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RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTRO
DE RUEHEG #0384/01 0591502
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R 281500Z FEB 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0440
INFO ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 02 CAIRO 000384 
 
SENSITIVE 
SIPDIS 
DEPT FOR NEA/ELA 
 
E.O. 12958: N/A 
TAGS: EINT ENRG SENV TSPL EG
SUBJECT: Despite Potential, Leading Wind Developer Not Bullish on 
Egypt's Renewable Energy Prospects 
 
¶1. (SBU) Key Points: 
 
--A leading Middle East wind energy company envisions tremendous 
potential for renewable energy in Egypt but blames government 
inaction and unwillingness to support business initiatives as the 
main problem hindering development. 
 
--The company's vice president believes solar energy is not a 
feasible renewable energy option for Egypt due to high equipment 
costs. 
 
--At this time, the company possesses no plans to explore the US 
renewable energy market because of political constraints and the 
belief the General Electric would "block any and all" business 
opportunities. 
 
¶2. (U) ESTH officer met with El Sewedy (ES) Cables Vice President 
Hassan Abd El Salam Abd El Salam to discuss renewable energy (RE) 
issues in Egypt.  ES, an industrial conglomerate involved in 
manufacturing power cables and electrical products across the 
Middle East, launched a subsidiary called El Sewedy for Wind Energy 
Generation (SWEG) in October 2008 to take advantage of an Egyptian 
government (GoE) decree to increase domestic renewable energy 
development.  (Note: The GoE has established an official target 
that 20 percent of the country's electricity consumption will come 
from RE sources by 2020 - modeling its plan directly on a European 
Union proposal to achieve the same goals. End Note.)  Abd El Salam 
oversees SWEG's operations and was the driving force behind 
business deals including the purchase of a 30 percent stake in 
Spanish wind energy equipment manufacturer M.Torres Olvega and a 
joint venture project with German wind town manufacturer SIAG. Both 
of these deals were designed to give SWEG greater leverage to 
pursue wind development projects in the Middle East and beyond. 
 
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Wind is the Wave of the Future 
 
------------------------------------------- 
 
 
 
¶3. (SBU) Abd El Salam foresees tremendous wind potential in Egypt 
and has led SWEG efforts in building an industrial compound in the 
Red Sea town of Ain Sukhna to construct wind turbines, wind towers, 
and rotor blades.  "Saudi Arabia has oil, Qatar has gas, and Egypt 
has the best wind conditions in the world," he asserted.  He 
estimated that the Suez Gulf coastal area - starting from the city 
of Zafarana  (where a 550 mega watt wind farm is currently 
operating) and stretching to the southern town of Gabal El Zeit - 
could annually produce 20 gigawatts of electricity solely from 
wind.  "We don't have any space restrictions," he explained, 
referring to the fact that most of this area lies in the desert. 
Given recent technology developments, new wind farms could run for 
20 years with only "minimal" upkeep.  Abd El Salam predicted that 
wind-generated electricity would eventually cost less per kilo watt 
hour than fossil fuel sources.  In response to ESTH office inquiry 
about environmental concerns for wind farm development - noting 
government plans to study bird migration in the Suez Canal area, 
Abd El Salam said the issue was a non-starter.  "This is a stalling 
tactic" from the government, he stated without elaborating beyond a 
claim that no bird deaths have occurred since Egypt's largest wind 
farm - Zafarana - began operating in 2004. 
 
 
 
--------------------------------------------- --------- 
 
But Many Problems Await Development 
 
--------------------------------------------- --------- 
 
 
 
¶4. (SBU) The biggest obstacle hindering wind development is the 
lack of government support.  Abd El Salam repeatedly returned to 
this theme, voicing his frustration with Electricity Minister 
Hassan Younes and the Ministry-controlled New and Renewable Energy 
Authority (the main administrative body for all domestic renewable 
energy projects).  He ticked off a long list of items the Ministry 
had failed to back: relaxing customs to ease the importing of raw 
materials for wind equipment; encouraging domestic companies to 
manufacture wind equipment by granting tax breaks, and moving to a 
feed-in tariff system (which guarantees power grid access and sets 
purchase prices based on the cost of renewable energy generation). 
As a result of what Abd El Salam perceived as government 
 
CAIRO 00000384  002 OF 002 
 
 
"inaction," he explained SWEG was delaying the opening of a new 
wind turbine factory and was unsure when operations would begin. 
Instead, SWEG plans to explore business opportunities elsewhere and 
mentioned South Korea, Brazil, and unnamed African countries as 
possibilities.   The company is also negotiating with the Italian 
government to sell wind equipment, manage a yet-to-be built 300 
megawatt wind farm, and sell the electricity generated back to the 
government - all in Italy. 
 
------------------------------ 
 
Solar Not in the Cards 
 
------------------------------ 
 
 
 
¶5. (SBU) Despite Egypt's location in a "sun belt" area where it 
receives sunshine from nine to eleven hours daily, SWEG is 
pessimistic about solar energy development and does not see it as a 
viable business option.  Abd El Salam noted that, in the absence of 
a significant breakthrough in solar technology, SWEG would continue 
to view solar equipment as a costly investment.  He estimated that 
wind and geothermal equipment currently costs four to five times 
less than solar.  While SWEG plans to track solar technology 
development, "we will not touch it" anytime soon, he added. 
 
-------------------------------------------- 
 
No Plans to Enter the US Market 
 
-------------------------------------------- 
 
 
 
¶6. (SBU) SWEG has no plans to pursue wind energy opportunities in 
the United States at this time.  Abd El Salam explained that 
political pressure was "too strong" against foreign companies 
seeking entry into the US renewable energy market, and intimated 
that the USG might take protectionist measures to stop companies 
like SWEG.  Abd el Salam also stated that General Electric would 
"block" any entry into the US renewable energy market but offered 
no evidence or explanation of why he believed this.  The 
combination of these two factors had led Abd El Salam to direct 
SWEG's business exploration activities elsewhere. 
 
¶7. (SBU) Comment: Abd El Salam's downbeat analysis echoes what 
private industry consultants and even GoE officials have said about 
the renewable energy situation in Egypt.  A lack of government 
leadership has hampered efforts to commission new wind farms along 
the Suez Gulf area. As a result, it is unlikely that Egypt will 
reach its 2020 goal, of deriving 20% of its electricity consumption 
from RE sources - wind (and to a far lesser degree, solar) forms 
approximately 1% of its current energy production.  Nevertheless, 
any solution to increase RE development in Egypt will likely 
include SWEG as it has positioned itself as the country, and 
perhaps the region's, leading wind energy company. 
SCOBEY