April 16, 2020 Read More →

Plans for second-largest coal-fired plant on planet postponed indefinitely

Business Live:

The Hamrawein coal-fired power proposal in Egypt has reportedly been postponed indefinitely. The huge plant was to have been the second largest on the planet, and its demise is symptomatic of the seismic shifts that are occurring in global energy markets, which have been rammed into overdrive by Covid-19.

The Hamrawein proposal was led by a consortium of China’s Shanghai Electric and Dongfang Electric, and Egypt’s Hassan Allam Construction. Egypt is a key Belt and Road Initiative (BRI) nation for China, sitting on the crossroads between Africa, Europe and Asia.

Egypt also finds itself at an energy technology crossroads. The country has until recently maintained an “all of the above” approach to power generation, encompassing fossil fuels, nuclear power, wind and solar. It now seems to be pivoting away from coal and towards renewable energy. 

The indefinite postponement of the Hamrawein plant would mean a total of 15.2GW of proposed coal-fired power plants in Egypt have been either cancelled or shelved. There would be no coal projects left in the country’s project pipeline.

The Hamrawein proposal appears to have been shelved because Egypt now has sufficient power capacity and the construction of such a huge plant would exceed growth requirements.

Around the world the economic downturn, worsened by the Covid-19 pandemic, is suppressing power demand, further eroding the need for large, out-of-date coal-fired power plants.

For example, BRI coal power proposals in Bangladesh and Pakistan threaten to leave both nations with significant over-capacity, potentially leading to unaffordable capacity payments to coal power plants lying idle. The risk is only increased by Covid-19.

The pandemic-driven downturn, and the slow global recovery that is now seeming more likely, will also see power demand growth in Africa at lower levels than expected throughout 2020 and beyond. SA has already seen power demand plummet by more than 25%.

Large coal-fired power plants in Africa will make less sense than ever and the coronavirus pandemic provides an impetus to reset the BRI’s approach to energy investment across the African continent.

With the opportunity for coal power in Africa now largely closed, we ought to see BRI energy investment on the continent move distinctly towards renewable energy.

[Simon Nicholas]

More: Fate of Egypt’s coal-fired project a sign of greener times

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