichtner Solar, Flabeg Solar International, SBP and DLR (Germany); CRES (Greece); Iberdrola, Abengoa/ Inabensa, and PSA-CIEMAT (Spain); and Solel (Israel). Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 97 4.5.1.2 MAIN COMPETITORS • Ingeteam: Engineering company specialized The following companies have been identified as in power electronics design and inverter actual or potential suppliers of Inverters for PV manufacturing. projects: • Kaco New Energy: Company specialized in solar inverters and monitoring devices. • Danfoss: The Danfoss Group is a global producer • Siemens: Siemens AG is a German multinational of components for the control of electric motors, engineering and electronics conglomerate that HVAC systems, industrial automation, and also manufactures solar inverters and monitoring elements for solar energy such as power inverters devices. and system monitoring devices. • SMA Solar Technologies: Company specialized • Fronius: Fronius is an Austrian company in solar inverters and monitoring devices. specialized in welding equipment, battery loading • Solar Max: Company specialized in solar inverters regulation, and solar inverters and monitoring and monitoring devices. devices. • Gamesa: Gamesa is a Spanish company 4.5.2 SOLAR GLASS manufacturing wind turbines and solar invertors. • GE Energy: General Electric Company, or GE, is 4.5.2.1 PRODUCTION PROCESS AND FACTORS a multinational conglomerate. One of its divisions Solar glass can be defined depending on the final manufactures inverters for solar applications. use (Figure 59). Figure 59 | Types of Solar Glass 98 | Local Manufacturing Potential for Solar Technology Components in Egypt General requirements can be defined for any of these applications. These requirements include: • Tight tolerances in overall dimensions, warp • Surface quality, smoothness, and planarity to avoid coating problems • Edge shape and quality required for assembly • Durability and small loss of properties with aging • Reliability and repeatability. 4.5.2.2 MAIN COMPETITORS The following companies have been identified as actual or potential suppliers of solar glass for PV projects: • AGC Solar: The AGC Group, with the Asahi Glass Company at its core, is a global business group. Its main industries are flat glass, automotive glass, display glass, electronics and energy, and chemicals. • Guardian: Guardian Industries Corp. is a diversified global manufacturing company. It has leading positions in float glass, fabricated glass products, fiberglass insulation and other building materials for commercial, residential, and automotive markets. • Pilkington: Pilkington is a division of Nippon Sheet Glass Co., Ltd., a Japanese company that is one of the world’s largest manufacturers of glass and glazing products for the automotive, architectural, and technical glass markets. • Saint Gobain: Saint-Gobain S.A. is a French multinational corporation that produces a variety of construction and high-performance materials. The solar energy division, Saint-Gobain Solar Power, designs and manufactures mirrors for CSP. • Schott: Originating in Germany, Schott AG is an international technology group with more than 125 years of experience. Their products include components and systems made from specialty glasses and materials. Chapter 4 | Potential Value Chains in Which Egypt’s Manufacturing Sector Could Participate | 99 5 CHAPTER 5: Demand Forecast To set up an industry of the solar supply chain, a Global and European forecasted installed capacity minimum demand should exist so that a threshold includes three scenarios: conservative, moderate, technical and economical production capacity can and optimistic (Figure 60). Modifications were made be reached. This demand can come from the country to the projections in (IEA 2010) to include Algeria and in which the industry is set up (internal demand) or Morocco’s solar plans targets because they were from exports (external demand). disclosed after its publication. A linear hypothesis was considered to determine annual growth. In the long run, the annual installed capacity is the key number to determine whether a manufacturing industry will 5.1 Installed Capacity have a stable demand. The driving force for internal demand is the growth Figure 60 | Global and European CSP of the installed capacity of solar power plants in the and PV Annual Installed Capacity in country. Therefore, a forecast up to 2027 has been Different Scenarios, Average 2008-20 made to deduce the solar component demand for Egypt. 10 Yearly installed capacity, GW/year 7.9 Demand for solar components is not only domestic 8 but also can come from exports to other countries 6 and regions. Thus, demand from four separate regions––neighboring MENA countries, the MENA 4 2.8 Region as a whole, the European Union, and the rest 2 1.3 of the world (ROW)––has been forecast. 0.3 0 Global European The methodology to define the component demand PV Conservative scenario PV Optimistic scenario PV Base case CSP Conservative scenario is based on the forecast installed capacity in each of CSP Base case CSP Optimistic scenario Source: Authors based on IEA 2010. these regions, as per: • Projections to 2020 and 2030 for Europe and the For MENA countries, the European Investment Bank rest of the world (IEA 2010). (EIB), and Egypt’s Ministry of Energy and Mines • Objectives and plans to 2020 and beyond for (MEM) and Ministry of Environment set up a similar each MENA country (EIB 2010), (MEM 2012), scenario, which is called “moderate.” Conservative November 11. and optimistic scenarios were built (Figure 61) following the same proportions as forecasted in The World Energy Outlook 2010 (IEA 2010). For both PV 100 | Local Manufacturing Potential for Solar Technology Components in Egypt and CSP, the moderate scenario was taken as the Figure 63 | PV Annual Installed Capacity baseline for the present analysis. Base Case, 2013-27 25 Annual installed capacity non-MENA, 400 Figure 61 | MENA CSP and PV Installed Annual installed capacity MENA, MW 20 Capacity for 3 Scenarios in 2020 300 15 GW 200 4,000 10 100 5 Installed capacity, MW 3,000 0 0 2,000 1,525 1,600 Egypt Neighboring countries (Jordan and Tunisia) 1,100 Other MENA (Algeria and Morocco) Europe, GW 800 ROW, GW 1,000 450 400 200 300 150 50 0 Algeria Egypt Jordan Morocco Tunisia 5.2 Market Share PV Conservative scenario PV Base case PV Optimistic scenario CSP Conservative scenario CSP Base case CSP Optimistic scenario An initial ramp followed by a stable annual installation The basic scenario hypothesis is that a fraction of hypothesis was used to determine annual growth in domestic, MENA Regional, European, and ROW Egypt, considering the impetus that the Kom Ombo (rest of the world) demand could be met from Egypt, project will give to the sector in 2015. For other if appropriate actions were taken. regions, a linear hypothesis was considered. To evaluate the business models in Task 5, projections After discussion with industry leaders and taking into were continued until 2027. As explained, the annual account the necessity of a track record to supply installed capacity is the reference to determine components in the energy business, the following whether a manufacturing industry will have a stable hypotheses on market share growth were made: demand. 1. Regarding the feasibility for Egypt to be Figure 62 | CSP Annual Installed competitive in the market, three main types of Capacity Base Case, 2013-27 solar component industries are relevant: 2,500 a. Target industries: Those for which Egypt is Annual installed capacity, MW 2,000 likely to be competitive in the short or medium term, if appropriate actions were taken. 1,500 b. Neutral industries: Those for which Egypt could 1,000 reach a certain market share in the medium or 500 long term, but only through partnerships with technology proprietors or an extensive and 0 expensive research and development process. Egypt Other MENA (Algeria and Morocco) Neighboring countries (Jordan and Tunisia) Europe c. Difficult-to-reach industries: Those with ROW strong entry barriers, such as an oligopolistic market situation, high capital requirements, patent-protected knowledge requirements. No market share has been considered for these industries. Chapter 5 | Demand Forecast | 101 2. The hypothesis of increase in market share is the Figure 64 | Market Share Evolution same for both CSP and PV technologies. for Target Industries until 2027, 3. A domestic market share increase hypothesis Hypotheses (%) for Egypt reaches 80 percent in 2018 for target industries. 100.0% 4. Market share to be supplied by Egypt in Egypt neighboring countries (Jordan and Tunisia) 10.0% Neighboring has been estimated to reach a 5 percent of the countries (Jordan and Tunisia) demand for target industries in 2020. 1.0% Other MENA (Algeria and 5. MENA Regional (Algeria and Morocco) market Morocco) share to be supplied by Egypt has been estimated 0.1% Europe to be a 2.5 percent of the demand for target industries in 2020. ROW 0.0% 6. A residual market share is considered for Europe 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 (1.0 percent) and ROW (0.5 percent) in 2020. 7. Actual market share has been estimated at 25 percent for local demand. No participation in 5.3 Market Volume foreign markets has been considered to date. 8. A linear increase from actual to forecasted market share has been considered. Combining the annual installed capacity with the expected market share, the expected market volume TABLE 27 | MARKET SHARE and, therefore, the demand to be supplied by Egypt’s HYPOTHESES FOR EGYPT (%) manufacturing sector are evaluated. CSP/PV CSP/PV Market Actual Share in 2020, The sales structure is different for CSP and Market Share, Forecasted PV (Figure 65 and Figure 66). CSP demand Estimated Target* is driven primarily by local installed capacity, Local 25.0 80.0 whereas the PV sector is expected to rely on Neighboring 0.0 5.0 exports for more than 60 percent of its volume.33 countries Other MENA 0.0 2.5 countries Figure 65 | CSP Market Volume Base Case, 2012-27 Europe 0.0 1.0 250 ROW 0.0 0.5 228 229 229 229 229 230 231 231 232 233 Market volume in Egypt (MW/year) 200 199 Note: *Target industries are anticipated to reach their forecasted market share in 2018, and stay flat from then on. 150 126 100 50 40 - 1 5 0 Egypt Neighboring countries (Jordan and Tunisia) Other MENA (Algeria and Morocco) Europe ROW 33. This conclusion, if based on the share between PV and CSP defined in the current national planning, thus is sensitive to changes in the energy matrix planning. 102 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 66 | PV Market Volume Base Figure 68 | Market Volume Sensitivity Case, 2012-27 Analysis for PV (MW) 204 MW Market volume in Egypt (MW/year) 200 189 300 176 164 152 141 250 150 132 200 98 100 84 90 67 150 53 50 20 100 11 7 - 50 0 Egypt Neighboring countries (Jordan and Tunisia) 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Other MENA (Algeria and Morocco) Europe ROW TOTAL Conservative Egypt Conservative TOTAL Base case Egypt Base case TOTAL Optimistic Egypt Optimistic Three scenarios can be proposed that accord with the moderate, conservative, and optimistic scenarios Although Egypt’s targets for PV are modest (200 described for the installed capacity forecast. MW in 2020 and 700 MW in 2027), global demand can suffice as a driving force if local manufacturers Figure 67 | Market Volume Sensitivity succeed in foreign markets. Succeeding will require Analysis for CSP (MW) a strong commitment from local entrepreneurs to adapt their production lines to the restrictive quality levels demanded worldwide, because they will have to enter markets in which other companies are well established suppliers. 5.3.1 SALES FORECAST The industries identified in this document for development in Egypt rely on well-known base industries (metal fabrication, steel manufacturing and glassworks), and their target market has grown every year since at least 2007, enabling us to forecast an The combination of Egypt’s ambitious targets for CSP expected sales range for each proposed technology, (1,100 MW in 2020 and 2,800 MW in 2027) and high considering actual prices of solar components. market shares of local components yields a market volume strongly depending on local sales. This local dependence can pose both an advantage, because the familiarity with the local business environment is good for competitiveness, and a disadvantage, because any delay or reduction in Egypt’s Solar Plan will negatively affect the success of industrial initiatives. Chapter 5 | Demand Forecast | 103 TABLE 28 | ACTUAL SALE Figure 70 | Sales Forecast Sensitivity PRICES RANGE CONSIDERED Analysis for CSP Mirrors, 2013-27 (US$ mil) FOR COMPONENTS (US$/KW OF 350 INSTALLED SOLAR POWER) 300 250 CSP Heat transfer equipment 175- 225 200 Mirrors 400- 500 150 Pumping equipment 60- 70 100 Storage tanks 250- 300 50 Structures 600- 800 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 PV 200- 400 Mirrors - Base case Inverter 200- 300 Solar glass 13- 22 The estimated sales price of the pumping equipment 5.3.1.1 CSP TECHNOLOGIES in a CSP plant is US$60-$70/kWh. This price would The estimated sales price of the heat transfer result in an annual market volume of US$10-$40 equipment in a CSP plant is US$175- $225/kW. This million in 2027. price would result in an annual market volume of US$30 million- $130 million in 2027. Figure 71 | Sales Forecast Sensitivity Analysis for CSP Pumping Equipment, Figure 69 | Sales Forecast Sensitivity 2013-27 (US$ mil) Analysis for CSP Heat Transfer Equipment, 2013-27 (US$ mil) 45 40 35 160 30 140 25 120 20 100 15 80 10 60 5 0 40 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 20 Pumping equipment - Base case 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Heat transfer equipment - Base case The estimated sales price of the storage tanks in a The estimated sales price of the mirrors in a CSP CSP plant is US$250-300/kW. This price would result plant is US$400-$500/kW. This price would result in an annual market volume of US$40 million-$170 in an annual market volume of US$50 million-$280 million in 2027. million in 2027. 104 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 72 | Sales Forecast Sensitivity Figure 74 | Sales Forecast Sensitivity Analysis for CSP Storage Tanks, 2013-27 Analysis for PV Solar Glass, 2013-27 (US$ mil) (US$ mil) 6 200 5 180 160 4 140 3 120 100 2 80 60 1 40 0 20 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 0 Solar glass - Base case 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Storage Tanks - Base case 5.3.1.2 PV TECHNOLOGIES 5.3.1.3 STRUCTURES The estimated sales price of the inverters in a PV plant The industries of Structure and Tracker for CSP and is US$200/kW-$300/kW. This price would result Support Structure for PV are considered a single in an annual market volume of US$40 million-$75 manufacturing industry because the techniques and million in 2027. materials employed are similar. Figure 73 | Sales Forecast Sensitivity The prospective demand forecasts are combined, Analysis for PV Inverter, 2013-27 (US$ mil) and the sales prices are considered proportionately. 90 The combined demand would result in an annual 80 70 market volume of US$130 million-$550 million in 60 2027. 50 40 30 Figure 75 | Sales Forecast Sensitivity 20 Analysis for PV and CSP Structures, 10 0 2013-27 (US$ mil) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Inverter - Base case 600 500 400 The estimated sales price of the solar glass in a PV 300 plant is US$13kW-$22/kW. This price would result in 200 an annual market volume of US$2 million-$6 million 100 for 2027. 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Structures - Base case Chapter 5 | Demand Forecast | 105 106 PART C | Existing and Potential Applications of Solar Technology, Solar Components, and/or Solar Energy in Residential, Commercial, Governmental, and Industrial Sectors 107 6 CHAPTER 6: Existing and Potential Applications for CSP Technologies 6.1 Existing Applications 6.1.2 PROCESS HEAT Linear focus concentrators are well suited for process 6.1.1 POWER GENERATION heat plants, in which a Solar Field is used to warm up either a heat transfer fluid (indirect process heat) “Concentrated solar power” is used to describe or a process fluid from the client plant (direct heat). technologies that use the thermal energy from solar This concept is in use, for example, in Chile (Minera radiation to generate electricity. These systems el Tesoro plant) (Abengoa 2013) and in a pilot plant consist of three main subsystems: in Egypt (El Nasr Pharmaceutical) (Fitchner Solar AG 2012). • Solar field (SF), in which mirrors concentrate the sunlight energy and convert it to high-temperature “Process heat” comprises various possible system heat. This thermal energy is transferred using a configurations that require different components, so heat transfer fluid (HTF). Point focus systems the forecasted demand has been described case allow for higher temperatures and efficiencies, by case. although they require two-axis tracking systems. Linear focus systems are less demanding but are less efficient as well. 6.2 Potential Applications • Power block (PB), in which the thermal energy in the HTF generates electricity by producing high-pressure steam, then channels it through 6.2.1 POWER GENERATION a conventional steam turbine and generator in a Rankine cycle. To improve the capacity factor and security of supply, • Thermal Energy Storage (TES) system, in which hybridization of solar energy with other energy excess energy from the SF is stored for later use sources is possible. The approaches in use at utility in the PB. scale are: These systems and their forecasted demand are • Alternative fuel boost: Most CSP commercial described extensively in chapter 4. plants have one or more auxiliary fossil-fueled burners to maintain production levels during transient situations. The existence of auxiliary burners also increases the capacity factor of the plant. 108 | Local Manufacturing Potential for Solar Technology Components in Egypt • Full-scale hybridization: Biomass-solar hybrid • Over 9.8 GW combined cycles, some of which plant developed by Abantia and Comsa Emte could be revamped to integrate a CSP Solar Field at Les Borges Blanques (Spain) can reach its and become ISCC nameplate power during day, and keep up to 90 • Nearly 900 MW gas turbines, which could percent of this value during the night by using a increase their outputs by including a heat recovery biomass boiler. The plant thus achieves capacity steam generator (HRSG) and a steam turbine, factors comparable to those of a 100 percent and a CSP Solar Field, thus becoming also ISCC biomass facility (Abantia and Comsa Emte. 2012). • Almost 13 GW “steam” power plants, mostly The advantage is that the solar energy reduces fueled by heavy fuel oil and natural gas. A solar the fuel consumption of the plant. support also is feasible, either as a solar boost • Solar boost: Coupling a Solar Field allows similar to Kogan Creek; or, if the cycle configuration conventional power plants such as coal, fuel-oil, cannot be adapted further, an auxiliary energy and combined cycles to work at or slightly above source to reduce fuel consumption. their rated power while reducing fuel consumption during daylight. Integrated solar combined cycle Regarding new projects, according to the Egyptian (ISCC) power plants and the Kogan Creek coal Electricity Holding Company (EEHC), 12,400 MW fired power station are in operation using this thermal power projects will be implemented within concept. the Seventh Five-Year Plan 2012-17. Of these, roughly 50 percent will be combined cycle power Kuraymat ISCC power plant has given Egypt a plants (Egypt EEHC 2012). If electricity demand valuable insight into the development, construction, keeps growing steadily a 5 percent/year, as it did and operation of this type of plant. This experience from 2007-11, additional power could be necessary may be valuable as the sector develops in the in the medium term (Table 29). Region and could be replicated. Aside from new developments, Egypt has: TABLE 29 | ELECTRICITY SOLD DURING FISCAL YEARS 2006/2007 TO 2010/2011, BY PURPOSE Energy Sold, by Purpose (GWh) 2007 2008 2009 2010 2011 Industries 34,569 37,045 37,273 38,916 40,702 Agriculture 3,789 4,209 4,617 4,834 4,927 Utilities 4,228 4,380 4,714 5,555 5,759 Public lighting 6,653 6,759 6,982 7,050 6,186 Gov. entities 5,562 5,691 5,563 5,443 5,977 Residential 36,596 40,271 43,811 47,431 51,370 Commercial 7,046 8,240 8,754 9,674 10,238 Subtotal 98,443 106,595 111,714 118,903 125,159 International connections and BOOT7 369 631 903 1,277 1,775 Total 98,812 107,226 112,617 120,180 126,934 Source: Egypt EEHC 2012. Chapter 6 | Existing and Potential Applications for CSP Technologies | 109 Although the average capacity factor of Egyptian – Therefore, to avoid peak demand issues, the power plants is near 65 percent, peak demand installed capacity will need to grow more than issues have occurred during the last few years for 5 percent/year. A 6 percent annual growth has several reasons.34 Recurring peak demand is leading been assumed. to a “fast-track program” to construct gas turbines to • The nonrenewable fraction of the installed meet the peaks. capacity growth can be hybridized with CSP up to 10 percent of its power. Fifty percent of the newly Egypt has a Country Strategy with targets to produce installed plants could be located in suitable places 20 percent of the electricity generated by year 2020 for CSP hybridization. from renewable projects. This generation includes • A five-year delay has been taken into account for 7,200 MW of wind power, 1,100 MW of CSP, and the hybridization of new plants, considering the 200 MW of PV (Egypt NREA 2011). Additional targets additional planning and engineering required. for 2027 exist (3,500 MW solar plan). Figure 76 shows the annual installed capacity required 6.2.1.1 POWER GENERATION-DEMAND to include a solar boost in the new nonrenewable FORECAST power plants. Considering the situations above, the following assumptions were made to estimate future installed Figure 76 | Installed Capacity Needed capacity: to Supply Demand Estimates, and Estimated Solar Boost of New Plants, • The electricity demand will keep growing at 5 2013-27 (MW) percent/year 1,600 • The Country Strategy targets will be fulfilled, 1,400 reaching 20 percent renewable generation in 1,200 1,000 2020. A 30 percent renewable share in 2027 has 800 been considered as well. 600 • Egypt’s actual overall capacity factor is near 65 400 percent (Egypt EEHC 2012). 200 47 48 55 63 65 67 69 71 73 74 - - - - - – A typical, profitable wind farm will reach up to - 35 percent capacity factor. Solar boost, new New, non-renewable – A typical, profitable Parabolic Trough CSP plant with TES will reach up to 35 percent capacity factor. Revamping and improving existing plants also is – A typical, profitable PV plant will reach 15 feasible. The following assumptions have been made: percent-18 percent capacity factor. – A typical, profitable thermal power plant will • Up to 10 percent of actual combined cycles can reach up to 85 percent capacity factor. be adapted for solar boost. This adaptation will – Thus, increasing the renewable share probably increase their output during sunny hours by up to will lower the overall capacity factor. 5 percent, yielding a total solar capacity of nearly 50 MW. • Up to 10 percent of actual gas turbines can become ISCC. This adaptation will increase their 34. Namely, delay in Abu Kir and El Sokhna projects to 2012-13, output a 50 percent due to the steam turbine; and cancelling Newibaa project, and unexpected high temperatures during sunny hours up an additional 5 percent, during summer that increased electricity consumption for air conditioning (EEHC 2012). yielding a total solar capacity of near 30 MW. 110 | Local Manufacturing Potential for Solar Technology Components in Egypt • Up to 10 percent of actual “steam” power plants Figure 77 | Installed Capacity Needed can be adapted for solar boost. Adaptation will to Supply Demand Estimations, and increase their output during sunny hours by up to Estimated Solar Boost of Existing 10 percent, yielding a total solar capacity nearing Plants, 2013-27 (MW) 130 MW. 1,600 25,000 1,400 1,200 24,500 These changes will require extensive engineering. 1,000 Furthermore, to avoid peak demand issues, the 800 24,000 integration needs to be coordinated with the actual 600 400 23,500 production schedule. A five-year delay is anticipated 200 81 83 85 87 89 91 81 11 65 65 73 for the additional planning and engineering. The - - 23,000 overall construction schedule will extend to 2027. Solar boost, new Solar boost, revamp New, non renewable New, non renewable w/o revamp Revamped power TABLE 30 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN POWER GENERATION, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Solar boost, - - - - - - 44 44 52 60 62 64 66 new Solar boost, - - - - - 11 21 21 21 21 21 21 21 revamp Total (MW) - - - - - 11 65 65 73 81 83 85 87 Not all components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. The additional demand will apply to the following CSP components with the weights included beside them: • Heat transfer equipment 6 (new), 0.5 (revamp) • Pumping equipment 9 (new), 0.75 (revamp) • HTF thermal oil 1 (both) • Mirror 1 (both) • Receiver 1 (both) • Storage tanks 0.85 (both) • Structures 1 (both) Chapter 6 | Existing and Potential Applications for CSP Technologies | 111 6.2.2 PROCESS HEAT Additional assumptions are made for the thermal fraction of nonelectrical energy consumption, as well 6.2.2.1 HIGH TEMPERATURE-DISTILLATION as for the temperature level at which that energy is Final energy consumption in Egypt in 2010 amounted demanded. Results of these estimates are shown in over 70 Mtoe (IEA 2012). Considering the shares Table 31 and Table 32. shown in Figure 77 and the electricity consumptions obtained from EEHC (Egypt EEHC 2012), nonelectrical energy consumption is estimated. Figure 78 | Shares of Total Final Energy Consumption in Egypt, 2005 (%) Other 11% Transport 29% Agriculture & Fishing Industries 3% 37% Residential & Services 20% Source: Enerdata 2006. TABLE 31 | ANNUAL THERMAL ENERGY CONSUMPTION ESTIMATES 2010 (GWH)-I Consumption Total Energy Electricity Nonelectrical Thermal Thermal Share Consumption Consumption Energy Energy Energy (%) Fraction Consumption (%) Industries 37 314,735 40,702 274,033 90 246,629 Residential 20 170,127 61,608 108,519 100 108,519 and services Agriculture 3 25,519 4,927 20,592 30 6,178 and fishing Transport 29 246,684 - 246,684 0 - Other 11 93,570 17,922 75,648 50 37,824 112 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 32 | ANNUAL THERMAL ENERGY CONSUMPTION ESTIMATES 2010 (GWH)-II High Medium Low High Medium Low Temperature Temperature Temperature Temperature Temperature Temperature Fraction Fraction Fraction Energy Energy Energy > 250ºc 250<>120ºc < 120ºc Consumption Consumption Consumption (%) (%) (%) Industries 60 30 10 147,978 73,989 24,663 Residential 0 50 50 - 54,259 54,259 and services Agriculture 0 50 50 - 3,089 3,089 and fishing Transport 0 0 0 - - - Other 0 50 50 - 18,912 18,912 Within the “high temperature” fraction, two different • Refineries usually will end up surrounded by uses are considered: auxiliary industries and petrochemical facilities, so the availability of adjacent suitable land will be • Above 400  ºC, which usually requires direct low. Therefore, 5 percent of the refineries’ actual combustion of a fuel thermal energy installed power35 is proposed for • Below 400 ºC, which are suitable for CSP heating. substitution by CSP heating. • These changes will require extensive engineering, The main industrial use that will be considered is the and the integration needs to be coordinated with distillation of crude oil, which takes place at 370 ºC- actual production schedule to avoid business 390  ºC. Egypt has an installed refinery capacity of interruption. A five-year delay has been taken into 726,000 bbl/day (U.S. EIA 2010). account for the planning and engineering, and the overall construction schedule will extend to 2027. 6.2.2.1.1 PROCESS HEAT: DISTILLATION-DEMAND • No additional refining capacity installation has FORECAST been taken into account. Given the above circumstances, the following assumptions were made to estimate future installed capacity: • The typical thermal energy consumption for crude oil distillation is nearly 300 kWh/bbl (Metso 2012). This distillation leads to a thermal energy installed power of nearly 9 GW. 35. A conversion factor of 2.8 is used to assimilate thermal to electrical power to determine component demand. Chapter 6 | Existing and Potential Applications for CSP Technologies | 113 TABLE 33 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PROCESS HEAT FOR DISTILLATION, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thermal - - - 25 49 49 49 49 49 49 49 49 25 power Electric - - - 9 18 18 18 18 18 18 18 18 9 equivalent Not all components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. Therefore, this additional demand will apply to the following CSP components with the weights included beside them: • Heat transfer equipment 0.50 • Pumping equipment 0.25 • HTF thermal oil 1.00 • Mirror 1.00 • Receiver 1.00 • Storage tanks 0.85 • Structures 1.00 6.2.2.2 MEDIUM TEMPERATURE-STEAM • Industrial facilities usually are grouped in industrial PRODUCTION zones, so the availability of adjacent suitable land In 2010 Egypt had a medium temperature thermal will be low. Therefore, 5 percent of their actual energy consumption of nearly 150,000 GWh/year, of thermal energy installed power36 is proposed for which nearly 50 percent was for industrial purposes substitution by CSP heating. (Table 32). • These changes will require extensive engineering, and coordinating the integration with the 6.2.2.2.1 Process heat: Steam production-demand actual production schedule to avoid business forecast interruption. A three-year delay has been taken Given the above-mentioned circumstances, to into account for the planning and engineering. estimate future installed capacity, the following The overall erection schedule will extend to 2027. assumptions were made: • Annual thermal energy consumption growth of 5 percent has been assumed. • The medium temperature thermal energy consumption for industrial purposes was near 75,000 GWh/year in 2010. Assuming an average capacity factor of 85 percent, the thermal energy installed power would be nearly 9 GW. • Given the diverse nature of industrial processes, 60 percent is feasible to adapt for CSP heating. 36. A conversion factor of 2.8 is used to assimilate thermal to electrical power in terms of component demand. 114 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 34 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PROCESS HEAT FOR STEAM PRODUCTION, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thermal - 14 29 30 32 33 35 37 39 41 43 45 47 power Electric - 5 10 11 11 12 13 13 14 14 15 16 17 equivalent Not all components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. The additional demand will apply to the following CSP components with the weights included beside them: • Heat transfer equipment 0.25 • Pumping equipment 0.20 • HTF Thermal oil 1.00 • Mirror 1.00 • Receiver 1.00 • Storage Tanks 0.65 • Structures 1.00 6.2.2.3 LOW TEMPERATURE-DRYING FOOD OR • Industrial facilities usually are grouped in industrial OTHER PRODUCTS zones, so the availability of adjacent suitable land Egypt had a low temperature thermal energy consumption will be low. However, these industries are expected of near 100,000 GWh/year in 2010, of which nearly 25 to be medium to small. Therefore, 45 percent of percent went for industrial purposes (Table 32). their actual thermal energy installed power37 is proposed for substitution by CSP heating. 6.2.2.3.1 Process heat: Drying demand forecast • These changes will require extensive engineering Considering the above circumstances, the following and coordinating the integration with the assumptions were made to estimate future installed actual production schedule to avoid business capacity: interruption. A three-year delay has been taken into account for the planning and engineering. • The low temperature thermal energy consumption The overall construction schedule will extend to for industrial purposes was nearly 25,000 GWh/ 2027. year in 2010. Assuming an average capacity • Annual thermal energy consumption growth of 5 factor of 85 percent leads to a thermal energy percent has been taken into account. installed power of nearly 3 GW. • Twenty percent of the production value for companies registered in IDA (Egypt IDA 2009) is related to companies in the category, “Foodstuff and Beverages.” Given the diverse nature of industrial processes, 40 percent is considered to 37. A conversion factor of 2.8 is used to assimilate thermal to be feasible to adapt for CSP heating. electrical power in terms of component demand. Chapter 6 | Existing and Potential Applications for CSP Technologies | 115 TABLE 35 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PROCESS HEAT FOR DRYING, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thermal - 5 12 12 13 13 14 15 15 16 17 18 19 power Electric - 2 4 4 5 5 5 5 6 6 6 6 7 equivalent Not all components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. The additional demand will apply to the following CSP components with the weights included beside them: • Heat transfer equipment 0.20 • Pumping equipment 0.20 • Mirror 1.00 • Storage tanks 0.35 • Structures 0.75 6.2.2.4 LOW TEMPERATURE-MED DESALINATION South Sinai governorate: Egypt has put in place plans to address water availability issues (Moawad 2004). During 2012-27, • 2012-17: the following new desalination plants or expansion of Sharm El Sheikh (new 10,000 m3/day) existing plants will be carried out: Al Naqab (new 12,000 m3/day) • 2017-22: Red Sea governorate: Abo Redees (new 10,000 m3/day) • 2022-27: • 2012-17: Sharm El Sheikh (10,000 à 20,000 m3/day) North Hurgada (45,000 à 55,000 m3/day) Newaibaa (new 10,000 m3/day) South Hurgada (new 20,000 m3/day) Abo Redees (10,000 à 20,000 m3/day) Al-Qusair (new 9,000 m3/day) New Safaga plant (new 18,500 m3/day) Matruh governorate: New Marsa-Allam plant (3,000 à 6,500 m3/day) New city plants (10,000 à 20,000 m3/day) • 2012-17: Shalateen (3,500 à 5,000 m3/day) Al Barany (new 5,000 m3/day) • 2017-22: Al Saloom (new 4,000 m3/day) North Hurgada (55,000 à 145,000 m3/day) Industrial area plant (17,000 à 50,000 m3/day) South Hurgada (20,000 à 40,000 m3/day) • 2017-22: Al-Qusair (9,000 à 24,000 m3/day) Al Dabaa (1,000 à 10,000 m3/day) New Marsa-Allam plant (6,500 à 10,000 m3/day) Al Saloom (4,000 à 8,000 m3/day) New city plants (20,000 à 35,000 m3/day) • 2022-27: • 2022-27: Al Negaila (new 10,000 m3/day). New Safaga plant (18,500 à 28,500 m3/day 116 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 36 | PLANNED INSTALLATION • Multi-effect distillation requires 1.5 kWh-2.5 kWh OR EXPANSION OF DESALINATION of electricity per cubic meter of desalinated water, PLANTS UNTIL 2027 (000S OF M3/DAY) plus 40 kWh-100 kWh of low temperature thermal 2012-17 2017-22 2022-27 energy (Osman 2011). Red Sea 72.5 143.5 10 • Desalination facilities usually are located beside Sinai 22.0 10.0 30 the sea, so the availability of adjacent suitable land Matrooh 42.0 13.0 10 could be high unless environmental restrictions apply. Therefore, 70 percent of the planned Source: Osman 2011. desalination capacity could consider the use of Reverse osmosis (RO) is a competitive option when MED, with a thermal energy power supply38 of electric grid connection is available. However, multi- CSP heating. Forty percent of these plants found effect distillation (MED) consumes less electricity and MED to be the best technological option. can be preferable if thermal energy is available at low • These changes will require extensive engineering, cost (Osman 2011). so a three-year delay has been taken into account for the planning and engineering. The plants to 6.2.2.4.1 Process heat: MED desalination-demand have been erected during those three years have forecast been omitted from the estimate. Considering the above situations, the following assumptions were made to estimate future installed capacity: TABLE 37 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PROCESS HEAT FOR MED DESALINATION, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thermal - 22 22 27 27 27 27 27 8 8 8 8 8 power Electric - 8 8 10 10 10 10 10 3 3 3 3 3 equivalent Not all components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. The additional demand will apply to the following CSP components with the weights included across from them: • Heat transfer equipment 0.20 • Pumping equipment 0.20 • Mirror 1.00 • Storage tanks 0.35 • Structures 0.75 38. A conversion factor of 2.8 is used to assimilate thermal to electrical power in terms of component demand. Chapter 6 | Existing and Potential Applications for CSP Technologies | 117 6.2.2.4.2 Off-grid application: MED desalination plus Over 6 million air conditioning devices operate in Pumping Egypt, in approximately 30 percent of the average MED desalination consumes 40kW-100 kWh of low houses. This number is likely to increase. temperature thermal energy (Osman 2011) per cubic meter of desalinated water, plus 1.5kW-2.5 kWh of The overall coefficient of performance (COP) of state- electricity. Considering the usual ratio for CSP of of-the-art electromechanical cooling equipment is 1.5kW-2 kWh of waste heat per kWh of electricity, nearly 3.00. Absorption cycles show COP values installing a conventional CSP power plant coupled between 0.55 and 1.50 (Grupo Nova Energía 2012), to a MED desalination plant would result in a surplus but they use mostly thermal energy (the electric of electricity. This surplus could be put to valuable consumption is barely noticeable). Thus, using use by installing a pumping facility to send the absorption cycle is advisable when thermal energy desalinated water to its final consumption points. The prices are significantly lower than those of electricity. surplus also would allow for the installation of MED desalination plants off-grid in isolated locations. 6.2.2.5.1 Process heat: Air conditioning-demand forecast To obtain a robust configuration and to avoid daily Considering the above circumstances, the following start/stop cycles, a combination of fossil fuel backup assumptions were made to estimate future installed and higher than usual solar multiple and TES capacity capacity: would be required. This off-grid variant would generate the same additional demand described for • Peak load in summer 2012 reached 29.5 GW the on-grid solution, plus: (Hussein 2012). Air conditioning equipment accounted for 20 percent of this load. • Additional heat transfer equipment +0.8 • Air conditioning demand will grow due to: • HTF thermal oil +2/+0 – Population growth: Annual growth of 1.7 • Mirrors +1 percent has been estimated (World Bank 2012). • Additional pumping equipment +2/+0 – Market growth: By 2027, 60 percent of average • Receivers +2/+0 houses are projected to have air conditioning • Solar salt +2 systems. • Steam turbine +1 • The use of CSP heating allows reaching COP • Electrical generator +1 values near 1.2. • Storage tanks +1 • The market share of CSP solar-powered • Structures +2 absorption cycles for air conditioning will be 5 percent of the overall air conditioning market by 6.2.2.5 COOLING-ABSORPTION CYCLES FOR 2027. HVAC IN LARGE BUILDINGS OR DISTRICT HEATING/COOLING Solar-powered absorption cycles are used for air conditioning because, among other reasons, their energy source is coupled to the demand. The proliferation of air conditioning equipment in residential buildings, which is responsible for approximately 20 percent of the peak load in summer, is considered one of the main reasons for peak demand issues (Hussein 2012). 118 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 38 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PROCESS HEAT FOR RESIDENTIAL AC, 2015-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thermal - 86 171 171 171 171 171 171 171 171 171 171 171 power Electric 31 61 61 61 61 61 61 61 61 61 61 61 61 equivalent Not all of the components for CSP power plants are required in the same amounts or proportions in this application and in utility-scale CSP power plants. The additional demand will apply to the following CSP components with the weights included beside them: • Heat transfer equipment 1.00 • Mirror 1.00 • Receiver 1.00 • Storage tanks 0.01 • Structures 1.00 Chapter 6 | Existing and Potential Applications for CSP Technologies | 119 7 CHAPTER 7: Existing and Potential Applications for PV Technologies 7.1 Existing Applications 7.1.1.2 INTEGRATED STRUCTURES Rooftop integration of PV plants has the added benefit of locating together power generation and 7.1.1 POWER GENERATION consumption, thus lowering distribution losses. 7.1.1.1 UTILITY SCALE A typical residential building can host PV plants from This technology converts solar energy directly into 1 to few dozen kW; industrial warehouses can reach electricity using the photovoltaic effect. When solar several MW. radiation reaches a semiconductor, the electrons present in the valence band absorb energy and, 7.1.1.2.1 Rooftop integrated PV-demand forecast being excited, jump to the conduction band and Taking into account the above circumstances, the become free. These highly excited, nonthermal following assumptions were made to estimate future electrons diffuse, and some reach a junction at which installed capacity: they are accelerated into a different material by a built-in potential (Galvani potential). This technology • Considering Egypt’s population and an average generates an electromotive force, which converts occupation ratio of 3.75 m2/inhabitant (on a some of the light energy into electric energy. Unlike footprint basis), the combined rooftop area has CSP, solar PV can utilize all radiation––both direct been estimated at 300 km2. and diffuse––that reaches the system. • Solar water heaters and PV compete for the same locations. A 25 percent share of PV has been The basic building block of a PV system is the PV estimated. cell, which is a semiconductor layer that converts • To improve annual output, PV plants must be solar energy into direct current electricity. PV cells are oriented south, with an appropriate tilt and interconnected to form a PV module, typically up to spacing to avoid shadows. An effective available 50-200 Watts (W). The PV modules, combined with area of 30 percent has been assumed. a set of additional application-dependent system • An average solar-to-electric efficiency of 12 components (such as inverters, batteries, electrical percent has been estimated. components, and mounting systems), form a PV • Rooftop PV demand will grow due to: system. PV systems are highly modular, that is, – Population growth: 1.7 percent annually has modules can be linked together to provide power been estimated (World Bank 2012). ranging from a few watts to tens of megawatts (MW). – Market growth: An estimated 25 percent of all These systems and their forecasted demand are average houses will have rooftop PV systems described extensively in chapter 4. by 2027. 120 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 39 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN ROOFTOP PV, 2014-27 (MW) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Installed 25 50 50 50 50 50 50 50 50 50 50 50 50 50 power Unlike for CSP, this additional demand will be applied 7.1.2.1.1 Solar glass in LCD screens-demand evenly to all PV components. forecast Taking into account the above circumstances, the 7.1.2 COMPONENTS FOR OTHER following assumptions were made to estimate future MARKETS installed capacity: 7.1.2.1 SOLAR GLASS IN LCD SCREENS • TCO coating of solar glass is already required Transparent conductive oxide (TCO)-coated flat glass for PV applications, so the PV industry needs is used in the liquid crystal display (LCD) screens no additional modifications to supply the LCD industry. This industry reached worldwide sales of screens market. 203 million units in 2012 (Rapid TV News 2013), and • Considering average efficiency of TF modules, is expected to grow by 2.8 percent/year after 2014 a conversion factor of 100 W/m2 is used to (IHS 2013). The average unit size was 38.6 inches assimilate surface to electrical power in terms of (Hsieh 2012), that is, an estimated global surface of component demand. nearly 75 million m2. • A 0.5 percent share of the global demand for TCO-coated glass is expected to be supplied by Egyptian companies. This additional demand will apply only to solar glass. TABLE 40 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN LCD SCREENS, 2014-27 (MW) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Surface, 380 390 400 410 420 440 450 460 470 490 500 510 530 540 10^3 m2 Electric 38 39 40 41 42 44 45 46 47 49 50 51 53 54 equivalent Chapter 7 | Existing and Potential Applications for PV Technologies | 121 7.2 Potential Applications Groundwater extraction in 2000 comprised 87 percent from the Nile Basin; 12 percent from the 7.2.1 OFF-GRID eastern and western deserts, that is, mainly the Nubian Sandstone aquifer; and 1 percent from 7.2.1.1 WATER PUMPING FOR IRRIGATION shallow wells in Sinai and on the northwestern coast In Egypt by 1997, 99.8 percent of cropland was (UN FAO 2009). The depth of wells in the Nubian irrigated. Smallholdings characterize Egyptian Sandston aquifer can reach up to 1,000 m. Water agriculture: approximately 50 percent of holdings have availability can be as low as 1 hour every 12 days an area of less than 0.4 ha (1 feddan) (UN FAO 2009). (U.S. The White House 2011). Irrigation potential is estimated at 4.4 million ha. 7.2.1.1.1 Water pumping for irrigation PV-demand The total area equipped for irrigation was 3.4 million forecast ha in 2002; 85 percent of this area was in the Nile Considering the above circumstances, the following Valley and Delta. Total water withdrawal in 2000 was assumptions were made to estimate future installed estimated at 68.3 km3. This amount included 59 km3 capacity: (86 percent) for agriculture (UN FAO 2009). • The average water consumption for agricultural Surface water was the source for 83 percent of the uses is near 60 km3. An 85.8 percent of this water irrigated area in 2000. In contrast, in the provinces of needs to be pumped (UN FAO 2009). Matruh, Sinai, and New Valley, 11 percent (360,000 • Surface water stands for 86 percent of the total ha) of the area was irrigated with groundwater. The and has to be pumped from the distributaries with power-irrigated area in 2000 was estimated at 2.9 a required head of 0.5-1.5 m. The approximate million ha (UN FAO 2009), or 85.8 percent of the total energy required for this pumping is 185 GWh/year. irrigated area. • Groundwater stands for 14 percent of the total pumped water. The approximate energy required The irrigation system for surface water is a combined for this pumping is 3,000 GWh/year. The average gravity and water-lifting system. Downstream of depth of the wells is 100 m. Deep wells account the High Aswan Dam, the main canal system (first for 12 percent of the extractions, but require over level) comprises thousands of kilometers of canals 99 percent of the groundwater pumping energy, and takes its water from head regulators located and over 90 percent of the total pumping energy. upstream of the Nile barrages. Water is distributed • The average pumping period is 10 hours/day. This along branches toward the distributaries, which creates an estimated pumping power of 900 MW. receive water according to a rotation schedule. Water • The market share of PV-powered pumping for is pumped from the distributaries to irrigate fields; the irrigation purposes will be 50 percent of the overall typical required head is 0.5-1.5 m (UN FAO 2009). pumping power, to be installed over the next 8 years. 122 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 41 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN WATER PUMPING FOR IRRIGATION, 2014-27 (MW) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Installed 30 60 60 60 60 60 60 60 - - - - - - power Unlike for CSP, this additional demand will be applied such as cold and cloudy days, the wind is usually evenly to all PV components. stronger, allowing the wind turbines to generate enough electricity to compensate for the lower solar 7.2.1.2 POWER GENERATION energy production. On days with little wind energy As per 2009, Egypt had an electrification rate production, the skies usually are clearer so enable PV approximately of 99.6 percent (World Bank 2011). panels to generate more electric power. In any case, Although it is one of the highest rates in Africa, some kind of backup or energy storage is required to approximately 300,000 people still lack access to ensure continuous supply throughout the day. electricity. 7.2.1.2.1 Standalone power generation PV-demand Several configurations can be chosen when forecast considering a PV plant for standalone applications. Considering the above circumstances, the following Some examples are: assumptions were made to estimate future installed capacity: • Partial PV supply with fossil backup • Full PV supply with energy storage: • The average electricity consumption for residential – Batteries uses is near 600 kWh/year per capita in Egypt – Pumped-storage hydroelectricity (PSH).39 (Egypt EEHC 2012). This amount leads to an unsatisfied demand near 180 GWh/year. Any of the above-mentioned configurations can be • The peak demand of an average house ranges coupled with small-scale wind power, increasing the from 1.5 kW to 5 kW, depending on the degree primary renewable supply and benefitting from the of comfort demanded. The requirements are complementary annual production cycles of both assumed to start at 1.5 kWh and reach 5 kW in technologies. Hybrid systems improve the usage 2027. of wind and sun resources by complementing each • The market share of standalone PV supply will be other for higher energy production and efficiency. 60 percent of the overall off-grid requirements to For example, on days with little direct sunlight be installed until 2027. 39. The plant is oversized, and the excess generation capacity is used to pump water into a high reservoir. When demand exceeds production (at night), water is released back into a low reservoir through a turbine, thus generating electricity. Reversible turbine/ generator assemblies can act as both pump and turbine. The applicability of this solution depends on the availability of the high reservoir. Chapter 7 | Existing and Potential Applications for PV Technologies | 123 TABLE 42 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN STANDALONE POWER GENERATION, 2014-27 (MW) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Installed 3 7 8 10 12 14 15 17 19 21 22 24 26 27 power Unlike for CSP, this additional demand will be applied each other for higher energy production and efficiency. evenly to all PV components. For example, on days with little direct sunlight such as cold and cloudy days, the wind is usually stronger, 7.2.1.3 REVERSE OSMOSIS DESALINATION-PV allowing the wind turbines to generate enough electricity Egypt has plans to increase its desalination capacity to compensate for the lower solar energy production. (Table 36). Reverse osmosis (RO) is a competitive On days with little wind energy production, the skies option when electric grid connection is available, usually are clearer so allow PV panels to generate more Multi-effect distillation (MED) (Osman 2011) has a electric power. In any case, some kind of backup or lower electricity consumption and can be preferable if energy storage is required to ensure continuous supply thermal energy is available at low cost. Conventional throughout the day. PV plants have no waste heat recovery, so only their combination with RO will be estimated. 7.2.1.3.1 Reverse osmosis desalination PV-demand forecast Several configurations can be chosen when coupling Considering the above circumstances, the following a PV plant to a RO desalination facility. Some assumptions were made to estimate future installed examples are: capacity: • Grid connected: • Reverse Osmosis distillation requires 2.5 kWh to – Partial PV supply with grid backup 7 kWh of electricity per cubic meter of desalinated – Full PV supply with net metering water (Osman 2011). • Off-grid: • Desalination facilities usually are located beside – Partial PV supply with fossil backup the sea, so the availability of adjacent suitable land – Full PV supply with energy storage: could be high unless environmental restrictions › Batteries40 apply. Therefore, a 70 percent of the planned › Pumped-storage hydroelectricity (PSH). desalination capacity could consider the utilization of PV-powered RO. An estimated 60 percent of these Any of the above-mentioned configurations can be plants find RO to be the best technological option. coupled with small- or medium-scale wind power • PV plants have a low capacity factor (15 plants, increasing the primary renewable supply and percent-18 percent). To achieve a full PV supply, benefitting from the complementary annual production the ratio peak power/peak demand will be 4. Fifty cycles of both technologies. Hybrid systems improve percent of the installed plants will opt for full PV the usage of wind and sun resources by complementing supply, either with net metering or energy storage. • These changes will require extensive engineering. 40. Large-capacity storage with electric batteries is not usual. Therefore, a three-year delay has been estimated Hybridization of PV with other power sources such as wind would reduce the storage necessity and might make viable this kind of for the planning and engineering, and the plants to solution. In this case, the batteries also would help to stabilize the be erected during those years have been omitted power and energy flow to the desalination plant for smoother operation (U.S. DOE NREL 2005). from the estimate. 124 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 43 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN PV POWERED REVERSE OSMOSIS DESALINATION, 2014-27 (MW) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Installed - 5 6 6 6 6 6 6 2 2 2 2 2 power Unlike for CSP, this additional demand will be applied The inverter manufacturing industry proposed for evenly to all PV components. PV can be adapted easily to supply the inverters required for these turbines. The demand proposed 7.2.2 COMPONENTS FOR OTHER for this application is analogous to the one described MARKETS in Table 42 for standalone PV. 7.2.2.1 INVERTERS FOR SMALL This additional demand will apply only to Inverters. SCALE WIND POWER Small-scale wind turbines (from a few hundred watts to 50,000 W) can share the applications for standalone power generation PV in hybrid systems, including a set of batteries. They serve the double purpose of storing energy and stabilizing the power and energy flow to the consumer (U.S. DOE NREL 2005). TABLE 44 | ANNUAL ADDITIONAL DEMAND DUE TO POTENTIAL APPLICATIONS IN STANDALONE POWER GENERATION, 2014-27 (MW) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Installed 3 7 8 10 12 14 15 17 19 21 22 24 26 27 power Chapter 7 | Existing and Potential Applications for PV Technologies | 125 126 PART D | Potential Economic Costs and Benefits Result from Enlarging Solar Component Manufacturing in Egypt 127 8 CHAPTER 8: Potential Economic Costs and Benefits Figure 79 | Potential Demand for CSP in 8.1 Methodology Egypt, 2013-27 (equivalent MW) 1,400 1,200 A model has been developed to estimate potential 1,000 538 567 569 economic costs and benefits that could result from the 800 299 development of key solar component manufacturing 600 101 107 113 77 in Egypt. The estimations are projected until 2027. 400 585 583 583 200 476 20 The model is based on four main categories of inputs: - 26 2013-2015 2016-2018 2019-2021 2022-2024 2025-2027 production factors, demand factors, risk and stability Base demand CSP, LOCAL Base demand CSP, EXPORT Total CSP ALTERNATIVE factors, and business factors. Note: A conversion factor of 2.8 is used to assimilate thermal to For production factors, different aspects have been electrical power in terms of component demand. analyzed for Egypt, including the labor market, material availability, manufacturing ability, energy Figure 80 | Potential Demand for PV in cost, financial cost, and fiscal cost. Egypt, 2013-27 (MW) 1,200 Regarding demand factors, an analysis has been 1,000 conducted to forecast the demand for each 800 416 component based on the estimation of local, export, 392 600 553 and alternative applications41 projected for 2027. 526 400 Details of estimates can be found in Part C (Existing 286 398 and Potential Applications of Solar Technology, Solar 200 264 119 199 121 171 171 Component, and/or Solar Energy in Residential, - 38 - 85 2013-2015 2016-2018 2019-2021 2022-2024 2025-2027 Commercial, Governmental and Industrial Sectors). Base demand PV, LOCAL Base demand PV, EXPORT Total PV ALTERNATIVE 41. Alternative applications refer to those that are not large-scale electricity generation. 128 | Local Manufacturing Potential for Solar Technology Components in Egypt Additionally, both risk and stability factors and Each component has been estimated independently business factors were identified during the mission in based on its own projected demand. Egypt and were estimated as part of the qualitative analysis. Some of the risks contemplated were risk The model outputs for each component include associated to doing business, financial risks, and materials, energy, labor, and financing requirements risk associated to demand. Business factors focus for the developments of the industry. These all have on Egyptian innovative capacity and the industrial been used to determine the feasibility of the industry structure of the country. and cost/benefit impacts of its development in Egypt. Apart from inputs already mentioned, constraints surrounding the manufacturing process for different components also feed into the model. Figure 81 | Methodology Followed for the Model Chapter 8 | Potential Economic Costs and Benefits | 129 8.2 Assumptions 8.2.2 LABOR WAGES ASSUMPTIONS Desktop analysis has been combined with stakeholders’ Labor requirements per factory have been estimated feedback during the mission in the country in April 2013 by applying labor requirements in factories of a similar and the Cairo workshop in June 2013. size in OECD countries and extrapolating these data to the context in Egypt, assuming that labor is equally 8.2.1 ECONOMIC ASSUMPTIONS productive in both locations. The following economic assumptions have been Two types of labor have been assumed: (1) medium- made in the model: skilled labor, which could be found easily in the country, as confirmed with expert local stakeholders • The assumed exchange rate is 6.9 EGP per US$. during interviews and workshop, and (2) high-skilled • The model is calculated based on 2012 constant labor with solar energy expertise, which for at least US$. the first years of production could be made up largely • Corporation taxes have been estimated as 20 of an expatriate labor force, based on information percent, applied to profits before taxes. provided by stakeholders during the information- • Depreciation has been calculated for the whole gathering mission and workshop. investment, taking a five-year lineal depreciation for each factory. Thus, two different types of wages have been • An 8 percent financial cost has been applied to assumed. The medium-qualified labor wage was loans in US$. estimated based on Egyptian wages. The wage for • With reference to investment, an estimated 30 highly qualified labor was estimated based on wages percent of the total investment is equity and 70 of expatriates. In both cases, social security tax has percent debt. been added. • Neither fiscal incentives nor subsidies have been estimated for any of the components. TABLE 46 | LABOR WAGE ASSUMPTIONS   Social Annual Annual TABLE 45 | ECONOMIC ASSUMPTIONS Security wage wage (%) (000 EGP) (US$000) Summary of economic assumptions Expatriate   291 42 Exchange rate 6.9 EGP/US$ labor wage Inflation 0.0 Local labor 21 3 wage Corporation tax 20.0 Social 20 Depreciation 20.0 security Financial cost 8.0 (Egypt) Leverage 70.0 Average 30     social Subsidy to investment (%) 0% security Fiscal incentives 0.0 (OECD countries) Note: Interest rates are in US$ currency. 130 | Local Manufacturing Potential for Solar Technology Components in Egypt 8.2.3 ENERGY PRICES ASSUMPTIONS 8.2.4 MATERIAL PRICES ASSUMPTIONS Energy price assumptions consider both electric Material requirements have been analyzed for each energy consumption and also thermal energy component, taking into account availability of each consumption. Prices were obtained by Egyptian material in the country. Materials have been classified sources and confirmed with stakeholders during the depending on whether they can be assumed to workshop. be local or import. For import materials, additional transport costs have been added. TABLE 47 | ENERGY PRICES ASSUMPTIONS (US$/MWH) Local prices were confirmed with stakeholders during Energy, thermal 42 the workshop, and import prices have been obtained Energy, electric 52 from consultant sources. TABLE 48 | MATERIAL PRICE ASSUMPTIONS Material Market price Market price Source Imports transport Final market (EGP/kg) (US$/kg) needs (US$/t) price (US$/kg) Carbon steel, beam 8.0 1.2 Local 0 1.2 Carbon steel, plate 6.0 0.9 Local 0 0.9 Carbon steel, cast 8.0 1.2 Local 0 1.2 Stainless steel, cast 35.0 5.0 Import 60 5.1 Stainless steel, plate 30.0 4.3 Import 60 4.4 Stainless steel, tube 24.0 3.5 Import 60 3.5 Electrodes 19.4 2.8 Import 20 2.8 Silver/cooper coating 6,592.2 950.0 Import 20 950.0 Polymeric coatings 20.8 3.0 Import 20 3.0 Float glass 2.4 0.5 Local 0 0.5 Silicon 541.3 78.0 Import 10 78.0 Copper 75.0 10.8 Local 0 10.8 Aluminum 30.0 4.3 Local 0 4.3 Special alloys 22.6 3.3 Import 20 3.3 Silica 0.3 0.04 Local 0 0.0 Na2O 2.1 0.3 Local 0 0.3 CaO 1.0 0.1 Local 0 0.1 MgO 1.5 0.2 Local 0 0.2 Additives 1.2 0.2 Local 0 0.2 Chapter 8 | Potential Economic Costs and Benefits | 131 8.3 Main Economic Costs Figure 82 | Cost Breakdown and Benefits Associated for CSP Structure with CSP and PV: Structures 8.3.1 INTRODUCTION In Egypt, structures of existing industries easily could be adapted to become structures for solar energy production. For example, by using an existing steel structure factory such as a transmission tower factory, diversifying production toward the solar sector not only would reduce initial investment cost but also would profit from skilled workforce and In addition, structures for the Egyptian PV industry developed logistics. have been compared to the total cost for the same industry in OECD countries. In this case, too, results Moreover, materials requirements can be met almost differ less than 15 percent, which amount has not completely from those available in Egypt. Except been considered significant. Regarding energy and for electrodes, almost 95 percent of the materials labor expenses, Egypt holds the same advantages requirements are carbon steel. Availability, quality, as OECD countries. and price of carbon steel will condition the final price of the structure. Figure 83 | Cost Breakdown for PV Structure (US$ mil) 8.3.2 COMPETITIVENESS OF THE INDUSTRY COMPARED TO OTHER COUNTRIES Total costs estimated for the development of Egypt’s CSP structure industry have been compared with total costs for the same industry in OECD countries. Results differ by less than 15 percent, which has not been considered significant. At the moment, Egypt still poses an advantage regarding energy and labor expenses when compared to OECD countries. In both industries, other expenses included O&M, spare parts, and general. Since the overall estimated costs are not significantly different, the sales price in Egypt is similar to that in OECD countries. 132 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 84 | Sales Price for CSP Structure Figure 87 | Forecasted Demand and (US$/kg) Annual Proposed Production for Structure, CSP Alternative Applications, 2013-27 t/year 100% 45 x 10^3 90% 40 80% 35 70% 30 60% 25 50% 20 40% 15 30% 20% 10 10% 5 0% 0 Figure 85 | Sales Price for PV Structure (US$/kg) Solar cooling MED desalination Drying Steam supply Crude distillation Hybrid, revamp Hybrid, new Proposed annual production TOTAL demand STRUCTURE Figure 88 | Forecasted Demand and Annual Proposed Production for PV Alternative Applications, 2013-27 t/year 100% 45 x 10^3 90% 40 80% 35 70% 30 60% 25 8.3.3 ANNUAL PRODUCTION AND 50% 40% 20 INVESTMENT 30% 15 10 20% 10% 5 0% 0 Annual production requirements have been estimated at 45,000 tons/year. In other words, 1 plant would be LED autonomous lamppost PV powered Reverse needed to cover the demand from 2013 to 2027. Osmosis Standalone power generation Water pumping f or irrigation Figure 86 | Forecasted Demand and Annual Proposed Production for CSP It has been estimated that 1 plant of this size requires and PV Structure, 2013-27 an investment of approximately US$23 million. Regarding the first plant, production should be started by 2017, which means that investment would be needed 1 year earlier. Chapter 8 | Potential Economic Costs and Benefits | 133 Figure 89 | Investment Requirements for Figure 91 | Energy Requirements for CSP and PV Structure, 2013-27 (US$) CSP and PV Structures, 2013-27 MWh 35 0 0 0 130 x 25 20 15 10 5 0 Electric energy requirements 8.3.4 LABOR CREATION 8.3.6 MATERIALS REQUIREMENTS By 2027, more than 70 jobs would be created locally. Five percent of Egypt’s total labor force should have The main material requirement is carbon steel, which specific solar energy skills to solve the technical is available locally. Electrodes are not available locally complexity and barriers that could appear due to the and will need to be imported. complex design of hydraulic circuits and components and also to achieve stiffness. Figure 92 | Description of Material Requirements for CSP and PV Structure Figure 90 | Labor Requirements for CSP by Weight and Cost per Plant (%) and PV Structures, 2013-27 (required workers) Proportion of materials by weight 90 Proportion of materials 80 5% 3% 70 5.0% 60 50 Carbon steel, plate 40 30 20 Electrodes 10 0 Carbon steel, Solar energy skilled labor requirements Local labor requirements beam 90.0% 85% materials by weight Proportion of REQUIREMENTS 8.3.5 ENERGY Proportion of materials by cost 5% 3% 5.0% 12% Only electric energy is required for the structure industry, mainly for welding. Carbon steel, plate Electrodes Carbon steel, beam 90.0% 85% 134 | Local Manufacturing Potential for Solar Technology Components in Egypt 8.3.7 CONCLUSION Figure 93 | Cost Structure Breakdown for CSP Mirrors (US$ mil) Structures are an interesting industry for Egypt to start developing in the short term, and to continue developing as it develops solar expertise and progresses to develop other solar industries. However, hot-dip galvanizing of large structures (>12 m) could be a bottleneck so is important to take into account for CSP. Therefore, the final price of the structure would be conditional on availability, quality, and cost of nearby galvanizing facilities and availability and price of carbon steel. Other expenses include O&M, spare parts, and general. This difference in cost, mainly in materials and energy, 8.4 Main Economic Costs would permit achieving a lower sales price compared and Benefits Associated to OECD countries. with CSP: Mirrors Figure 94 | Sales Price for CSP Mirrors 8.4.1 INTRODUCTION (US$/m2) CSP mirrors industries have the potential to be developed due to the existing float glass factories in the country. As part of diversifying the production strategy of the industry toward the solar sector, existing factories could find opportunities to be adapted. Advantages would be that investment needs would be reduced and the solar industry would profit from the skilled workforce and developed logistics. 8.4.2 COMPETITIVENESS OF THE INDUSTRY COMPARED TO OTHER 8.4.3 ANNUAL PRODUCTION AND COUNTRIES INVESTMENT Total costs for Egyptian CSP mirrors have been An annual production of 2.5 million square meters compared with total costs for the same industry in per year has been estimated. Under this hypothesis, OECD countries. It is important to highlight Egypt’s only 1 plant would be needed to cover the demand competitiveness in cost compared to OECD from 2013 to 2027. countries. Materials and energy prices could be a clear advantage to develop the industry in the country. Chapter 8 | Potential Economic Costs and Benefits | 135 Figure 95 | Forecasted Demand and 8.4.4 LABOR CREATION Annual Proposed Production for CSP Mirror, 2013-27 By 2027, almost 80 jobs would be created. Seventy m 2/year percent of them would be local owing to highly 100% 3.0 skilled workforce requirements regarding the glass x 10^6 90% 80% 2.5 70% 2.0 processing, chemical reagents, and heavy-duty 60% 50% 1.5 machinery handling. 40% 30% 1.0 20% 0.5 Figure 97 | Labor Requirements for CSP 10% 0% 0.0 Mirrors, 2013-27 (%) 90 Alternative CSP Hybrid, revamp 80 Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production 70 Alternative CSP 60 m 2/year 50 100% 3.0 x 10^6 40 90% 80% 2.5 30 70% 2.0 20 60% 10 50% 1.5 40% 0 30% 1.0 20% 0.5 Solar energy skilled labor requirements Local labor requirements 10% 0% 0.0 Solar cooling Drying MED desalination Steam supply 8.4.5 ENERGY REQUIREMENTS Crude distillation Proposed annual production Alternative CSP The CSP mirror industry has electricity and, mainly, It has been estimated that 1 plant of this size would thermal energy requirements. require an investment of approximately US$38 million. Production should start by 2019, which means that Figure 98 | Energy Requirements for the investment would be needed by 2018. CSP Mirrors, 2013-27 Figure 96 | Investment Requirements for CSP Mirrors, 2013-27 (US$ mil) 136 | Local Manufacturing Potential for Solar Technology Components in Egypt 8.4.6 MATERIALS REQUIREMENTS 8.4.7 CONCLUSION The main material requirement is float glass, which CSP mirrors is an interesting industry for Egypt to is available locally. Polymeric and cooper coating are develop in the short or medium term. It could be a not available locally and will have to be imported. competitive industry both nationally and for exports. However, there are a series of potential risks to note: The percentage of silver requirements is less than 1 percent of the total weight of materials. Nevertheless, As an industry, there is a risk due to the complexity this percentage has a significant impact on materials’ of manufacturing line and the highly skilled workforce costs. required. From a labor point of view, CSP mirrors require a highly skilled workforce with solar energy Figure 99 | Description of Material expertise, which increases the price of labor. Requirements for CSP Mirrors by Weight and Cost per Plant (%) Unless these industries are integrated in the existing float glass industry, the capital-intensive nature of the investments could be a barrier. Proportion of materials by weight Proportion of materials by cost 0.01% 10.00% The availability and price11% of thermal energy would condition the final price of the mirrors. Silver / cooper coating Depending on the distance to be covered, Polimeric transportation of float glass could increase the final coatings 53% costs. 36% Float glass 89.99% 8.5 Main Economic Costs ght Proportion of materials by cost and Benefits Associated 11% with CSP: Pumps Silver / cooper 8.5.1 INTRODUCTION coating CSP pumps industries for solar energy could be Polimeric coatings 53% an opportunity to develop and expand the existing 36% pumps factory industry in Egypt. CSP pumps could Float glass be an opportunity for small companies that could develop this industry and manufacture different new models. Chapter 8 | Potential Economic Costs and Benefits | 137 8.5.2 COMPETITIVENESS OF THE 8.5.3 ANNUAL PRODUCTION AND INDUSTRY COMPARED TO OTHER INVESTMENT COUNTRIES An annual production of 325 tons per year has been Total costs for CSP pumps have been compared to estimated. Thus, to cover the estimated demand total costs for the same industry in OECD countries. during from 2013 to 2027, 2 plants would be needed. Results differ less by than 15 percent, which has not been considered significant. At the moment, Figure 102 | Forecasted Demand and Egypt still possesses an advantage regarding energy Annual Proposed Production for CSP expenses when compared to OECD countries. Pumps, 2013-27 MW/year 100% 900 Figure 100 | Cost Structure Breakdown 90% 800 for CSP Pumps (US$ mil) 80% 70% 700 600 60% 500 50% 400 40% 300 30% 20% 200 10% 100 0% - Hybrid, revamp Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production TOTAL demand PUMPS MW/year 100% 700 90% 600 80% 70% 500 60% 400 50% Other expenses include O&M, spare parts, and 40% 300 general. 30% 20% 200 100 10% 0% - As the overall estimated costs are not significantly Solar cooling MED desalination different, the sales price in Egypt is similar to that in Drying Steam supply Crude distillation Proposed annual production OECD countries. Alternative CSP Figure 101 | Sales Price for CSP Pumps It has been estimated that 1 plant of this size requires (US$/MW) an investment of approximately US$31 million. It has been estimated that there would be sufficient demand to start producing by 2018, which means that investment would be needed in 2017. The second plant should start in 2025, for which investment would be required in 2024. 138 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 103 | Investment Requirements 8.5.5 ENERGY REQUIREMENTS for CSP Pumps, 2013-27 (US$ mil) The CSP pumps industry has medium requirements for electricity and thermal energy. The electricity energy requirements are higher than for thermal. Figure 105 | Energy Requirements for CSP Pumps, 2013-27 MWh 70 x 1000 60 50 40 30 20 10 8.5.4 LABOR CREATION 0 Electric energy requirements Thermal energy requirements The CSP pumps industry has high labor-creation requirements. By 2027, more than 350 jobs would be created. Of these, 70 percent of them would be 8.5.6 MATERIALS REQUIREMENTS local employees. The remaining 30 percent would be a highly skilled workforce with specific training in Regarding quantity of material required, the main carbon and stainless steel casting, machining and material is carbon steel cast, which is available locally. welding, and heavy duty machinery handling. Initially, Special alloys and stainless steel are not available this 30 percent could be met through international locally so must be imported. jobs. However, the objective would be to be able to fill these jobs in the future locally as well. Figure 104 | Labor Requirements for CSP Pumps, 2013-27 400 350 300 250 200 150 100 50 0 Solar energy skilled labor requeriments Local labor requeriments Chapter 8 | Potential Economic Costs and Benefits | 139 Figure 106 | Description of Material Requirements for CSP Pumps by Weight and Cost per Plant (%) Proportion of materials by weight Proportion of materials by cost 0.0% 0.0% 1.0% 3.8% 5.00% 5.00% Carbon steel, 15.00% plate 18.0% Carbon steel, beam 25.00% Special alloys 13.6% Copper 50.00% Carbon steel, 63.6% cast Stainless steel, cast 8.5.7 CONCLUSION 8.6 Main Economic Costs CSP pumps could be an interesting industry for and Benefits Associated Egypt to start developing in the short or medium with CSP: Heat Exchangers term. However, technical barriers such as complex design for molten salt pumps, the high precision 8.6.1 INTRODUCTION requirements to manufacture under international standards, and the highly skilled workforce required CSP heat exchanger industries could be developed could pose significant barriers that would need to be due to the existence of light duty heat exchangers of resolved for the industry to achieve traction. other metal fabrication industries that seem to exist in the country. As part of diversifying the production For this industry to be developed, technology transfer, strategy of the industry toward the solar sector, current joint ventures, or foreign companies that own the factories could find an opportunity because adapting technologies and the track record will be required. them for the heat exchanger industries would reduce investment cost, and the new industries would profit from the skilled workforce and developed logistics. 140 | Local Manufacturing Potential for Solar Technology Components in Egypt 8.6.2 COMPETITIVENESS OF THE 8.6.3 ANNUAL PRODUCTION INDUSTRY COMPARED TO OTHER AND INVESTMENT COUNTRIES Annual production of 1,824 tons per year has been Total costs for CSP heat exchangers have been estimated; therefore, from 2013 to 2027, 1 plant compared with total costs for the same industry in would be needed to cover the demand. OECD countries. It is important to highlight Egypt competitiveness in cost compare to OECD countries. Figure 109 | Forecasted Demand and Materials and energy prices could be a clear Annual Proposed Production for CSP advantage to develop the industry in the country. Heat Exchangers, 2013-27 t/year Figure 107 | Cost Structure Breakdown 100% 4.0 x 10^3 90% 3.5 for CSP Heat Exchangers (%) 80% 3.0 70% 60% 2.5 50% 2.0 40% 1.5 30% 1.0 20% 10% 0.5 0% 0.0 Alternative CSP Hybrid, revamp Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production TOTAL demand HEAT EXCHANGER t/year 100% 2.0 x 10^3 90% 1.8 80% 1.6 70% 1.4 60% 1.2 Other expenses include O&M, spare parts, and 50% 1.0 40% 0.8 general. 30% 0.6 20% 0.4 10% 0.2 0% 0.0 If current prices are maintained during the next few years, the lower costs in the diverse MENA countries Solar cooling Drying MED desalination Steam supply Crude distillation Proposed annual production would permit a lower sales price compared to the Alternative CSP price in OECD countries. A plant of this size needs an estimated investment of Figure 108 | Sales Price for CSP Heat approximately US$7 million. Exchangers (US$/MWth) Construction of the first plant should begin by 2018 and of the second plant by 2021. Thus, investment would be needed by 2017 and 2020, respectively. Chapter 8 | Potential Economic Costs and Benefits | 141 Figure 110 | Investment Requirements 8.6.5 ENERGY REQUIREMENTS for CSP Heat Exchangers, 2013-27 The CSP heat exchangers industry requires mostly electric energy. The plant energy requirements are low-medium, so could encourage the development of the industry. Figure 112 | Energy Requirements for CSP Heat Exchangers, 2013-27 8.6.4 LABOR CREATION By 2027, almost 30 jobs would be created. A skilled workforce is required to do the stainless steel welding and heavy duty machinery handling. Therefore, if capacity building were done, by 2027 approximately 20 people could be local employees. 8.6.6 MATERIALS REQUIREMENTS Figure 111 | Labor Requirements for CSP More than 80 percent of the component requirement Heat Exchangers, 2013-27 (required corresponds to stainless steel, which would need workers) to be imported. Availability, quality, and cost of this material could seriously condition the final price of 35 the component per unit. 30 25 20 15 10 5 0 Solar energy skilled labor requeriments Local labor requeriments 142 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 113 | Description of Material Requirements for CSP Heat Exchangers by Weight and Cost per Plant (%) Proportion of materials by weight Proportion of materials by cost 3% 4% 10% 7% 5% Carbon steel, plate 5% Electrodes Stainless steel, plate Stainless steel, tube 80% 86% 8.6.7 CONCLUSION 8.7.2 COMPETITIVENESS OF THE INDUSTRY COMPARED TO OTHER CSP heat exchangers could be interesting if there COUNTRIES is the opportunity to adapt some of the existing industries. If not, development of the CSP industry Total costs estimated for the development of the CSP is conditioned on the availability, quality, and price storage tanks industry have been compared with of stainless steel and the development of technical total costs for the same industry in OECD countries. high precision expertise to comply with the industry’s Results differ by less than 15 percent, which has not international standards. These are the barriers that been considered significant. At the moment, Egypt Egypt must address for the industry to develop. still possesses an advantage regarding energy and labor expenses when compared to OECD countries. Technology transfer, joint venture, or foreign company (owning the technology and track record) also will be Figure 114 | Cost Structure Breakdown necessary for this industry to be developed. for CSP Storage Tanks (US$ mil) 8.7 Main Economic Costs and Benefits Associated with CSP: Storage Tanks 8.7.1 INTRODUCTION CSP storage tanks must be manufactured under international standards for compatibility with Other expenses include O&M, spare parts, and other equipment, safety, performance, and quality general | assurance. Chapter 8 | Potential Economic Costs and Benefits | 143 Because the overall estimated costs are not A plant of this size would require an estimated significantly different than in OECD countries, the sales investment of approximately US$24 million. Of which price in Egypt is similar to that in OECD countries. this amount, 30 percent would be equity and 70 percent loans. Figure 115 | Sales Price for CSP Storage Tanks Production should start by 2024, which means that investment would be needed by 2023. Figure 117 | Investment Requirements for CSP Storage Tanks, 2013-27 (US$ mil) 8.7.3 ANNUAL PRODUCTION AND INVESTMENT Estimated annual production would be 19,800 tons per year. Only 1 plant would be needed fill the demand from 2013 to 2027. 8.7.4 LABOR CREATION Figure 116 | Forecasted Demand and By 2027, approximately 65 jobs would be created; Annual Proposed Production for CSP significantly, 95 percent of them would be local. Storage Tanks, 2013-27 Figure 118 | Labor Requirements for t/year 100% 90% 30 CSP Storage Tanks, 2013-27 (required 80% 25 workers) 70% 20 70 60% 50% 15 60 40% 30% 10 50 20% 5 40 10% 0% - 30 Alternative CSP Hybrid, revamp 20 Hybrid, new Base demand CSP, EXPORT Base demand CSP, LOCAL Proposed annual production 10 TOTAL demand STORAGE TANKS 0 t/year 100% 25 90% Solar energy skilled labor requirements Local labor requirements 80% 20 70% 60% 15 50% 40% 10 8.7.5 ENERGY REQUIREMENTS 30% 20% 5 10% 0% - The CSP storage tanks industry has low thermal energy requirements, mainly electricity. Solar cooling MED desalination Drying Steam supply Crude distillation Proposed annual production Alternative CSP 144 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 119 | Energy Requirements for 8.7.6 MATERIALS REQUIREMENTS CSP Storage Tanks, 2013-27 MWh 45 The main material requirement is carbon steel, which x 1000 40 is available locally. Stainless steel is not available 35 30 locally so would need to be imported. 25 20 15 10 5 0 Electric energy requirements Thermal energy requirements Figure 120 | Description of Material Requirements for CSP Storage Tanks by Weight and Cost per Plant (%) Proportion of materials by weight Proportion of materials by cost 15.00% Carbon steel, 5.00% plate 46.7% 49.2% Carbon steel, cast 80.00% Stainless steel, plate 4.1% 8.7.7 CONCLUSION Although at the moment Egypt’s electricity price is still competitive, the industry’s high requirements for For the development of the CSP storage tanks electric energy could be a future problem and could industry to become feasible, Egypt must solve condition the final price of storage tanks. specific technical barriers such as the complex design of molten salt tanks, steam drum, and aerator. In addition, to be able to sell nationally as well as to export, manufacturing according to international standards to obtain compatibility with other equipment, safety, and performance in operation is required. Chapter 8 | Potential Economic Costs and Benefits | 145 8.8 Main Economic Costs Figure 122 | Sales Price for PV Solar and Benefits Associated Glass (US$/kg) with PV: Solar Glass 8.8.1 INTRODUCTION Solar glass is usually less than 1 percent of total float glass. Therefore, to develop this industry, alternative demand needs to exist, in the form of demand from the building and automotive industries, to at least 70 percent of capacity. 8.8.3 ANNUAL PRODUCTION 8.8.2 COMPETITIVENESS OF THE AND INVESTMENT INDUSTRY COMPARED TO OTHER COUNTRIES For the estimated annual production of 16,000 tons per year, from 2013 to 2027, 1 plant would be Total costs for solar glass have been compared with needed to cover the demand. total costs for the same industry in OECD countries. It is important to highlight Egypt’s cost competitiveness Figure 123 | Forecasted Demand and with OECD countries. Energy cost is clearly an Annual Proposed Production for PV advantage to develop the industry in Egypt. Solar Glass, 2013-27 (%) Figure 121 | Cost Structure Breakdown m 2/year for PV Solar Glass (US$ mil) 100% 3 x 10^6 90% 2.5 80% 70% 2 60% 50% 1.5 40% 1 30% 20% 0.5 10% 0% 0 PV Alternative Base demand PV, EXPORT Base demand PV, LOCAL Proposed annual production TOTAL demand SOLAR GLASS m 2/year 100% 1.8 x 10^6 90% 1.6 80% 1.4 70% 1.2 60% 1 50% Other expenses include O&M, spare parts, and 40% 0.8 0.6 general. 30% 20% 0.4 10% 0.2 0% 0 This difference in cost, mainly in materials and energy, would permit Egypt to achieve a sales price LED autonomous lamppost Standalone power generation PV powered Reverse Osmosis Water pumping f or irrigation LCD screens Roof top PV competitive with OECD countries. Proposed annual production PV Alternative 146 | Local Manufacturing Potential for Solar Technology Components in Egypt A plant of this size is estimated to need an investment 8.8.5 ENERGY REQUIREMENTS of approximately US$320,000. The PV solar glass industry requires electric and By 2018, there will be enough demand to begin thermal energy. Moreover, the quantity of thermal production. One year before launching the plant, it energy required is high. will be necessary to invest the required amount. Figure 126 | Energy Requirements for Figure 124 | Investment Requirements PV Solar Glass Source, 2013-27 (MWh) for PV Solar Glass, 2013-27 8.8.6 MATERIALS REQUIREMENTS 8.8.4 LABOR CREATION The main material requirement is silica, which is available locally. The rest of the materials also are By 2027, the 4 plants would enable the creation available locally. of more than 30 jobs. At least 70 percent of them would be local. Another 30 percent would need to be highly skilled, owing to the highly skilled workforce requirements. Figure 125 | Labor Requirements for PV Solar Glass, 2013-27 (required workers) 35 30 25 20 15 10 5 0 Solar energy skilled labor requirements Local labor requirements Chapter 8 | Potential Economic Costs and Benefits | 147 Figure 127 | Description of Material Requirements for PV Solar Glass by Weight and Cost per Plant (%) Proportion of materials by weight Proportion of materials by cost 2% 2% 4% 5% 10% Additives 30% 15% MgO 14% CaO Na2O 72% Silica 46% 8.8.7 CONCLUSION 8.9.2 COMPETITIVENESS OF THE INDUSTRY COMPARED TO OTHER Before launching the solar glass industry, additional COUNTRIES analysis is required on the main barriers to entering it. They include the high overall investment due to Estimated total costs for PV inverters in Egypt have the scale-up required for the manufacturing process. been compared with total costs for the same industry This scale-up could increase exposure if a competitor in OECD countries. It is important to highlight Egypt’s were to develop a more efficient manufacturing cost competitiveness with OECD countries. The process or an alternative product. lower costs of materials, labor, and energy prices in Egypt could be clear advantages to develop the It also is important to look for vertical integration or industry there. association opportunities with existing float glass line manufacturers to achieve competitive costs while Figure 128 | Cost Structure Breakdown ensuring the supply and quality of raw materials. for PV Inverters (US$ mil) 8.9 Main Economic Costs and Benefits Associated with PV: Inverter 8.9.1 INTRODUCTION Developing the inverter industries could be an opportunity to diversify companies so that they are less sensitive to oscillations of the PV market. Other expenses include O&M, spare parts, and general. 148 | Local Manufacturing Potential for Solar Technology Components in Egypt The differences in costs, mainly for energy and labor, A plant of this size will need an investment estimated would permit Egypt to achieve a lower sales price at US$19 million, of which 30 percent will go to equity compared to prices in OECD countries. and 70 percent to loans. Figure 129 | Sales Price for PV Inverters Until 2027, demand will not be enough to begin (US$/MW) production. One year before launching the plant, it will be necessary to perform the required investment. Figure 131 | Investment Requirements for PV Inverter, 2013-27 (US$) 8.9.3 ANNUAL PRODUCTION AND INVESTMENT The estimated annual production of 120 tons per year from 2013 to 2027 would necessitate having only 1 plant. 8.9.4 LABOR CREATION Figure 130 | Forecasted Demand and By 2027, the plant would allow for the creation of Annual Proposed Production for PV more than 60 jobs. At least 95 percent of them would Inverter, 2013-27 be local. MW/year Figure 132 | Labor Requirements for PV 100% 350 90% 300 Inverter, 2013-27 (required workers) 80% 70 70% 250 60% 200 60 50% 40% 150 50 30% 100 40 20% 50 10% 30 0% 0 20 PV Alternative Base demand PV, EXPORT 10 Base demand PV, LOCAL Proposed annual production 0 TOTAL demand INVERTER MW/year 100% 180 Solar energy skilled labor requirements local labor requirements 90% 160 80% 140 70% 120 60% 50% 100 8.9.5 ENERGY REQUIREMENTS 80 40% 60 30% 20% 40 The PV inverter industry requires electric and thermal 10% 20 0% 0 energy. LED autonomous lamppost Standalone wind power generation PV powered Reverse Osmosis Standalone power generation Water pumping f or irrigation LCD screens Roof top PV Proposed annual production PV Alternative Chapter 8 | Potential Economic Costs and Benefits | 149 Figure 133 | Energy Requirements for PV 8.9.6 MATERIALS REQUIREMENTS Inverter, 2013-27 MWh 4.0 The main material requirement is cooper, which is x 1000 3.5 available locally. Silicon is not available locally and will 3.0 2.5 need to be imported. 2.0 1.5 1.0 0.5 0.0 Electric energy requirements Thermal energy requirements Figure 134 | Description of Material Requirements for PV Inverters by Weight and Cost per Plant (%) Proportion of materials by weight Proportion of materials by cost 2% 10% 21% Aluminum 30% Silicon 60% Copper 77% 8.9.7 CONCLUSION Before launching the inverter industry, further analysis is required on the main barriers to entering. They include the complex design to achieve performance and difficulties to gain market share due to the strong competitors that already exist in the market. 150 | Local Manufacturing Potential for Solar Technology Components in Egypt 8.10 Aggregated Economic Figure 135 | Labor Creation in the PV Costs and Benefits Solar Sector, 2013-27 Associated with an Enlarged 800 700 Solar Sector in Egypt 600 Required workers 500 400 Solar components sector development would have 300 200 an overall impact on: 100 - • Labor creation High q., PV components industries Medium q., PV components industries • GDP increase Medium q., PV installers, domestic Medium q., PV installers, large plants • Upstream impacts: Materials and energy consumption • Lower cost of the solar power plants. Figure 136 | Labor Creation in the CSP Solar Sector, 2013-27 8.10.1 LABOR CREATION 3,000 2,500 Required workers To assess the impacts of the solar sector on job 2,000 creation, the following job qualifications have been 1,500 taken into consideration: 1,000 500 • Highly qualified jobs, with wages assimilated - to those of expatriates. These will be in the High q., CSP components industries Medium q., CSP components industries components manufacturing industries. Medium q., CSP installers, domestic Medium q., CSP installers, large plants • Medium qualification jobs, with wages according to the Egyptian labor market: – In the components manufacturing industries. For both PV and CSP, the main source of jobs for – As installers of large power plants42 the long run is the installation of small and domestic (either CSP or PV) and/or in construction plants. companies. – As installers of small or domestic plants43 8.10.2 GDP INCREASE and/or in specialized SMEs. To assess the impacts of the solar sector on job creation, the following sources have been considered: Wages of workers in installation activities, in both large and small plants 42. Average labor demand of 33 person-month/MW. 43. Average labor demand of 45 person-month/MW. Chapter 8 | Potential Economic Costs and Benefits | 151 Local share of component manufacturing industries For both PV and CSP, the main long-term contribution revenue, including: to Egypt’s GDP would be the local share of the components manufacturing industries revenue. • Wages of local workers • Energy expenditure, both electrical and thermal 8.10.3 UPSTREAM IMPACTS • Material costs from local suppliers • Profit 8.10.3.1 MATERIALS REQUIREMENTS – Engineering services provided by local The materials expected to be consumed by the companies for the solar plants developed in component manufacturing industries for PV and the country CSP are presented in Figure 139 and Figure 140, – For comparison, the inclusion of import respectively. expenditures of component manufacturing industries. Figure 139 | Material Requirements for PV Industries, 2013-27 Figure 137 | Contribution to GDP from 100,000 the Solar PV Sector, 2013-27 x 1000 Yearly consumption in PV industries, kg 10,000 90 GDP contribution, USD million 80 70 60 1,000 50 40 30 100 20 10 - 10 Medium q., PV installers, large plants Medium q., PV installers, domestic PV engineering Local, PV industries Imports, PV industries Carbon steel, beam Carbon steel, plate Carbon steel, cast Stainless steel, cast Stainless steel, plate Stainless steel, tube Electrodes Silver / cooper coating Polimeric coatings Figure 138 | Contribution to GDP from Float glass Silicon Copper Aluminum Special alloys Silica the Solar CSP Sector, 2013-27 Na2O CaO MgO Additives 350 GDP contribution, USD million 300 250 200 150 100 50 - Imports, CSP industries Local, CSP industries CSP engineering Medium q., CSP installers, large plants Medium q., CSP installers, domestic 152 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure 140 | Material Requirements for Figure 141 | Energy Intensity of Solar CSP Industries, 2013-27 Component Manufacturing Industries 100,000 7,000 x 1000 6,000 Yearly consumption in CSPindustries, kg 5,000 10,000 kWh/kUSD 4,000 3,000 1,000 2,000 1,000 - 100 10 Thermal energy Electricity Country average, thermal Country average, electricity Carbon steel, beam Carbon steel, plate Carbon steel, cast Stainless steel, cast Stainless steel, plate Stainless steel, tube Electrodes Silver / cooper coating Polimeric coatings Float glass Aluminum Silicon Special alloys Copper Silica Figure 141 shows that inverters and structures have Na2O CaO MgO lower specific energy consumption than the global Additives average, both thermal and electric. Solar glass, on the other hand, is above both averages. The expected consumption of local supplies is below 1 percent of the country’s production capacity (Chapter 8.10.4 CONCLUSION 2.2), so no short-term shortages are expected. On the other hand, the quality of the materials might be Egypt has the capacity to enlarge its solar component troublesome in, for example, extra-clear float glass manufacturing base. According to the assumptions for mirrors. in this study, expanding the sector would result in the direct creation of up to 3,000 jobs, most of them in 8.10.3.2 ENERGY REQUIREMENTS installation-related activities. Egypt has expressed intentions to discourage the installation of new energy-intensive industries. As a Expansion also would increase GDP by over US$300 reference to determine the relative energetic intensity million/year. No shortages of materials supply are of the component manufacturing industries, an expected. On the other hand, energy could pose a estimate was made of the actual average energy problem because some of the proposed industries consumption of the Egyptian industrial sector per are energy intensive, and strongly depend on heavy unit of GDP (MWh/US$ mil). duty, continuous production to achieve profitability. Chapter 8 | Potential Economic Costs and Benefits | 153 154 PART E | Solar Component Manufacturing Case Studies 155 9 CHAPTER 9: Solar Component Manufacturing in China 9.1 Executive Summary and At present, China is implementing an ambitious program for innovation, technology, and science with Key Findings these objectives: China’s policy to develop renewable energy (RE) is • Promote basic research supported by programs and plans that have been • Promote development of new technologies regulated and institutionalized by national and local • Create infrastructure for scientific research governments, and financial institutions. • Develop R&D human resources • Reward scientific and technological excellence. The Chinese government’s commitment, planning, incentives, and effective execution of the plans have The evolution of Chinese development of renewable generated sufficient confidence in local producers energy has been possible due to the establishment for them to devote efforts in the manufacture of and implementation of the following: components. • Plan and review national and international RE China sets policies that are similar in many respects targets to the policies of other leading countries to promote, • Distribute responsibilities between the central and foster, and encourage producers of RE technologies. local administration Since 2001 China’s significant growth in domestic • Encourage the development of R&D and demand has increased industrial production and international collaboration mechanisms exports of solar photovoltaic cells and modules. • Develop appropriate infrastructure • Establish rates, loans, and generation rates for The government’s development policies, the thermal solar energy participation of top universities and institutes, along • Evaluate national and local costs and financial with the participation of leading technologically resources. developed countries and the support of international institutions, have encouraged and enabled China to both manufacture and export some key parts of CSP technology. 156 | Local Manufacturing Potential for Solar Technology Components in Egypt 9.2 Policies and Activities In 2001, due to natural resource scarcity, increase in of the Country to Support prices, and pollution from traditional sources, China began a policy of diversification of energy sources Local Solar Component to decrease its dependence on traditional fossil fuel. Manufacturing From 2001-07, China focused its policy on promoting Solar PV and CSP development in China is closely large-scale PV, improving the energy infrastructure, related to the government’s incentive policies. Since growing a domestic market, diversifying the energy the end of the 1970s, several research institutes supply, expanding energy security, and sustainably and universities in PRC, such as the Institute of developing the economy and society. Electricity Engineering of Chinese Academy of Sciences (IEE CAS), Shanghai Mechanics College, In 2002 the NDRC (National Development and Reform and Tianjin University, had engaged in fundamental Commission) initiated the Township Electrification research for CSP application. Tianjin and Shanghai, Program to meet the power needs of remote border respectively, set up 1kW tower solar power modeling areas in Western China. This program marks the devices and 1kW plate panel Organic Rankine cycle start of China’s beginning to install and construct solar power modeling device with low boiling point standalone renewable energy power systems. temperature mediums. Consequentially, this policy greatly stimulated the growth of China’s solar PV industry. At the beginning of the 1980s, with the U.S. company, Space Electronic, Xiangtan Electric- From 2004, China began to focus policies on the Mechanical Plant developed 2 sets of 5 kW parabolic large-scale promotion of solar energy. The main concentrating solar power generators. During the activity during this period was the installation the periods of China’s eighth, ninth, and tenth National solar panels in rural areas. Five-Year Science and Technology (S&T) plans, the key technologies of CSP were listed as national key In June 2004, a small Parabolic Trough receiver S&T projects and National Hi-Tech plan (the “863 vacuum tube heat collector with high temperature was Plan”) projects (China MOST 1986). Since 1993, developed by the Institute of Electricity Engineering output of domestic PV production has soared by 20 of the Chinese Academy of Sciences (IEE CAS) and -30 percent. PV development was not industrialized the Beijing Solar Energy Research Institute. The Dish- until the mid-1980s. In 1996, China’s former State Stirling technology was first adopted in the IEE CAS Planning Commission formulated plans for the High-Temperature Experiment Field in Tong County Brightness Program. Its aim was to try to use PV of Beijing. The latter technology was financed jointly modules and wind power systems to provide daily during the 10th Five-year plan by the “863 Plan,” the power for China’s 23 million people who were living Himin Solar Energy Group, and Xinjiang New Energy without electricity. Company. Chapter 9 | Solar Component Manufacturing in China | 157 In 2005 China formulated the Renewable Energy b. Management (regulation) Law, which became effective on January 1, 2006. • Assign a high-ranking body (Council of State) This law guarantees: the role to promote the national plan for the development of renewable energy • National targets for the development of renewable • Establish the responsibilities of the national and energy the local authorities. In addition, regulate and • A purchase policy, by which grid companies are implement the authority of energy officials at the required to sign an agreement to purchase RE national level (State Council) in relationship to the and provide grid connection services powers of the local energy authorities • An on-grid electricity price for renewables, similar • Regulate the protection of the rights and interests to a national feed-in tariff system of the producers and users of energy • Cost sharing, in which the cost of RE generation and grid connection is divided between utilities c. Incentives or assistance to entities of public or and electricity end users, and is supported by a private property to develop and use renewable surcharge on sales energy for local manufacturing of components • Special Fund for Renewable Energy, which offers • Generate programs for scientific and technological additional financial support and subsidies for development to increase scientific and technical research and development. research seeking to develop renewable energy. Establish and fund research and development During 2006-09, the government’s main activities to (R&D) enact its policies were: • Subsidize and provide tax relief to solar companies a. Planning • Provide assistance and support to services • Through collaboration and coordination between industry technology central and decentralized levels, develop a • Generate programs for reducing production costs national plan to expand renewable energies and optimizing the quality of these energies. • Analyze renewable industry market and registry of renewable companies • Conduct surveys from the State Council on the various renewable energy sources to coordinate technical regulation with related offices • Set benchmark goals and develop a long-term national development strategy for renewable energy 158 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 49 | MAJOR POLICY INSTRUMENTS IN CHINA’S 2006 RENEWABLE ENERGY LAW Instrument Specification National renewable Establishes strategic position of RE; identifies scale of market energy target development, types of technologies needed, and priority locations for development. Grid-connection priorities Grid companies must accept all power generated by RE with price fixed by government and are required to build systems to integrate RE with grid. Classification of tariffs for Government determines price based on 1 of 3 options: average cost, cost renewable energy power with advanced technologies, or bidding price. Cost-sharing at national Costs for on-grid RE electricity and off-grid generators in rural areas level shared by all grid consumers in country. Renewable Energy Covers: Technology research, standards development, and pilot projects; Special Fund household RE utilization projects in rural and pastoral areas; off-grid electrification projects in remote areas; RE resource assessments and evaluation; establishment of localized RE manufacturing industry. Special Fund comes from central and local finance as balance of cost sharing. Policies on favorable Financial institutions may offer preferential loans with national financial credit treatment interest subsidies to eligible energy development and utilization projects. National policy banks, national banks, bilateral aid funds, international multilateral aid banks, and financial organizations are able to supply favorable loans. Policies on favorable tax Preferential tax will be given to RE projects. treatment. Source: Ng 2011. During 2006-10, a 1MW solar power tower In 2009 the government of China announced the Solar demonstration project in Yanqing County of Roofs Program and the Golden Sun Demonstration Beijing was financed by the National 863 Plan, Program. The Solar Roofs Program provides to the and implemented by IEE CAS, to explore the supplier an upfront subsidy of 50 percent of the key technologies and equipment of solar power bidding price to supply the critical components for tower technology and verify its feasibility. With the roof top systems and Building Integrated PV. The implementation of the R&D and demo engineering Golden Sun Demonstration Program provides for of the tower system, concentrated solar thermal off-grid systems for solar PV projects of more than power (CSP) began to receive attention in China. The 500MW within 2-3 years. As of 2012, both programs industry chain is forming gradually. At the beginning had gone through 4 phases. of 2011, Chinese government issued the feed-in tariff for the first 50MW CSP plant in Inner Mongolia. This outcome shows that, for a new technology to be recognized and paid attention by the government and industry, the demonstration is important. Chapter 9 | Solar Component Manufacturing in China | 159 TABLE 50 | GOLDEN SUN DEMONSTRATION PROGRAM, 2009-12 Phase Year Approved Approved capacity Subsidy (RMB/W) projects (MW) SOLAR PV building Off-grid I 2009 98 201 14.5 20 II 2010 50 272 11.5 16 III 2011 140 690 C-Si:9.0,a-Si: 8.5 IV 2012 167 1,709 5.5 >7.0 Total 455 2,872 These two subsidy programs clearly demonstrate In July 2010, the first Fresnel system with 2,300 m2 China’s determination to support the adoption of area was built in Dezhou of Shandong province, by solar PV. Himin Group in cooperation with IEE CAS and China Huadian Engineering Company (CHEC). To promote CSP technology and industry breakthrough, in September 2009, the National On December 28, 2010, the groundbreaking Alliance for Solar Thermal Energy was set up with ceremony of a 10MW CSP testing demonstration the support of MOST (Ministry of Science and plant was held in Jayuguan of Gansu province. The Technology) of PRC. The objectives of the National plant was jointly invested by China Datang Corporation Alliance were to strengthen enterprises’ independent and Baoding Tianwei Group. Total investment was innovation capability and competitiveness for key 300 million CNY plus 20 hectares (ha) of occupied technologies. land. In January 20, 2011, the first concession bid for a full-scale CSP demonstration project in PRC–– The National Alliance is voluntarily constituted by the Inner Mongolia 50 MW trough CSP project–– enterprises, research institutions, and universities/ was opened. China Datang Corporation Renewable colleges involved in CSP-related R&D, manufacture, Power Co., Ltd., which had proposed 0.9399 CNY/ services, and investment. To date, the members of kWh was the successful tender. the Alliance have been increased to 65, including 34 enterprises, 19 universities, and 12 research On October 17, 2010, Gansu Provincial Concentrated institutes. Solar Power Innovation Strategy Alliance was set up in Lanzhou, first, to promote CSP application and The Alliance’s main tasks for CSP technology are: related equipment technology in Gansu province. The second objective was to strengthen exchange • Using intellectual property, develop 100MW CSP and cooperation among CSP-related enterprises technology and trough vacuum tube. in Gansu province and international and national • Research and master 100 MW solar tower power institutions. technology • Set up trough concentrating heat absorption Organized by Gansu Provincial Industry and system and vacuum tube production lines Information Commission, the Gansu Alliance was • Formulate the standards for CSP technology jointly established by 14 members. They include • Set up general testing platform. enterprises, universities, and research institutes, such as Datang Gansu Power Generation Co., Ltd., Aviation 501 Institute, and Langzhou Jiaotong University. 160 | Local Manufacturing Potential for Solar Technology Components in Egypt The targets of the Gansu Alliance are to: • Integrate the short- and long-term use of technology to maximize development potential. • Create innovation schemes based on enterprises, Integration will set the priority technologies applied oriented by market and combined with industry, to renewable energies and give importance to universities, and institutes the less developed technologies that have good • Integrate and share innovation resources, and prospects for the future such as photovoltaic and strengthen cooperative R&D biofuels. • Overcome bottlenecks of key common CSP • Harmonize policy incentives with market technologies mechanisms. The government will establish • Speed up commercialization of R&D results economic incentives to promote the use of through technology transfer renewable energy technologies to solve the • Strengthen competiveness of CSP industry problems of cuts in service delivery and lack of • Train and exchange personnel access to electricity in rural areas. • Cultivate integrated CSP industry. • Adopt market mechanisms to encourage participation by investors. This adoption will In the span of a decade, China’s PV solar panel increase the technical level of RE technology and production has risen dramatically: From supplying progressively improve competitiveness to achieve 1 percent of world PV production to becoming the large-scale development. world’s largest exporter of solar panels, with over 40 • Provision financial resources (managed through a percent of global market share (Richardson 2011). special fund) to optimize the technologies used in the generation of RE: Through its Development Plan for Renewable Energy – Reduce costs and the high levels of PV technology production, – Develop and implement the projects to China is taking steps to improve the domestic market generate REs in remote areas that lack to stimulate local solar component manufacturing. sufficient energy connections To stimulate domestic demand for PV technology, – Finance clean energy projects in rural areas the government has announced targets to generate – Install information networks to harness RE 15GW of power from solar capacity by 2015, and – Finance local production of the necessary 20GW by 2020 (E-Young 2012). equipment to develop RE development and improve the quality of the final product. Goals, objectives, and main activities for the • Force local governments to develop plans development of RE to ensure the promotion of the exclusively to the promotion of renewable market and RE industry from 2007 to 2020 are to: energies. • Design and Implement incentive schemes and • Ensure the promotion of the market and financial support for the local implementation of renewable energy industry. Increase market RE projects. The approval is for government aid demand for RE (a) to create conditions for the rather than local scope. development of an energy industry and (b) to • Provide preferential loans and subsidized interest self-promote technological development to rate for RE projects that are in the Renewable advance manufacturing equipment and improve Energy Industry Registry. (It is a grant under competitiveness. These measures will ensure a the legislation and is mandatory for financial solid foundation for the long-term development of institutions.) RE in China. • Establish tax incentives and provide tax benefits for projects recorded in the Renewable Energy Industry Registry. Chapter 9 | Solar Component Manufacturing in China | 161 9.3 Extent of In-Country In the 2000s, to promote, foster, and encourage Demand Versus Demand producers of RE technologies, China set policies similar in many respects to those of other leading for Exports of the countries. During those years, China experienced Country’s Solar Component significant growth in domestic demand and Manufacturing Capacity, increased its industrial production and exports of solar photovoltaic cells and modules. and its Evolution and Correlation with Policies China’s rapid growth in RE capacity has reflected its emphasis in the country’s 11th and 12th Five- and Markets Dvelopment Year Plans (2006-10 and 2011-15). The proportion of renewable energy in total national energy Since 1990, the Chinese government has consumption is targeted to be above 9.5 percent implemented policies and strategies to stimulate (British Chamber of Commerce in China/China- solar PV and CSP growth. CSP development has Britain Business Council 2012). benefited from a policy of financial support for R&D. During 2005-09, MOST (Ministry of Science and The following figures reflect that Chinese producers’ Technology) invested over 100 million yuan (CNY). PV technology output during the 2000s was bound MOST has worked with universities and top institutes overwhelmingly for foreign markets. Less than 5 to develop CSP technologies and elements such as percent of the solar PV production was absorbed by Parabolic Troughs, towers, and dishes. China’s domestic consumers. Chinese companies recently have been producing half of the world’s “China accelerated its transition from a centrally PV component output (The Pew Charitable Trusts planned to a market economy and integration into 2011b). the global economy, taking a series of important measures such as deepening economic restructuring Figure 142 | China Solar PV, Domestic in almost all the sectors, making the country strong Installation vs | Export, 2005-10 through developing science and education and tapping human resources, implementing sustainable development strategy and western development strategy, strengthening social safety net, and combining bringing in and going global to encourage its economic and social development and opening up. By the end of the 20th century, China already had achieved its strategic development goals of the first two steps in the modernization drive, quadrupling its GDP and per capita GDP by 2000 from 1980 ahead of schedule” (UNCTAD 2005). Source: The Pew Charitable Trusts 2011b. From the 1990s to 2000, Chinese solar manufacturers benefited from the new policies and strategies implemented by the government. The production of photovoltaic solar energy in China was small scale, and production was destined for an internal market of low demand. 162 | Local Manufacturing Potential for Solar Technology Components in Egypt The domestic installed capacity of solar PV started are capital, technology, and value intensive45 from a very low base. Its growth rate began to • Implementation of environmental policies to accelerate only after 2008. Domestic installed reduce the harmful impacts of rapidly growing capacity thus remains at an insignificant level both Chinese industry.46 in international terms and in relation to Chinese PV producers’ massive output. Together, these interrelated political developments have strongly influenced the objectives, outcomes, Figure 143 | China Solar PV Capacity, and consequences of China’s renewable energies 2002-10 technology push. In 2009 when Chinese manufacturers of modules had achieved substantial positions in the world market, the Chinese government set policies and programs to increase domestic demand and R&D grants to build capacity silicon manufacturing. In recent years, due mainly to the economic crisis, European countries reduced subsidies for RE installation. Consequently, the demand for solar cells decreased. In 2010, at 33 percent, China was producing a majority of the world’s silicon output, but little was being exported (SEIA 2011). These circumstances created Chinese industry’s overcapacity and depressed prices and profits. To offset the decline in prices and export benefits, Source: The Pew Charitable Trusts 2011b. maintain social stability, promote exports, and hold its position in the international market, the Chinese The Chinese government’s policies for development, government reestablished governmental grants and the participation of top universities and institutes along subsidies so that manufacturers of components with leading technologically developed countries, could bear the manufacturing costs. and the support of international institutions have encouraged and enabled China to both manufacture and export key parts of CSP technology. In the twentieth century, three basic circumstances 45. “Beginning in the late 1990s, the Chinese government sharpened its focus on developing industries considered strategic facilitated the evolution of Chinese renewable energy for reasons of national security, economic infrastructure, or critical supply chains” (Mattlin 2009). production and the development of the RE industry: 46. Recent directives have targeted energy conservation (2007 • Government policies that increased Chinese Energy Conservation Law); RE implementation (2005 Renewable Energy Law and a 2009 amendment); 2007 Medium and Long- presence in the international market44 Term Development Plan for Renewable Energy (China NDRC 2007); and emissions reduction (2009 and 2010 State Council • Increased emphasis on strategic industries that Notice on Energy Conservation and Emission Reduction). In addition, the China Greentech Initiative (2009) identified key sectors to be developed, including cleaner conventional energy, renewables, green building, and cleaner transportation 44. “The macroeconomic importance of exports began to and industry generally. In a related development, the central increase, as the Chinese government more actively utilized government committed to reduce CO2 emissions by 45% by net export-promoting policies regarding exchange rates and 2020 (China State Council of China 2010), is enforcing limits taxation” (Liu and Goldstein 2013). on vehicular gasoline consumption, and is building an electric railway system. Chapter 9 | Solar Component Manufacturing in China | 163 The international recession demonstrated the targets for solar capacity installation for 2015 and vulnerability of Chinese industry to fluctuations in 2020 to 9 GW and 50 GW, respectively (British external demand for PV technology. China increased Chamber of Commerce in China/China-Britain its objectives and incentives for domestic absorption. Business Council 2012). In 2011 China announced sharp increases in its TABLE 51 | CHINESE GOVERNMENT POLICY SUPPORT FOR RENEWABLE ENERGY INDUSTRY, 2005-11 Year Policy Details 2005 Renewable Energy Law Renewable energy to account for 10% of total energy consumption in 2010, 20% by 2020. Increase share of total electricity from nonhydro- renewable energy from 1% in 2010 to 3% in 2020. 2006 Renewable Energy Electricity generated by renewable energy priced by the Electricity Price Sharing and government. Portion above the market price for conventional Management electricity would be shared by all electricity consumers. 2007 Medium- and long-term Construct large-scale wind farms in Northern China and small- development plan for to-medium-sized wind farms in other areas. renewable energy in China Set up off-shore wind power generation pilot projects with at least 100 MW capacity by 2010, 1000 MW capacity by 2020. Promote solar PV power plants in remote areas to address electricity shortage problems. Target 1,000 roof-top solar PV projects nationwide by 2010, 20,000 by 2020. 2007 Notice of construction of Construct model solar PV power plants with at least 5 MW large-scale solar PV power capacity in Inner Mongolia, Yunnan, Tibet, Xinjiang, Gansu, plants Qinghai, Ningxia, and Shannxi provinces. 2008 National Energy Bureau Promote policy making for energy development and created reconstruction; manage national oil reserves, natural gas, coal, and electricity. Propose strategic policies in renewable energy and energy conservation. Manage international cooperation and ensure adequate supplies of oil. 2008 Tenth Renewable Energy Promote application of solar heat and solar PV energy in new Five-Year Plan buildings. Set target for aggregate installed capacity of wind energy to be at least 10.0 GW, and for solar PV energy to be at least 0.3 GW. 2009 State Council Notice on Enforce use of RE in new residential and office buildings. Energy Conservation and Reconstruct and upgrade industries with high energy Emission Reduction consumption and high emissions. Merge or close small inefficient power-generation plants. 164 | Local Manufacturing Potential for Solar Technology Components in Egypt 2009 Solar Energy Construction Subsidize 20 CNY (US$2.94)/kWp. Subsidy Funds Management Subsidize solar PV products, which need at least 50 kWp installed capacity. Give priority to solar PV products applicable to new buildings, schools, hospitals, and other public infrastructure. 2009 Notice on Golden Sun Model Subsidize total investment for qualified solar PV generation by Project 50%; subsidize projects in remote areas with no electricity by 70%. Subsidized projects must operate no fewer than 20 years Solar PV generation units must have at least 0.1 billion CNY (US$14.7 million) registered capital. Single projects must have installed capacity over 300 kWp. 2009 Renewable Energy Select and subsidize qualified model cities, with 50 million Construction Model City Plan CNY-80 million CNY (US$7.35 million-11.76 million) per city. Model cities must have RE coverage in over 30% of the newly constructed area. 2010 National Energy Committee Highest level energy agency in China, directed by Premier created Wen Jiabao, and Vice Premier Li Keqiang. Directly supervise Energy Bureau. Unify national strategy for energy, ensure energy security, and coordinate energy development. 2011 Twelfth National Energy Reduce costs of solar PV energy to compare with Technology Five-Year Plan conventional energy. (2011-15) Create research and development capability for solar PV facilities with at least 1 MW capacity. Construct grid solar PV power generation system with 100 MW capacity. Source: Li and others 2010. The downstream cells and modules segments 9.4 In-Country Research industries have been characterized by lower entry and Development Capacity barriers and intense competition.47 PV cell and in Solar Component module production are labor and energy intensive, both factors with which China is well endowed. In Manufacturing addition, PV cell and module producers benefited from an influx of Chinese executives returning from In 1970 China began its own research and technical abroad, where they had gained valuable experience development. However, most of China’s development in leading international solar technology firms. China at the time was aligned with the progress in other entered this industry early and now dominates the parts of the world. market. The Chinese solar PV companies began with the downstream segments of the industry manufacturing components. Downstream segment manufacturing 47. The 2010 4-firm concentration ratio in cells was only 24%. requires an energy- and labor-intensive process of Both segments experienced rapid year-to-year turnover among the leading firms as Chinese companies entered the market (U.S. turning wafers into cells, and cells into modules. DOE NREL 2011). Chapter 9 | Solar Component Manufacturing in China | 165 During the 2000s, China’s upstream manufacturing As a result, market concentration and profits have utilized the Siemens method, the state-of-the-art been high at this end of the PV value chain. In 2010 technique in silicon purification. Upstream segment the top 4 firms––only 1 Chinese––accounted for manufacturing requires high levels of technological 58.5 percent of the market, and 2009 profit margins capability and investment which, in tandem, create exceeded 40 percent (Green Rhino Energy 2012). sustainable competitive advantage for market leaders and significant barriers for would-be entrants. This process depends on extensive experience in ‘‘precisely controlling the parameters of all the chemical reactions’’ (de laTour and others 2011). TABLE 52 | RENEWABLE ENERGY INDUSTRY AND MARKET ENTRY DYNAMICS Technology Global industry dynamics Chinese entry path characteristics Solar PV—(upstream) Distinctive producer Highly concentrated, with Policy level: Subsidize silicon, ingots, and capabilities built through persistent early-leader R&D. wafers distinctive experience. positions. producer capabilities Process control affects Up-front expenses Firm level: Build quality-cost nexus. and expertise required capabilities via Quality, intellectual to reduce backward domestic sales; property, R&D critical to integration threat. pursue export quality. value. Profit margins wide. Solar PV— Turnkey production lines Fragmented; rapid change Policy level: None (downstream) cells, available. in market shares as required. modules Capabilities available via Chinese firms enter. hiring, vendor training. Attracting forward and Firm level: Purchase Energy, labor costs backward integration. and hire for critical to value. Profit margins thin. equipment and know- how; produce low- cost exports. Sources: De laTour and others 2011; Green Rhino Energy 2012; Zhou and Wang 2009; Zhao and others 2012; IHS 2013. In CSP technology, the participation of top most central tower components. However, China universities and institutes along with leading does not have the same ability to make Parabolic technologically developed countries and the Trough collectors. China is implementing processes support of international institutions have benefited to increase its manufacturing capacity at all stages and enabled China. Industry in China has sufficient of the production chain and to achieve production capacity to manufacture most of the inputs used in projections that satisfy the internal market. CSP projects: glass, metal frames, molten salts, and 166 | Local Manufacturing Potential for Solar Technology Components in Egypt 9.5 Partnership TABLE 53 | CHRONOLOGICAL Arrangement with OVERVIEW OF KEY RESEARCH AND INNOVATION POLICY PROGRAMS, International Solar 1982-2003 Technology Expertise Chronological Overview of Key Research and Innovation Policy Programs Since 1999, Chinese R&D investment has increased National Key Technology R&D Program 1982 annually by approximately 20 percent. In 2005 Rude Key Laboratory Program 1984 investment reached 1.3 percent of gross domestic Resolution on the Reform of Science and product (GDP), compared to only 0.7 percent in Technology (S&T) System (1985) 1998. This growth has been possible due to the fact Spark Program 1985 that China´s leaders: 863 Program 1986 Torch Program 1988 • Strongly believe in the potential of technology National New Products Program 1988 • Fully understand the problems associated with National S&T Achievements 1990 current technological changes Dissemination Program • Adopt the necessary measures through National Engineering Technology 1991 Research Centers technology programs and international R&D and Climb Program 1992 innovation. Endorsement of UAE by State Science 1992 and Technology Commission (SSTC) To continue growing in technology development, Science and Technology Progress Law 1993 China is creating and implementing a highly ambitious 211 Program Ministry of Education of the 1993 program of innovation, technology, and science. Its People’s Republic of China (MOE) objectives are to: Decision on Accelerating S&T Progress (1995) Law for Promoting Commercialization of 1996 • Promote basic research S&T Achievements • Promote R&D of new technologies in selected Super 863 Program 1996 areas 973 Program 1997 • Create the necessary infrastructure for scientific Chinese Academy of Sciences (CAS) 1998 research Knowledge Innovation Program • Develop R&D human resources, and reward scientific-technological excellence. Decision on Developing High-Tech and 1999 Realizing Industrialization 985 Program 1998 Innovation Fund for Technology-based 1999 Small and Medium Enterprises (SMEs) Guidelines for Developing National 2000 University Science Parks Action Plan for Promoting Trade by S&T 2000 Chinese National Laboratories (Program) 2003 Source: Spain CDTI 2010. Chapter 9 | Solar Component Manufacturing in China | 167 In 2006 Chinese government published the Strategic an important collaborative mechanism. The joint Plan for Science and Technology for Medium and research projects have financial support from the Long Term (2006-20) (China MOST 2006). The Plan’s governments and research/industry partnerships objectives are to: (including partnerships between the countries’ research organizations and Chinese industry • Increase the innovative capacity of firms. partners). Research, investigation, and development will be main pillars of its future economic growth. Joint workshops, seminars, and symposia were • Achieve great discoveries in areas of interest noted by respondents as important means of worldwide as both technology and development facilitating collaboration. Many responses indicated for basic research. that these events are underpinned by their formal • Reach 2.0 percent of gross domestic product collaborative arrangements. The possibility of (GDP) in 2010 and 2.5 percent in 2020 in R&D. face-to-face meetings with Chinese partners at • Technology and innovation will contribute 60 these events is considered particularly valuable, percent of GDP. giving international researchers the opportunity to • Reduce dependence on foreign technologies strengthen partnerships by identifying new research by more than 30 percent. (In 2005 the share of goals and building research collaborations. spending on imported technology, compared to the cost of R&D, was approximately 39 percent). To incorporate foreign talent in China, nine cities have • Attain level of the top five countries in number of established incubators for international companies. national patents. International business incubators are created to provide appropriate environments for foreign experts China is a member of the Energy Working Group of in China to innovate and expand from there to the Asia Pacific Economic Cooperation (APEC), the international markets. Specialized incubators focus Association of Southeast Asian Nations (ASEAN), their activities on attracting particular industries the China, Japan and Republic of Korea Energy promoted by national policies, such as renewable Cooperation, the International Energy Forum, the energy World Energy Conference, and the Asia-Pacific Partnership on Clean Development and Climate. Multinational companies operating in China have China has taken on a wide range of international been established at major universities, such as commitments; and an active role in exploring Tsinghua University, and are collaborating with technology, environmental protection, renewable the universities’ laboratories. In many cases, the energy, and finding new energy sources. universities themselves are the ones that seek to collaborate with companies located in areas of high- China has established bilateral agreements and tech development, incubators, and science and mechanisms for dialogue and cooperation in the field technology parks. of renewable energy technology development with producer countries such as the European Union, China wants to boost its investment in renewable Japan, Russia, and the U.S. resources by encouraging the incorporation of technology, management experience, and foreign Representatives of China have signed with capital. The country has enacted laws and policies institutions and universities in other countries: formal to encourage business creation and develop Sino- arrangements, memoranda of understanding, foreign equity: Law on Sino-Foreign Equity Joint collaborative partnership agreements, and letters of Ventures, Law on Sino-Foreign Cooperative Joint intent. Joint research projects also were considered Ventures, and Law on Foreign Capital. 168 | Local Manufacturing Potential for Solar Technology Components in Egypt In 2002 China revised its Industrial Guidance Catalogue for Foreign Investment. The government set its policy on the appropriate use of the flow of foreign direct investment (FDI). The FDI will support a production model that relies on technology transfers (TTs) to achieve a substantial technological improvement of Chinese enterprises, and forces foreign companies to invest in local partners as “joint ventures.” Internationally, China is one of the leading investors in Europe and the United States. China also is increasing its overseas renewable energy investments through partnership arrangements with international solar technology experts. Figure 144 | Trade, Investment, and Contribution to China’s Balance of Payments Surplus, 2005-11 Source: Tan and others 2013. Chapter 9 | Solar Component Manufacturing in China | 169 10 CHAPTER 10: Solar Component Manufacturing in Brazil 10.1 Executive Summary 10.2 Policies and Activities and Key Findings of the Countries to Support Local Solar Component Brazil possesses major potential in renewable energy Manufacturing resources, including solar, wind, biomass, and hydraulic potential. At the same time, Brazil is one of the fastest growing countries in its region. The As part of its strategy to maintain its historically 2010-19 forecasts point to an annual GDP growth renewable energy matrix, Brazil now is looking of 5.1 percent (Meisen and Hubert 2010), which in beyond hydraulic and biomass energy to wind and turn would require a concurrent major expansion solar power, particularly. The Brazilian approach to of the energy sector. One of Brazil’s priorities is to solar energy is directed toward CSP and PV as well, ensure the continued renewability of its energy although both are still incipient. matrix, which, thanks to the country’s large hydraulic potential, already is more than 70 percent renewable As of 2001, installed PV power in Brazil was 20 MWp (Empresa de Pesquisa Energética 2009). (Empresa de Pesquisa Energética 2009). Most of this power was installed under the auspices of two Brazil has significant experience with some renewable programs: (a) Light for All (Luz para Todos) program sources, specifically wind power. The country is headed by the Ministry of Energy and Mines (MEM) to developing a relevant wind component industry supply electricity to isolated areas and communities alongside the wind energy generation, solar energy in the Brazilian Amazon, and (b) Program for and, more specifically, associated solar component Energy Development of States and Municipalities manufacturing industries. These last are still at a very (PRODEEM), launched by the federal government in incipient stage. This status was expected to change 1995. Most of this capacity is in off-grid installations. because solar energy was part of the power tender The largest solar power plant, located in the city of carried out in October 2013, although finally no Taua, is a 1 MW plant operated by MPX Energía. solar plants were among the winning bids (Empresa de Pesquisa Energetica 2013). In any case, the Brazil has more experience in the development of development of the industry will require coordinated wind energy. This case is worth highlighting due to effort on the part of the different players. the possible parallel with future solar energy and component manufacturing capacity development, particularly on how to capitalize on strengths and avoid weak points. 170 | Local Manufacturing Potential for Solar Technology Components in Egypt Brazil has an installed capacity of 1,509 MW of wind the industry and energy projects. The requirements power (IRENA and GWEC 2012), more than half are negative in that they put an additional strain on of that installed in Latin America. The first projects project development and could exclude companies were installed mainly with financing from PROINFA, that could otherwise be strong players in the sector.51 a program managed by Eletrobras to support the development of investments in alternative sources of The final results remain to be seen as the contracted electricity. PROINFA’s main objective was to increase wind farms are built over the next few years. Because the quota of renewable energy in Brazil. The first the Brazilian tenders have elicited considerable phase (2002-09) included tenders of 1,100 MW each interest, they have made prices more competitive for wind, biomass, and small hydro plants.48 than may have been thought possible, while developing the local wind component industry. Brazil However, after the first phase of PROINFA, the already has developed the industrial competence to Brazilian government moved to specific electricity produce wind turbines from 250 W to 3 MW for both auctions (tenders) for wind power generation as a domestic use and export (Ramos Martins 2011). mechanism for driving new wind power capacity. Among the companies involved are IMPSA WIND, Since 2009, reverse price auctions have been the Wobben WindPower, General Electric do Brasil, main mechanisms employed in Brazil to incentivize ENERSUD, ELETROVENTO, and TECSIS, as well the development of wind power. The auctions have as some international players. It is expected that the steadily led to a fall in the price per MWh of wind sector will implement a manufacturing base capable energy to the point at which wind power is now of producing from 2.0 GW-2.5 GW of wind power competitively priced.49 Advantages of the auction equipment per year (IRENA and GWEC 2012). system are that it rewards efficiency in the process and ensures transparency and fairness, encouraging Based on the success of the wind sector, Brazil bidding by as many prospective bidders as can is hoping to replicate the same success for solar qualify and avoiding collusion.50 energy52 and solar component manufacturing. In 2013 the government announced that solar projects, The Brazilian wind energy tenders have generated both CSP and PV, would be able to participate in significant interest from various multinational and the auction held in October 2013. However, solar Brazilian companies establishing themselves in had neither its own reserved demand nor special Brazil for the manufacture/assembly of equipment. incentive, so it had to compete on equal terms with Brazilian tenders do not include local component wind. The final results of the auction included no development requirements. Partly due to this fact, solar plants among the winning bids (Empresa de funding from the Brazilian National Development Pesquisa Energetica 2013). Bank does have additional local requirements. These have both positive and negative connotations. The requirements are positive in that the conditions encourage (almost guarantee) the development of 51. At the end of 2012, Banco Nacional de Desenvolvimento Economico e Social, Brazil’s development bank, increased local- 48. The wind quota was increased to 1,422 MW via re-management content requirements for wind turbine manufacturers. Under of the noncontracted portion of biomass projects. these requirements, developers asking for loans need to source 49. Additionally, Brazil has employed tax incentives in the form 60% of the turbine components locally, and assemble or produce of an exemption from tax liability of approximately 30% of the at least 3 of the 4 main wind-farm elements (towers, blades, investment (IEA-PVPS Executive Committee 2007). nacelles, and hubs) locally as well. 50. However, the Brazilian tenders are not without problems. 52. In April 2012, ANEEL (Brazilian National Agency of Electrical There are still doubts as to whether all the MW awarded can be Energy) approved an important piece of legislation for the solar delivered at the very competitive prices offered in the auction. industry, putting in place regulation for net metering for solar The reason is that, in the Brazilian auction system, the determining systems up to 1MW and granting utilities an 80% reduction in criterion for the winning bid is the lowest tariff (that is, the lowest distribution taxes for power generated by solar plants up to price/MWh) to meet the forecasted demand. 30MW in size, in an attempt to incentivize sector development. Chapter 10 | Solar Component Manufacturing in Brazil | 171 10.3 The Extent of In- Brazil is now increasing its emphasis on green Country Demand Versus technology research, including solar energy and solar components. In 2004 the Solar Energy Technological Demand for Exports of the Nucleus of the Pontifical Catholic University of Rio Countries’ Solar Component Grande do Sul, the Ministry of Science and Technology, Manufacturing Capacity the Secretariat of Energy, Mines and Communication as well as the Secretariat of Science and Technology and Its Evolution and from Rio Grande do Sul, the Municipality of Porto Correlation with Policies Alegre, and the State Electrical Utility Rio Grande do Sul (CEEE) established the Brazilian Centre for and Markets Development Development of Photovoltaic Solar Energy. Among other issues, the center is working on silicon solar Due to the current nonexistence of a solar component cell processing, developing static concentrators, industry in Brazil, plants to be developed in the short and designing standalone systems (Moehlecke term will have to import components. However, using and Zanesco n.d.). The third area is of particular the example from wind, Brazil very likely will take the interest to Brazil due to the large number of isolated opportunity to ensure that, in the medium term, in- communities living in the Brazilian Amazon. country demand is met as much as possible through local manufacturing capacity. In 2012 the Studies and Projects Financing Agency (FINEP), a public company administered by Brazil’s However, a few major suppliers already are Ministry of Science, Technology and Innovation, working in the country and could supply key solar launched the Sustainable Brazil Programme. The components.53These suppliers include: latter will distribute some US$10 million in lines of credit for initiatives to preserve natural resources. • Condensers and heat exchangers: Alfa Laval and The program responds to a demand perceived by Spirax Sarco FINEP, which over the last 8 years has provided • Pumps: Ensival Moret, Flowserve, Ruhrpumpen US$2.3 million in financing for projects with a “green” • Solar glass (TF): Pilkington, Saint Gobain, Guardian. component. Recently, several Brazilian solar R&D projects have 10.4 In-Country Research made it into the news. One example is the plastic and Development Capacity solar panels printed with photovoltaic cells created by in Solar Component scientists at CSEM Brazil, a research institute based in Minas Gerais.54 This project had the support of the Manufacturing Minas Gerais State Research Foundation (FAPEMIG); venture capital firm, FIR Capital; and the Centre Research and development in solar is not new in Suisse d’Electronique et de Microtechnique (CSEM). Brazil. As early as 1979, after the second world oil crisis, the Brazilian government began to encourage research efforts in solar energy, particularly solar cells. However, efforts waned over the next decades. It was only in 1995, with the implementation of PRODEEM, that solar research picked up. 54. The technology to produce these organic photovoltaic cells has been studied in Europe and the United States for a number of 53. Excludes small companies positioning themselves for years but now has been further developed in Brazil (Marcondes installation, engineering, and general project development. 2013). 172 | Local Manufacturing Potential for Solar Technology Components in Egypt 10.5 Partnership Another joint venture is that between Gehrlicher Arrangement with Ecoluz Solar do Brasil, the Chinese equipment provider Yingli, and U.S.-based United Solar Ovonic International Solar Corp, which will be installing solar panels at the Technology Expertise Pituacu sports stadium in the city of Salvador in a project financed by the Companhia de Eletricidade The private sector also wants to stay abreast of new do Estado da Bahía and the state government.55 innovation opportunities. As an example, the Brazilian Electrical and Electronics Industry Association Foreign-made equipment will not be eligible for loans (ABINEED) has set up the Photovoltaic Sectoral at below-market rates from Brazilian Development Group. The group intends to identify and propose Bank (BNDES) may be a barrier. It has been suggested strategies and demands that, from the point of view that Chinese module makers, for example, which are of private companies, would help drive the sector. being shut out of Brazil, may be shifting sales to Chile (Nielsen 2012). Joint ventures also are developing between Brazilian and international companies to jointly carry out solar projects. An example is the case of the 1.1MW project announced in 2013 to be built jointly by Petrobras and SunEdison, a California-based company with 989 MW of interconnected electricity around the world. SunEdison specializes in wafer and cell manufacture but also develops, finances, installs, and operates solar plants. The construction of the plant is part of an initiative led by Petrobras within the structure of the Research and Development Program of the Brazilian Electricity Regulatory Agency. The plant then will be operated by the SunEdison Renewable Operations Center. 55. Brazil planned to use some of the events in the country, such as the 2014 FIFA World Cup, to showcase its potential as an emerging solar country. Chapter 10 | Solar Component Manufacturing in Brazil | 173 174 PART F | Recommendations for a Road Map for Development of Solar Industry in Egypt 175 11 CHAPTER 11: Recommendations for the Development of Solar Industries in Egypt 11.1 Introduction Eight issues have been identified as priorities to address: The analysis and insights obtained during both the Issue 1: Visibility of the pipeline information-gathering mission in Egypt and the later Issue 2: Capital availability workshop have highlighted a series of issues that Issue 3: Qualified labor requirements need to be addressed for Egypt to be able to develop Issue 4: Technology transfer the solar component industry for key components. Issue 5: Clustering Issue 6: Materials supply Issue 7: Exports Issue 8: Certification and accreditation. The specific actions that can be carried out, taking into account the Kom Ombo project and the newly announced large-scale PV projects in Egypt, are described separately. 176 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 54 | ISSUE DEFINITION AND OBJECTIVES Issue Stakeholders Definition Objective Visibility of Policy makers: The private sector Give visibility on the pipeline Ministry of Electricity and Energy (MoEE) has little visibility the pipeline to the New and Renewable Energy Authority on the developing private sector, so (NREA) pipeline, so it does that it perceives the Egyptian Electricity Holding Co. (EEHC) not perceive the demand as credible Egyptian Electricity Regulatory Agency demand (both and can react (EgyptERA) public and private) appropriately. Ministry of Industry and Foreign Trade and does not (MIFT) react. Ministry of Investment (MoI) Capital Financial institutions: The capital market Ensure enough availability Commercial banks (local banks and non- is difficult to capital is available local banks) access (both in to develop Specialized banks and financial institutions terms of equity the sector operating in the fields of investment and and loan), and competitively, credit for industry, and development expensive (two- with appropriate Policy makers: digit zone). payback periods. Ministry of Finance (MoF) Ministry of Investment (MoI) Ministry of Industry and Foreign Trade (MIFT) Private sector Qualified Policy makers: Training is Develop training labor Ministry of Industry and Foreign Trade required to ensure programs to ensure requirements (MIFT) international all necessary Ministry of Electricity and Energy (MoEE) quality standards capabilities New and Renewable Energy Authority are met, including are in place to (NREA) both skilled development the Ministry of Education engineers and sector. Ministry of Higher Education and Scientific managers for the Research manufacturing Private sector process and specific training for installation and maintenance. Technology Policy makers: Local industry is Identify know- transfer Ministry of Industry and Foreign Trade lacking some of how requirements, (MIFT) the know-how and acquire the Egypt Technology Transfer and Innovation required on both know-how over the Center (ETTIC) the manufacturing shortest period. Industry Modernization Center (IMC) processes and the Ministry of Higher Education and Scientific solar market. Research Academia: Academy of Scientific Research Research Centers Universities and technical institutes Private sector Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 177 Clustering Policy makers: Company Define, design, and Ministry of Industry and Foreign Trade dispersion leads to develop clustering (MIFT) lost opportunities opportunities to Industrial Development Authority (IDA) in synergies and maximize synergies Federation of Egyptian Industries (FEI) economies of in Ministry of Investment scale. the sector and General Authority For Investment (GAFI) encourage new Private sector entrants. Materials Private sector The increase Monitor this supply in demand of phenomenon and local materials give visibility to caused by the upstream actors in development the of the solar sector so that they component can be prepared industry could in both quality and impact material quantity. supply and price. Exports Policy makers: Egyptian exports Identify key export Ministry of Industry and Foreign Trade might be affected markets and (MIFT) by internal develop future Egyptian Export Promotion Center (EEPC) customs duties, agreements to Export Credit Guarantee Company (ECGE) destination minimize this risk. Export Development Bank of Egypt (EDBE) customs duties, or Ministry of Finance other requirements Ministry of Investment imposed by Private sector destination countries. Certification Policy makers: The adoption Design and and Ministry of Industry and Foreign Trade of international facilitate the accreditation (MIFT) quality standards development Egyptian Organization for Standardization is necessary for of Egyptian and Quality (EOS) both exports standards, Egyptian Accreditation Council (EGAC) and the internal encouraging Ministry of Electricity and Energy (MoEE) market. communication New and Renewable Energy Authority between national (NREA) and international Egyptian Electricity Regulatory Agency laboratories. (EgyptERA) Private sector Specific recommendations to address each of the key issues above have been formulated as an action plan that details short-, medium- and long-term initiatives and actions. 178 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 55 | ACTION PLAN AND TIMELINE Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 179 11.2 Issue 1: Visibility of the Pipeline Potential targets and objective: To make Egypt’s plan a reality, giving visibility of the pipeline to the private sector, so that the latter perceives a credible demand and can react appropriately. It includes visibility both on 2027 Solar Plan targets of 2,800 MW of CSP and 700 MW of PV; and on private demand stemming from other solar applications. Figure 145 | Visibility of Pipeline Action Plan 180 | Local Manufacturing Potential for Solar Technology Components in Egypt TABLE 56 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 1 Immediate Actions (Year 1) Key Barriers Addressed 8 1. Analyze possible mechanisms to develop the pipeline. Lack of clear incentive Within the Egyptian context, analyze the main mechanisms mechanism(s) to turn the targets and incentives that other countries have used to develop into a reality, guaranteeing renewable energies––Feed-In Tariff, Feed-In Premium, demand and allowing for Tenders, Clean Energy Quota (production and/or financing. consumption-based), pilot and demo projects, green certificates––considering the advantages and disadvantages of each and their forecasted impacts. The objective is for policy makers to have clear inputs from which to select the best set of mechanisms for the Egyptian context. 2. Select and put in place the mechanism(s) of choice. From the See barrier in number 1 above. above analysis, policy makers shall define the set of tools and a communication strategy to develop investor awareness. 3. Develop a credible action plan. In conjunction with the Lack of visibility of the pipeline. establishment of the selected incentive mechanisms, policy makers need to develop a detailed, credible action plan to allow investors visibility into how the incentive mechanism is designed to reach the 2027 target. The action plan should detail either indicative or binding intermediate targets at appropriate intervals. In this way, milestones and achievements in the sector can be communicated transparently to all stakeholders. Targets and actions should address the different technologies for CSP and PV and their applications. 4. Make permit and license processes more agile. Policy makers Long administrative lead times, should streamline permits and licenses required to develop complex access to land, and these kinds of projects to minimize administrative burden access to grid. on project developers and incentivize a faster development of the pipeline. Streamlining would include environmental requirements, access to land, and access to grid license processes, thus reducing costs and risks. 5. Inform society of the milestones being achieved. Policy See previous paragraph. makers should set up a communication strategy to update society, potential investors, financial institutions, and others of plan’s achievements, any delays, and any needed corrective actions. 6. Identify success stories or pilot projects, promote and Lack of visibility of the pipeline. communicate them The solar cluster or the appropriate agencies of the Ministry of Industry can support the development of some high-visibility and potential projects to serve as references and to start the industry. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 181 TABLE 57 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 1 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Implement technical and environmental regulation. Where Lack of regulatory clarity for changes to technical or environmental regulation are certain procedures, such as grid required––for example, regarding regulatory clarity for grid access and connection policies. access and connection, independent power producer, self- production––policy makers should work to solve doubts and implement required changes. 2. Analyze effectiveness of the mechanisms implemented. Lack of visibility of the pipeline and Two to three years after implementation of the mechanisms, to project developments. policy makers should be in a position to do a first analysis of the effectiveness of the mechanisms implemented, for number of MWs, cost, and benefits achieved by the projects. TABLE 58 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 1 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Review mechanisms and introduce new ones. Depending Lack of clear incentive on the success and cost of the selected mechanisms, mechanism(s). and on the developing cost and maturity of the different technologies, policy makers should review the mechanisms to see whether they should be maintained or whether any changes or revisions should be applied. 2. Focus on external pipeline development. Once project Strong international competition in development in Egypt is heading in the right direction, using the sector. the experience gained during these years, policy makers should direct their attention to developing the external pipeline and making sure that Egypt becomes a strong, international competitor in the solar energy sector. 182 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.3 Issue 2: Capital Availability Potential targets and objective: To ensure enough capital, at competitive rates, is available to develop the sector, ensuring appropriate payback periods. The objective is to use all available sources of financing, including public, private, national and international, to reduce perceived risk and allow Egyptian solar industrial projects to be financed on a competitive basis with international projects. Figure 146 | Capital Availability Action Plan TABLE 59 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 2 Immediate Actions (Year 1) Key Barriers Addressed 1. Identify and disseminate possible international and national Lack of insight into different sources of financing for solar industries. Multilateral and local sources of finance available. financial institutions and a solar cluster can work together to compile and empower existing mechanisms and communicate them to industrial partners and potential investors, alerting them to financing opportunities. 2. Promote contact among interested industrial parties and Lack of access, particularly for financial institutions or other sources of finance. As part of smaller companies, to financial this role of creating awareness, a solar cluster and appropriate institutions and/or other public bodies can create the opportunity for industrial partners sources of finance; high interest in the sector and financial institutions to meet to discuss. rates. 3. Assist industrial project developers in the development See previous paragraph. of business plans. Provide advice (a) on business plan development to interested companies, including advice on how to make the transition from informal to formal business; and (b) on financial planning services to ensure that their business plans are ready for investment. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 183 TABLE 60 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 2 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Develop an investment fund to drive the sector. Analyze Lack of finance available and, if appropriate, create and feed a revolving fund particularly for initial phases, to to support the solar component manufacturing sector. validate viability of new concepts Subsidies could be granted at different stages in the project, in the market. including to researchers, entrepreneurs, and new branches of existing companies. These subsidies would support the development and adaptation to the local solar technologies market of new concepts and testing. Subsidies also ensure the viability of new concepts in the market, that is, areas in which a traditional financing institution still might have trouble entering. This fund could be followed by venture capital and financing. 2. Develop local bank capabilities and knowledge of these Lack of knowledge by local sectors. Extend capability development to the financial financing institutions increases sector so that local banks become knowledgeable in the financing rates. technologies and risks. 3. Elaborate case studies and success stories based on See previous paragraph. international examples, and disseminate nationally. Develop case studies to show how other countries have developed lending for their domestic solar sectors, including mechanisms used. 4. Participate in the development of a Regional Clean See previous paragraph. Innovation Center. A Regional Clean Innovation Center can enable knowledge dissemination about issues relating to financing for solar industries on a Regional scale. TABLE 61 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 2 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Review financing rates, participation of local banks to evaluate next Lack of information on steps. Financing rates for the solar sector evolution can be one available financing rates. criterion by which to assess the success and failures of the sector and to evaluate next steps required to reduce risk. 2. Create new mechanisms, such as multicurrency swaps and/or High currency risks for partial guarantees, to continue driving finance to solar industries. investors; fluctuating Create mechanism to implement risk guarantee programs with local inflation rate. banks and facilitate working capital programs and other innovative mechanisms, including multicurrency swaps. 184 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.4 Issue 3. Qualified Labor Requirements Potential targets and objective: To develop training and capacity building programs at all required levels (including engineers, installation technicians, policy makers, and financial institution experts) to ensure that all necessary capabilities are in place for the development of the sector in Egypt. The objective is two-fold: (a) staff the key roles required in the solar industry organizations to be set up and (b) increase productivity to ensure alignment with international productivity standards to make the industry in Egypt competitive. Figure 147 | Qualified Labor Requirements Action Plan TABLE 62 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 3 Immediate Actions (Year 1) Key Barriers Addressed 1. Perform a detailed analysis of required capabilities and gaps. Lack of clarity as to which of the Under its coordination, the Ministry of Industry, with the technical capabilities required for collaboration of the private sector, should perform a critical the sector are available in Egypt. assessment of domestic capabilities and gaps for the different Probable lack of technical solar industries and technologies. Capabilities analyzed should knowledge of solar energy include those necessary for the main job profiles related to component design and the solar industries, including for both manufacturing and manufacturing. system integration. 2. Kick off a “training of trainers” (ToT) technical capability See above; absence of development program. Under the coordination of the Ministry specialized centers to train and of Industry, and involving the private sector and academia, develop specific skills. the objective is to take advantage of existing capabilities to train new trainers through a multiplier effect. 3. Kick off a management program focused on the solar industry. Lack of management capabilities, In coordination with a Regional Climate Innovation Center, which can stop industries, for example, set up a program to offer business planning including solar, from developing. and support to individuals and companies interested in the sector to get them ready to set up and grow companies in the solar industry. Programs could include general management capabilities, project development, and marketing. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 185 TABLE 63 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 3 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Develop national, Regional, and international collaboration Lack of clarity on which technical programs with universities and academic institutions. Under capabilities required for the sector the coordination of the Ministry of Industry and Education, are available in Egypt. and with Egypt’s main universities, develop collaboration Probable lack of technical programs at the national, Regional, and international levels knowledge on solar energy that take education further than the classroom using the component design and “learning by doing” ethos. manufacturing. 2. Increase the breadth and depth of training programs See previous paragraph. according to market development. As the market strengthens and different industries gain traction, develop training programs that (a) parallel these developments, including training seminars on specific (commercial and technical) topics, and (b) are organized for different audiences. Courses should be aligned with private sector development and offer specialized knowledge on specific industries that are hiring, so that students and recent graduates are prepared to join the work force as soon as they complete their studies. TABLE 64 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 3 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Perform a review of required capabilities and gaps to identify Lack of domestic capabilities missing capabilities. With the experience acquired during may hinder the development of the preceding years, and in light of how the sector and its the sector. industries have developed, carry out an in-depth assessment of capabilities to identify which ones Egypt has acquired fully and which are still gaps. 2. Put in place all programs required to meet these gaps. Under See previous paragraph. the auspices of the Ministry of Industry and the Ministry of Education, redouble efforts to address the missing gaps to ensure that lack of domestic capabilities do not hinder the development of solar industries. For example, training programs should ensure that Egypt reaches international quality standards in manufacturing. 3. Develop programs to transform Egypt into a capability trainer At the Regional level, MENA lacks in the Region. Package the lessons and experience acquired specific technical capabilities to during the preceding years to develop international programs, develop clean technologies. perhaps within a Regional Climate Innovation Center, 186 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.5 Issue 4. Technology Transfer Potential targets and objective: To identify know-how requirements, and acquire the know-how in the shortest time to get to the market through, among others, interaction with Egyptian academic experts and development of international joint venture agreements. Figure 148 | Technology Transfer Action Plan TABLE 65 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 4 Immediate Actions (Year 1) Key Barriers Addressed 1. Identify technological gaps in the local industry required for Hidden technological gaps. solar industry development. Carry out a detailed assessment Lack of experience in to identify technological gaps and barriers that could stop manufacturing solar components. the solar industry from developing on a large scale. 2. Coordinate a local platform of interested industrial players Lack of visibility of the pipeline and academics to generate interest and establish the and of activities developed from most effective ways of bridging the gaps. Coordinate a technological companies multi-actor platform (involving policy makers, academics, multilateral organizations, private sector) in which each interested party can play a role in generating interest and establishing the most effective ways of developing these industries on a large scale. A solar cluster, if established, could take the lead Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 187 TABLE 66 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 4 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Coordinate activities to bridge technological gaps with the See above; R&D often not a solar industry cluster being developed. Concentrating on the priority for companies. top R&D and technological gaps, develop a joint research program between academics and private sector industrial players. Concentrate on, among others, innovations to develop solar technologies adapted to the local conditions regarding maintenance, grid, temperature, and demand requirements. 2. Support the solar cluster to generate the matches between See previous paragraph. interested industries. Policy maker support of the cluster can include financial support, for example, through a Social and Technology Fund, dedicated to financing new developments when demand for a product is demonstrated. 3. Analyze, assemble, and disseminate success stories. Analyze Lack of insight into the pipeline international and, once they start appearing, national and activities developed from success stories of how technological gaps were bridged technological companies.a for specific solar component industries, thus making other companies, and society at large aware of these success cases and, more specifically, of the opportunities that exist to replicate them. Note: Throughout this report, “companies” refers to “companies with the expertise to develop and/or innovate industrial processes related to solar energy, either component manufacturing processes or power plant configuration.” TABLE 67 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 4 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Perform a review of technological knowledge and gaps Persisting lack of technological or to see how many are left to bridge. With the experience other know-how capabilities may acquired during the preceding years, and in light of how the hinder the development of the sector and its industries have developed, carry out an in- sector. depth assessment of remaining technological gaps. 2. Develop new mechanisms to close the gaps. Consider new See previous paragraph. mechanisms that involve partnerships among policy makers, academia, and the private sector, to close all remaining technological or know-how gaps. These mechanisms could include regulatory measures, subsidies, and clustering. The development of joint ventures among various private sector players also can play an important role. 188 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.6 Issue 5. Clustering Potential targets and objective: To define, design, and develop clustering opportunities to maximize synergies in the sector and encourage new entrants. One objective is the development of a solar energy cluster to bridge technological knowledge gaps in the industry. Figure 149 | Clustering Action Plan TABLE 68 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 5 Immediate Actions (Year 1) Key Barriers Addressed 1. Identify interested industrial partners and a champion to Lost synergies and missed lead the cluster. Although the Ministry of Industry could economies of scale due to support, the champion of the cluster could be a private company dispersion. sector stakeholdera and the process be driven by private sector. 2. Create cluster with virtual infrastructure. To avoid delays See previous paragraph. and put the thinking and the collaboration ahead of the physical infrastructure, the cluster can be created as a virtual cluster. Another advantage of beginning with a virtual cluster is that geographic proximity is not a necessity at the start. 3. Catalyze the creation of the cluster. Working together, See previous paragraph. multilateral institutions, policy makers, and private sector can catalyze the creation of the cluster, thus fostering networking and developing cooperation among members and interested observer organizations. Note: During the May 2013 mission in Egypt, PGESCo was identified as a possible champion for the solar energy cluster. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 189 TABLE 69 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 5 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Support the cluster and disseminate information about Lack of support a main reason that it. Supporting the cluster could include disseminating clustering attempts fail. information about it and its purpose, linking with other Regional and international clusters, supporting joint projects proposed by the cluster, and disseminating value and innovation opportunities derived from the cluster. 2. Prepare for the existence of a physical cluster. To improve Lost synergies and economies of the chances of a physical cluster, plan for and develop the scale due to company dispersion. requisite infrastructure to facilitate it. Preparation could require additional legislation to facilitate the cluster’s creation, the physical space, and the infrastructure investment. Unlike virtual infrastructure, for a physical cluster, geographic proximity plays a very important role. Thus, the space and location should be thought out carefully. This cluster could be part of a planned high technology cluster. TABLE 70 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 5 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Create new clusters based on the original cluster. If the Lost synergies and economies of growth of the industry allows for it, the success of one scale due to company dispersion. cluster can catalyze the creation of a new cluster or clusters, such as other renewable energy clusters in Egypt, However, nearby countries also could benefit from Egypt’s experience and good practices to create their own clusters. 190 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.7 Issue 6. Materials Supply Potential targets and objective: To help actors in the sector, particularly upstream actors, prepare in both quality and quantity for the amount of materials that the solar industry will require. Figure 150 | Materials Supply Action Plan TABLE 71 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 6 Immediate Actions (Year 1) Key Barriers Addressed 1. Engage from the start with local upstream materials Increase in demand could cause a partners. Engagement by private sector industries with local shortage of a certain materials (in upstream materials partners provides visibility on sector general, or for a specific quality requirements for different materials. The foci are quality and that the sector requires). quantity. The objective is to ensure sustainable supply of important materials, giving industrial and financial partners a higher degree of certainty concerning supply. The solar cluster could lead this action. 2. Engage with international upstream materials partners. For Volatility of international markets. materials not available in Egypt, engage with international partners, creating long-term relationships that ensure sufficient availability of key materials required by the industry. By developing long-term relationships with international actors, the risk of price and quality fluctuations also is significantly reduced. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 191 TABLE 72 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 6 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Analyze and consider new mechanisms to improve material Increase in demand could cause a flow to the industry. The private sector can propose new shortage of a certain material (in mechanisms to policy makers to improve material flow general, or for a specific quality to the industry for specific materials of interest. These that the sector requires). mechanisms could include reductions or exemptions from customs duty taxes, special fiscal conditions, and other mechanisms that encourage material flow and ensure sufficient availability for the industry. TABLE 73 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 6 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Review whether material flow to the industry is an issue. Increase in demand could cause a Conduct an assessment to evaluate to what extent industry shortage of a certain material (in development has impacted flows of key materials (such as general, or for a specific quality steel, glass). Potential issues to look out for in the analysis that the sector requires). include price increases or general price volatility; and, in the more extreme cases, material shortages that can impact the solar industry and other sectors. This analysis should be carried out jointly with upstream materials partners, and the solar cluster could have a leading role. 2. If applicable, put in additional mechanisms and policies to See previous paragraph. help flow. If it is determined that solar industry development has impacted material flows for key materials, consider additional mechanisms and policies to ensure a correct flow. 3. Analyze future opportunities for Egypt to export materials See previous paragraph. in the MENA Region. An analysis of future opportunities to export materials in the MENA Region, which should be developed jointly with the Ministry of Industry, could include development of incentives and bilateral agreements to exports. 192 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.8 Issue 7. Exports Potential targets and objective: To identify key export markets, both Regional and international, and to maximize the chance of successful exports by Egyptian solar industrial companies. Figure 151 | Exports Action Plan TABLE 74 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 7 Immediate Actions (Year 1) Key Barriers Addressed 1. Identify preliminary list of potential markets for Egyptian Exports may be affected by solar components. Perform an assessment of potential customs duties and other markets for solar components, beginning with nearby measures imposed by destination countries in the MENA Region and Europe that could benefit countries that reduce export from importing Egypt’s solar components to develop solar competitiveness. energy. 2. Identify existing or potential barriers for said exports. See previous paragraph. Barriers could include customs duties, stringent certification requirements.a Note: As an example, Gulf countries have been known to demand certified compliance with local regulations for imports, something that reduces competition to local producers. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 193 TABLE 75 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 7 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Analyze possible mechanisms that could be applied. Analyze See previous paragraph. mechanisms that could be applied to facilitate Egyptian exports, including removal of customs duties and the establishment of other monetary or qualification incentives. 2. Apply said mechanisms and, in parallel, develop bilateral or See previous paragraph. multilateral agreements with other countries. Carry out high- level negotiations to remove barriers to Egyptian exports in foreign countries. TABLE 76 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 7 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Review success of export policy and, if program has not See previous paragraph. been successful, identify new actions. To ground-truth existing policies and agreements with priority markets, carry out an assessment to evaluate to what extent Egyptian solar component exports are growing, and to which countries most components are being exported. 2. Review preliminary list of potential markets for expansion. See previous paragraph. With the objective of growing Egypt’s export base of solar components, review and add to the list of potential markets for expansion. 194 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.9 Issue 8. Certification and Accreditation Potential targets and objective: To develop Egyptian standards, something that is considered necessary to develop both exports and the national market. Figure 152 | Certification and Accreditation Action Plan TABLE 77 | DETAILED RECOMMENDATIONS FOR IMMEDIATE ACTIONS REGARDING ISSUE 8 Immediate Actions (Year 1) Key Barriers Addressed 1. Analyze existing Egyptian technical standards applicable to Track record and certification the industry for availability and quality. Perform an analysis are necessary in most bidding of existing technical standards applicable to the industry to processes; international standards see which options are already available and which ones need often are required. to be developed, as well as the track record of any available standards. Concurrently, analyze existing standards in nearby countries as a reference. 2. Develop a list of requirements and identify actors who can Egypt has Regional, but not assist in developing said standards. If new standards are national, certification entities.a required, set up a working group comprising policy makers, private sector, and academics to identify technical and other requirements to develop said standards. Note: Egypt has an Institute for Standards, which comes under the Ministry of Industry. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 195 TABLE 78 | DETAILED RECOMMENDATIONS FOR MEDIUM-TERM ACTIONS REGARDING ISSUE 8 Medium-Term Actions (Years 2-4) Key Barriers Addressed 1. Assist in the development of standards. Coordinate the See previous paragraph. work of the groups and organizations that will develop the standards for the solar industry, prioritizing standards for Lack of specific testing and the technologies and industries that are most interesting in certifying facilities. the short term (for example, CSP mirrors and CSP and PV structures). Consider, as one alternative, the involvement of the solar cluster (virtual and/or physical). 2. Encourage collaboration among parties. The solar cluster See previous paragraph. could mediate among parties and make sure that all relevant players are included in developing the standards. Take advantage of the existence of early movers in the sector to collaborate with them in the development of standards; Collaborate with international laboratories, universities, and experts to maximize knowledge-sharing. 3. Disseminate results nationally and internationally. Develop Track record and certification a communications plan to disseminate results nationally, are necessary in most bidding Regionally, and internationally, to ensure that entities processes; international standards globally are aware of Egypt’s efforts in the field of often are required. accreditation and certification. TABLE 79 | DETAILED RECOMMENDATIONS FOR LONG-TERM ACTIONS REGARDING ISSUE 8 Long-Term Actions (Years 5-8) Key Barriers Addressed 1. Carry out accreditation activities. Coordinate the start of See previous paragraph. the work of the accreditation and certification offices and laboratories. 2. To stay on top of new technological developments, continue See previous paragraph. to encourage collaboration. Maintain collaboration and communication activities with international accreditation laboratories to follow and comply with potential changes in international requirements. 196 | Local Manufacturing Potential for Solar Technology Components in Egypt 11.10 Actions Related to In collaboration with public stakeholders, prepare a Kom Ombo plan for the development of the cluster including the identification of the cluster champion: The Kom Ombo project, as well as the newly • In collaboration with NREA and the Ministry of announced large-scale PV projects in Egypt (Shorouk Industry, identify the mechanisms to develop News 2013), can be the starting point for Egypt’s a sustainable pipeline of projects in Egypt and solar component industry. their effects (cost and benefits); prepare a communication strategy for both Kom Ombo and To profit fully from the positive effects that these the plan projects may bring, suggestions follow on the • Disseminate among the local industries the areas of required TA activities to help enhance local possible business opportunities associated with manufacturing potential of solar energy components the Kom Ombo project in Egypt. The World Bank could support the • Set up workshop on Kom Ombo project with the preparation of the Kom Ombo CSP project to increase participation of national and international players the proportion of local components. To facilitate • Promote contact among interested industrial the implementation from engineering through to parties and financial institutions or other sources operation, the following recommendations are made: of finance through workshops and dissemination activities This TA comprises preparatory and support actions • In collaboration with the solar cluster, prepare oriented toward developing local capacity and workshops to exchange ideas, develop capacity, enabling the necessary structures. and create a network of solar industries • Identify promising solar component projects and • The preparatory actions focus on identifying the support the initial stages gaps and opportunities jointly with the involved • Identify pilot energy supply projects that could stakeholders: lead to solar component industry development; • Identify gaps in local industry that are required to support the initial stages be filled for the solar industry to develop • Prepare and initiate a “training of trainers” (ToT) • Identify possible international and national sources technical capability development program of financing for solar • Support the development of national, Regional, • Identify success stories and international collaboration programs among • Identify interested industrial partners in clustering R&D centers, universities, and academic and a champion to lead the cluster institutions • Analyze existing Egyptian technical standards • Disseminate success stories applicable to the industry for availability and • Catalyze the development of technical standards quality. and certifying bodies. It is proposed that the following actions be developed This holistic institutional capacity development in collaboration with the stakeholders. The objectives program not only will ensure the sustainability of the are to develop their capacity, empower the solar Kom Ombo project but also will enable the growth cluster, support its first activities, and enable the of solar expertise, solar industries, and other key basic structures. economic sectors supporting solar projects. Chapter 11 | Recommendations for the Development of Solar Industries in Egypt | 197 Appendix 1 | Solar Industries Datasheets CSP INDUSTRIES Sector: Subsystem: Solar industry: CSP Power Block Condenser Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 - 1% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 45% Energy 25% Labor 15% O&M 15% Materials; 45% Energy 25% O&M 15% Labor 15% Component Market Price (Average Sales Price) 25 - 35 kUSD/MWth Typical demand from a reference customer 75 - 85 MWth, 1 piece Average production for a factory 200 - 300 MWth/yr Investment 10 - 20 kUSD / (MWth/yr) Production requirements Materials 100% Stainless steel, tube 80% Stainless steel, plate 15% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Foster Wheeler Switzerland GEA Germany HAMON Belgium Barriers to entry 1. Guarantees of turbine manufacturer 2. Technical barrier: complex design to achieve performance 3. Highly skilled workforce required Key Factors 1. Stainless steel market 2. High precision manufacturing under international standards 198 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Power Block Electrical generator Value Unit Comments Weight in the value chain (as a % of total wealth) 1.5 - 2.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 65% Energy 10% Labor 20% O&M 5% Materials; 65% O&M 5% Labor Energy 20% 10% Component Market Price (Average Sales Price) 100 - 150 kUSD/MWe Typical demand from a reference customer 50 MWe, 1 piece Average production for a factory 2,000 - 3,000 MW/yr Investment 30 - 50 kUSD / MW/yr Production requirements Materials 100% Copper 50% Carbon steel, cast 35% Lubricant oil 5% CrMo steel 10% Energy 100% Electric 90% Thermal 10% Top Companies Origin ABB Switzerland GE Power US Mitsubishi Japan Siemens Germany Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Fluctuations in copper market 3. Highly skilled workforce Key Factors Mirrors 1. Copper market 2. Power electronics Appendix 1 | Solar Industries Datasheets | 199 Sector: Subsystem: Solar industry: CSP Power Block Heat exchangers Value Unit Comments Weight in the value chain (as a % of total wealth) 2.5 - 4% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 45% Energy 25% Labor 15% O&M 15% Materials; 45% Energy 25% O&M 15% Labor 15% Component Market Price (Average Sales Price) 20 - 25 kUSD/MWth Typical demand from a reference customer 300 MWth, 1 set SGS + heat recovery + molten salt Average production for a factory 350 - 400 MWth/yr Investment 10 - 20 kUSD / (MWth/yr) Production requirements Materials 100% Carbon steel, plate 10% Stainless steel, tube 80% Electrodes 5% Stainless steel, plate 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Aalborg CSP Denmark Alfa Laval Sweden Foster Wheeler Switzerland GEA Germany HAMON Belgium Barriers to entry 1. Highly skilled workforce required Key Factors 1. Stainless steel market 2. High precision manufacturing under international standards 3. Adapt existing industries 200 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Power Block HTF Pumps Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 - 1% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 30% Labor 25% O&M 30% Energy 30% Materials; 15% Labor 25% O&M 30% Component Market Price (Average Sales Price) 45 - 55 kUSD/MW Typical demand from a reference customer 1 set of 3 to 5 main pumps, antifreeze, recirculation Average production for a factory 300 - 500 MW/yr Investment 35 - 45 kUSD / MW/yr Production requirements Materials 100% Carbon steel, cast 40% Stainless steel, cast 5% Copper 40% CrMo steel 10% Lubricant oil 5% Energy 100% Electric 75% Thermal 25% Top Companies Origin Flowserve US KSB Germany GE Oil & Gas US Sterling Fluid Germany Sulzer Switzerland Barriers to entry 1. Highly skilled workforce required Key Factors 1. High precision manufacturing under international standards 2. Motor and power electronics Appendix 1 | Solar Industries Datasheets | 201 Sector: Subsystem: Solar industry: CSP Solar Field HTF Thermal Oil Value Unit Comments Weight in the value chain (as a % of total wealth) 3.5 - 4.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 15% Labor 10% O&M 5% Materials; 70% O&M 5% Labor 10% Energy 15% Component Market Price (Average Sales Price) 8 - 10 USD/kg Typical demand from a reference customer 16 - 20 10^3 kg/MW 50MW parabolic with 7h TES Average production for a factory 225 MW/yr Investment cost for a factory 30 - 50 million USD / (MW/yr) Production requirements Materials 100% Diphenyl oxide 73.5% Diphenyl 26.5% Energy 100% Electric 5% Thermal 95% Top Companies Origin Dow Chemical US Solutia (Monsanto) US Barriers to entry 1. Byproduct in chemical industry (phenol) with large productions (40 to 600 kt/year) 2. Market dominated by a small number of competitors 3. Low market opportunities to sell this product to other industries and sectors Key Factors 1. Adapt existing industries 202 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Solar Field Mirror Value Unit Comments Weight in the value chain (as a % of total wealth) 5 - 6% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 20% Labor 3% O&M 7% Energy 20% Materials 70% Labor O&M 3% 7% Component Market Price (Average Sales Price) 25 - 35 USD/m2 Typical demand from a reference customer 8 - 12 10^3 m2/MW 50MW parabolic with 7h TES Average production for a factory 300 MW/yr Investment 100 - 200 kUSD / (MW/yr) Production requirements Materials 100% Silver / copper coatings 0% Polimeric coatings 10% Float glass 90% Energy 100% Electric 10% Thermal 90% Top Companies Origin AGC Solar Belgium Flabeg Gmbh Germany Guardian Ind. US Rioglass Solar Spain Saint-Gobain France Barriers to entry 1. Technical barrier: complex manufacturing line 2. Highly skilled workforce required 3. Capital-intensive unless integrated in existing float glass Key Factors 1. Energy 2. Transport 3. Adapt existing industries Appendix 1 | Solar Industries Datasheets | 203 Sector: Subsystem: Solar industry: CSP Power Block Pumps Value Unit Comments Weight in the value chain (as a % of total wealth) 0.5 - 1% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 30% Labor 25% O&M 30% Energy 30% Materials; 15% Labor 25% O&M 30% Component Market Price (Average Sales Price) 20 - 25 kUSD/MW Typical demand from a reference customer 1 set circulation, condensate, main pressure, molten salts, other minor Average production for a factory 300 - 500 MW/yr Investment 35 - 45 kUSD / MW/yr Production requirements Materials 100% Carbon steel, plate 5% Carbon steel, cast 50% Stainless steel, cast 15% Copper 25% CrMo steel 5% Energy 100% Electric 55% Thermal 45% Top Companies Origin Ensival Moret France Flowserve US GE Power US KSB Germany Ruhrpumpen Germany Barriers to entry 1. Technical barrier: complex design for molten salt pumps 2. Highly skilled workforce required Key Factors 1. High precision manufacturing under international standards 204 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Solar Field Receiver Value Unit Comments Weight in the value chain (as a % of total wealth) 6.5 - 7.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 15% Labor 20% O&M 10% Materials 55% Energy 15% O&M 10% Labor 20% Component Market Price (Average Sales Price) 800 - 1,000 USD/piece Typical demand from a reference customer 400 - 500 pieces/MWp 50MW parabolic with 7h TES Average production for a factory 100 - 200 MW/yr Investment 0.4 - 0.6 million USD / (MW/yr) Production requirements Materials 100% Stainless steel, tube 52% Borosilicate glass, tube 46% Collars,flanges and bellows 2% Absorbing coating - negligible weight Getters - negligible weight Anti reflective coating - negligible weight Energy 100% Electric 25% Thermal 75% Top Companies Origin SCHOTT Solar AG Germany Siemens (Solel Solar System) Germany Archimede Italy Barriers to entry 1. Technical barrier: highly specialized coating process with high accuracy 2. Technical barrier: vacuum-tight glass to metal welding process and materials 3. High specific investment for manufacturing process 4. Low market opportunities to sell this product to other industries and sectors 5. Highly skilled workforce required Key Factors 1. Transport Appendix 1 | Solar Industries Datasheets | 205 Sector: Subsystem: Solar industry: CSP Thermal Energy Storage Solar salt Value Unit Comments Weight in the value chain (as a % of total wealth) 8 - 10% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 15% Energy 40% Labor 20% O&M 25% Energy 40% Materials; 15% Labor O&M 20% 25% Component Market Price (Average Sales Price) 800 - 900 USD/t Typical demand from a reference customer 500 - 600 t/MWe 50MW parabolic with 7h TES Average production for a factory 300 MW/yr Investment n/a million USD / MW/yr Production requirements Materials 100% Sodium nitrate (NaNO3) 60% Potassium nitrate (KNO3) 40% Energy 100% Electric 40% Thermal 60% Top Companies Origin SQM Chile Haifa Israel Barriers to entry 1. A mineral vein must exist within the territory Key Factors 1. Purity of the vein, valorization of byproducts 206 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Power Block Steam turbine Value Unit Comments Weight in the value chain (as a % of total wealth) 3.5 - 4.5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 20% Labor 20% O&M 5% Materials; 55% O&M 5% Energy 20% Labor 20% Component Market Price (Average Sales Price) 200 - 250 kUSD/MWe Typical demand from a reference customer 50 MWe, 1 piece Average production for a factory 200 - 300 MW/yr Investment 60 - 100 kUSD / (MW/yr) Production requirements Materials 100% Carbon steel, plate 5% Carbon steel, beam 5% Carbon steel, cast 20% Stainless steel, cast 50% Special alloys 20% Energy 100% Electric 10% Thermal 90% Top Companies Origin Alstom France GE Power US Harbin China MAN Turbo Germany Mitsubishi Japan Siemens Germany Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Highly skilled workforce required 3. High specific investment for manufacturing process Key Factors 1. Long Term Service Agreements and performance guarantee Appendix 1 | Solar Industries Datasheets | 207 Sector: Subsystem: Solar industry: CSP Power Block Storage Tanks Value Unit Comments Weight in the value chain (as a % of total wealth) 3 - 5% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 70% Energy 20% Labor 3% O&M 7% Materials 70% O&M 7% Labor Energy 3% 20% Component Market Price (Average Sales Price) 150 - 200 kUSD/MW Typical demand from a reference customer 1 set incl. expansion vessel, overflow tanks, ullage vessels, molten salts, steam drum, deaerator, other Average production for a factory 300 minor MW/yr Investment 70 - 90 kUSD / (MW/yr) Production requirements Materials 100% Carbon steel, plate 80% Carbon steel, cast 5% Stainless steel, plate 15% Energy 100% Electric 100% Thermal 0% Top Companies Origin Caldwell Tanks US Duro Felguera Spain IMASA Spain Barriers to entry 1. Technical barrier: complex design of molten salt tanks and deaerator Key Factors 1. Manufacturing under international standards 208 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: CSP Solar Field Structure & Tracker Value Unit Comments Weight in the value chain (as a % of total wealth) 15 - 17% 50MW parabolic with 7h TES Cost Structure breakdown 100% Materials 55% Energy 5% Labor 1% O&M 39% Materials 55% Energy 5% Labor 1% O&M 39% Component Market Price (Average Sales Price) 2-3 USD/kg Typical demand from a reference customer 180 - 220 10^3 kg/MWp 50MW parabolic with 7h TES Average production for a factory 150 - 250 MW/yr Investment 75 - 85 kUSD / (MW/yr) Production requirements Materials 100% Carbon steel, beam 90% Carbon steel, plate 5% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Albiasa Solar Spain Asturfeito Spain Gossamer US Ideas en Metal Spain MADE Spain SBP Germany Sener Spain Siemens Germany Barriers to entry 1. Hot-dip galvanizing of large structures (>12 m) can be a bottleneck 2. Technical barrier: complex design to achieve stiffness 3. Technical barrier: complex design of hydraulic circuit and components Key Factors 1. Carbon steel market 2. Transport 3. Galvanizing 4. Adapt existing industries Appendix 1 | Solar Industries Datasheets | 209 PV INDUSTRIES Sector: Subsystem: Solar industry: PV Crystalline silicon Cells Value Unit Comments Weight in the value chain (as a % of total wealth) 17% Cost Structure breakdown 100% Materials 70% Energy 10% Labor 15% O&M 5% Materials 70% Energy Labor 10% O&M 5% 15% Component Market Price (Average Sales Price) 85 - 95 kUSD/t Typical demand from a reference customer 6.5 - 7.5 t/MWp Average production for a factory 45 - 50 MWp/yr Investment 700 - 750 kUSD / (MWp/yr) Production requirements Materials 100% Wafers 90% Silver 1% Aluminum 4% Etching agents 5% Energy 100% Electric 10% Thermal 90% Top Companies Origin Canadian Solar Inc Canada Gintech Energy Corporation  Taiwan JA Solar Holdings Co China Kyocera Japan Hanwha (Q-Cells) South Korea Sharp Japan SolarWorld AG Germany Suntech Power China Yingli Green Energy China Barriers to entry 1. Technical barrier: highly specialized surface treatment (etching) 2. High specific investment for manufacturing process 3. Overcapacity in the sector, downward pricing pressure, vertical integration in most cells manufacturing companies 4. Highly skilled workforce required Key Factors 1. Vertical integration to achieve competitive costs 210 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: PV Crystalline silicon Ingots / Wafers Value Unit Comments Weight in the value chain (as a % of total wealth) 15% Cost Structure breakdown 100% Materials 30% Energy 15% Labor 15% O&M 40% Energy 15% Labor Materials 15% 30% O&M 40% Component Market Price (Average Sales Price) 50 - 60 kUSD/t Typical demand from a reference customer 5.5 - 6.6 t/MWp Average production for a factory 150 t/yr Investment 600 kUSD / (t/yr) Production requirements Materials 100% Silicon, high purity 100% Dopants 0% negligible weight O&M Consumables 100% Carbon 50% cost fraction Steel wire 25% cost fraction Crucible 25% cost fraction Energy 100% Electric 15% Thermal 85% Top Companies Origin Canadian Solar Inc Canada LG-siltron South Korea MEMC US Shin-Etsu Japan Siltronic Germany SUMCO Japan Barriers to entry 1. High specific investment for manufacturing process 2. Overcapacity in the sector, downward pricing pressure, vertical integration in 75% of wafer manufacturing companies 3. Global demand in 2011 covered above 90% with already installed capacity of the five top suppliers Key Factors 1. Alternative market (electronics) requires higher purity than solar, additional purification process required 2. Vertical integration to achieve competitive costs Appendix 1 | Solar Industries Datasheets | 211 Sector: Subsystem: Solar industry: PV Crystalline silicon c-Si Modules Value Unit Comments Weight in the value chain (as a % of total wealth) 13% Cost Structure breakdown 100% Materials 80% Energy 5% Labor 10% O&M 5% Materials 80% Labor O&M 10% 5% Energy 5% Component Market Price (Average Sales Price) 0.9 - 1.4 USD/Wp Typical demand from a reference customer 1 - 100 MWp Average production for a factory 300 MWp/yr Investment 45 - 55 kUSD / (MWp/yr) Production requirements Materials 100% Cells 10% Glass 60% Aluminum 25% Encapsulant 5% Energy 100% Electric 80% Thermal 20% Top Companies Origin Kyocera Japan Motech Industries Taiwan Sanyo Component Europe GmbH Germany Schott Solar Germany Sharp Japan SolarWorld AG Germany Sunpower Corp USA Suntech Power China Trina Solar China Yingli Green Energy China Barriers to entry 1. Overcapacity in the sector, downward pricing pressure, vertical integration in most module manufacturing companies Key Factors 1. Distinguishing features, quality control 2. Vertical integration to achieve competitive costs and ensure cell supply and quality 212 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: PV Crystalline silicon Polysilicon Value Unit Comments Weight in the value chain (as a % of total wealth) 15% Cost Structure breakdown 100% Materials 45% Energy 40% Labor 10% O&M 5% Materials 45% Energy 40% Labor O&M 10% 5% Component Market Price (Average Sales Price) 25 - 30 kUSD/t Typical demand from a reference customer 5.5 - 6.6 t/MWp Average production for a factory 16,000 t/yr Investment 30 - 60 kUSD / (t/yr) Production requirements Materials 100% Silicon, metallurgical grade 90% depends on process followed Hydrochloric acid 5% depends on process followed Hydrogen 5% depends on process followed Energy 100% Electric 20% Thermal 80% Top Companies Origin GCL-Poly China OCI South Korea Wacker Germany Hemlock US REC FBR Norway MEMC US Barriers to entry 1. Technical barrier: highly specialized deposition process with high purity 2. High specific investment for manufacturing process 3. Overcapacity in the sector, downward pricing pressure 4. Global demand in 2011 could have been covered with already installed capacity of the six top suppliers Key Factors 1. Alternative market (electronics) requires higher purity than solar. Capability to reach purity (Siemens, others in development) Appendix 1 | Solar Industries Datasheets | 213 Sector: Subsystem: Solar industry: PV Common systems Inverter Value Unit Comments Weight in the value chain (as a % of total wealth) 14% Cost Structure breakdown 100% Materials 60% Energy 13% Labor 25% O&M 2% Materials 60% Energy 13% O&M Labor 2% 25% Component Market Price (Average Sales Price) 150 - 200 kUSD/MWp Typical demand from a reference customer 1 - 100 MWp Average production for a factory 250 MWp/yr Investment 70 - 90 kUSD / (MWp/yr) Production requirements Materials 100% Silicon 30% Copper 20% Aluminum 50% Special alloys - negligible weight Energy 100% Electric 30% Thermal 70% Top Companies Origin Danfoss Denmark Fronius Austria GE Energy USA Ingeteam Spain Kaco New Energy Germany Siemens Germany SMA Solar Technologies Germany Solar Max Switzerland Barriers to entry 1. Technical barrier: complex design to achieve performance 2. Most inverter manufacturers are large power electronics companies which diversified into the solar market Key Factors 1. Distinguishing features, quality control 2. Maximum power point tracking and anti-islanding protection 214 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: PV Common systems Support Structure Value Unit Comments Weight in the value chain (as a % of total wealth) 13 - 17% Up to 30% if 2-axes tracking Cost Structure breakdown 100% Materials 52% Energy 5% Labor 3% O&M 40% Materials Energy 52% 5% O&M 40% Labor 3% Component Market Price (Average Sales Price) 2-3 USD/kg Fixed structure or 1-axis tracking Typical demand from a reference customer 60 - 100 t/MWp Average production for a factory 10 - 200 MWp/yr Investment 80 - 100 kUSD / (MWp/yr) Production requirements Materials 100% Carbon steel, beam 90% Carbon steel, plate 5% Electrodes 5% Energy 100% Electric 100% Thermal 0% Top Companies Origin Conergy Germany Hilti Spain Mecasolar Spain Sun Power USA Barriers to entry 1. Technical barrier: complex design to achieve reliability and low maintenance for tracker Key Factors 1. Carbon steel market 2. Transport 3. Galvanizing 4. Adapt existing industries Appendix 1 | Solar Industries Datasheets | 215 Sector: Subsystem: Solar industry: PV Thin films TF Materials Value Unit Comments Weight in the value chain (as a % of total wealth) 35% Cost Structure breakdown 100% Materials 60% Energy 20% Labor 15% O&M 5% Materials 60% Energy 20% O&M Labor 5% 15% Component Market Price (Average Sales Price) 700 USD/kg Typical demand from a reference customer 220 kg/MWp Average production for a factory 60 MWp/yr Investment 300 - 350 kUSD / (MWp/yr) Production requirements E.g.: materials for CdTe cell Materials 100% Tellurium 50% Cadmium 45% Sulphur - negligible weight Indium 5% Tin - negligible weight Energy 100% Electric 30% Thermal 70% Top Companies Origin 5N Plus Inc Canada Advanced Technology and Materials USA Hitachi Metals Japan Barriers to entry 1. Raw material supply depends on existing zinc and copper industries Key Factors 1. Vertical integration or association with zinc and copper industries 2. Transport 3. Purity of final product 4. Valorization of byproducts 5. TCO: alternative markets (LCD displays, etc.) 216 | Local Manufacturing Potential for Solar Technology Components in Egypt Sector: Subsystem: Solar industry: PV Thin films TF Modules Value Unit Comments Weight in the value chain (as a % of total wealth) 10% Including TF materials (35%), Solar glass (20%), total 65% Cost Structure breakdown 100% Materials 75% Energy 10% Labor 10% O&M 5% Materials 75% O&M Labor Energy 5% 10% 10% Component Market Price (Average Sales Price) 0.5 - 1 USD/Wp Typical demand from a reference customer 0.5 - 100 MWp Average production for a factory 100 - 1000 MWp/yr Investment 0.8 - 1.5 million USD / (MWp/yr) Production requirements Materials 100% Solar glass 99% Photoactive layer - negligible weight TCO - negligible weight Back contact - negligible weight Polymeric backsheet 1% Energy 100% Electric 30% Largely depending on deposition Thermal 70% technique Top Companies Origin First Solar (CdTe) US Best Solar (TF Si) China Moser Baer (TF SI) India Sharp (TF Si) Japan Barriers to entry 1. High specific investment for manufacturing process 2. Technical barrier: highly specialized deposition processes with high purity and thickness control 3. Overcapacity in the silicon sector has led prices below thin films, with higher performance Key Factors 1. Vertical integration or association with existing Solar glass line 2. R&D to improve performance 3. Niche market: weight-constrained applications 4. Niche market: flexible substrates Appendix 1 | Solar Industries Datasheets | 217 Sector: Subsystem: Solar industry: PV Thin films Solar glass Value Unit Comments Weight in the value chain (as a % of total wealth) 20% Cost Structure breakdown 100% Materials 6% Energy 62% Labor 2% O&M 30% Energy 62% Materials 6% Labor O&M 2% 30% Component Market Price (Average Sales Price) 1.5 - 2.5 USD/kg Typical demand from a reference customer 8 - 20 t/MWp One / two glass sheets Average production for a factory 200 MWp/yr Adaptation of an existing float glass line Investment 1-2 kUSD / (MWp/yr) Production requirements Note: composition of final product, some raw Materials 100% materials will lose volatile fraction Silica 72% Low iron content (impurities) Na2O 14% Sources: Na2CO3, trona CaO 10% Sources: CaCO3, (dolomite) MgO 2% Sources: dolomite Fining agents and additives 2% E.g. Sb2O3, Na2SO4, NaCl, TiO2 Energy 100% Electric 30% Thermal 70% Top Companies Origin AGC Solar Belgium Pilkington UK Saint Gobain solar Germany Guardian US Barriers to entry 1. High overall investment for manufacturing process due to scale 2. Solar glass is usually < 1% of total float glass. Alternative demandmust exist to achieve, at least, 70% cap. factor Key Factors 1. Vertical integration or association with existing float glass line 2. For CIS/CIGS: stable Na composition, integration of Mo coating 3. For CdTe and TF-Si: Integration of TCO deposition to access alternative markets (LCD displays, etc.) 4. Transport 5. Energy 6. Alternative markets: crystalline modules 218 | Local Manufacturing Potential for Solar Technology Components in Egypt Appendix 2 | Suggested CSP Industries Description applications when the thermal difference between Heat Exchangers the fluid flows otherwise would result in excessive thermal expansion of the tubes. PRODUCTION PROCESS AND • Tube sheet: Tube sheets are constructed from a FACTORS round, flattened sheet of metal. Holes for the tube ends are then drilled for the tube ends in a pattern Two different sets of heat exchangers are required relative to each other. Tube sheets typically are in the Power Block. First, heat transfer fluid (HTF)- manufactured from the same material as tubes, water heat exchangers (usually referred to as and attached with a pneumatic or hydraulic SGS, or steam generation system) are required to pressure roller to the tube sheet. At this point, generate the high-pressure and temperature steam tube holes can be both drilled and reamed, or that will drive the turbine. Second, water-water heat they are machined grooves (the latter significantly exchangers are used to recover the heat from turbine increases tube joint strength). bleeds to preheat the condensate or feed water, thus • Shell: The shell is constructed from either pipe increasing the Rankine cycle efficiency. If a Thermal or rolled plate metal. For economic reasons, Energy Storage (TES) system is included, a reversible, steel is the most commonly used material. When molten salt-HTF heat exchanger also is necessary. applications involve extreme temperatures and Carbon steel and stainless steel are required for corrosion resistance, other metals or alloys are its manufacture, as well as copper and aluminum specified. Roundness typically is increased by in smaller amounts. Materials and supplies usually using a mandrel and expanding the shell around account for over 95 percent of total manufacturing it, or by double-rolling the shell after welding the costs (Grenada 2011). longitudinal seam. • Head: Heads typically are fabricated or cast. They High-temperature and pressure-heat exchangers are mounted against the tube sheet with a bolt and usually are shell-and-tube type. These exchangers gasket assembly, although many designs include comprise the following elements: a “machine grooved” channel in the tube sheet sealing the joint. The materials typically used in • Tubes: Heat exchanger tubes often are the cast bonnets are steel, bronze, Hastelloy, and manufactured to industry standard diameters. The nickel plated or stainless steel. materials commonly used are low carbon steel, • Baffles: To fit, all baffles must have a diameter copper, copper-nickel, stainless steel, titanium, or slightly smaller than the shell. However, tolerances special alloys. Tubes can be drawn and thus are must be tight enough to avoid a performance loss seamless, or welded. High quality electro-resistant as a result of fluid bypass around the baffles. welded tubes display good grain structure at the Baffles usually are stamped/punched, or machine weld joints. Extruded tubes with fins and interior drilled depending on size and application. Material rifling are sometimes specified for certain heat selection must be compatible with the shell-side transfer applications. A U-tube design is found in fluid to avoid failure as a result of corrosion. Appendix 2 | Suggested CSP Industries Description | 219 Figure A2.1 | Schematic of a U-tube Heat Exchanger Source: Public domain. Less-demanding heat exchangers, such as those materials such as titanium may be used. The used in condensate preheating, can be plate-type. plates are pressed to form troughs at right A plate heat exchanger consists of a series of thin, angles to the direction of flow of the liquid that corrugated plates that are joined by gaskets, welded, runs through the channels in the heat exchanger. or brazed together depending on the application of These troughs are arranged so that they interlink the heat exchanger. The plates are compressed with the other plates that form the channel with together in a rigid frame to form an arrangement of gaps of 1.3-1.5 mm between the plates. parallel flow channels with alternating hot and cold • Gaskets: The purpose of the gaskets is to space fluids. These exchangers comprise the following the plates, thus procuring a good seal. Gaskets are elements: made of rubber (such as ethylene propylene diene monomer, or EPDM; or acrylonitrile-butadiene • Plates: The plates are manufactured by single rubber, or NBR, or Viton®) and cemented into a piece pressing of metal plates. Regarding the section around the edge of the plates. When high material, plates usually are made of stainless pressures or incompatible materials are expected, steel (AISI, or American Iron and Steel Institute, plates are welded without gaskets. 304 or 316) due to its temperature and corrosion • Head and follower: The head and the follower resistance as well as its mechanical properties. are the ends that enclose the plate pack. They Depending on the application, higher grade usually are cast from stainless steel. 220 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure A2.2 | Schematic of a Plate Heat Exchanger Source: Public domain. TECHNOLOGICAL BARRIERS • Aalborg CSP: Danish company, Aalborg CSP A/S, is the result of the merger between the The design of the heat exchangers must comply engineering, procurement, and construction (EPC) with multiple constraints and have the flexibility to company, BK Aalborg A/S, and the engineering operate even in partial loads. The limited pressure company, BK Engineering A/S. The merger took drop allowed in the tube, shell, or both sides; the place January 1, 2011. Aalborg CSP’s core complex heat transfer in phase-change conditions; business areas are design and delivery of steam and the maintenance required to avoid fouling make generators for concentrated solar power (CSP), its design a complicated one. CSP module system, gas- and oil-fired steam boilers, and engineering services. The projects This barrier can be overcome if the design and vary from component deliveries to complete manufacturing procedures and quality control comply turnkey installations including piping, valves, with the specifications of the engineering supplier. instrumentation, electrical, steel, gallery, pumps, Because third-party guarantees are involved, a local and commissioning. No data is available about partnership with experienced companies providing the company’s size or turnover. Nevertheless, it design drawings and specifications might be the best has references of over 250 MWe installed since approach. 2008 and over 75 MWe expected for 2013 and 2014. MAIN COMPETITORS • Alfa Laval: Alfa Laval AB is a Swedish company founded in 1883. It is a leading producer of The following companies have been identified as specialized products and solutions used to heat, actual or potential suppliers of heat exchangers for cool, separate, and transport such products as CSP projects: oil, water, chemicals, beverages, foodstuffs, Appendix 2 | Suggested CSP Industries Description | 221 starch, and pharmaceuticals. Alfa Laval divides steam generators, and waste heat boilers. its operations between equipment (capital sales) Targeted customers are mainly power generation; and process technology (contracts with longer oil, gas, and petrochemical industries; and, in a duration). Alfa Laval is listed on Nasdaq OMX, and more general way, heavy industries (iron and steel, in 2012 posted annual sales of approximately EUR cement factories, glass factories, incinerators). 3.5 billion (Alfa Laval AB 2013). The company has In 2012 the group had a revenue of EUR 474 approximately 16,400 employees. million (Hamon & Cíe International S.A. 2012) and • Foster Wheeler: Foster Wheeler AG (previously approximately 1,650 employees worldwide. Foster Wheeler, Inc.) is a global conglomerate with its principal executive offices in Geneva, LOCATION OF MANUFACTURING Switzerland and its registered office in Baar, FACILITIES Switzerland. It is focused on engineering, procurement, and construction (EPC) for power • The above-mentioned companies work at the facilities. The company comprises two business global scale, either through subsidiaries or by groups: Global Engineering and Construction means of distribution partnerships with local (E&C) Group and Global Power Group. As of companies. However, their manufacturing facilities February 2013, the market capitalization of the are concentrated in a few countries. company was approximately US$2.7 billion • Aalborg CSP: Aalborg CSP A/S has (Foster Wheeler AG 2013), and it employed manufacturing facilities in Denmark, although approximately 13,000 persons. their equipment can be manufactured in several • GEA: GEA Group Aktiengesellschaft is one of countries according to EN (European Standard) the largest system providers for food and energy or ASME (American Society of Mechanical processes with approximately EUR 5.7 billion Engineers) standards through partnerships with revenue in 2012, of which 1.6 billion came from local manufacturers (Aalborg CSP A/S 2011). its Heat Exchangers division (Alfa Laval AB 2013). • Alfa Laval: At end-2012, the Alfa Laval Group As an internationally operating technology group, had 32 major manufacturing units; 15 in Europe, the company focuses on process technology 9 in Asia, 6 in the US, and 2 in Latin America (Alfa and components for demanding production Laval AB 2012). processes in various end markets. The group • Foster Wheeler: Foster Wheeler AG has generates approximately 70 percent of its revenue manufacturing facilities in China, Poland, Spain, from the long-term growing food and energy and Thailand (Foster Wheeler AG n.d.). industries. The company’s workforce comprised • GEA: GEA Group Aktiengesellschaft has approximately 24,500 employees worldwide as of manufacturing facilities in China, France, Germany, December 31, 2012. Hungary, Qatar, South Africa, Spain, and the US, • HAMON group: Founded in 1927, Hamon & Cíe as well as partnership agreements in Russia, International is a Belgium-based engineering, South Korea, and South Eastern Asia (GEA n.d.). procurement, and contracting company (EPC). • HAMON group: Hamon & Cíe International It provides specific process equipment and has manufacturing facilities in China, France, the associated after-sales services for cooling Germany, Indonesia, Saudi Arabia, UAE (United systems, air quality systems, process heat Arab Emirates), and the US. exchangers, industrial chimneys, heat recovery 222 | Local Manufacturing Potential for Solar Technology Components in Egypt Mirror PRODUCTION PROCESS AND FACTORS Mirrors are used to reflect the direct solar radiation incident on them and concentrate it onto the receiver placed in the focal line of the Parabolic Trough collector. The mirrors are made with a thin silver or aluminum reflective film deposited on a low-iron, highly transparent glass support to give them the necessary stiffness and parabolic shape. Additional layers protect the silver coating against corrosion and erosion. Figure A2.3 | Schematic of a CSP Mirror Structure Mirror-backing coatings are produced by traditional layer. The chemical resistance is improved; the SnO2 wet-chemistry processes. The clean glass is still allows adhesion of the paint layer; the SnO2 is sensitized with SnCl2; the Ag layer is applied by a good diffusion barrier for oxygen and water and is chemical reductive processes; the Cu layer is applied immune to further oxidation; the Ag/SnO2 system by chemical processes; the mirror-backing paint does not suffer from the known problems of copper/ layers are applied by various techniques; and the silver inter-diffusion implicated in mirror degradation; applied paint is force-cured by heating. and the process does not produce copper-containing waste streams that must be environmentally New processes are under development, such as a processed and treated for recycling. copper-free process, which replaces the copper layer used to inhibit silver-layer corrosion in mirror The mirror-backing paint systems and resulting manufacturing with the application of a layer of tin coatings typically are based on solvent-borne alkyd oxide (SnO2). The copper-free process has multiple resins, which are relatively complex paint systems advantages compared to the older copper protective and are proprietary to the paint manufacturers. The Appendix 2 | Suggested CSP Industries Description | 223 paint formulations that afford the best protection technological barrier in the mirror industry is shaping against the corrosion of the copper layer protecting the glass. The actual standard manufacturing a silvered mirror contain lead pigments as the active precision of the parabolic shape is above 99.9 corrosion-inhibitor component. Historically, solar percent interception factor. This, combined with a systems built 10-20 years ago used glass mirrors high impact resistance and the restrictive composition with multiple-layer paint systems, in which 1 layer required for high transmittance, makes necessary a contained specially formulated, highly leaded (10 large manufacturing ability. percent-20 percent lead by weight) paints. MAIN COMPETITORS Highly leaded paints containing more than 10 percent lead by weight no longer are available due The following companies have been identified as to environmental and health concerns. Most leaded actual or potential suppliers of mirrors for CSP paints now contain 0.5 percent-2 percent lead by projects: weight. Companies are adapting their mirror lines to run a new low-lead paint system, in which the lead • AGC Solar: The AGC Group, with the Asahi Glass is reduced to the point that the durability remains Company at its core, is a global business group. equivalent. The prime coat of the new three-layer Its main industries are flat glass, automotive paint system now contains 2.5 percent lead; the glass, display glass, electronics and energy, and intermediate coat contains 1 percent lead; and chemicals. The group employs some 50,000 the white top coat is still acrylic based and has high people worldwide and generates annual sales of ultraviolet (UV) stability (Kennedy and others 2007). more than EUR 11,199 million through business in approximately 30 countries. Unfortunately, although the coatings with a lead • Flabeg: FLABEG Holding GmbH is a German content are robust, they have been mostly phased company founded in 1882 as Fürth Glass out because lead pigments are toxic so their use Factory. It is a technology leader in the field of is discouraged for environmental health reasons. glass finishing. It is among the leading global Mirror-backing paint companies have developed new manufacturers of low-glare mirrors and cover lead-free paint systems that perform quite well in plates for the automotive industry, as well as solar accelerated tests, but, notably, are intended for indoor and high-technology glass applications. conditions. A (Ni2+ and Co2+)-bis-hydrogen cyanamide • Guardian: Guardian Industries began as is considered one of the best-performing, lead-free, the Guardian Glass Co. in 1932, making corrosion-inhibitor pigments on the market. A second windshields for the automotive industry. Today, type of lead-free mirror back-coating incorporates Guardian Industries Corp. is a diversified global antioxidant pigments, which also are cyanamide manufacturing company headquartered in derivatives of metals, within a melamine-based resin. Auburn Hills, Michigan, with leading positions in A third type of lead-free mirror back-coating can be float glass; fabricated glass products; fiberglass applied as a film and hardened to form a protective insulation; and other building materials for layer on the back of the mirror. It comprises a fluid commercial, residential, and automotive markets. organic resin and a corrosion inhibitor. The group declared US$4.9 billion revenues in 2011 and had approximately 17,000 employees TECHNOLOGICAL BARRIERS (Forbes 2011). • Rioglass: Created in 1991 in Spain, Rioglass The coating technologies are important for the is a privately owned glass maker. After initially ultimate performance of the mirror. So is obtaining supplying short- and medium-run vehicle highly transparent low-iron glass. However, the main manufacturers, Rioglass has become a significant 224 | Local Manufacturing Potential for Solar Technology Components in Egypt player in the European automotive glass market. manufacturing: Saint-Gobain Glass Deutschland The solar division was created in 2007 and has GmbH and Saint-Gobain Solar-Portugal (Saint approximately 200 employees. Gobain Solar Power 2011). • Saint Gobain: Saint-Gobain S.A. is a French multinational corporation founded in 1665 in Paris. Originally a mirror manufacturer, it now Storage Tanks also produces a variety of construction and high-performance materials. The solar energy division, Saint-Gobain Solar Power, designs and PRODUCTION PROCESS AND manufactures mirrors for CSP. The group Saint FACTORS Gobain declared EUR 2.9 billion in 2012 and employs more than 190,000 persons. A large number of tanks and pressure vessels are required in a CSP plant. They include raw and treated LOCATION OF MANUFACTURING water storage tanks; the deaerator, the steam drum, FACILITIES and condensate tank for the Rankine cycle; and the HTF storage, expansion, and ullage vessels and The above-mentioned companies work at a global other minor tanks for sewage and water treatment scale, either through subsidiaries or by means of intermediate steps. If a TES system is included, distribution partnerships with local companies. molten salt “hot” and “cold” storage tanks also are However, their manufacturing facilities are necessary. Carbon steel and stainless steel are concentrated in a few countries. required for their manufacture. • AGC Solar: The AGC Group has 10 manufacturing Most of these tanks are small enough to be sites all over the world, of which 1 is totally manufactured in a workshop and transported, but dedicated to solar mirrors manufacturing, namely, others such as molten salt tanks must be erected Zeebrugge in Belgium (AGC Solar 2013). on site. Both the hot tank and the cold tank will be • Flabeg: FLABEG Holding GmbH has 13 manufactured from steel plates (stainless steel for the manufacturing sites all over the world. Five (5) hot tank and carbon steel for the cold one) that have are totally or partially dedicated to solar mirrors been laminated and curved. manufacturing: Furth im Wald and Köln in Germany, Shanghai in China, Pittsburgh, PA in the US, and TECHNOLOGICAL BARRIERS New Delhi in India (Flabeg Holding GmbH 2013). • Guardian: Guardian Industries has over 100 Designing and manufacturing pressure vessels manufacturing facilities all over the world. Most according to the ASME Boiler and Pressure Vessel are in North America, but it has presence in China, Code or an equivalent standard should pose no India, Japan, Thailand, Egypt, Saudi Arabia, UAE, challenge to any experienced manufacturer. On-site South Africa, Argentina, Brazil, Colombia, Costa welding and testing, on the other hand, requires Rica, Venezuela, and several European countries. skilled welders to ensure the highest quality within a • Rioglass: Rioglass has 7 manufacturing centers tight erection schedule. all over the world. Three are totally dedicated to solar mirrors manufacturing: Rioglass Solar 1 and The second main issue regarding molten salt tanks 2 in Spain, and Rioglass Solar, Inc. in Arizona, US is the design and construction of the foundations. (Rioglass Solar S.A. 2013). The high temperature of the tanks requires that the • Saint Gobain: Saint Gobain S.A. has two base of the tanks is vented to prevent excessive manufacturing facilities dedicated to solar mirrors temperature that could damage the concrete. Appendix 2 | Suggested CSP Industries Description | 225 MAIN COMPETITORS facilities, all in the US: fabrication facilities in Louisville, KY and Newnan, GA and a painting The following companies have been identified as facility in Harrodsburg, KY (IEA n.d.). actual or potential suppliers of storage tanks for CSP • Duro Felguera: The Duro Felguera group has five projects: manufacturing facilities in Spain. One of them is dedicated to heavy-duty metal works for boiler • Aitesa: Aitesa S.L. is a Spanish company founded and pressure vessel manufacturing (Duro Felguera in 1985, with over 25 years of experience in design S.A. 2013). and manufacturing of heat transfer equipment • IMASA: IMASA Ingeniería y Proyectos, S.A. has over a wide range of pressures, temperatures, more than 10 manufacturing facilities in Spain. One and fluids. of them is dedicated to heavy-duty metal works • Caldwell Tanks: Caldwell Tanks was founded in for boiler and pressure vessel manufacturing 1887. It designs, fabricates, and builds tanks for (IMASA 2013). the water, wastewater, grain, coal, and energy industries. Caldwell has approximately 500 employees as of 2012. Structure and Tracker • Duro Felguera: Duro Felguera, S.A. is an international company founded in Spain in 1858. It is specialized in turnkey projects for the PRODUCTION PROCESS AND industrial and power generation sector, as well FACTORS as equipment manufacturing. The Duro Felguera group declared EUR 109.5 million revenues in The solar tracking system changes the position of 2011 and has approximately 2,000 employees. the parabolic collector (or, in solar tower plants, the • IMASA: IMASA Ingeniería y Proyectos, S.A., heliostats) to follow the apparent position of the sun headquartered in Oviedo (Spain), was founded during the day, thus enabling the concentration of the in the 1970s as a company dedicated to the solar radiation onto the receiver. The system consists implementation of projects56 and the maintenance of a hydraulic (or, in solar tower plants, electric) drive and erection of industrial plants. At present, IMASA unit that rotates the optical element around its axis leads several multidisciplinary companies involved and a local control that governs it. The structure, in in different industrial sectors. These companies turn, must keep the shape and relative position of generate a turnover exceeding EUR 300 million the elements, transmitting the driving force from the with a workforce of over 1,500 professionals. tracker, and avoiding deformations caused by their own weight or other external forces such as the wind. LOCATION OF MANUFACTURING FACILITIES Galvanized structural carbon steel is the usual material for the structures. Commercial beam profiles The above-mentioned companies’ manufacturing are cut, welded, and hot-dip galvanized. The same is facilities are concentrated in a few countries. true for plates. On-site assembly is done by bolting together the different pieces. • Aitesa: Aitesa has long-term partnership agreements with metal fabrication facilities in Rack- or crown-and-pinion electric drives are the Spain and Thailand (Aitesa S.L. 2013). most commonly used to move the heliostats. For • Caldwell Tanks: Caldwell has three major parabolic collectors, a hydraulic drive is used to handle the heavy loads. 56. “Projects” here refers to any project that requires deposits or pressure vessels, thus practically any industrial project. 226 | Local Manufacturing Potential for Solar Technology Components in Egypt Figure A2.4 | Schematic of CSP Structure and Tracker Manufacturing TECHNOLOGICAL BARRIERS MAIN COMPETITORS The design of the structure can be subcontracted The following companies have been identified as or locally developed. In any case, despite the tight actual or potential suppliers of structures and/or tolerances required, steel structures should pose no trackers for CSP projects: challenge to any experienced local manufacturer. On the other hand, hot-dip galvanizing of large structures • Albiasa: Through its parent company Albiasa (over 12 m long57) could become a bottleneck in the Gestión Industrial, S.L. is a Spanish group founded supply chain. in 1974. It has developed an active capital assets engineering business. It has had especially Regarding the tracker manufacturing, high-precision intense activity in the iron and steel industry, after machining and surface treatment of the hydraulic entering the renewable energies field through the drive shaft require specialized tools and experienced company, ALBIASA SOLAR, S.L., in 2004. workforce to achieve the required quality. • Asturfeito: Asturfeito S.A. is a Spanish company founded in 1989. It specializes in structure and equipment manufacturing. Its subsidiary, Asturmatic, focuses on hydraulic, pneumatic, and electric equipment and control systems. The company declared EUR 25 million sales in 2012 and has 57. Double-end dipping in smaller tanks is possible but seriously reduces the throughput of the galvanizing plant. approximately 160 employees (Asturfeito S.A. 2013). Appendix 2 | Suggested CSP Industries Description | 227 • Gossamer: Gossamer Innovations is a structural recent years, the company has increased its solar design company based in the U.S. Its designs portfolio including most CSP components such are manufactured through a network of local as structures and trackers, receivers, mirrors, and workshops and suppliers and have been used in turbines. Siemens and its subsidiaries employ approximately 200 MWe installed capacity. approximately 360,000 people across nearly 190 • Ideas en Metal: Ideas en Metal S.A. is a family- countries and reported global revenue of approx. owned Spanish company specializing in the EUR 73.5 billion in 2011. design and manufacture of space frames, storage systems, and other metal products that are made LOCATION OF MANUFACTURING primarily from sheet and pipe, and manufactured FACILITIES in series. The company was founded in 2001 and since has supplied all or part of the structures The above-mentioned companies work on the global for over 1,300 MWe installed capacity (Ideas en scale, through either subsidiaries or distribution Metal S.A. 2013). partnerships with local companies. However, the • MADE: Made Torres is part of the Invertaresa Group manufacturing facilities are concentrated in a few established in 1940. MADE is an industrial company countries. of reference both nationally and internationally. It is one of the leaders in the manufacture of structures • Albiasa: Albiasa Solar S.L. is a structure design for the CSP sector, having supplied approximately company. Its designs are manufactured through a 350 MWe installed capacity. network of local workshops and suppliers. • SBP: Schlaich Bergermann & Partner, based • Asturfeito: Asturfeito S.A. has its main in Stuttgart, is a world-renowned structural manufacturing facility in Spain (Asturfeito S.A. engineering firm founded in 1980. The company 2013). manages the patent rights on the Parabolic Trough • Gossamer: Gossamer Innovations is a structural designed by the EuroTrough consortium,58 one of design company based in the US. Its designs the most installed solar collectors worldwide. are manufactured through a network of local • Sener: Sener Grupo de Ingeniería, S.A. is a workshops and suppliers. Spanish engineering company founded in 1956. • Ideas en Metal: Ideas en Metal S.A. has five It has extensive experience in the development manufacturing facilities in Spain (Ideas en Metal of thermosolar plants, state-of-the-art combined S.A. 2013). cycle electric plants, regasifications of liquid gas, • MADE: Made Torres has its main manufacturing nuclear energy, biofuels, oil refining, chemical and facility in Spain, with a capacity of up to 50,000 t/ petrochemical, and plastics. SENER has a workforce year. of more than 5,000 professionals and a turnover • Sener: Sener Grupo de Ingeniería, S.A. is above EUR 1,000 million in 2011 (Vadillo 2011). an engineering company. Its designs are • Siemens: Siemens A.G. is a German multinational manufactured through a network of local engineering and electronics conglomerate workshops and suppliers. headquartered in Munich. It is the largest Europe- • SBP: Schlaich Bergermann & Partner, based based electronics and electrical engineering in Germany, is a structural engineering firm. Its company. Siemens’ principal activities are in business model is the exploitation of the patent industry, energy, transportation, and healthcare. In rights on the EuroTrough Parabolic Trough design. • Siemens: Siemens AG is a German multinational 58. The companies and research institutions in the EuroTrough company. Siemens and its subsidiaries have consortium are Fichtner Solar, Flabeg Solar International, SBP, manufacturing facilities in nearly 190 countries. and DLR (Germany); CRES (Greece); Iberdrola, Abengoa/ Inabensa, and PSA-CIEMAT (Spain); and Solel (Israel). 228 | Local Manufacturing Potential for Solar Technology Components in Egypt Appendix 3 | Suggested PV Industries Description Support Structure TECHNOLOGICAL BARRIERS PRODUCTION PROCESS AND The design of the structure can be subcontracted FACTORS or locally developed. In either case, steel structures should pose no challenge to any experienced local This industry is similar to the CSP structure and manufacturer. tracker industry. The main differences are: MAIN COMPETITORS • A fair number of trackers are made without hydraulic drives (electric devices are used instead) The companies identified as actual or potential • Tolerances are less restrictive in manufacturing suppliers of support structures for PV projects are and assembly. the same shown in the CSP structure and tracker industry. However, as the usual size of PV projects is When building-integrated applications are smaller than for CSP, the market is shared with many considered, aluminum can be used for structures small and medium local companies. due to weight restrictions. Appendix 3 | Suggested PV Industries Description | 229 Solar Glass PRODUCTION PROCESS AND FACTORS Solar glass can be defined depending on the final use (Figure A3.1). Figure A3.1 | Types of Solar Glass General requirements can be defined for any of these For the substrate-manufactured modules (copper/ applications, including indium sulfide or CIS; or copper/indium/gallium di- selenide, or CIGS), the back glass must endure • Tight tolerances in overall dimensions, warp high-temperature processes such as molybdenum • Surface quality, smoothness, and planarity to deposition. A certain amount of sodium is required avoid coating problems in the CIS/CIGS photoactive layers, and the usual • Edge shape and quality required for assembly method to provide it is the thermal diffusion of the • Durability and small loss of properties with aging existing sodium in soda lime glass. However, soda • Reliability and repeatability. lime glass is not a high-tech material (it is commonly used in windows). For solar applications, a stable 230 | Local Manufacturing Potential for Solar Technology Components in Egypt composition and higher quality of surface and edge In addition, tolerances are tighter, and the overall treatments are required. process manufacturing quality required is higher than for conventional applications such as automotive or The front glass for substrate-manufactured modules domestic glass. requires low absorption (thus requires low-iron glass), mechanical resistance, and low reflection. To reduce MAIN COMPETITORS reflective59 losses and increase absorption rates,60 referred to collectively as “light trapping effects,” a The following companies have been identified as textured surface is convenient. In single-crystalline actual or potential suppliers of Solar glass for PV modules, the photoactive surface is textured, so a projects: flat glass with antireflective coating is used. In thin- film modules, the photoactive surface is likely to be • AGC Solar: The AGC Group, with the Asahi Glass flat, so a “thick” (larger than the coherence61 length Company at its core, is a global business group. of light) texture is commonly used, as opposed to the Its main industries are flat glass, automotive “thin” texture that can be used in the substrate. glass, display glass, electronics and energy, and chemicals. The group employs some 50,000 In the superstrate-manufactured modules (TF-Si people worldwide and generates annual sales of and CdTe), the front glass undergoes a transparent more than EUR 11,199 million through business conducive oxide (TCO) deposition as a first step. in approximately 30 countries. For TF-Si, a hazy finish is advantageous, smooth • Guardian: Guardian Industries began in 1932 as for CdTe. The requirements of low absorption, Guardian Glass Company, which manufactured mechanical resistance, and textured surface still windshields for the automotive industry. Today, apply for the outer side. However, the inner surface Guardian Industries Corp. is a diversified global quality must be as high as in the back glass for manufacturing company headquartered in substrate-manufactured modules. Auburn Hills, Michigan. It has leading positions in float glass, fabricated glass products, fiberglass The back glass for superstrate-manufactured insulation, and other building materials for modules is the less demanding, with only general commercial, residential, and automotive markets. requirements with which to comply. In some The group declared US$4.9 billion revenues in manufacturing processes, this rear glass is replaced 2011 and had approximately 17,000 employees by a metallic or plastic cover. (Forbes 2011). • Pilkington: Pilkington is a division of Nippon Sheet TECHNOLOGICAL BARRIERS Glass Co., Ltd., a Japanese company that is one of the world’s largest manufacturers of glass and Availability of high purity prime matters for low-iron glazing products for the automotive, architectural glass manufacturing could become a bottleneck in and technical glass markets. With approximately the supply chain. 29,500 permanent employees, it has principal operations in 29 countries and sales in over 130 59. Primary reflection is reduced because the texture increases (Nippon Sheet Glass Co., Ltd. 2013). the chances of the reflected angle leading the light back onto the surface, rather than out to the surrounding air. Secondary • Saint Gobain: Saint-Gobain S.A. is a multinational reflection (on underlying surfaces) is reduced because the corporation founded in 1665 in Paris. Originally reflected beam likely will find different surface angles in the entrance and exit paths, thus increasing the chances of the a mirror manufacturer, it now also produces a reflected angle leading the light back onto the underlying surface. 60. By causing an oblique incident angle on the photoactive variety of construction and high-performance surface, texturizing increases the effective path of the light. materials. The solar energy division, Saint-Gobain 61. A thick texture has light-trapping properties due to ray optics, whereas thin textures show interference and polarization effects. Solar Power, designs and manufactures mirrors Appendix 3 | Suggested PV Industries Description | 231 for CSP. The group, Saint Gobain, declared EUR • Pilkington: Pilkington has manufacturing facilities 2.9 billion in 2012 and has more than 190,000 in over 30 countries. They include Argentina, Brazil, employees. Canada, Chile, Colombia, Dominican Republic, • Schott: Schott AG is an international technology Mexico, Uruguay, United States, Venezuela, group with more than 125 years of experience. Its Austria, Czech Republic, Denmark, Finland, products include components and systems made France, Germany, Greece, Hungary, Ireland, Italy, from specialty glasses and materials. The group Netherlands, Norway, Poland, Portugal, Romania, declared global sales of EUR 2 billion in 2011/12 Russia, Slovakia, Spain, Sweden, Switzerland, and has 16,000 employees worldwide. United Kingdom, Kuwait, Seychelles, UAE, China, India, Japan, Malaysia and Vietnam (Pilkington LOCATION OF MANUFACTURING 2013). FACILITIES • Saint Gobain: Saint Gobain S.A. has 11 manufacturing facilities dedicated to solar glass The above-mentioned companies work at a global manufacturing, in Australia, Belgium, Canada, scale, either through subsidiaries or by means of China, France, Italy, Luxembourg, Sweden, distribution partnerships with local companies. United Kingdom, and United States (Saint Gobain However, their manufacturing facilities are Solar Power 2011). concentrated in a few countries. • Schott: Schott AG has over 60 manufacturing facilities worldwide. One, Schott Solar AG in • AGC Solar: The AGC Group has 10 manufacturing Mainz, Germany, is dedicated to solar glass sites all over the world. Five are dedicated to float manufacturing (Schott AG 2013). glass manufacturing: Dalian in China, Mol and Moustier in Belgium, Rayong in Thailand, and Spring Hill in the U.S. Three sites are dedicated to patterned glass and anti-reflective coating: Manila in Philippines, Roux in Belgium, and Suzhou in China. • Guardian: Guardian Industries has over 100 manufacturing facilities all over the world. Although most of them are in North America, the company has presence in China, India, Japan, Thailand, Egypt, Saudi Arabia, UAE, South Africa, Argentina, Brazil, Colombia, Costa Rica, Venezuela, and several European countries. 232 | Local Manufacturing Potential for Solar Technology Components in Egypt Appendix 4 | Industry on Kom Ombo According to previous works developed by Introduction the consortium STA-Accenture, the following components could be manufactured in Egypt: Egypt has shown interest in developing solar energy to contribute to the national energy mix while avoiding • CSP structure: Withstanding structure of solar CO2 emissions. collectors. • CSP mirrors: Reflectors to be installed in the A concentrated solar power (CSP) plant expected Parabolic Trough collectors. to be constructed is Kom Ombo. To enhance • Pumps, including: the contribution of Egypt’s local industries, an −− Heat transfer fluid (HTF) pumps in the Solar assessment of the expected equipment that can be Field manufactured in Egypt was made. This assessment −− Molten salts pumps in the molten salts storage included: tanks −− Feed water pumps: Main water pumps that • Identification of components that could be increase water pressure up to 100 bar and manufactured in Egypt located at the output of deaerator • Definition of quantities required for Kom Ombo −− Auxiliary pumps (such as condensate pumps). project • Heat exchangers, including: • Expected costs of equipment in current −− Steam generation systems (SGS), in which the manufacturing facilities and Egypt HTF transfers the heat to the water to obtain • Expected savings and percent of equipment steam at 390ºC and 100 bar supplied by Egyptian industry. −− Molten salts heat exchangers, used to charge (heat molten salts with HTF) or discharge (heat HTF with molten salts) the storage system −− Condenser Key Assumptions −− HP and LP preheaters used to heat cold feed water (≈50 ºC) from the condenser output to LOCAL COMPONENTS the inlet of the steam generation system (≈230 ºC) in several stages. The local components study is focused only on specialized components required to install CSP The elements included in this study are shown in power plants. General equipment such as balance of Figure A4.1. plant (BOP), buildings, and common services are not included in the study. Appendix 4 | Industry on Kom Ombo | 233 Figure A4.1 | Plant Diagram Showing Location of Main Equipment That Could Be Supplied by Egypt’s Local Industry 234 | Local Manufacturing Potential for Solar Technology Components in Egypt KOM OMBO PROJECT The model estimates the equipment manufacturing costs in Egypt plus profit. The model is later The main characteristics of Kom Ombo project follow: compared to the sales price in OECD countries.62 The main assumptions made in the model were: Technology: CSP with Parabolic Trough collectors Thermal storage: 7.5h • Total investment costs for factory installations Expected power: 100 MW. are the same in OECD countries as in Egypt. Components required for Kom Ombo project • Typical factory size has been used for each industry. This size has been defined according As a reference scenario, the cost of installing a to the maximum installed electrical power of 50MW CSP-Parabolic Trough plant in Europe was CSP plants that a factory can supply per year63: considered. To obtain component requirements, the same plant was scaled up to align with Kom Ombo’s Mirrors: 250 MW/year expected power and storage. These European data Pumps: 400 MW/year are the main data required to forecast the costs of Heat exchangers: 50 MW/year. the Kom Ombo project: The amortization period of factory installations is 5 Total mirror surface: 1,000,000 m 2 years; the loan corresponds to 70 percent of required Total structure weight: 20,400,000 kg investment costs; and the interest rate is 13 percent. Total thermal power required in heat exchangers: The output of the model is the expected cost per unit 760 MWth of production: Total electrical power required by pumps: 15 MWe. Mirrors: US$/m2 Structure: US$/kg MODEL ASSUMPTIONS Pumps: US$/MWe Heat exchangers: US$/MWth. To evaluate the expected impact on the component costs, the model developed during preparation of MODEL RESULTS the present report, “Local Manufacturing Potential for Solar Technology Components in Egypt,” carried The model outputs according to the assumptions out for the World Bank has been used. follow (Table A5.1): 62. The model is calibrated using the reference sales price in the OECD. 63. For example: One mirror factory could supply mirrors to 3 CSP plants such as Kom Ombo (3x100 MW). One pump factory could supply pumps to 4 CSP plants such as Kom Ombo (4x100 MW). Two heat exchanger factories would be required to provide heat exchangers to 1 Kom Ombo power plant (0.5x100 MW). Appendix 4 | Industry on Kom Ombo | 235 TABLE 80 | SALES PRICE COMPARISON IN MIRROR INDUSTRY Mirrors Units International Estimated EGYPT Market Price Requirements m2 1,000,000.00 Cost $/m 2 $30.00 $19.41 Total* $30,000,000.00 $19,407,073.00 Expected Savings $10,592,926.12 TABLE 81 | SALES PRICE COMPARISON IN STRUCTURE INDUSTRY Mirrors Units International Estimated EGYPT Market Price Requirements Kg 20,400,000.00 Cost $/kg $2.50 $2.39 Total* $51,000,000.00 $48,693,652.62 Expected Savings $2,306,347.38 TABLE 82 | SALES PRICE COMPARISON IN HEAT EXCHANGER INDUSTRY Mirrors Units International Estimated EGYPT Market Price Requirements Mwe 15,00 Cost US$/Mwe $483,333.33 $404,625.59 Total* $7,250,000.00 $6,069,383.86 Expected Savings $1,180,616.14 TABLE 83 | SALES PRICE COMPARISON IN PUMPS INDUSTRY Mirrors Units International Estimated EGYPT Market Price Requirements MWth 760,00 Cost $/ MWth $22,500.00 $13,947.82 Total* $17,100,000.00 $10,600,345.36 Expected Savings $6,499,654.64 As a result, the expected savings account for approximately US$20,500,000. 236 | Local Manufacturing Potential for Solar Technology Components in Egypt References Aalborg CSP A/S. 2011. 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