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PART I: PROJECT INFORMATIONProject Title: Utilizing Solar Energy for Industrial Process Heat in Egyptian Industry1

Country(ies): Egypt GEF Project ID:2 4790GEF Agency(ies): UNIDO GEF Agency Project ID: 120073Other Executing Partner(s): Ministry of Industry, Trade &

SMEs (MITS), National Renewable Energy Authority (NREA)

Submission Date:Resubmission Date

09/16/201410/24/2014

GEF Focal Area (s): Climate Change Project Duration(Months) 60Name of Parent Program (if applicable):For SFM/REDD+ For SGP

For PPP

N/A Project Agency Fee ($): 617,500

A. FOCAL AREA STRATEGY FRAMEWORK 3

Focal Area Objectives Expected FA Outcomes Expected FA Outputs

Trust Fund

Grant Amount ($)

Cofinancing($)

CCM-2 Outcome 2.2: Sustainable delivery mechanisms for EnMS established and operationalized

Output 2.2: Investments mobilized for application of Energy Savings achieved

GEF TF 200,000 1,000,000

CCM-3 Outcome: 3.1: Policy framework encouraging RE investments in industrial applications adopted

Output: 3.1. Renewable energy policy in place

GEFTF 300,000 1,500,000

Outcome 3.2: Investment in RE technologies increased

Output 3.2.: Electricity and heat produced from renewable sources

GEFTF 6,000,000 34,800,000

Total project costs 6,500,000 37,300,000

1 The project title approved at the PIF stage is “Promoting low-carbon technologies for cooling and heating in industrial applications”. The project title is being changed for reasons documented in section A on pages 5 and 6 of the document.2Project ID number will be assigned by GEFSEC.3 Refer to the Focal Area Results Framework and LDCF/SCCF Framework when completing Table A.

GEF5 CEO Endorsement Template-February 2013.doc 1

REQUEST FOR CEO ENDORSEMENTPROJECT TYPE: FULL-SIZED PROJECTTYPE OF TRUST FUND:GEF TRUST FUND

http://www.thegef.org/gef/node/3624

B. PROJECT FRAMEWORK

Project Objective: To develop the market environment for the diffusion and local manufacturing of solar energy systems for industrial process heat

Project ComponentGrant Type Expected Outcomes Expected Outputs

Trust Fund

Grant Amount ($)

Confirmed Cofinancing($)

1. Develop policy instruments to promote the use of solar energy for industrial process heat

TA 1.1. Policy instruments promoting the use of solar energy for industrial process heat

1.1.1. A roadmap and implementation plan for the dissemination of solar energy for industrial heat in 3 selected sectors formulated1.1.2. Instruments to control the quality of solar components, companies and personnel performing installation and maintenance of solar thermal systems

GEFTF

300,000 1,500,000

2. Mobilize financing for the deployment of solar energy for industrial heat

INV 2.1. Financing for the deployment of solar energy for industrial heat Mobilized

2.1.1. Revolving fund to facilitate financing of solar thermal technologies is set up2.1.2. Solar thermal technologies installed in selected facilities

GEFTF

2,000,000 19,000,000

TA 2.1.3. Technical capacity of staff of local banks on the assessment of projects enhanced2.1.4. Awareness campaign on solar thermal technologies for industrial process heat implemented

400,000 1,600,000

3. Improve the manufacture, supply and distribution of solar energy

INV 3.1. The local manufacture, supply and distribution of solar energy

3.1.1. Laboratory facility for testing quality of the locally manufacturers and

GEFTF

2,000,000 12,000,000


components and systems

components and systems is strengthened

imported products accredited3.1.2. Basic tools and sets of equipment required for improving the quality of locally manufactured components provided

TA 3.1.3. Training programme on best practices in the manufacture of solar energy components and systems conducted3.1.4. Capacity of the testing laboratory staff on testing protocols and procedures developed3.1.5. A platform to enhance information exchange, cooperation and partnerships between local industries, international centers of excellence and technology suppliers created

800,000 1,000,000

4. Build the capacity of technical staff designing, developing and servicing solar systems

TA 4.1. Technical capacity of the system designers, developers, facility managers and service providers for solar energy utilization for industrial process heat enhanced.

4.1.1. Training programme on energy savings based on process heat optimization for experts, facility managers and service providers is conducted4.1.2. Training programme on system design for experts, facility managers and service providers is conducted4.1.3. Training programme on solar thermal equipment installation and

GEFTF

600,000 1,000,000


servicing for technicians, installers and service providers established.4.1.4. Training programme on business development for solar energy businesses developed

5. Monitoring & Evaluation

TA 5.1. Adequate monitoring and evaluation mechanisms are in place, facilitating smooth and successful project implementation and sound impact

5.1.1. Regular monitoring exercises conducted, PIRs prepared, tracking tools according to the GEF requirements prepared.5.2. Final project evaluation conducted

GEFTF

100,000 200,000

Subtotal 6,200,000 36,300,000Project management Cost (PMC)4 GEFT

F300,000 1,000,000

Total project costs 6,500,000 37,300,000

C. SOURCES OF CONFIRMED CO-FINANCING FOR THE PROJECT BY SOURCE AND BY NAME ($)

Please include letters confirming co-financing for the project with this form

Sources of Co-financing Name of Co-financier (source) Type of Co-financing

Co-financing Amount ($)

National Government Ministry of Industry, Trade & SMEs (MITS)

In-kind 600,000

National Government National Renewable Energy Authority (NREA)

In-kind 2,000,000

Others / Banks National Bank of Egypt (NBE) Loan 2,000,000Private Sector Commercial International Bank5 (CIB) Hard-Loan 20,000,000National Government Social Development Fund6 Loan 11,500,000GEF Agency UNIDO Cash 60,000GEF Agency UNIDO In-kind 140,000Private Sector Industries7 Cash 1,000,000

4PMC should be charged proportionately to focal areas based on focal area project grant amount in Table D below.5 The letter provided by CIB refers to available funding of140 million. The project targets the use of 20 million. As the project continues, it can be expanded further.

6 The SDF offers loans to SMEs and MSMEs to invest in environmental and renewable energy projects. The project targets the use of 11.5 million from existing credit lines of the SDF.7 In accordance with footnote 2 on page 3 of the GEF co-financing policy(FI/PL/01): “Co-financing that is expected to be secured or mobilized from private sector entities or project beneficiaries during project implementation, but after CEO endorsement, may be counted as confirmed co-financing if the Agency’s project document includes clear requirements that such co-financing be mobilized during implementation at a clearly expressed minimum level. Such contributions will often be mobilized during project


Total Co-financing 37,300,000

D. TRUST FUND RESOURCES REQUESTED BY AGENCY, FOCAL AREA AND COUNTRY1

GEF Agency Type of Trust Fund Focal Area

Country Name/Global

(in $)Grant Amount (a)

Agency Fee (b)2

Total c=a+b

Total Grant Resources1 In case of a single focal area, single country, single GEF Agency project, and single trust fund project, no need to provide information for this table. PMC amount from Table B should be included proportionately to the focal area amount in this table.

2 Indicate fees related to this project.

E. CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:

Component Grant Amount($)

Cofinancing ($)

Project Total ($)

International Consultants 800,000 510,000 1,310,000National/Local Consultants 550,000 2,300,000 2,850,000

F. DOES THE PROJECT INCLUDE A “NON-GRANT” INSTRUMENT? The project uses a non-grant instrument in implementation, however the type of instrument (i.e. revolving fund) means there will be no reflows to the GEF. (If non-grant instruments are used, provide in Annex D an indicative calendar of expected reflows to your Agency and to the GEF/LDCF/SCCF/NPIF Trust Fund).There will be no non-Grant instrument financed by the GEF grant. However the project will setup a revolving fund with lower than the market interest rates.

PART II: PROJECT JUSTIFICATION

A. DESCRIBE ANY CHANGES IN ALIGNMENT WITH THE PROJECT DESIGN OF THE ORIGINAL PIF8

The incremental activities remained largely the same as in PIF and are still organized into four thematic components: (1) Developing policy instruments to promote the use of solar energy for industrial process heat, (2) Mobilizing financing for the deployment of solar energy for industrial process heat, (3) improving the manufacture, supply and distribution of solar energy components and (4) building the capacity of technical staff designing, installing and servicing solar systems.

The main change introduced to the project is a change in project scope whereby the project will now focus exclusively on industrial process heat and will no longer look into solar cooling. This is taking into account the maturity of the technologies for these two applications as indicated in the comments of the STAP at the PIF/PPG approval and realized during the PPG phase. This is also in view of the high potential for utilizing solar energy for industrial process heat which is discussed later in the document. Further the project will focus exclusively on the industrial sector and will not directly support the tourism industry as there are different initiatives supporting the tourism industry. The technical knowledge to be introduced through the project may also serve the tourism industry however no pilots or loans will be granted to hotels and commercial buildings.

In view of the above, it is highly recommended for the GEF Secretariat to consider changing the project title to “Utilizing solar energy for industrial process heat in Egyptian Industries” to better reflect the project scope.

implementation through match requirements in the project or similar project design features”. In this case the fund established requires 10% equity for the participating companies to be eligible.8 For questions A.1 –A.7 in Part II, if there are no changes since PIF and if not specifically requested in the review sheet at PIF

stage, then no need to respond, please enter “NA” after the respective question.GEF5 CEO Endorsement Template-February 2013.doc

5

During the PPG phase, some of the outputs within each component have been adjusted to align the outputs with the country needs and establish linkages to national and international initiatives based on findings of the PPG phase. A summary of the changes introduced component by component is presented below:

Component 1: At the PIF stage, component 1 was geared towards the development of the policy and regulatory framework to support the use of low carbon technologies in the industrial sector. During the PPG phase, it was realized that many international donors and projects support the Government of Egypt on the higher level regulatory framework, mainly the EU funded project TARES (Technical Assistance to Support the Reform of the Energy Sector) along with a few more initiatives, one of which is supported by IFC and looks into fiscal measures. Therefore it was agreed that the GEF funded project will particularly add value in developing more targeted policy instruments and roadmaps that will generate and sustain direct results in industry. Furthermore, the support related to quality standards of products and components and the creation of a certification scheme for personnel working on the installation and maintenance of solar thermal systems are considered essential in improving the quality of the manufacturing, supply and installation of solar energy systems. These schemes were reallocated from component 3 to component 1 as they relate more to policy aspects of the manufacturing and servicing of systems.

Component 2: The main change in this component is that a revolving fund will be setup rather than a credit guarantee facility or a platform. Moreover the entire component is now more geared to tackling the financial barriers by building the capacity of local banks, supporting demonstration projects and rolling out a good awareness and outreach programme to raise awareness on the programme and leverage interest and resources to support it. The training of system designers is now moved to component 4 which is more focused on the capacity building.

Component 3: The quality standards aspects of this component were moved to component 1. The component still aims at improving the supply chain for solar technologies but provides more details on the type of support to be provided based on the findings of the PPG phase. Mainly assistance will be provided to component manufacturers through offering training, guidelines on best practices and providing tools required to improve the manufacturing practices. Furthermore discussions with NREA during the PPG phase revealed that NREA is in the process of procuring equipment to start a laboratory for testing solar products, therefore the project is now focusing on supporting NREA in getting the laboratory accredited and getting the testing protocols and adequate staff capacity in place.

Component 4: Component 4 remains largely the same but includes additional training on system optimization to ensure that energy efficiency measures are made first prior to introducing renewable energy. Also training on business development and entrepreneurship in the energy sector is added to support energy enterprises in this area get into the market

Generally the GEF grant distribution across the various components remained the same, except for some funds reallocated from component 4 to component 2 to support the creation of a revolving fund. On the other side, the level of co-financing committed during the PPG phase is reduced by around 10%.

A.1. National strategies and plans or reports and assessments under relevant conventions, if applicable, i.e. NAPAS, NAPs, NBSAPs, national communications, TNAs, NCSA, NIPs, PRSPs, NPFE, Biennial Update Reports, etc.According to the African Development Bank, Egypt ranks among the 11 countries in the world showing fastest growing GHG emissions. Furthermore, Egypt installed capacity is no longer able to meet the increasing demand. To face those issues, the Egyptian Government has set up policies and targets to increase the share of renewables in the energy mix and to promote the involvement of the private sector. According to the New & Renewable Energy Authority (NREA) a strategy was approved in February 2008 aiming at raising the share of renewables to 20% of the total electricity generation by 2020. This represents about 7200 MW. The NREA also explains that this target will be met through two paths: 2375 MW will be developed by the government and 4825 MW will be developed

Egypt’s national power sector strategy includes, among others, the following:


to optimize the use of available energy resources and minimize environment pollution to provide electricity with minimum price and best quality to restructure electricity sector to optimize investments and improve electrical services to utilize modern and sophisticated technical systems in electricity sector's operation and activities to develop the expertise and skills of engineers and technicians working in the electricity sector

The proposed GEF project is in line with most of the goals of the Ministry of Electricity and Energy, specifically, to optimize the use of available energy sources and minimize environment pollution, expand the utilization of new and renewable energy resources, restructure the electricity sector to optimize investments and improve electrical services.

Opportunities and barriers presented in the second national communications

Egypt submitted its second national communications in May 2010 and is in the process of preparing its third national communications, which is expected to be ready by mid-2015.

Table (1):

Year GDP GDP(billion LE)

Industry Production Value (billion LE)

Industry share in the GDP (%)

Industrial production value compared to 1990/91 (%)

1990/91 34.12 5.52 16.18 100

2000/01 51.47 10.05 19.52 182

2006/07 68.34 12.99 19.01 235Source: 2nd national communication plan

Attraction of Foreign Direct Investment (FDI) is one of the major goals of privatization and the prevailing investment, political, economic and technical Egyptian environment. The current Egyptian exports are dominated by natural resources-based and low-technology products (Ministry of Industry, Trade & SMEs, 2006). In this context, highly fossil fuels consuming industries and associated energy-intensive products are the primary growing industries.

The cement and fertilizers industries have intensively grown, and their impact on the GHG emissions in Egypt will be felt in the near future. In January 2006, Egypt issued an ambitious strategy for Egyptian industry. The goals entail (Ministry of Industry, Trade & SMEs, 2006):

Achieving higher growth in industrial production through an aggressive utilization of export development and Foreign Direct Investment (FDI) attraction;

Achieving a gradual shift in the industrial structure from resource-based and low-technology activities to medium- and high-technology industries.

Table (2) below presents the emissions from Egyptian industries by gas type. It can be seen that the emissions primarily entail CO2, with the largest contributors being the cement, and iron & steel production sectors. The primary source of N2O emissions is nitric acid production for the fertilizers industry, while aluminum production (smelting process) is the primary source of PFCs. These main sources contribute about 28 Mt of CO2e per year, representing more than 99% of the total emissions of Egypt’s industrial sector. Other minor sources are ozone depleting substances and the lime industry.

Table (2): GHG emissions by different industrial sectors, according to gas type, 2000.

Source Sectors GHG Gas Specific gas emissions,(tons)

CO2e (Mt) Contribution to total emissions (%)

Cement Production CO2 17,251,370 17.25 62.13GEF5 CEO Endorsement Template-February 2013.doc

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Lime Production CO2 31,400 0.03 0.11

Iron and Steel Industry

CO2 1,576,175 1.58 5.68

Ammonia Production

CO2 2,736,000 2.74 9.85

Nitric Acid Production

N2O 16,266 5.04 18.16

Aluminum Production

PFCs 160 1.08 3.88

Ozone DepletingSubstances

ODSsubstitutes,

HFCs

28 0.05 0.18

Total emissions fromthe Egyptian Industry(CO2e)

27.77 100

Source: 2nd national communication plan

The objective of national plans is to create a national greenhouse gas mitigation portfolio to support the process of sustainable development in Egypt. They stress Egypt’s need for technology transfer, donor funding, capacity building and financing from the Clean Development Mechanism (CDM).

Promotion of energy efficiency and utilization of renewable resources of energy not only contribute to the reduction of greenhouse gases but also are consistent with the long-term development goals of the Egyptian economy. Various policies and measures related to internalizing renewable energies, energy efficiency and reduction of GHG emissions, as advocated in the UNFCCC, have been developed in Egypt. An Inter-Ministerial Committee on Climate Change was established in 1998 to formulate, implement and promote the Comprehensive Action Plans for Combating Climate Change. Table (3) shows policies and measures implemented for GHG emissions reduction in Egypt during the last decade.

Accelerated developments are taking place for introducing renewables, fuels witching in industry and transport, domestic and industrial efficiency programs, energy-efficient buildings, agriculture and plantation schemes to enable establishment of an economic structure that prioritizes energy efficiency. This reflects Egypt’s basic policy direction and measures for greenhouse gas reductions to contribute to the global efforts to mitigate climate change, though not legally required to do so.

Table (3): Policies and measures implemented for GHG emissions reduction in Egypt during the last decade.Integrated Energy Planning (IEP) at the sectoral level Helping ensure the optimum overall mix of energy

sources. Optimizing indigenous energy resources. Securing reliable supply of energy with minimum

cost to different sectors of Egypt’s economy.


Promotion of energy efficiency, development of environment-friendly energy, reducing GHG emissions

Maximizing use of all available renewable sources of energy.

Switching to using natural gas in substitution to oil for power generation.

Maximizing use of high-efficient gas-fired combined cycle power plants, in addition to using large-scale generating capacity for traditional thermal power generation.

Minimizing transmission and distribution losses throughout the national electrical networks.

Institutional restructuring of the energy sector. Enhancing electricity and gas grid-interconnection

across borders of neighboring states.

Fortifying energy efficiency policies for the residential and commercial sectors via reinforcing energy efficiency standards, expanding energy efficiency labeling for household appliances, application of energy efficiency code for buildings and disseminating efficient lighting.

Conserving transportation fuel consumption via promoting cleaner alternative fuel.

Reinforcing GHG reduction policy via improving methods of farming and animal husbandry in the agriculture and livestock sectors as well as promoting recycling and waste minimization.

Conserving and expanding plant sinks through plantation and re-plantation projects.

Enhancing Public Participation & Cooperation Promoting public participation and strengthening partnerships with civil society and NGOs.

Motivating the public and industries to conduct efforts that reduce GHG emissions.

Source: 2nd national communication plan

Since the late 1990s the most important mitigation measures implemented by the energy sector have encompassed fuel substitution of oil with natural gas in electricity generation and the industrial sector; combined heat and power generation; efficiency lighting systems; use of wind energy, particularly large-scale grid-connected wind farms, in electricity generation; steam condensate recovery; and the use of solar thermal energy in electricity generation.

For the GHG emissions from the industrial sector, the cement industry is responsible for 17 Mt of CO 2 emissions per year, amounting to about 62% of the total GHG emissions of the industrial sector. In addition, the fertilizers industry is responsible for 5 Mt of CO2 emissions per year, equivalent to about 20% of the total emissions of the sector. Egypt’s industrial development strategy issued in 2006 incorporates climate change into national development priorities. The prime objective of this strategy is to upgrade the Egyptian industrial sector from being technology-excluding to being technology-adopting in the medium term. This would be realized through directly linking the industrial sector to the world technology markets through sustainable technology transfer channels. The most significant industrial processes and product categories in Egypt with respect to GHG emissions, are cement production, processes of carbonates and nitric acid production, as well aluminum production. Some of these industrial processes have already partly acquired technologies through the Clean Development Mechanism (CDM) under the Kyoto Protocol.

Over the years, a series of policies and measures have been adopted so that GHG emissions per unit of product in


industrial processes (excluding those related to energy) witnessed a general drop. Examples of these measures include: Designating GHGs reducing technology as one of the environmentally sound technologies; Creating a market for climate and environment friendly technologies; Comprehensive utilization of flue gases, boiler’s steam and every possible heat waste; Minimizing the ratio between raw materials and products without significant changes in specifications; Treating tail gases to convert nitrous oxide and NOx in nitric acid production into nitrogen, oxygen and water

vapor; Controlling the process chain to reduce the GHG emissions such as PFCs emission reduction in the aluminum

industry.

The main barriers currently preventing the industrial sector from achieving full energy conservation and considerable GHG emissions reduction include:

Subsidies that hinder the incentives to activities for GHG emissions reduction; Lack of information about GHG emissions reduction opportunities in the sector; Long payback period on some GHG emissions reduction investments compared to other investment

alternatives; Financial barriers such as lack of access to investment capital or requiring very high rates of return on

investments; Competing corporate priorities such as competitiveness, other environmental and/or regulatory concerns.

Regulatory programs, such as emission standards and offsets will help setting industry-specific and product-specific GHG emission standards for bringing about more certain compliance. Efficiency or performance standards can help to overcome a variety of barriers and shift production to lower GHG-emitting industrial practices.

Research, development and demonstration (RD&D) is needed in the near term in order to create and commercialize new industrial technology and to reach future emissions goals in the period 2020 to 2050 timeframe. Table (4) presents a variety of potential sector-specific measures which could encourage further reductions in process-related GHG emissions.

Table (4): Mitigation options for GHGs abatement in the industrial sector.

Technical Options Climate and OtherEnvironmental EffectsNew Technologies and Processes- Hydrogen reduction of metal oxide ores- Carbon-free hydrogen and ammonia production- Non-reactive electrodes for aluminum production- Non-fluorine-based aluminum production

Climate BenefitsReduction of CO2 emissionsOther Additional EffectsReduction in air pollution from coke

Process Improvements- N2O reduction for nylon production- N2O reduction for urea production- CF4 reduction in aluminum production- HCFC elimination

Climate BenefitsReduction of CO2 emissionsOther EffectsN2O and HCFC reduction will protectozone layer

Material Substitution- Replacement of metals with plastics- Replacement of concrete with plastics- Lighter materials lower transport-related CO2 emissions- Introducing chemicals made from plant feed stock materials- Cement blending

Climate BenefitsHas to be determined on case by case basisOther EffectsReduction in air pollution


Material Recycling/Reuse- Design for disassembly- Design materials for reuse- Material quality cascading

Climate BenefitsSavings of carbon emissions proportional to the increase inrecycling percentageOther EffectsLess solid waste and lower resource use

Source: 2nd National Communication Plan

A.2. GEF focal area and/or fund(s) strategies, eligibility criteria and priorities.

The project is consistent with GEF-5 Climate Change Focal Area Objectives 2 and 3 aimed at promoting market transformation for energy efficiency in industry and the building sector and promoting investment in renewable energy technologies. It presents a programme that promotes heat system optimization measures in selected sectors complemented with the installation of solar thermal technologies through a combination of technical assistance and investment activities including: (1) Supporting the policy and institutional framework for the dissemination of solar thermal technologies while promoting the local manufacturing of system components, (2) Implementing demonstration projects in pilot sites coupled with establishing a financial mechanism that supports the financing of future projects, (3) Supporting the local manufacturing of quality systems and components and (4) Building the national capacity on the system design, installation, servicing and maintenance.

The Focal Area objective 2 was not initially considered at the PIF stage but was added during the PPG stage. It was added to account for the capacity building and implementation of measures to improve the energy efficiency of the system prior to switching to a renewable energy source.

The Project will directly contribute to the core outputs of the GEF-5 Results Framework “Technologies successfully demonstrated, deployed, and transferred”, and “Enabling policy environment and mechanisms created for technology transfer” as well as “Investment in renewable energy technologies increased”, and “GHG emissions avoided”.

A.3. The GEF Agency’s comparative advantage:The GEF Council document GEF/C.31/rev.1 gives UNIDO comparative advantage for this Focal Area Objective under the Intervention Type Capacity Building/Technical Assistance and the project has a strong focus on promoting RE/EE in industry. Combining the provision of policy and normative development support services and capacity building for all market players, UNIDO aims to remove the key barriers to the continuous improvement of energy efficiency in industries and the increased adoption of renewable energy for productive uses. The UNIDO Energy Programme is structured around four core thematic areas: (1) Industrial Energy Efficiency; (2) Renewable Energy for Productive Uses; (3) Low-carbon technologies; and (4) Benchmarking, Monitoring and Verification.

UNIDO is well suited to implement this project due to its expertise in dealing with the Egyptian Industry. The project also builds on the experience obtained in the “Industrial Energy Efficiency in Egypt” project financed by the GEF and implemented by UNIDO, GEF ID No. 3742. Coordination with UNIDO branches such as the Trade Capacity Building will also provide ample opportunities for cooperation among related initiatives in the country. Through its Trade capacity-building branch, UNIDO enhances the capacity of developing countries and countries with economies in transition to participate in global trade as an area that is critical for economic growth. To this end, some of the services offered by the Trade Capacity Building Branch include:

Capacity building in the area of standards, metrology, testing and accreditation Quality and productivity improvement to enhance the competitiveness of developing country enterprises Develop local capacities in metrology, calibration and product testing Make internationally recognized certification services for international public and private standards

A.4. The baseline project and the problem that it seeks to address:

I. Background information


A.4.1. Egyptian Energy Sector Overview

Egypt’s total primary energy supply in 2011 was 77,649 ktoe (IEA, 2013). Egypt is a significant producer of natural gas and crude oil and relies on imports of coal and oil products and part of its crude oil consumption to meet its energy needs. Around 3% of the energy produced is derived from hydro, geothermal, solar and bio-fuels and waste. Further energy data on Egypt is presented in tables 5 to 7 contained in annex G to this document.

Figure (1) – Egypt Share of Total Energy Supply (IEA, 2012)

The Egyptian electrification rate is 99.4%, according to the International Energy Agency (IEA); this rate is among the highest in Africa. However, ageing infrastructure and rising demand have led to intermittent blackouts mainly associated with the high cooling demands during the summer months.

According to the African Development Bank (AfDB), Egypt’s total primary energy demand has grown at an average annual rate of 4.6% during the last two decades. In order to meet the increasing energy needs, mainly thermal power plants have been built. As a result, Egypt ranks among the 11 countries in the world showing fastest growing GHG emissions according to the AfDB.

A.4.2. Potential for Utilizing Solar Energy for Industrial Process Heat in Egypt

Industry is the most significant energy consuming sector in Egypt. The sector is expected to further grow due to high demand and rapid expansion of industrial production. The energy productivity in Egyptian industry is way below the international average, where the energy consumption per unit of output in Egyptian industries is 10 to 50% higher in Egypt compared to the international average. Other users including commercial sector (hotels, offices, shopping malls, etc.) and residential buildings are also excessively growing and consuming more and more energy particularly for air


conditioning and water heating, etc. Industrial process, large buildings and tourism facilities are typical major users of electricity for air conditioning and heating purposes.

The industrial sector is also one of the highest sectors consuming energy in the country consuming over 40% of the final energy consumption in Egypt. Out of that, according to surveys carried out by the national cleaner production center and statistics available at the Central Agency for Public Mobilization and statistics, the textile industry consumes 8% of the total industrial energy consumption, the food industries consumer 14% and the chemicals industry around 20% constituting a total of 42% of the entire industrial consumption.Industrial thermal energy (heat and cold) demand constitutes about 28% of the total final energy demand and produces about 21 % of the CO2 emissions in Europe9 and about 30% in Southern Mediterranean Countries10. A significant share of the heat consumed in the industrial sector is in the low and medium temperature range, in fact it is estimated that temperature ranges of up to 80oC represent 7% and those between 80 and 150oC represent 50%11. These two issues make the industrial sector a promising and suitable application for solar thermal energy, however application of solar thermal sources without optimizing the overall process heat system would yield a lot of inefficiency. Therefore a comprehensive approach taking into account energy efficiency measures related to optimizing the process heat supply and demand within selected industries is essential.

Globally, the key sectors with the greatest potential for solar thermal uses are food, textile, pulp and paper, transport equipment, metal and plastic treatment and chemical. The areas of application with the most suitable industrial processes include cleaning, drying, evaporation and distillation, blanching, pasteurization, sterilization, cooking, melting, painting and surface treatment. The most promising applications include space heating and cooling of factory buildings as well. Table (8) below displays the temperature ranges by industrial sector and process.

Table (8). Industrial sectors and processes with the greatest potential for solar thermal uses globallyIndustrial sector Process Temperature

level (°C)Food and beverages drying 30–90 washing

pasteurizingboilingsterilizingheat treatment

40–8080–1095–105140–15040–60

Textile industry washingbleachingdyeing

40–8060–100100–160

Chemical industry boilingdistillingvarious chemical processes

95–105110–300120–180

All sectors pre-heating of boiler feed waterheating of production halls

30–10030–80

Source: Solar Thermal Untapped Potential, RENEWABLE ENERGY WORLD, January–February 2006

A study conducted by the Egyptian Government, in October 2011 presenting “Solar Energy Utilization for Industrial Process Heat in Egypt estimates that IPH represents 23% of the energy consumption in the textile industry, 33% of that

9 IEA SHC Task 33 and Solar PACES Task IV: Solar Heat for Industrial Heat, “Potential for Solar Heat in Industrial Processes”, 2008.10Observatoire Mediterraneen de l’Energie , “Technical Study Report on Solar Heat for Industrial Processes (SHIP) State of the Art in the Mediterranean Region”, 2013.11Hamed Korkor, “Solar Energy Utilization for Industrial Process Heat (IPH), The Case of the Egyptian Textile, Food and Chemical Industries”, October 2011.


in the food industry and 7% in the chemical sector. To assess these potentials, selected companies from each of these sectors were audited and the economic feasibility for utilizing solar energy was evaluated and the payback period varied depending on the process and the type of industry. The results in the textile industry showed that attractive payback periods of about 1 year can be achieved in processes such as dyeing and bleaching whereas for preheating the feed water to steam boilers, the period increased to up to 20 years.

Table (9): Industrial sub-sector shares of process hear demand disaggregated by temperature ranges (%) – The Case of Egyptian IndustriesSector/Temperature Range (oC)

Up to 80oC 80 – 150 oC 150-300 oC > 300 oC

Textile 7% 80% 8% 5%Food 23% 61% 16%Chemicals 6% 74% 19%Metal 3% 1% 96%Refractory 43% 43% 2% 12%Process Applications

Ambient pressure hot water generation

Pressurized hot water generation Water/steam generation

Steam generation

Process Drying: Food-TextileWashing: Food-TextileBleaching: TextilePreheating of boiler feed water: all sectorsCleaning: All sectorsHeating of production halls: All sectors

Pasteurization/boiling/sterilization: foodDyeing: TextileBoiling: ChemicalCleaning: All sectors

Distilling: ChemicalVarious processes: Chemical

Solar thermal collectors

Flat Plate Evacuated tube Parabolic trough Parabolic trough

Source: Solar Energy Utilization for Industrial Process Heat – The case of Egyptian Textile, Food and Chemical Industries, Dr. Hamed Korkor

After examining the global potential and comparing it to the potential in the various sectors in Egypt, the 3 sectors textile, food and chemicals were selected to be the focus sectors for the project.

A.4.3. Egyptian Solar Atlas

Egypt is a rich country with renewable sources especially solar. The Egyptian solar atlas developed in the year 1991 estimates that two thirds of the country’s area has a solar energy intensity more than 6.4 kWh/m 2 day, between 2000 KWh/m2/y at the north and 3200 KWh/m2/y at the south with an economic potential 73656 TWh/Y. Duration of sun shine ranges between 9-11 h/day from north to south, with very few cloudy days as displayed in the global horizontal irradiation for Africa and the Middle East in figure (2) below. Therefore Egypt has a great potential to use various types of solar technologies to support Egypt’s economic growth and increasing energy demand.

Figure (2): Global horizontal irradiation map for Africa and Middle East


Source: SolarGIS © 2014 GeoModel Solar

A.4.4. Local Manufacturing

The Ministry of Industry, Trade & SMEs through the Egyptian National Cleaner Production Center (ENCPC) and within technical support and funding from GIZ performed a study on the status of the local manufacture of solar thermal technologies in Egypt. During the PPG phase analyzed the supply chain determining needs of the manufacturing sector.

A.4.4.1. Overview of current situation Solar Thermal technologies in Egypt

From the local manufacturing point of view, the stages of local manufacturing for renewable energy technologies components can be divided into 3 categories (A, B and C) as shown in the following table (1). It should be mentioned that the innovation and R&D is a continuous process even for the category A. In this category, innovation and R&D will help the local manufacturers in reducing the production cost and improving the quality. According to the Egyptian companies' survey and the experience of the project team, the local manufacturer for each RET systems and components are evaluated and summarized in the Table (10).

Table (10): Evaluation of current local manufacturing capabilities for different components of renewable energy technologiesCategory DescriptionA Local manufacturing: RET components can be produced directly with current resources of Egyptian

industry.B After innovation and R&D: RET components can be produced with current resources but with help of

innovation and R&D: need about 3 yearsC Import /joint venture with foreign companies: RET components can be produced by Egyptian industry

only when a joint ventures with big universal companies takes place(transfer of know how takes about within five years

Manufacturing of solar water heater components Manufacturing of CSP- Fresnel Collector


Component A B C Component A B CGlass X X Flat mirrors

and surface quality

X X

Absorber Plates

X X Step motor X X

Selective coating

X X Steel Structure

X

Tanks X Sun tracking system X X

Pumps/control X X X Control system

X X

Insulation X X Piping X XElectric heaters and control X X

Auxiliaries X X

Auxiliaries X X Cleaning system

X X

Manufacturing of CSP – parabolic trough

Component A B CReflector material and glass X XVacuum and absorber tube X XRotary joints X XStep motor X XSteel structure XSun tracking system X XTrough cleaning system X XAuxiliaries X XSource: MIFT/ENCPC (Adopted from IMC report)

From the previous table (10) we can analyze that some of the components of SWH are manufacturing in Egypt and the other components are imported as shown in the following table (11):

Table (11): Classification of the local manufacturing components and the imported Local Manufacturing in Egypt Component SWH Imported Components of SWHTempered Glass Evacuated tubesFlat plate collector PumpsTanks Selective CoatingInsulationPipingSteel structureElectric heatersSource: MIFT/ENCPC

Solar water heating is currently used in residential, commercial and tourism buildings. Currently, NREA estimates that there are about 375,000 typical SWH systems in Egypt with about 750,000 m2 of collector’s area.

About 85% of solar collectors are used for individual domestic water heaters. (The rest is used as collective systems). They are Open Loop Thermosyphon type. The storage tank is either in a vertical or in a horizontal position, separated from the collectors. The great majority of the systems are of 150 liter tank with about 2 m2 collector, with an electric back-up heating element of 2 kW. SWHs are still 4 to 10 times more expensive than electric or gas ones. On the other


side, the price of the locally manufactured SWH is half the price of SWH imported from Greece and 10% cheaper than SWH imported from China.

A.4.4.2. Solar Water Heater Manufacturing in EgyptThere are about ten Solar Water Heater Manufacturers (Companies) in Egypt. The most prominent companies are Arab Organization for Industrialization and Olympic Electric. About 56% of the components are imported and 33% are partially imported, while only 11% are totally manufactured in Egypt as shown in the following figure (3) below.

Figure (3): Classification of SWH Components

Importe

d

Partia

lly im

ported

Locally

man

ufactu

red

0%10%20%30%40%50%60%

ImportedPartially importedLocally manufac-tured

Source: MIFT/ENCPC

In interviewing Solar Water Industry experts in Egypt, they raised concerns about the quality of the locally manufactured products. The manufacturers preferred to use the Thermosyphon technology with flat plate collectors. The capacities vary from 80 to 700 Liter/ day. The manufacturers may produce forced flow heaters on demand. Table (12) below depicts the different components of Solar Water Heaters together with its origin whether domestic or imported.Table (12): Classification of the Components of SWHComponents Locally Manufacturing ImportedGlass Tempered High TransparencyAbsorption Surface Copper plates and stainless steel pipes Copper plates and welded copper

platesPaints Locally available Selective paintsFrame Ionized AluminumInsulation Foam and PolyurethaneTank Galvanized SteelPipes Poly-propyleneSource: MIFT/ENCPC

Aside from superior products the raw materials are locally available. Furthermore, the availability of presence of trained base should result in the flourishing of the industry in Egypt. The general consensus among the manufacturers is the need for government support for the Research and Development together with the innovation in the financing.

To synergize for the support of the local manufacturing of SWHs a forum for the interested businessmen is in the formulation phase. A review of the origin of the imports shows that the imports are coming from China, Tunisia, and Greece and as far as the USA in some cases. The following table (13) shows a listing of local manufacturers which are about 10 companies:

Table (13): List of Local Manufacturers of SWHCompany Location Annual Production (Pieces)Cairo Industries Floury 10th of Ramadan City 2,000Egyptian Solar Energy Systems 6th of October City 1,500


CompanyDelta Industrial (Ideal) - (Tanash Factory) Tanash - Giza 1,000

Cairo Light Industries (Olympic) Tanash - Giza 1,000Solar Energy and Environmental Technology Tebeen 800

Port Said for Solar Heaters Port said 200QSE Aswan 80D- Lux Abbassia 30United for Light industry (Pelco) Qaliubiya 25Hatko International Abu Alnmrs - Giza 20Source: MIFT/ENCPC

A.4.4.3. SWH Components

For all SWH applications, the primary components are collectors, storage, and balance of systems (BOS) components. The below figure (4) shows the distribution of the SWH component related to the cost of each component.

Figure (4): Percentage of SWH Components

11% 3%

9%

10%

16%

51%

SWH components

Storage tankHeat exchanger and circulator systemSensors and gaugesvalvestubing and insulationcollectors and mounts

Source: MIFT/ENCPC

(a) CollectorsCollectors are made mostly of copper, aluminum and glass, which represent the most materials intensive components of an SWH system.

(b) StorageMost SWH storage tanks are built with glass-lined steel or stainless steel. The technology is the same as that used for conventional pressurized water heating tanks, although commercial and industrial systems may require larger tanks than residential systems. In addition, some SHW tanks have integral heat exchangers (HXs) that are either wrapped around the outside of the tank or located inside the tank. Inside the tank, water is used as storage medium commonly, but advancements in phase-change materials could result in a shift away from water because these materials have the potential to store more heat in smaller vessels.


(c) Balance of Systems (BOS)BOS for SWHs consists primarily of pumps, valves, piping, and control systems. Copper (for piping) and brass (for pipe fittings, valve bodies, and pump housings) are by far the most prevalent BOS materials. The fluctuation in copper prices has led to more use of stainless steel and polymer pipe. Large commercial/ industrial systems often use steel or stainless steel pipe because the larger diameter of pipes in those installations cost less.

There is a study between ENCPC and GIZ for the local market demand with suppliers and manufacturers of SWHs. Moreover, the study aims to gather information of what is the local manufactured components and what is imported.Also, to determine the number of feeding in industry and how can we improve them to produce local SWH as an individual clusters according to international standards.

II. Baseline Project

The baseline project consists of a set of initiatives supported by the government of the Republic of Egypt through laws, government resolutions, presidential decrees, by laws, regulations, norms, standards, guidelines as well as strategies promoting sustainable energy use. The baseline project will be implemented through (a) Government-budgeted activities and policies, (b) existing multilateral and bilateral assistance programmes as well as (c) loans from local banks.

(a) Government led Energy Policies and Strategy

The key government led policies impacting energy efficiency and renewable energy use in industry include:

National Strategy up to 2020

In February 2008, the Supreme Council of Energy approved an ambitious plan to satisfy 20% of the generated electricity by renewable energies by 2020, including 12% from wind energy, i.e., reaching more than 7200 MW grid-connected wind farms, 6% from Hydro, and 2% from solar energy; Concentrated Solar Power(CSP) and Photovoltaic (PV).

Egyptian Solar Plan

In July 2012 an Egyptian Solar Plan has been approved by the Cabinet which targeting to install about 3500 MW by 2027 (2800 MW CSP + 700 MW PV) with private investment share of 67% including enhancement of relevant local industry.

Egypt Solar Master Plan

In cooperation with the European Union and KfW, NREA is developing the Solar Master Plan which is mainly focusing on the future of solar energy technologies for electrification in Egypt (PV, CSP) . The Master Plan also includes a feasibility study for 100 MW CSP grid connected. This will contribute for a comprehensive plan for renewable energy development in Egypt. The project is planned to start in 2016 and will also include two grid connected PV projects, 20 MW each.

Decree on Local Manufacturing of Renewable Energy Technologies

Prime Ministerial Decree number 205 issued in 2014 calls for the Establishment of a National Committee for Local Manufacturing of Renewable Energy Technologies. The committee is led by Ministry of Industry in cooperation with Ministry of Electricity and Renewable Energy, Ministry of Housing, Ministry of Tourism. The Committee looks into strategies to promote the development of the local manufacturing of renewable energy technologies.

New Constitution


In the new constitution passed in a referendum in January 2014, Article 32 was added to support the deployment of renewable energy and its manufacturing “The State shall make the best use of renewable energy sources, stimulating investment there-in and encouraging Scientific Research related to renewable energy resources. The State shall encourage the manufacturing of components/raw materials and increase their added value according to economic viability.”

Removal of the energy subsidy

In early July 2014, the Egyptian Government announced an increase in the electricity prices under a plan to eliminate power subsidies within five years. Electricity prices are set to double over five years, but the introduction of a more graduated pricing structure aims to reduce the burden on the poor in a country where one person in four lives on less than $2 a day. The plan foresees a larger increase for the industrial sector, which will trigger industries to be more and more interested in energy efficiency and renewable energy projects.

The present project will put in place programmes to support industries comply with the set targets.

(b) Ongoing internationally supported programmes

There are several internationally supported projects both ongoing and under development in Egypt which aim at supporting the introduction of renewable energy and particularly solar energy in various sectors of the economy, some of which are led by the private sector and civil society organization. During the PPG phase efforts were made to establish links to these projects and take them into account in designing the scope of the project. The projects that are more directly linked to the proposed project are:

EGYSOL: Most of the focus on solar thermal applications in Egypt has been for solar water heaters. This was mainly driven by the EGYSOL project, which is a project funded by the Italian Ministry for Environment Land and SEA (IMEL), implemented by the United Nations Environment Programme (UNEP) in cooperation with NREA. EGYSOL facility was based on a public-private partnership established with the aim to replace conventional water heaters (electric/natural gas) by solar water heaters in the Egyptian hotel sector. EGYSOL was designed to build a sustainable long-term framework for the solar water heaters market in Egypt. The initial target for the project was to install new thermal systems for hot water for 15 hotels. The hotel dealt directly with certified suppliers paying 75% of the cost and the project covered a Grant of 25% of the investment cost. The project documented 4 success stories in 4 hotels in Sharm El Sheikh and Hurghada where the hotels switched from Electric water heater to solar water heaters. The project also prepared lists of companies that are certified to do the installations for the hotels. Linkage to proposed project: The list of trained and certified suppliers will be a good base to start from the activities for the industrial sectors. Further whereas the proposed project will not support the implementation of demonstration projects in the tourism industry, enhancing the knowledge of experts on the design, installation and maintenance will mutually benefit the tourism industry. Demonstration projects in the tourism sector can be financed directly within the EGYSOL funding facility.

Roadmap for SWH introduction: GIZ in cooperation with the Energy Efficiency Unit and the Ministry of Industry developed a Roadmap for How to Implement a New SWH Project. The project emphasizes the importance of introducing economic incentives, improving the quality of the solar systems and its maintenance and providing financing schemes with low interest rates. GIZ support also includes the development of a roadmap for the development of the local manufacturing of solar water heaters.Linkage to the proposed project: The proposed project will complement the efforts of GIZ by offering support to component and system manufacturers in improving the quality of their products by providing technical assistance and the tools required to improve those practices.

Pilot projects in Industry: A few pilot projects for utilizing solar energy for industrial process heat were implemented in Egypt with the support of NREA. The pilots were installed at the United Chicken Company (Poultry processing plant project), The Misr Helwan Textile Company (Helwan Textile Project), and Abu Zabal Pharmaceutical plant. These installations have not succeeded and currently do not operate mainly due to poor operation and maintenance practices. There is a dire need for building capacities on the proper operation and


maintenance of such systems. There are a couple of additional pilots installed at private-sector factories such as CHIPSY Co. and Pachin for Paints however no data could be obtained on their success.Linkage to the proposed project: The proposed project will apply lessons learned from the implementation of these projects.

The MED- DESIRE is a project under the Program ENPI CBC 2007-2013 which aims to contribute to the transfer and implementation of best practices to facilitate the deployment of renewable energy, particularly solar, in the Mediterranean area, Egypt being one of the countries and the Andalusian Energy Agency is part of this international consortium developing the project.Linkage to proposed project: The main partner of this MED DESIRE is NREA and they will be working on building the capacity of concerned stakeholders, look into benchmarking the national/regional policies and analysis of the certification procedures for solar energy technologies. These activities need to be closely coordinated with the proposed project as there could be common activities.

SEKEM in cooperation the Austrian Development Agency: will work on developing a market for a high-quality solar system in Egypt. The project will focus on the production of solar panels and solar thermal plants. It will also cooperate with universities and vocational centers to strengthen the capacity on the local market for technicians of solar thermal systems. In cooperation with Austrian and Egyptian partners and with support from the Austrian Development Agency (ADA), the project is working on the development of a market for high-quality solar thermal systems in Egypt.In the course of the project SEKEM has installed a solar thermal demonstration system at the main farm near Belbeis to provide hot water for industrial purposes. The system is improving the local air quality and replaces diesel, which is currently facing serious supply shortages.The project activities include the development of an independent production of solar panels, as well as the establishment of solar thermal plants for sale purposes. Additionally the generated products and plants should act as showcase to raise awareness and provide research & development in this field. Further a nationally recognized training program for solar technicians - the Egyptian "solar energy installer" will be formed together with the Heliopolis University to attract the necessary skilled labor for the growing solar industry. For assessment and as an incentive for the development of financial models for solar thermal systems in Egypt, training will be conducted with local financial institutions.Linkage to the proposed project: The proposed project will support scaling up of the results, products and trainings developed and delivered within the ADA/SEKEM project and ensure that they reach a larger target audience in Egypt.

Testing laboratories: The only recognized laboratory for testing the quality of solar collectors and other components is based in the governmental agency NREA and belongs to the Ministry of Electricity and Renewable Energy. This laboratory is outdoor and was designed since late 80s early 90s based on the old ASHRAE standards. NREA is already in the process of purchasing equipment for new outdoor laboratories compatible with the European Standards EN 12975 and EN 12976 as well as the International Standards ISO 9806 and ISO 9459.The laboratory equipment will be financed through a partial grant from the EU. Other modest test labs for research purposes exist in some universities and in the solar energy section of the national research centre in Cairo. None of these laboratories is accredited by any local or international accreditation body.Linkage to the proposed project: The project will support NREA in getting its laboratories to be accredited, developing the code of practice and related manuals for the testing procedure and building the capacity of its staff in that area.

(c) Loans from local banks and development banks

A number of local banks including the National Bank of Egypt (NBE), Commercial Investment Bank (CIB) and others offer credit lines to support projects investing in renewable energy. The EBRD is also planning to start a credit line supporting the introduction of energy efficiency and renewable energy in SMEs.

Within the proposed project, NBE commits US$ 2 million to support setting up a revolving fund dedicated to finance projects promoting solar thermal technology installations in the industrial sector. The creation of the fund along with


other project activities will leverage additional funds from CIB, Misr El-Kheir, the Social Fund for Development (SFD) and support SME investment in clean energy.

A. 5.Incremental /Additional cost reasoning: describe the incremental (GEF Trust Fund/NPIF) or additional (LDCF/SCCF) activities requested for GEF/LDCF/SCCF/NPIF financing and the associated global environmental benefits (GEF Trust Fund) or associated adaptation benefits (LDCF/SCCF) to be delivered by the project: The project remained largely the same as at the PIF stage. Slight adjustments were proposed to each component to better suit the needs analysis performed during the PPG stage.

The GEF project is complimentary to the existing baseline project and aims at addressing the barriers that are not addressed by the baseline project.

As described in section A.4, EE and RE is now seen as a priority at Government level and the potential for using solar energy for industrial process heat is fairly high. However, to date there is a very slow penetration of solar energy use in industrial applications. This is due mainly to:

Lack of awareness of the potential for utilization of solar energy for industrial process heat and its benefits The economic case for solar energy is weak given the high cost of the technology, low energy pricing and long

payback periods Lack of knowledge and know-how on the design, installation and maintenance of solar systems Lack of demonstration projects Lack of tools and guidelines for selected industrial cases Lack of access to finance at reasonable rates Lack of planning and roadmaps to achieve the targets set out by the renewable energy strategy Lack of standards and instruments to control the quality of the solar thermal systems

Barrier analysis

There are many reasons why Egyptian industry is so energy intensive. Some of them form barriers which must be addressed by project activities:

Barrier Actions

Absence of policy instruments to support the introduction of applications and the manufacturing of RE

Assess the market potential and prepare roadmaps for the introduction of solar energy in selected sectors and introduce standards for quality components and products and a certification scheme for technicians working in this area.

Related project outcome& outputs:

Outcome 1, Outputs 1.1. and 1.2

Lack of targeted financial schemes and support tools for RE investors and consumers

The finance available for RE projects provided by banks has high interest rates, high collateral requirement. There is a need to have better financial mechanisms to serve the sector.Further bank staff require training on evaluation of RE proposals

Set up a revolving fund for financing such investments and link up to other financial mechanisms

Related project outcome:

Outcome 2, Outputs 2.1 and 2.3


Lack of awareness of the potential and the opportunities

Widespread awareness programs targeting management and decision-makers on the benefits of RE, as well as the impact in terms of costs-benefits, efficiency improvement, competitiveness and environmental impacts

Related project outcome:Outcome 2, Output 2.4.

Low quality of locally manufactured systems and feeding industries for solar thermal systems coupled with weak laboratory facilities for enforcing the quality assurance

Introduce standards for minimum quality of systems and components, support the capacity building and accreditation of the quality testing lab and support the manufacturers by providing the required tools and training to improve the quality manufacture

Related project outcomes:

Outcomes 1 and 3, Outputs: 1.2, 3.1., 3.2., 3.3. and 3.4.

Weak technology knowledge Technology transfer and capacity building for designing solar thermal systems. Close cooperation with ongoing initiatives, consultants and universities and implementing 100 demonstration projects. In addition to training of experts on the system optimization and the system design.

Related project outcomes:

Outcome 2, 3 and 4, Outputs 2.2, 3.5, 4.1. and 4.2

Low quality installation and after sales services Capacity building of technicians and installers of solar thermal systems and enforcement of a certification scheme.

Related project outcome:

Outcome 1 and 4, Outputs 1.2. and 4.3.

Lack of skills training both for technical issues as well as business development

For the solar market to flourish, companies working in the sector will be provided with training on business development and entrepreneurship.Related project outcome:

Outcome 4, Output 4.4.

The GEF project will address these barriers via:

Assisting the Government to put in place a roadmap and related action plan for utilizing solar energy for industrial process heat

Assisting state organizations to put in place policy measures to promote the use of solar energy for process heat in industry and promote the local manufacturing of quality products


Increasing awareness of various stakeholders including industry representatives, technical experts and policy makers

Implementing pilot projects promoting EE and RE in selected industrial sectors

Creating a revolving fund to finance eligible projects

Promoting standards for minimum required quality of solar components

Creating a certification scheme for personnel installing and servicing solar thermal systems

These measures will ensure that the project reduces the energy intensity of Egyptian industry in a way that is sustainable leading to ongoing significant energy and CO2 savings during and beyond the lifetime of the project.

Project Objective

The objective of the project is ‘To develop the market environment for the diffusion and local manufacturing of solar energy for industrial process heat.’

The project focuses on improving the energy efficiency of the industrial process heat system and the introduction of solar thermal technologies mainly in industrial companies with a high fraction of low and medium temperature heat demand in three industrial sectors, namely the food, chemical and textiles sectors. Further the project will support the local manufacturing of quality components of the solar systems.

Project Scope

In Egypt, the potential for reducing energy demand is fairly high and still not exploited. This can be achieved by the intelligent combination of system optimization measures and solar technologies. As presented in table (9) under section A.4. above, the sectors with the highest potential for low and medium heat in Egypt are the food, chemicals and textile sectors. Therefore the project will focus on interventions in these three sectors.

Component 1: Develop policy instruments to promote the use of solar energy for industrial process heat in 3 sectors

Outcome :1.1.Policy instruments promoting the use of solar energy for industrial process heat in 3 sectors developed

On the regulatory front, the Egyptian Government is already working with the support of major donors such as the EU on the development of policies and regulations to support the energy reform in Egypt by establishing targets for renewable energy, reducing subsidies, introducing feed-in tariffs and other financial incentives to promote renewable energy. What is required is policy instruments to support attaining those goals and enforcing the mechanisms put in place by the Government effectively. Therefore the project will focus on such policy instruments with two angles, one on the use and application of solar energy in industry and the other on the local manufacturing of quality components and products.

Output 1.1.1. A roadmap and implementation plan for dissemination of solar energy for industrial heat in the 3 selected sectors formulated

The development of a roadmap and implementation plan for the dissemination of solar energy for industrial heat is a useful policy tool to unlock the technological and market potential for solar thermal energy in Egypt. It is planned that roadmaps for the 3 selected sectors: chemicals, textile and the food industries will be developed. The roadmaping process will include a detailed analysis of the potential in the selected sectors, identifying the pathways for developing this market, developing the scenarios, strategy and plans for unlocking this market on the short term as well as the long term. It will also determine the uncertainties and the challenges. The development of the roadmap will be a consultative process involving various stakeholders in the sector to validate the findings and ensure the buy-in of the developed roadmap.


This output will be led by the Ministry of Industry who will continue to monitor the implementation of the roadmap and the sustainability of the project results beyond the project lifetime.

Output 1.1.2.Instruments to control the quality of solar components, companies and personnel performing installation and maintenance of solar thermal systems

Three main instruments are proposed to control the quality of the components as well as the technical services provided for solar energy products in the market. On one side, the project will support the Egyptian Organization for Standards and Quality (EOS) as well the New and Renewable Energy Authority (NREA) to develop standards for the minimum required quality of solar components and systems. It will also support them in developing a framework for the certification of personnel working on the installation and maintenance of solar energy equipment to ensure that only highly qualified technicians are working in this field. Finally the project will support MITS and NREA in defining lists of qualified companies and providers of solar energy systems to control the supply and installation of quality products in the market. The list will be issued following an assessment of the company’s capacities and will include a provision to having certified personnel.

The coordination mechanisms for this component are led by Government agencies such as NREA and EO, which will ensure the sustainability of project impacts.

Output Activity

1.1.1. A roadmap and implementation plan for dissemination of solar energy for industrial heat in the 3 selected sectors formulated

1.1.1.1. Perform a detailed assessment of the potential for EE improvements and introduction of solar energy in the three selected sectors

1.1.1.2. Develop the roadmaps and implementation plan

1.1.1.3. Conduct stakeholder consultations to ensure public acceptance of the suggested roadmaps & plans

1.1.2. Instruments to control the quality of solar components, companies and personnel performing installation and maintenance of solar energy systems

1.1.2.1. Develop standards for minimum required quality of solar components1.1.2.2. Develop a framework for the certification of personnel working in the installation and maintenance of solar energy systems

1.1.2.3. Define lists of approved solar collectors and other component manufacturers and lists of approved installers

Component 2: Mobilize financing for the deployment of solar energy for industrial heat

Outcome 2.1.:Financing for the deployment of solar energy for industrial heat mobilized

To ensure that projects promoting the use of solar thermal technologies are implemented, the project will facilitate financing through the creation of a revolving fund that provides loans to industries at an incentivized rate. It will also link up to other existing financing instruments to generate a larger pipeline of projects. The project will also facilitate technical assistance to industries in developing their technical and financial feasibility studies and trainings to bank staff on the appraisal of such projects. Finally a good outreach programme will target increasing the awareness of the potential for the utilization of solar energy in the three targeted industrial sectors.

Output 2.1.1.Revolving Fund to facilitate financing of solar thermal technologies is set up

To support the financing of investment projects, the project will establish a revolving fund that will be managed by the National Bank of Egypt as the Fund Manager. The fund of a total of US$ 2 million will be deposited at NBE in a bank account in the project name at the onset of the project at a peak interest rate of 3% p.a. The fund will be converted into local currency. The fund structure will be 10% of personal equity, 45% of the GEF grant funding matched by a 45%


loan from the NBE. Beneficiaries will pay the loan back over a period of 5 years with a one-year grace period at an interest rate of 6.5% in comparison to an average market rate of 13%. Further information about the revolving fund is presented in annex D to this document.

The revolving fund will be operated by NBE subject to rules and procedures established in consultations with national counterparts and key stakeholders during the inception phase. The modalities for operating the fund including the project management guidelines, selection criteria, etc. will be further elaborated during the inception phase, particularly addressing the ownership of the revolving fund during the project and by the Ministry of Industry after the project completion as well as its monitoring and remedial actions if this not works out according to plan.

NBE will be responsible for the day-to-day management of the fund management and will report to UNIDO the statement of accounts bi-monthly. The loan project cycle will consist of the following phases:

a)Project identification

This phase starts with the identification a pipeline of projects that are eligible for financing through the revolving fund. Project ideas can be generated via an open and competitive call for proposals supported by three main sources:

- Identification by Project Management Unit (described under output 2.2. below)- Identification by NBE- Identification by other co-financing partners

b) Initial Project Screening

The purpose of the initial project screening is to gather information that shall enable the PMU to assess whether the proposed project meets the eligibility criteria.

During this phase, the PMU will support the completion of an Initial Project Proposal, which provides a summary of the project rationale and includes a description of project objectives, implementation details, timetable, sources and amount of financing required and the potential for energy savings. The information provided in the Initial Project Proposal includes:

- Details of the project beneficiary, including contact details, legal status and activities- Details on project partners and the rationale for their involvement- Basic project information, including technical description, location, lifetime and duration of implementation- Description on estimated project costs, financing sources and share of equity.

Based on the completed Initial Project Proposal, the PMU makes a recommendation of approval to NBE to allow further project screening by the bank on the credit-worthiness of the project beneficiary. If the project proposal is approved by NBE for further evaluation, it is registered in a database and an individual dossier is established with a unique identification number. The applicant is notified about the decision and briefed about further steps in the process.

c) Comprehensive Project Appraisal

Following the positive project screening decision, the PMU will support the companies with technical assistance to prepare the technical and financial feasibility assessment of the project.

The purpose of the technical feasibility assessment is to establish whether the project will achieve the estimated energy savings and GHG emission reductions and whether it is designed and engineered in compliance with generally accepted technical standards and norms. Whereas, the purpose of the financial feasibility assessment is to determine if the proposed project is expected to yield a sufficient financial rate of return, that the expected cash-flows can cover both the


financing and operational costs and that the project beneficiary is able to co-finance part of the projects costs with own funds. The evaluation of achievability and reliability of financial projections should be determined on the basis of close due-diligence of historic financial statements and projected performance. The projected performance and financial results should be presented in a well-developed and detailed business plan, based on clear assumptions and supported by evidence.

The financial feasibility also involves the assessment of the borrowers overall creditworthiness. This is especially crucial for the final co-financing decision of commercial banks.

d) Project Approval

The PMU will submit a comprehensive project appraisal document to NBE for their financial approval of the incentivized financing from the revolving fund and to UNIDO/MITS for their approval of the eligibility for financing.

e)Financial Closure and Disbursement

Following the technical approval by UNIDO/MITS and the financial approval of NBE, the NBE will sign loan agreements with selected beneficiaries based on the conditions described above.

f) Project Monitoring

The PMU is responsible for monitoring the performance of each project and for periodically collecting the relevant reported data in accordance with the project monitoring plan. Special emphasis should be placed on the collection of data about actual energy savings and GHG-emissions. NBE will be in charge of monitoring the financial performance of the fund and the timely repayment by the enterprises. This will be covered through a contractual agreement with UNIDO.

As the PMU which is based in the ENCPC within the Ministry of Industry, the functions and technical backstopping of the project will continue beyond the project and the knowledge acquired will be sustained within the ENCPC and the Ministry.

Output 2.1.2. Solar thermal technologies installed in selected facilities. The project will focus on supporting 100 enterprises in the three selected sectors in installing solar thermal systems for providing hot water/steam. The projects will be divided in a way to cover different capacities depending on the needs of the enterprises. A simulation of the number of projects and the planned capacities is provided in to this document. To the extent possible, the project will help clusters of enterprises with similar or complementary needs to promote a more synergetic effect and have a more significant developmental impact.

At the onset of the project and as part of the project identification phase of the loan management cycle described in output 2.1.1.above, a call for proposal will be administered through the PMU inviting enterprises from the three selected sectors to express their interest to install solar thermal systems to provide hot water/steam within their enterprises. The selection of the projects will follow the project cycle described above as it is very tightly linked to the set-up of the revolving fund. The criteria for selection will be elaborated along with the fund rules and procedures during the inception phase of the project.

Output 2.1.3. Technical capacity of staff of local banks on the assessment of projects enhanced

Currently there are several finance schemes financing RE in Egypt including funds from CIB. Energy efficiency and renewable energy lending provides an opportunity for banks to increase revenues, however energy efficiency and renewable energy project still require special treatment at the side of the project developers as well as the side of the bank financing the investment. The project developers/beneficiaries will be supported in developing their feasibility studies or business plans, however the banks still require support in better understanding and structuring energy projects.


On the other side, the banking sector in Egypt is a very vibrant one consisting of at least 40 commercial banks, both local and international, specialized banks and financial institutions operating in the fields of investment and credit for industry. Therefore the project foresees the organization of awareness workshops to staff of various types banks and financial institutions such as NBE, CIB, SFD, Barclays Bank, HSBC and others. The awareness workshops will cover 150 staff including staff from various regional branches. 60 trainees will be selected to go through a more specialized training on the technical due diligence of the proposed projects and risk sharing. This will support leveraging additional funding from those banks/facilities and increasing private sector investment in clean energy as the project on one side works on creating the demand within the industrial sector and supports the financial sector in managing and meeting that demand. The candidates will be selected considering the bank’s interest in extending energy related credit lines to industry or to those banks that already do have such credit lines in place. Finally one-on-one coaching sessions will be provided to 20 experts from banks already having credit lines in place and who already expressed interest to cooperate with the project such as CIB, NBE and SFD.

Output 2.1. 4. Awareness campaign on solar thermal technologies for industrial process heat implemented

Information dissemination and awareness raising are key to the success of the programme. Therefore the project foresees a number of activities to raise the awareness of various target groups including the industrial companies, banks and other financing facilities, the public sector and CSOs. That includes the implementation of an awareness campaign using various media, the creation of a project website and compiling and disseminating case studies of pilots supported by the project.

Output Activity

2.1.1. Revolving Fund to facilitate financing of solar thermal technologies is set up

2.1.1.1. Set-up a revolving fund to finance investment projects

2.1.1.2. Train staff of local banks on identification, development and evaluation of demonstration projects

2.1.1.3. Establish links with banks offering RE loans.

2.1.2. Solar thermal technologies installed in selected facilities

2.1.2.1. Select companies where pilot projects will be implemented

2.1.2.2. Prepare technical and financial feasibility studies for 100 pilot projects

2.1.2.3. Sign loan agreements with 100 enterprises2.1.2.4. Companies will procure and install solar thermal equipment for 100 pilots2.1.2.5. Monitor, verify and report the performance of the installed systems

2.1.3. Technical capacity of staff of local banks on the assessment of projects enhanced

2.1.3.1. Organize 5 introductory workshops for 150 bank staff2.1.3.2. Organize 3 expert training workshops for 60 bank staff2.1.3.3. Provide personal coaching for 20 bank staff

2.1.4. Awareness campaign on solar thermal technologies for industrial process heat implemented

2.1.4.1. Organize 20 workshops over the project lifetime2.1.4.2. Develop and distribute leaflets2.1.4.3 Prepare and disseminate press releases via various media sources2.1.4.4. Document and disseminate good practice case studies of demonstration projects implemented through the project2.1.4.5. Organize technical tours to installed sites


Component3: Improve the manufacture, supply and distribution of solar energy components and systems

Output 3.1: The market manufacture, supply and distribution of solar energy components and systems is strengthened

The growth of the solar energy market has created an interest localizing the value chain for the manufacture of solar energy equipment and systems and mainly solar water heaters in Egypt. The analytical work has been led by GIZ. The development of local manufacturing capacities will on one side reduce the market cost of those technologies and stimulate industrial development and economic diversification in Egypt, creating new jobs and developing new export industries. The quality of the products and components being manufactured will determine the successful penetration of these products into the Egyptian as well as other markets. This entails work on one side on the testing of the quality of the products and on the other side support to the manufacturers on improving their practices and their models to fulfill the requirements of this new market.

Output 3.1.1. Laboratory facility for testing quality of the locally manufacturers and imported products accredited

As described in the baseline project description, NREA is already in the process of purchasing equipment for new outdoor laboratories compatible with the European Standards EN 12975 and EN 12976 as well as the International Standards ISO 9806 and ISO 9459. However, NREA requires support in getting their laboratory accredited and improving the technical capacity of staff performing the testing procedures. The project will provide NREA with the advisory support required to go through the accreditation process including; an assessment and mapping of the planned laboratories, development of the quality management system of the target laboratory, the standard testing procedures and related manuals and conducting at least one cycle of inter-laboratory comparison and proficiency testing schemes required for the accreditation.

Work under this output will be lead and supported by the Trade Capacity Building Branch at UNIDO.

Output 3.1.2. Capacity of the testing laboratory staff on testing protocols and procedures developed

The project will support in linking NREA staff and experts to laboratories and centers of excellence from developed and developing countries to exchange experiences, lessons learned and knowledge through a specialized expert group meeting. It will also develop a manual on the protocols and procedures for testing and deliver training to NREA and EOS staff. Trained staff will be provided with on the job coaching and monitoring to ensure proper application of the techniques and protocols adopted.

Work under this output will be lead and supported by the Trade Capacity Building Branch at UNIDO.

Output 3.1.3. Basic tools and sets of equipment required for improving the quality of locally manufactured components provided

An analysis performed by MITS with GIZ of the feed-in industries for solar collectors (flat plate and vacuum tubes) as well as the tanks and the valves indicated that the companies required support and assistance in improving their products and their manufacturing practices to meet the quality required for solar collectors. For example, the pipe manufacturers need laser welding while the manufacturers of gaskets and tubes require injection moulds and the manufacturers of frames need support in the development of the new prototypes. The project will identify 40 manufacturers of components and provide them with the required tool and technical assistance to improve the manufacturing of their products.

Output 3.1.4.Training programme on best practices in the manufacture of solar energy components and systems conductedA training manual on best practices in the manufacture of solar energy components and systems will be prepared. The manual will serve as a basis for training 40 manufacturers of components to improve their manufacturing practices and consequently improve the quality of their produced goods. The project will also look into means to stimulate demand by creating linkages between the supply side and the demand side. Output 3.1.5. A platform to enhance information exchange, cooperation and partnerships between local industries, international centers of excellence and technology suppliers created


It is foreseen that the project will setup a platform to facilitate information exchange, technology transfer and generate investments through identifying opportunities for joint-ventures, cooperation agreements and others. During the onset of the project, a strategy consultant will be recruited to design the framework of the platform. The consultant will support the PMU on an assignment basis in operating and monitoring the platform, documenting results and making adjustments as required. Since the PMU is based within the ENCPC and the Ministry of Trade, Industry, and SMEs the operation of the platform will be taken up by the Ministry beyond the lifetime of the project.

Output Activity3.1.1. Laboratory facility for testing quality of the locally manufacturers and imported products accredited

3.1.1.1. Perform an assessment and mapping of the existing and planned laboratory facilities and capacities in the country. Provide advisory support and agree on the scope of the tests to be accredited3.1.1.2. Develop the quality management system of the target laboratory following international accreditation standards for the target tests3.1.1.3. Develop the related testing procedures, sampling techniques, verification and validation protocols needed for the target scope3.1.1.4. Conduct at least one cycle of inter-laboratory comparison and proficiency testing scheme as part of the accreditation process3.1.1.5. Apply and go through accreditation process

3.1.2. Capacity of the testing laboratory staff on testing protocols and procedures developed.

3.1.2.1. Develop training material on testing protocols and procedures for quality testing of products and components3.1.2.2. Organize an expert group meeting with experts from various centers of excellence to share and exchange knowledge and lessons learned on quality testing of solar components and products3. 1.2.3. Train 20 experts from NREA and EOS3. 1.2.4. Conduct on the job coaching and monitoring of the staff practices

3.1.3. Basic tools and training required for improving the quality of locally manufactured components provided

3.1.3.1. Select 40 companies to be assisted in upgrading their practices to ensure quality manufacturing of components3.1.3.2. Identify and procure tools and sets of equipment required to ensure better quality manufacturing of components3.1.3.3. Develop a manual on best practices in the manufacture of solar energy components and systems3.1.3.4. Train 40 companies on the use of the tools and equipment and the improvements required for their components/products3.1.3.5. Create linkages between the supply and demand side to stimulate the market3.1.3.6. Technical assistance for start-ups and solar energy entrepreneurs

3.1.4. Training programme on best practices of solar energy components and systems conducted d systems conducted

3.1.4.1. Prepare a manual on best practices in the manufacture of solar energy components and systems3.1.4.2. Identify 40 companies to receive the training3.1.4.3. Organize workshops to train at least 200 technicians from selected companies

3.1.5. A platform to enhance information exchange, cooperation and partnerships between local industries, international centers of excellence and technology suppliers created

3.1.5.1. Design the framework of the platform: Partners, scope, objectives, means for attracting investments in the sector, etc.3.1.5.2. Launch and operate the platform3.1.5.3. Monitor the results of the platform and feed-in


opportunities for improvement

Component 4: Build the capacity of technical staff designing, developing and servicing solar systems

Outcome 4.1.: Technical capacity of the system designers, developers, facility managers and service providers for solar energy utilization for industrial process heat enhanced.

The fourth element required for stimulating the market for solar thermal energy in the industrial sector is skilled laborers. This component foresees extensive training to different target groups on different themes. Firstly energy efficiency training on system optimization of the process heat system complemented with training on the design and of the solar thermal systems for industrial applications. Further training will be provided to the installers and service providers on the installation and maintenance of the systems. Finally training on business development and entrepreneurship will be offered to new businesses working in this area to support the creation of a more vibrant sector.

The Productivity and Vocational Training (PVTP) Network within the Ministry of Industry will support the roll-out of the training and the project will attempt to institutionalize the training within the centers to ensure the sustainability of the training programme beyond the project life-time. Other partners include the Solar Energy Development Association (SEDA) and SEKEM who already run or are in the process of starting targeted training programmes which may be scaled up through the proposed project to ensure a better outreach.

Output 4.1.1. Training programme on energy savings based on process heat optimization for experts, facility managers and service providers is conducted

The project will provide training on system optimization for process heat. It will adapt UNIDO’s training modules on system optimization for process heat and translate them into Arabic language. Training on system optimization will be offered to three different target groups:

(a) Training of qualified SO practitioners: 20 local SO experts will be trained by international experts on system optimization with 7 days training which will be followed with some coaching over a 12 month period. On completion of their training, these consultants will assist industry in implementing SO within industry. They will advise businesses who are implementing SO as part of the project.

(b) Vendor training: Vendors of energy systems selected will be trained in System Optimization so that they can offer the service to their clients. Engineers within industry will receive 2 day user training in SO to enable them to implement SO within their business. 50 vendors will be trained throughout the project.

(c) User training: 100 staff of industrial companies will be provided with a 2 day user course on system optimization to support them in implementing SO measures.

Output 4.1.2. Training programme on system design for experts, facility managers and service providers is conducted

The project will provide training on system design for solar thermal systems for industrial applications. Training will be offered to three different target groups:

(a) Training of qualified experts/engineers: 20 local engineers/experts from universities, consulting companies and others will be trained by international experts on system design with 5 days training. The training will then be followed by coaching for a 12 months period.

(b) Vendor training: Vendors of solar energy systems will receive a 2 day user training on designing those systems. 50 vendors will be trained throughout the project.

(c) User training: 100 staff of industrial companies will be provided with a 2 day user course on system design to support them in evaluating proposals to be installed at their enterprises.

The Vocational Training Centers within the Ministry of Industry will support the roll-out of the training and the project will attempt to institutionalize the training within the centers. Other partners include academia, SEDA and SEKEM.


Output 4.1.3. Training programme on solar thermal equipment installation and servicing for technicians, installers and service providers established.

The project will develop training material for the installation, servicing and maintenance of solar thermal systems for industrial heat and provide training to 200 technicians on this subject. The training will be delivered over one week. The Productivity and Vocational Training Centers within the Ministry of Industry will support the roll-out of the training and the project will attempt to institutionalize the training within the centers. Other partners include SEDA and SEKEM.

Output 4.1.4. Training programme on business development for solar energy businesses developed

The project will provide training to solar energy businesses and entrepreuneurs on business development and entrepreneurship. A 2-day course will be designed and delivered to 100 enterprises.

Output Activity

4.1.1. Training programme on energy savings based on process heat optimization for experts, facility managers and service providers is conducted

4.1.1.1. Adapt the UNIDO SO library for process heat to the selected sectors4.1.1.2. Measurement equipment available for SO implementation and verification4.1.1.3. Awareness program for SO expert training4.1.1.4. Training of 20 SO experts delivered over 18 months4.1.1.5. Ongoing support to national trainees for duration of project4.1.1.6. (1/2) day course delivered to 50 vendor companies4.1.1.7. (2) day user training delivered to 100 engineers working in selected industrial sectors

4.1.2. Training programme on system design for experts, facility managers and service providers is conducted

4.1.2.1. Develop training material on the design for solar thermal systems for industrial purposes4.1.2.2. Training of 20 experts delivered over 12 months4.1.2.3. Ongoing support to national trainees for duration of project4.1.2.4. (1/2) day course delivered to 50 vendor companies4.1.2.5. Integrate the training into ongoing curricula of the vocational training schools and relevant universities

4.1.3. Training programme on solar thermal equipment installation and servicing for technicians, installers and service providers established.

4.1.3.1. Develop training material on the design for solar thermal systems for industrial purposes4.1.3.2. Training of 200 technicians4.1.3.3. Integrate the training into ongoing curricula of the vocational training schools

4.1.4. Training programme on business development for solar energy businesses developed

4.1.4.1. Develop training material on business development and entrepreneurship for the solar energy businesses4.1.4.2. Training of 100 small enterprises4.1.4.3. Integrate the training into ongoing curricula of the vocational training schools

Global GHG Emissions Reductions:

Direct Emissions


The project will result in considerable global environmental benefits in terms of the GHG emission reductions that will be reached through a substantial reduction in fuel and electricity consumption by implementing energy efficiency measures in 100 enterprises and switching from fossil fuels to solar thermal energy.

The project will focus on three main sectors; the chemicals, textile and food industries which have the highest potential for energy saving and utilization of the solar energy for industrial process heat. The demonstration projects will also cover different capacities. Annex E details the GWh savings resulting from the implementation of the 100 projects. Direct savings total 8,907,603 GJ over 10 years, which is equivalent to 722,028 tones of CO2 saved over a 10 year timeframe.

The cost effectiveness of the project in terms of the CO2 savings per $ is estimated at around $9/ tone, which is comparable with other similar GEF funded projects.

Indirect emission reductions – top down

There are a total of around 11,648 companies operating in the three selected sectors distributed as follows: 4,848 companies in the food sector, 2,336 companies in the chemicals sector and 4,500 in the textile sector. Considering a moderate replication impact of 3, the indirect bottom-up emission savings can be estimated at 2,166,085 tones of CO2.

Indirect emission reductions – bottom up

Assuming a replication factor post-project as spillover of 0.4 as a result of both the demonstration projects and capacity building , the total top down market potential amounts to around 288,811 over 10 years.

Further information on the calculation of the GHG emission reductions is available in Annex E to this document and the enclosed GEF/STAP methodology spreadsheet.

A.6 Risks, including climate change, potential social and environmental risks that might prevent the project objectives from being achieved, and measures that address these risks:

Risk Potential Impact

Probability Mitigation

Political Risk: Lack of government commitment to support the project

High Very low A comprehensive awareness plan is included aimed at business owners and senior managers to explain the benefits of implementing an EnMS and convince enterprises to avail of the training and technical assistance available

Technical Risk: There is limited technical risk since RE technologies (solar, wind, etc) are widely used in many developing countries. The risk can however come from the selection of an unsuitable site.

Medium Low Efforts will be done to pick suitable sites notably by extensively analyzing solar insolation records.

Financial risk: financial/credit constraints, high capital costs and an inhospitable investment environment prevent Egyptian private sector from investing in the projects. The existing financial mechanisms are inadequate and could affect investment projects on a larger

High Low/medium

In Egypt, like in many countries worldwide, efficient financial mechanisms have been set up. Based on the national and global experience it is possible to develop suitable financial tools for Egypt.


scale.Effects of project on the environment and biodiversity: the project has opposite effects than those expected.

Low Low The project will promote market based development of renewable energy use for air conditioning and hot water production. Such technologies (solar thermal, heat pumps, etc) are well exploited and do not have negative environmental impacts. Further the involvement of the Egyptian National Cleaner Production Center at the Ministry of Industry will ensure that the production of these components is done in line with the principles of resource efficiency.

Sustainability risk: failure to achieve project outcomes and objectives after successful delivery of outputs.

High Low/medium

by making market players fully aware of the economic potential of RE technologies and by equipping them with the capacity and tools to realize and reap the benefits of such potential, the project will generate a self-reinforcing market. In addition, the policy framework and financial mechanisms that will be put in place will create a positive context that is expected to ensure the attainment of the project outcomes and their sustainability.

Sustainability of Financial Mechanisms risk: failure to establish and sustain financial mechanisms to support access to project financing.

High Low/medium

By developing strong relationships with stakeholders including beneficiaries, investors, donors, banks and financial institutions and mobilizing a variety of funding types including private sector, government financing and other the project will build a financial platform that can be used for matchmaking between potential projects and investors.

Climate Change Risk:Climate change impacts could impact on solar technologies due to variations in cloud cover- though the science remains uncertain.

Low Low Sun radiation in Egypt remains very high and is considered among the best in the world.

A.7. Coordination with other relevant GEF financed initiatives

The present project has established strong links with the GEF-4 project ‘Industrial Energy Efficiency In Egypt’ (GEFSEC Project ID: 3729), implemented by UNIDO and has used the expertise within that project to make progress with this Project Document during the PPG phase, and will continue to share expertise where appropriate. During the implementation phase, the project will make use of the network of experts and stakeholders to further improve the effectiveness in the implementation of the new project.

Other ongoing projects financed by the GEF in Egypt include the energy efficient lighting project implemented by UNDP and the solar photovoltaic project also under preparation by UNDP. The scope of the UNDP projects is complementary to the projects proposed by UNIDO. As is the practice within the GEF4 projects, whenever opportunities for installation of energy efficient lighting at enterprises supported through the UNIDO project are identified, the UNDP project team is called upon to support the enterprise in implementing the energy efficient lighting solutions. It is expected that a similar coordination will be established through the new projects.

B. ADDITIONAL INFORMATION NOT ADDRESSED AT PIF STAGE:

B.1 Describe how the stakeholders will be engaged in project implementation.


As the GEF Implementing Agency, UNIDO holds the ultimate responsibility for the implementation of the project, the delivery of the planned outputs and the achievement of the expected outcomes.

UNIDO will be responsible for the general management and monitoring of the project, and reporting on the project performance to the GEF. UNIDO will be in charge of procuring the expertise and equipment needed to deliver the outputs planned under the three project components. It will manage, supervise and monitor the work of the international teams and ensure that deliverables are technically sound and consistent with the requirements of the project.

Project managementThe project will be coordinated through a Project Management Unit (PMU) to be hosted at ENCPC and responsible for the day-to-day execution of project activities as per an agreed annual project work plan. The PMU will work closely with various project stakeholders.

The PMU will consist of a national project coordinator supported by a Project Assistant. A technical expert supporting the implementation of the various project components will be based in the PMU. During the whole implementation period of the project UNIDO will provide the PMU with the necessary management and monitoring support while the PMU will be responsible for the day to day execution of the project activities and coordination with the project stakeholders. The PMU will submit a detailed monthly report to UNIDO.

The ENCPC will have a sub-contract with UNIDO to carry out agreed activities for the execution of the project based on specific TORs and agreement. The assigned budget of the agreement will cover the cost for technical assistance, organizing workshops and trainings, transportation & miscellaneous of ministry staff, in addition of incentives for participating staff of the ENCPC.

A brief description of every project partner and their related role is described in the table below:

Stakeholder Mandate &Role within the projectMinistry of Trade, Industry and SMEs (MITS)Egyptian National Cleaner Production Center (ENCPC) –

Mandate: The Egyptian National Cleaner Production Centre (ENCPC) was established in 2005 by the Ministry of Industry, Trade & SMEs (MITS) in close cooperation with the UNIDO as a service provider for the Egyptian Industry. The ENCPC is part of the UNIDO/UNEP National Cleaner Production Centers and also part of the Egypt Technology Transfer and Innovation Centers (TTICs).The centre acts as a vehicle for promoting green technologies transfer and innovation for the Egyptian Industry. ENCPC provides technical assistance for technology transfer in the fields of resource efficiency, industrial waste valorization in addition to energy efficiency and renewable energy applications. In addition to that, the centre initiates the implementation of Innovative Designs and supports companies to carry out constant product development.As a centre of Industrial Technology Transfer and Innovation; ENCPC enhances the productivity, environmental performance, and creates business opportunities for the Egyptian Industries to contribute to their long term presence and competitiveness on national and global markets.Role: ENCPC within the MTI will be the leading executing partner and will host location for the PMU and offer its staff and expertise to support the execution of the project activities.

New and Renewable Energy Authority (NREA)

Mandate: The New and Renewable Energy Authority (NREA) was established in 1986 to set up with the objectives of assessing the country’s renewable energy recourse and investigating the technology options through studies and demonstration projects.NREA is the national focal point to develop and introduce renewable energy technologies to Egypt on a commercial scale together with implementation of related energy conservation programs.NREA’s activities cover 4 major sectors which are wind energy, solar energy, testing and


certification, and capacity building.Role: NREA will be play the leading role in providing RE data, supporting policy development and setting up testing facilities for the quality assurance of locally produced components and systems.

Egyptian Organization for Standardization (EOS)

Mandate: EOS which was established in 1957, is the official body responsible for standardization activities, and quality and industrial metrology aiming at increasing the competitiveness of the Egyptian products in the international and regional markets along with consumer's and environment protection. EOS has been a member of the International Organization for Standardization (ISO).Role: EOS will support the elaboration and adoption of quality standards for the local manufacturing of components, products and vendors

Egyptian Accreditation Council (EGAC)

Mandate: EGAC was established by the Presidential Decree Number 312/1996 and re-organized bythe Presidential Decree Number 248/2006 as the sole national body for the assessment and accreditation of conformity assessment bodies in Egypt performing testing/calibration of laboratories, inspection and certification of products and systems, as well as personnel.EGAC is headed by the Minister of Foreign Trade, Industry, Investment and governed by a board of 14 members, representing all stakeholders and concerned bodies.Role: EGAC will overlook and confirm the accreditation of the NREA laboratories

Productivity and Vocational Training Department (PVTP) Ministry of Industry,

Mandate: The PVTP provides productivity and vocational training service to improve Egyptian industrial development. PVTD is one of the largest departments affiliated to The Ministry of Industry and Technological development. It qualifies Technical staff at various skill levels required by the industrial labor market. Its objectives are to improve productivity in industry and develop management systems.The PVTD has departments for Vocational Training Affairs, Training Zones Affairs and Consultancies and Continuous Education.PVTD seeks to continuously prepare Technical cadres of highly skilled required by industrial labor market. It has established El Amerya Technology Center, where Trainingis carried out in fields of Automatic Operation systems, Leather industries and lift maintenance. Additionally, there 37 different training sites being supervised and directed by the Training Zones.Role: The PVTD network can support the roll out of various training modules to the industrial sector

NGOs Mandate: Solar Energy Development Association (SEDA), is a non-profit organization whose mandate is to advocate the development of solar energy (heat and power) market in Egypt through: (a) Developing local competencies on utilizing solar energy, (b) Introducing innovative solutions for developing the market and guaranteeing quality supply and (c) Engaging with various stakeholders to promote solar energy in Egypt.SEKEM Energy – SEKEM Energy is an Austrian-Egyptian initiative whose aim is to promote affordable and environmentally friendly energy supply by utilizing regional sources.Misr El Kheir Foundation will establish a technical vocational institute for renewable energy in Port Said in cooperation with different institutes.TU-Berlin is a training center in El Gouna supported by GIZ which provides vocational training for Renewable energy.TEMPAS is a diploma program between EU and Egypt to provide a RE diploma. Fayoum University will give the training and there are 40 credit hours of the program, to be done in Greece, Germany, Spain and Italy.Role: NGOs will play a key role in developing and rolling out the training modules and certification schemes for personnel working in the installation and maintenance of solar technologies.

National Bank of Egypt (NBE)

Mandate: National Bank of Egypt (NBE) is the largest Egyptian bank, with a 27% share of the market for deposits and 21% of the loans market.


NBE's is the leading Egyptian bank in development/ environment financing. It is managing the largest environmental fund of Environmental Pollution Abatement Programme EPAP II which amounts to a total of 160 million USD funded by the World Bank, European Investment Bank, Agence de Development Francaise, and Japan International Cooperation Agency.In addition, NBE has managed other development related mechanisms of which the UNIDO/EEAA chillers replacement fund is one. NBE is co-financing for the replacement of 20 CFC based chillers operating at commercial, industrial and Governmental sites in Egypt.NBE's network of branches around the country will facilitate their outreach (338 branches and offices) in addition to their correspondent banks.Role: NBE will be the manager of the revolving fund to be created within the project

Industry Industry will be the main target group of the project involved in demonstration projects, local manufacturing and assembling of solar energy equipment and systems, project developers and service providers. The Industry Chambers of the sectors concerned will also be involved in identifying enterprises, preparing sector specific guidance reports, etc.

Banks Banks are keen to support the project by arranging loans – at commercial rates.

A Project Steering Committee (PSC) will be established with representatives from the MITS, the New and Renewable Energy Authority, the Federation of Egyptian Industries represented by the Chamber of Engineering Industries, ENCPC UNIDO and the Egyptian Environmental Affairs Agency as the GEF Focal Point in Egypt. The Committee will review project plans, provide advice on strategic approaches and solutions to ensure that project objectives are achieved. The PSC will meet every 6 months.

For project amendments, cancellation and extension considered and adopted by the Project Steering Committee will be made in accordance with the GEF Council document C. 39.

The project implementation arrangement will be structured as follows:


Project Steering CommitteeChair: Egyptian Environmental Affairs Agency

Members: UNIDO, MFTI, NREA, ENCPC

Project Management Unit (PMU) Headed by: National Project CoordinatorSupported by: National/international staff

CSOs (Industrial Associations etc.)

Private Sector,

MFTI hosts:

The Global Environment Facility (GEF)

UNIDO

B.2. Describe the socioeconomic benefits to be delivered by the Project at the national and local levels, including consideration of gender dimensions, and how these will support the achievement of global environment benefits (GEF Trust Fund/NPIF) or adaptation benefits (LDCF/SCCF):

B.2.1. Cost saving

Egypt spends a considerable amount of its budget on the energy subsidy. In the year 2011/2012, the state subsidy figure comprised 32% of the total Government expense account. That is already in the red with 43.1% of the total expenditures. The energy subsidy reached 72% of the subsidy figure, of which the industrial sector alone comprised 48.8%. The Government has recently adopted a plan for the removal of the energy subsidy as described earlier in this document.

Based on the reduction per installation in terms of diesel and on the market potential for the three surveyed sectors, the savings in installation of solar technology considering the market potential in the three focus industrial sectors (food, chemical and textiles) would result in a reduction in the state subsidy amounting to EGP 1.1 billion.

Table (14): Reduction in State Subsidy Resulting from Solar Heating/Cooling

Capacity # of Potential companies

Savings MWh/year/company

Savings Diesel/liter/company

Total Savings Diesel liter

Total EGP Subsidy (EGP 5.9/l)

Up to 1000 liters

11684 29 3463 40461692 238723983

10000 2921 290 34633 101162993 596861659

20000 730 880 105092 19021652 112227747

30000 181 1450 173163 31342503 184920768

Total 191,988,840 1,132,734,157

B.2.2. Employment creation

Since the project supports the local manufacturing of solar technologies, the project is expected to have an economic impact related to the number of jobs created within the sector. According to the publication of the European Renewable Energy Council, Green Peace and Global Wind Energy Council entitled “energy [r]evolution – A sustainable Energy Outlook”, 2013, “Employment factors” are used to calculate the number of jobs required per unit of electrical or heating capacity, or per unit of fuel. These factors take into account jobs in manufacturing, construction, operation and maintenance and fuel. The employment factor estimated for solar heat sector is 3 jobs/MW.

The employment factors used in this model for all processes reflect the situation in the OECD regions, which are typically wealthier. The regional multiplier is applied to make the jobs per MW more realistic for other parts of the world. In developing countries it typically means more jobs per unit of electricity because of more labor intensive practices. The multipliers change over the study period in line with the projections for GDP per worker. This reflects the fact that as prosperity increases, labor intensity tends to fall. The regional multiplier estimated in that same report for the middle-east start with 2.8 for 2015 and 2020 and go down to 2.5 by 2035.


Using the above figures, the employment opportunities per MW reduction is estimated considering the market potential for the three focus sectors of the project. The job opportunities that result from the investment in the solar technologies in these three sectors are 527,544 opportunities in the construction, installation and operations and maintenance jobs. A detailed breakdown of the calculation is presented in table (15).

Table (15): Estimated Job Opportunities in Solar Heating/Cooling Investments by Sector

Job Type JobOpportunities

Potential by Sector TotalFood Chemical Textiles

Construction and Installation 32 202368 99264 194880 496512Operations and Maintenance 2 12648 6204 12180 31032

Total 215016 105468 207060 527544

B.2.3. Gender Analysis

The Middle East and North Africa (MENA) region has made significant progress in reducing gender gaps in human development. The ratio of girls to boys in primary and secondary education is 0.96, which compares favourably to that in Low and Middle Income Countries (LMIs) worldwide.

Women in the MENA region are more likely than men to attend university; however, this progress has not translated into improvements in economic and political inclusion. The region’s female labour force participation rate of 26 percent is well below the 39 percent rate in Low and Middle Income countries. Among those participating in the labour force, women face greater challenges than men in accessing employment opportunities. In most MENA countries, women experience significantly higher unemployment rates than men. According to the World Bank, between 1998 and 2006, the percentage of young Egyptian women possessing a university degree rose from 6 to 12%. Surprisingly, the female labour force participation rate in this age group remained near-stagnant, while their rate of unemployment increased from 19 to 27 percent.

During the project, efforts will be made to make the training programmes available to equally qualified female candidates and will target as a minimum target for the training, the employee ratio within assisted enterprises and institutions. Efforts will also be made to make the training accessible to women for example, minimum level of literacy, adequate day times for women participation, locations easily accessible to women, etc. In addition, during the inception phase, a basic gender analysis will be done to ensure the integration of gender sensitive indicators in the project results framework.

B.3.Explain how cost-effectiveness is reflected in the project design:

The project focuses GEF funds on technical assistance to deliver sustained energy and CO 2 savings in high potential industrial sectors in Egypt. The sectors chosen are energy inefficient compared to EU norms and therefore have significant scope for savings. The concern for energy costs in the industrial sector is becoming a priority and a major concern following the phased removal of the energy subsidy planned by the Government of Egypt. Therefore enterprises are most likely to keen to co-operating with the project. Further the policy assistance and capacity building interventions to be delivered through the project will create sustainable impacts over the long term.

The model for the project – based on policy development, technical capacity building, implementation of demonstration projects and establishment of sustainable accessible financial mechanisms – has proven successful for UNIDO in projects supported in other developing countries and also in Egypt through earlier projects such as the Industrial Energy Efficiency Project.


The project is designed to guarantee long term sustainable savings beyond the lifetime of the project by ensuring that policies are in place to support a step change in how energy is managed within the three selected industrial sectors.

The creation of a revolving fund to support the financing of projects promoting utilizing solar energy for industrial process heat during and beyond the lifetime of the project is expected to generate sustainable impacts. The operator of the fund and the operational details will be the National Bank of Egypt.

The cost effectiveness of the project in terms of the CO2 savings per $ is estimated at $9/tonne, which is comparable with other similar GEF funded projects.

C. DESCRIBE THE BUDGETED M &E PLAN:

According to the Monitoring and Evaluation policy of the GEF and UNIDO, follow-up studies such as Country Portfolio Evaluations and Thematic Evaluations can be initiated and conducted. All project partners and contractors are obliged to (i) make available studies, reports and other documentation related to the project, and (ii) facilitate interviews with staff involved in the project activities.

Project Start

The project will go through a project inception phase of a 3 months duration. The project inception Workshop will be held at the end of the first 3 months period. During the inception phase, the detailed operational procedures of the revolving fund and other implementation and operational issues will be specified and prescribed in a project operational manual.

The inception workshop is crucial to building ownership for the project results and to plan the first year work annual work plan. The Inception Workshop will address a number of key issues including:

Understand objectives, outputs, activities Assist all partners to fully understand and take ownership of the project Detail the roles, support services and complementary responsibilities of local stakeholders vis a vis the Project

Management Unit (PMU) Discuss roles, functions and responsibilities within the project’s decision making structures, including reporting

and communication lines, and conflict resolution mechanisms Based on the project results framework, finalise the first annual work plan Review and agree on the indicators, targets and their means of verification and recheck assumptions and risks Provide a detailed overview of reporting, monitoring and evaluation (M&E) requirements. The M&E work plan

and budget should be agreed and scheduled. Plan and schedule Project Steering Committee (PSC) meetings. Roles and responsibilities of all project

organisation structures should be clarified and meetings planned.

The first PSC meeting should be held as soon as possible after the inception phase deliverables are available.

Annual Project Review/Project Implementation Reports (APR/PIR)

These key reports are prepared to monitor progress made since project start and in particular for the previous reporting period. The APR/PIR includes, but is not limited to, reporting on the following:

Progress made toward project objective and project outcomes – each with indicators, baseline data and end of project targets (cumulative)

Project outputs delivered per project outcome (annual) Lesson learned/good practice Expenditure reports Risk and adaptive management Portfolio level indicators (i.e. GEF focal area tracking tools) are also used by most focal areas on an annual basis

Mid-term of project cycleGEF5 CEO Endorsement Template-February 2013.doc

40

The project will undergo an independent mid-term evaluation at the mid-point of project implementation. The mid-term evaluation will determine progress being made toward the achievement of outcomes and will identify course correction if needed. It will focus on the effectiveness, efficiency and timeliness of project implementation; it will highlight issues requiring decisions and actions; and will present initial lessons learned about project design, implementation and management. Findings of this review will be incorporated as recommendations for enhanced implementation during the final half of the project’s term. The organization, terms of reference (TOR) and timing of the mid-term evaluation will be decided after consultation between the parties to the project document. The TOR for this mid-term evaluation will be prepared by the UNIDO Project Manager in consultation with the UNIDO evaluation group. The management response and the evaluation will be uploaded to the UNIDO Evaluation Group website.

End of Project

An independent Final Evaluation will take place will take place three months prior to the end of the project and will be undertaken in accordance with UNIDO and GEF guidance. The final evaluation will focus on the delivery of the project’s results as initially planned (and as corrected after the mid-term evaluation, if any such correction took place). The final evaluation will look at impact and sustainability of results, including the contribution to capacity development and the achievement of global environmental benefits/goals. The TOR for this evaluation will be prepared by the UNIDO Project Manager based on guidance from the UNIDO evaluation group.

The terminal evaluation should also provide recommendations for follow up activities and requires a management response.

During the last 3 months the project team will prepare the Project Terminal Report. This comprehensive report will summarize the results achieved (objectives, outcomes, outputs), lessons learned, problems met and areas where results may not have been achieved. It will also lay out recommendations for any further steps that may need to be taken to ensure sustainability and replicability of the project’s results.

Learning and knowledge sharingResults from the project will be disseminated within and beyond the project intervention zone through existing information sharing networks and forums.

The project will identify and participate, as relevant and appropriate, in meetings and conferences which may be of benefit to project implementation through lessons learned. The project will identify, analyze and share lessons learned that may be beneficial in the design and implementation of similar future projects.

Costs of M&E Activities:M&E Activity Categories

Feeds Into Time Frame

GEF Grant Budget

($US)

Co-financing Budget

($US)Responsible Parties

Measurement GEF Tracking Tool specific indicators

Mid-term & Terminal Evaluation Reports

At mid-term and completion

10,000 20,000 • Project technical experts & M&E consultants provide feedback to ENCPC/PMU; • ENCPC/PMU submit inputs for consolidation and approval by project steering committee (PSC)

Monitoring of project impact indicators (as per LogFrame)

Project management;

Semi-annual progress report;

Semi-annually

20,000 40,000


Annual GEF PIR

Periodic Progress Reports

Project management;

Annual GEF PIR

Semi-annually

10,000 20,000

Mid-term evaluation

Mid-term evaluation conducted by UNIDO PM in coordination with UNIDO EVA

At project mid-term

30,000 60,000 Independent evaluator for submission to UNIDO PM

Independent terminal evaluation

Terminal Evaluation Review (TER)

conducted by UNIDO EVA and/or GEF EO

Project completion (at least one month prior to the end of the project and no later than six months after project completion)

30,000 60,000 Independent evaluator for submission to UNIDO PM

Total 100,000 200,000

Legal context– “The Government of the Arab Republic of Egypt agrees to apply to the present project, mutatis mutandis, the provisions of the Standard Basic Assistance Agreement between the United Nations Development Programme and the Government, signed on 19 January 1987 and entered into force on 2 July 1987.

PART III: APPROVAL/ENDORSEMENT BY GEF OPERATIONAL FOCAL POINT(S) AND GEF AGENCY(IES)

A. RECORD OF ENDORSEMENT OF GEF OPERATIONAL FOCAL POINT(S) ON BEHALF OF THE GOVERNMENT(S): ): (Please attach the Operational Focal Point endorsement letter(s) with this form. For SGP, use this OFP endorsement letter).

NAME POSITION MINISTRY DATE(MM/dd/yyyy)Hossam Hegazy Chief Executive Officer of the

Egyptian Environmental Affairs Agency

MINISTRY OF ENVIRONMENT

03/11/2012

GEF agency(ies) certificationGEF5 CEO Endorsement Template-February 2013.doc

42

This request has been prepared in accordance with GEF/LDCF/SCCF/NPIF policies and procedures and meets the GEF/LDCF/SCCF/NPIF criteria for CEO endorsement/approval of project.

Agency Coordinator, Agency Name Signature

Date (Month, day, year)

Project Contact Person Telephone Email Address

Mr. Philippe R. Scholtès, Managing Director, Programme Development and Technical Cooperation division (PTC)UNIDO GEF Focal Point

10/24/2014 Ms. Rana Ghoneim, Energy and Climate Change Branch, UNIDO

+43-1-26026-4356

[email protected]


ANNEX A: PROJECT RESULTS FRAMEWORK (either copy and paste here the framework from the Agency document, or provide reference to the page in the project document where the framework could be found).

Result Baseline Target / Indicator Source of verification Risk & Assumptions

Component 1: Develop policy instruments to promote the use of solar energy for industrial process heat in 3 sectors

Project Objective:

To develop the market environment for the diffusion and local manufacturing of solar energy for industrial process heat.

The energy productivity of Egyptian industry is way below international average - Energy consumption per output is 10 to 50% higher than international average

2,166,085 t CO2 eq reduced as a results of the spillover of project activities(indirect bottom-up)

Validated energy savings& energy generated from project reports

Willingness of state and industry to embrace program and invest time and money in improvement

Component 1: Develop policy instruments to promote the use of solar energy for industrial process heat

Outcome 1.1:Policy instruments promoting the use of solar energy for industrial process heat.

No roadmap for solar thermal energy in industry endorsed by the stakeholders

No quality standards for solar energy systems enforced

No certification programme for personnel installing solar energy systems enforced

Roadmap for solar thermal energy in 3 industrial sectors adopted by stakeholders

Minimum quality standards for solar energy systems enforced

Certification scheme for personnel in place

Government institutions,

Official gazette

Willingness of the Egyptian Government to promote solar energy in industry

Output 1.1.1A roadmap and implementation plan for dissemination of solar energy for industrial heat formulated

No roadmap for solar thermal energy in 3 industrial sectors developed

Roadmaps for solar thermal energy in 3 industrial sectors developed Project Reports

Official documents

Websites of organizations

Output 1.1.2 Instruments to control the quality of solar components, companies and personnel performing installation and maintenance of solar energy systems

No quality standards for solar energy systems developed

2 standards for solar energy systems developed

No certification framework for certification of personnel developed

1 Framework for the certification of personnel developed

Component 2: Mobilize financing for the deployment of solar energy for industrial heat

Outcome 2.1.:Financing for the deployment of solar energy for industrial heat Mobilized

Limited investments made in solar thermal technologies in the industrial sector

Limited emission reductions as a result of fuel switching to solar

$ 19 million invested in solar energy in the industrial sector

8,907,180 GJ direct savings over

Reports of financial institutions, reports and statistics of development financial institutions and Government agencies

Banks interested and willing to invest in RE


energy for industrial heat (project replication effect)

10 years. Direct emission reductions of 722,028 t CO2 eq. over 10 years.

Output 2.1.1.Revolving Fund to facilitate financing of solar thermal technologies is set up

No dedicated fund for financing solar energy for industrial applications

Revolving fund is set-up and disburses US% 4 million over the project duration in loans

Bank report and statements of the fund account

Output 2.1.2.Solar thermal technologies installed in selected facilities

Limited projects improving the energy efficiency of the industrial heat system implemented

System optimization measures for industrial process heat implemented in 100 enterprises

Workshop report

Progress & monitoring reports

Limited installations of solar energy in industrial applications

100 installations of solar energy made in industrial applications

Monitoring reports, site visits

Output 2.1.3.

Technical capacity of staff of local banks on the assessment of projects enhanced

Staff of local banks have a limited knowledge of the assessment of business plans for financing solar thermal installations in industry

150 bank staff trained on evaluation of projects

(30% females)

Workshop reports

Output 2.1.4.

Awareness campaign on solar thermal technologies for industrial process heat implemented

Limited activities targeting the awareness of industries, experts and stakeholders on solar thermal applications in the industrial sector

20 workshops organized targeting 500 participants(30% females)

2 Leaflets distributed

5 press releases published

100 best practice case studies compiled

10 visits to successful projects organized

Workshop reports, publicity in media, progress reports

Component 3. Improve the manufacture, supply and distribution of solar energy components and systems

Outcome 3.1.:The local manufacture, supply and distribution of solar energy components and systems is strengthened

10% of the products manufactured fulfill quality requirements

50% of products manufactured locally fulfill quality requirements

Statistics and reports of the Government

Output 3.1.1.Laboratory facility for testing quality of the local manufactured and imported products is accredited

No facility for testing the quality of locally manufactured products is accredited

1 Facility for testing is accredited Official reports

Output 3.1.2Basic tools and training required for improving the quality of locally manufactured components provided

None of the local manufacturers possess tools required to produce good quality components

40 companies own tools required to improve the quality of their manufactured products

Site visits


Manual on best practices in the manufacturing developed

Reports

Progress reports

Output 3.1.3.Training programme on best practices in the manufacture of solar energy components and systems conducted

Staff of local manufacturers do not have the skills to manufacture good quality products

200 technicians from selected companies trained(10% females)

Manual on best practices developed

Training reports

Manual available

Output 3.1.4Capacity of the testing laboratory staff on testing protocols and procedures developed

Staff of the testing laboratory do no have the skills required for the testing

20 experts of the testing laboratory trained(20% females)

Manual on testing procedures developed

Training reports

Manual available

Output 3.1.5A platform to enhance information exchange, cooperation and partnerships between local industries, international centers of excellence and technology suppliers created

No platform is available 1 platform is established and functioning

Progress report, website of the platform, monitoring of statistics and figures

Component4: Build the capacity of technical staff designing, developing and servicing solar systems

Outcome 4.1.Technical capacity of the system designers, developers, facility managers and service providers for solar energy utilization for industrial process heat enhanced.

No institutionalized training courses available

4 Training courses developed are run at the vocational training schools

Curricula of the Vocational training schools

Availability of experts to receive the training

Vocational training schools have sufficient capacity to hold the trainings

Output 4.1.1.Training programme on energy savings based on process heat optimization for experts, facility managers and service providers is conducted

Staff of companies not aware of the opportunities for EE improvements

100 experts trained on SO

(10% females)

Training reports, progress reports

Output 4.1.2.Training programme on system design for experts, facility managers and service providers is conducted.

No experts aware of the best practice in the design of solar thermal systems

20 experts and 50 vendors trained on system design

(10% females)


Ouput 4.1.3.Training programme on solar thermal equipment installation and servicing for technicians, installers and service providers established.

A limited number of technicians is trained on proper installation and servicing procedures

200 technicians trained on proper installation and servicing practices

(10% females)


Output 4.1.4.Training programme on business development for solar energy businesses developed

Enterprises and entrepreneurs working in the energy sector do not posses sufficient management skills to support the market development

100 entrepreneurs trained on business development

(20 % females)



ANNEX B: RESPONSES TO PROJECT REVIEWS (from GEF Secretariat and GEF Agencies, and Responses to Comments from Council at work program inclusion and the Convention Secretariat and STAP at PIF).

No comments were raised by GEF council members at PIF/PPG approvalGEF Secretariat Comment to be addressed at CEO endorsement

a) Confirmed letters of co-financing from all partners are expected.

Co-financing letters attached in annex J to this document

b) Please explore options for the use of non-grant instruments that could help enhance and attract more local private sector financing.

A revolving fund is proposed for setup. More details under the description of Component 2 and Annexes D and I.

c) At CEO endorsement stage, more detailed descriptions of the baseline project are needed, specifically existing policies for promotion of solar and the gaps for application of solar in industry.

Addressed under the Baseline Project description under A. 4.

d) Please identify specific CSOs and industry associations as partners.

Solar Energy Development Association (SEDA), SEKEM and others are among the CSOs and industry associations who will be partners in the project. Further description is provided in section B.1.

e) We expect to see a more detailed analysis supporting the estimate for global environmental benefits.

The details of the GEB calculation is contained in Annex E

STAP comments

This project aims to use renewable energy for heating and cooling applications. The title states "industrial applications" but commercial buildings are also a key component.

The proposal confuses solar thermal water heating, solar thermal building space heating, cooling using absorption chillers, tri-generation technologies, and generating electricity using renewables, (including solar PV systems and possibly concentrating solar power (CSP) systems), to run heat pumps for heating and/or cooling. This makes it difficult to follow the rationale when such terms as "solar technologies" and "solar energy" are used.

During the PPG phase, it was decided to focus on industrial applications only.

The project will focus on utilizing solar energy for industrial process heat. It will also support the local manufacturing of solar energy technologies, which for the present times is more concentrated on solar water heaters.

1. It is suggested the full project document narrative be broken into several themes under the various fixed sub- headings for sections B1, B2 etc.:

Sub-chapters and headings are provided in the present document


a) solar thermal heating of water for buildings and industry, which is a mature technology, relatively low cost and involves a major part of the project proposal including support for local manufacturers and tourism;

b) solar cooling based on absorption chillers and similar technologies, which is currently a developing technology nearing commercial viability but relatively costly and complex;c) renewable electricity generation based on hydro, wind, solar PV, CSP etc. with the power produced used to run heat pumps (air conditioning units) for space heating in winter and cooling in summer;d) the MATS project which it is intended to support though little information is provided. I assume this "tri-generation" technology is at an early stage of development and a demonstration plant would be the next stage.

a) The project will continue to focus on that but only for the industrial sector

b) & c) Due to the fact that the technology for cooling is still at a developing stage and is not mature enough, the project will focus on industrial heat only. Demonstration of space heating in winter and cooling in summer will be considered on a case to case basis.

d) The MATS project is not progressing and will not be considered for cooperation with the presented project.

2. The CO2 avoided is calculated for solar water heaters assuming electricity is displaced - but no indication is given whether back-up electricity heating is needed or not. is there really 5 hours of solar radiation every day of the year in Egypt?

The solar Atlas for Egypt estimates a solar radiation of 9 to 11 hours per day in some regions. Information is contained under section A.4.

3. For absorption chillers, are there 5 manufacturers already in place? If so why are only 100 units produced per year by each? It is not clear why these will operate for 8 hours a day - but only for 240 days. Is this because cooling is not required for the rest of the year?

The manufacturing of chillers is no longer part of the proposed project scope.

4. The calculations show a cost of around USD 1.20 / t CO2 avoided for the whole project. This is difficult to believe given the current costs of solar cooling systems. Renewable electricity to run heat pumps is not included. This could be a confusing part of the proposal and perhaps reference to it throughout should be deleted. Detailed analysis of project cost-effectiveness is desirable during PPG stage.

5. Risks: Climate change impacts could impact on solar technologies in fact due to variations in cloud cover- though the science remains uncertain. Furthermore, the risk of such a new technology as tri-generation not

Climate Change risk included in section A.6.Tri-generation plant is no longer part of the baseline project.


delivering according to expectations in a scaled-up demonstration is surprisingly not included in section B4. Solar absorption chillers are not yet "widely used" so there are risks with these technologies too.

6. No indication is given on how the project will be monitored. Is it the number of systems in place and operating at the end of the 5 year period? And what will determine whether the near-commercial tri-generation plant is operating successfully or not? Robust M&E system is strongly recommended.

The budgeted M&E plan is described in section C.Tri-generation plant is no longer part of the baseline project.


ANNEX C: STATUS OF IMPLEMENTATION OF PROJECT PREPARATION ACTIVITIES AND THE USE OF FUNDS12

A. PROVIDE DETAILED FUNDING AMOUNT OF THE PPG ACTIVITIES FINANCING STATUS IN THE TABLE BELOW:

PPG Grant Approved at PIF: 80,000Project Preparation Activities Implemented GEF/LDCF/SCCF/NPIF Amount ($)

Budgeted Amount Amount Spent To date

Amount Committed

Collection of supplemental/baseline data and analysis

20,000 25,000 0

Stakeholder Consultations 15,000 11,000 0Design of the project structure 30,000 29,000 0Project Strategy and implementation detailing 15,000 15,000 0Total 80,000 80,000 0

12 If at CEO Endorsement, the PPG activities have not been completed and there is a balance of unspent fund, Agencies can continue undertake the activities up to one year of project start. No later than one year from start of project implementation, Agencies should report this table to the GEF Secretariat on the completion of PPG activities and the amount spent for the activities.


ANNEX D: CALENDAR OF EXPECTED REFLOWS (if non-grant instrument is used)

A revolving fund will be setup within the project. The fund will not reflow into UNIDO nor the GEF. Ownership of the fund will be transferred to the MITS following the closure of the project. The expected cash flow of the fund is described below:

Market Analysis

Capacity(liters)

Cost‘000 EGP

Self-contribution10%

Loan(90%)

1 m3Direct(without storage) 35 4 32 1 m3 complete 85 9 77 5 m3Direct(without storage) 175 18 158 5 m3complete 500 50 450 10 m3complete 1,300 130 1,170 10 m3Direct (without storage) 350 35 315 30 m3Direct (without storage) 1,057 106 951 50 m3Direct (without storage) 1,764 176 1,588

Financial Needs (Loans) based on fund utilizationCapacity (liters) # of financed projects Total

Year 1 Year 2 Year 3 Year 4 Year 51 m3 Direct (without storage) 0 7 7 8 8 301 m3 complete 0 4 4 6 6 205 m3 Direct (without storage) 0 3 3 4 4 145 m3 complete 0 2 2 3 3 1010 m3 complete 0 1 1 2 2 610 m3 Direct (without storage) 0 2 2 3 3 1030 m3 Direct (without storage) 0 1 1 1 2 550 m3 Direct (without storage) 0 1 1 1 2 5Loan Needs 0 6,238 6,238 8,515 11,054 100


GEF grant Contribution

Financial Assumptions


Year Loans GEF Contribution50%

1 0 02 6,238 3,1193 6,238 3,1194 8,515 4,2575 11,054 5,527Total 32,045 16,022

Year Loans Tenor Grace Period

Interest

Installment

1 0 5 years

1 year 13%2 6,238 129.963 6,238 129.964 8,515 177.395 11,05

4230.29

Loan Run-Off – 50%

Year 2

Month

Loan Amnt

Install'

Interest

T. Paid

12

6,237.90

-

-

-

13

6,237.90

-

33.79

33.79

14

6,237.90

-

33.79

33.79

15

6,237.90

-

33.79

33.79

16

6,237.90

-

33.79

33.79

17

6,237.90

-

33.79

33.79

18

6,237.90

-

33.79

33.79

19

6,237.90

-

33.79

33.79

20

6,237.90

-

33.79

33.79

21

6,237.90

-

33.79

33.79

Year 3

22

6,237.90

-

33.79

33.79

23

6,237.90

-

33.79

33.79

Month

Loan Amnt

Install'

Interest

T. Paid

24 6,237

-

33.79

33.79

24 6,237

-

-

-


.90 .90

25

6,237.90

129.96

33.79

163.74 25

6,237.90

-

33.79

33.79

266,107.94

129.96 33.79

163.74 26

6,237.90 - 33.79 33.79

27

5,977.99

129.96

33.08

163.04 27

6,237.90

-

33.79

33.79

28

5,848.03

129.96

32.38

162.34 28

6,237.90

-

33.79

33.79

29

5,718.08

129.96

31.68

161.63 29

6,237.90

-

33.79

33.79

30

5,588.12

129.96

30.97

160.93 30

6,237.90

-

33.79

33.79

31

5,458.16

129.96

30.27

160.23 31

6,237.90

-

33.79

33.79

32

5,328.21

129.96

29.57

159.52 32

6,237.90

-

33.79

33.79

33

5,198.25

129.96

28.86

158.82 33

6,237.90

-

33.79

33.79

Year 4

34

5,068.29

129.96

28.16

158.11 34

6,237.90

-

33.79

33.79

35

4,938.34

129.96

27.45

157.41 35

6,237.90

-

33.79

33.79

Month

Loan Amnt

Install'

Interest

T. Paid

36

4,808.38

129.96

26.75

156.71 36

6,237.90

-

33.79

33.79 36

8,514.90

-

-

-

37

4,678.43

129.96

26.05

156.00 37

6,237.90

129.96

33.79

163.74 37

8,514.90

-

46.12

46.12

38

4,548.47

129.96

25.34

155.30 38

6,107.94

129.96

33.79

163.74 38

8,514.90

-

46.12

46.12

39

4,418.51

129.96

24.64

154.59 39

5,977.99

129.96

33.08

163.04 39

8,514.90

-

46.12

46.12

40 40 40


4,288.56

129.96 23.93

153.89

5,848.03

129.96 32.38

162.34

8,514.90 - 46.12 46.12

41

4,158.60

129.96

23.23

153.19 41

5,718.08

129.96

31.68

161.63 41

8,514.90

-

46.12

46.12

42

4,028.64

129.96

22.53

152.48 42

5,588.12

129.96

30.97

160.93 42

8,514.90

-

46.12

46.12

43

3,898.69

129.96

21.82

151.78 43

5,458.16

129.96

30.27

160.23 43

8,514.90

-

46.12

46.12

44

3,768.73

129.96

21.12

151.07 44

5,328.21

129.96

29.57

159.52 44

8,514.90

-

46.12

46.12

45

3,638.78

129.96

20.41

150.37 45

5,198.25

129.96

28.86

158.82 45

8,514.90

-

46.12

46.12

Year 5

46

3,508.82

129.96

19.71

149.67 46

5,068.29

129.96

28.16

158.11 46

8,514.90

-

46.12

46.12

47

3,378.86

129.96

19.01

148.96 47

4,938.34

129.96

27.45

157.41 47

8,514.90

-

46.12

46.12

Month

Loan Amnt

Install'

Interest

T. Paid

48

3,248.91

129.96

18.30

148.26 48

4,808.38

129.96

26.75

156.71 48

8,514.90

-

46.12

46.12 48

11,053.80

-

-

-

49

3,118.95

129.96

17.60

147.55 49

4,678.43

129.96

26.05

156.00 49

8,514.90

177.39

46.12

223.52 49

11,053.80

-

59.87

59.87

50

2,988.99

129.96

16.89

146.85 50

4,548.47

129.96

25.34

155.30 50

8,337.51

177.39

46.12

223.52 50

11,053.80

-

59.87

59.87

51

2,859.04

129.96

16.19

146.15 51

4,418.51

129.96

24.64

154.59 51

8,160.11

177.39

45.16

222.56 51

11,053.80

-

59.87

59.87

52

2,729.08

129.96

15.49

145.44 52

4,288.56

129.96

23.93

153.89 52

7,982.72

177.39

44.20

221.59 52

11,053.80

-

59.87

59.87

53

2,599.13

129.96

14.78

144.74 53

4,158.60

129.96

23.23

153.19 53

7,805.33

177.39

43.24

220.63 53

11,053.80

-

59.87

59.87

54

2,469.17

129.96

14.08

144.03 54

4,028.64

129.96

22.53

152.48 54

7,627.93

177.39

42.28

219.67 54

11,053.80

-

59.87

59.87

55 2,339

129.

13.37

143.3

55 3,898

129.

21.82

151.7

55 7,450

177.

41.32

218.7

55 11,05

-

59.87

59.87


.21 96 3 .69 96 8 .54 39 1 3.80

56

2,209.26

129.96

12.67

142.63 56

3,768.73

129.96

21.12

151.07 56

7,273.14

177.39

40.36

217.75 56

11,053.80

-

59.87

59.87

57

2,079.30

129.96

11.97

141.92 57

3,638.78

129.96

20.41

150.37 57

7,095.75

177.39

39.40

216.79 57

11,053.80

-

59.87

59.87

58

1,949.34

129.96

11.26

141.22 58

3,508.82

129.96

19.71

149.67 58

6,918.36

177.39

38.44

215.83 58

11,053.80

-

59.87

59.87

59

1,819.39

129.96

10.56

140.52 59

3,378.86

129.96

19.01

148.96 59

6,740.96

177.39

37.47

214.87 59

11,053.80

-

59.87

59.87

60

1,689.43

129.96

9.86

139.81 60

3,248.91

129.96

18.30

148.26 60

6,563.57

177.39

36.51

213.91 60

11,053.80

-

59.87

59.87

61

1,559.47

129.96

9.15

139.11 61

3,118.95

129.96

17.60

147.55 61

6,386.18

177.39

35.55

212.95 61

11,053.80

230.29

59.87

290.16

62

1,429.52

129.96

8.45

138.40 62

2,988.99

129.96

16.89

146.85 62

6,208.78

177.39

34.59

211.99 62

10,823.51

230.29

59.87

290.16

63

1,299.56

129.96

7.74

137.70 63

2,859.04

129.96

16.19

146.15 63

6,031.39

177.39

33.63

211.02 63

10,593.23

230.29

58.63

288.91

64

1,169.61

129.96

7.04

137.00 64

2,729.08

129.96

15.49

145.44 64

5,853.99

177.39

32.67

210.06 64

10,362.94

230.29

57.38

287.67

65

1,039.65

129.96

6.34

136.29 65

2,599.13

129.96

14.78

144.74 65

5,676.60

177.39

31.71

209.10 65

10,132.65

230.29

56.13

286.42

66

909.69

129.96

5.63

135.59 66

2,469.17

129.96

14.08

144.03 66

5,499.21

177.39

30.75

208.14 66

9,902.36

230.29

54.89

285.17

67

779.74

129.96

4.93

134.88 67

2,339.21

129.96

13.37

143.33 67

5,321.81

177.39

29.79

207.18 67

9,672.08

230.29

53.64

283.93

68

649.78

129.96

4.22

134.18 68

2,209.26

129.96

12.67

142.63 68

5,144.42

177.39

28.83

206.22 68

9,441.79

230.29

52.39

282.68

69

519.82

129.96

3.52

133.48 69

2,079.30

129.96

11.97

141.92 69

4,967.03

177.39

27.87

205.26 69

9,211.50

230.29

51.14

281.43

70

389.87

129.96

2.82

132.77 70

1,949.34

129.96

11.26

141.22 70

4,789.63

177.39

26.90

204.30 70

8,981.21

230.29

49.90

280.18


71

259.91

129.96

2.11

132.07 71

1,819.39

129.96

10.56

140.52 71

4,612.24

177.39

25.94

203.34 71

8,750.93

230.29

48.65

278.94

72

129.96

129.96

1.41

131.36 72

1,689.43

129.96

9.86

139.81 72

4,434.84

177.39

24.98

202.38 72

8,520.64

230.29

47.40

277.69

Total

(0)

6,237.90

1,266.37

7,504.27 73

1,559.47

129.96

9.15

139.11 73

4,257.45

177.39

24.02

201.42 73

8,290.35

230.29

46.15

276.44

74

1,429.52

129.96

8.45

138.40 74

4,080.06

177.39

23.06

200.45 74

8,060.06

230.29

44.91

275.19

75

1,299.56

129.96

7.74

137.70 75

3,902.66

177.39

22.10

199.49 75

7,829.78

230.29

43.66

273.95

Effective Interest Rate:

6.50% 76

1,169.61

129.96

7.04

137.00 76

3,725.27

177.39

21.14

198.53 76

7,599.49

230.29

42.41

272.70

Flat Interest Rate:5.08

% 77

1,039.65

129.96

6.34

136.29 77

3,547.88

177.39

20.18

197.57 77

7,369.20

230.29

41.16

271.45

78

909.69

129.96

5.63

135.59 78

3,370.48

177.39

19.22

196.61 78

7,138.91

230.29

39.92

270.20

79

779.74

129.96

4.93

134.88 79

3,193.09

177.39

18.26

195.65 79

6,908.62

230.29

38.67

268.96

80

649.78

129.96

4.22

134.18 80

3,015.69

177.39

17.30

194.69 80

6,678.34

230.29

37.42

267.71

81

519.82

129.96

3.52

133.48 81

2,838.30

177.39

16.34

193.73 81

6,448.05

230.29

36.17

266.46

82

389.87

129.96

2.82

132.77 82

2,660.91

177.39

15.37

192.77 82

6,217.76

230.29

34.93

265.21

83

259.91

129.96

2.11

132.07 83

2,483.51

177.39

14.41

191.81 83

5,987.47

230.29

33.68

263.97

84

129.96

129.96

1.41

131.36 84

2,306.12

177.39

13.45

190.85 84

5,757.19

230.29

32.43

262.72

Total

(0)

6,237.90

1,266.37

7,504.27 85

2,128.72

177.39

12.49

189.89 85

5,526.90

230.29

31.18

261.47

86 86


1,951.33

177.39 11.53

188.92

5,296.61

230.29 29.94

260.22

87

1,773.94

177.39

10.57

187.96 87

5,066.32

230.29

28.69

258.98

88

1,596.54

177.39

9.61

187.00 88

4,836.04

230.29

27.44

257.73

89

1,419.15

177.39

8.65

186.04 89

4,605.75

230.29

26.20

256.48

90

1,241.76

177.39

7.69

185.08 90

4,375.46

230.29

24.95

255.24

91

1,064.36

177.39

6.73

184.12 91

4,145.17

230.29

23.70

253.99

92

886.97

177.39

5.77

183.16 92

3,914.89

230.29

22.45

252.74

93

709.57

177.39

4.80

182.20 93

3,684.60

230.29

21.21

251.49

94

532.18

177.39

3.84

181.24 94

3,454.31

230.29

19.96

250.25

95

354.79

177.39

2.88

180.28 95

3,224.02

230.29

18.71

249.00

96

177.39

177.39

1.92

179.32 96

2,993.74

230.29

17.46

247.75

Total

(0)

8,514.90

1,728.63

10,243.53 97

2,763.45

230.29

16.22

246.50

98

2,533.16

230.29

14.97

245.26

99

2,302.87

230.29

13.72

244.01

100

2,072.59

230.29

12.47

242.76

101

1,842.

230.2

11.23

241.5


30 9 1

102

1,612.01

230.29

9.98

240.27

103

1,381.72

230.29

8.73

239.02

104

1,151.44

230.29

7.48

237.77

105

921.15

230.29

6.24

236.52

106

690.86

230.29

4.99

235.28

107

460.57

230.29

3.74

234.03

108

230.29

230.29

2.49

232.78

Total

(0)

11,053.80

2,244.06

13,297.86


GEF grant cash flow

Investment Rate 3%

Month Balance

Out Flow In Flow

Investment

1 12,810.00

-

- -

2 12,842.03

-

- 32.03

3 12,874.13

-

- 32.11

4 12,906.32

-

- 32.19

5 12,938.58

-

- 32.27

6 12,970.93

-

- 32.35

7 13,003.35

-

- 32.43

8 13,035.86

-

- 32.51

9 13,068.45

-

- 32.59

10 13,101.12

-

- 32.67

11 13,133.88

-

- 32.75

12 13,166.71

3,118.95

- 32.83

13 10,080.68

-

- 32.92

14 10,105.88

-

- 25.20

15 10,131.14

-

- 25.26

16 10,156.47

-

- 25.33

17 10,181.86

-

- 25.39

18 10,207.32

-

- 25.45

19 10,232.84

-

- 25.52

20 10,258.42

-

- 25.58

21 10,284.06

-

- 25.65

22 10,309.78

-

- 25.71


23 10,335.55

-

- 25.77

24 10,361.39

3,118.95

- 25.84

25 7,268.34

-

64.98 25.90

26 7,351.49

-

64.98 18.17

27 7,434.85

-

64.98 18.38

28 7,518.41

-

64.98 18.59

29 7,602.19

-

64.98 18.80

30 7,686.17

-

64.98 19.01

31 7,770.36

-

64.98 19.22

32 7,854.77

-

64.98 19.43

33 7,939.38

-

64.98 19.64

34 8,024.21

-

64.98 19.85

35 8,109.25

-

64.98 20.06

36 8,194.50

4,257.45

64.98 20.27

37 4,022.51

-

129.96 20.49

38 4,162.53

-

129.96 10.06

39 4,302.89

-

129.96 10.41

40 4,443.60

-

129.96 10.76

41 4,584.67

-

129.96 11.11

42 4,726.09

-

129.96 11.46

43 4,867.86

-

129.96 11.82

44 5,009.98

-

129.96 12.17

45 5,152.46

-

129.96 12.52

46 5,295.30

-

129.96 12.88

47 5,438.50

-

129.96 13.24


48 5,582.05

5,526.90

129.96 13.60

49 199.06

-

218.65 13.96

50 418.21

-

218.65 0.50

51 637.91

-

218.65 1.05

52 858.16

-

218.65 1.59

53 1,078.96

-

218.65 2.15

54 1,300.31

-

218.65 2.70

55 1,522.21

-

218.65 3.25

56 1,744.67

-

218.65 3.81

57 1,967.68

-

218.65 4.36

58 2,191.26

-

218.65 4.92

59 2,415.39

-

218.65 5.48

60 2,640.08

-

218.65 6.04

61 2,865.33

-

333.80 6.60

62 3,206.29

-

333.80 7.16

63 3,548.11

-

333.80 8.02

64 3,890.77

-

333.80 8.87

65 4,234.30

-

333.80 9.73

66 4,578.68

-

333.80 10.59

67 4,923.92

-

333.80 11.45

68 5,270.03

-

333.80 12.31

69 5,617.00

-

333.80 13.18

70 5,964.84

-

333.80 14.04

71 6,313.55

-

333.80 14.91

72 6,663.13

-

333.80 15.78


73 7,013.58

-

268.82 16.66

74 7,299.94

-

268.82 17.53

75 7,587.01

-

268.82 18.25

76 7,874.79

-

268.82 18.97

77 8,163.30

-

268.82 19.69

78 8,452.53

-

268.82 20.41

79 8,742.48

-

268.82 21.13

80 9,033.15

-

268.82 21.86

81 9,324.55

-

268.82 22.58

82 9,616.68

-

268.82 23.31

83 9,909.54

-

268.82 24.04

84 10,203.14

-

268.82 24.77

85 10,497.46

-

203.84 25.51

86 10,727.55

-

203.84 26.24

87 10,958.21

-

203.84 26.82

88 11,189.44

-

203.84 27.40

89 11,421.26

-

203.84 27.97

90 11,653.65

-

203.84 28.55

91 11,886.62

-

203.84 29.13

92 12,120.18

-

203.84 29.72

93 12,354.32

-

203.84 30.30

94 12,589.05

-

203.84 30.89

95 12,824.36

-

203.84 31.47

96 13,060.26

-

203.84 32.06

97 13,296.76

-

115.14 32.65


98 13,445.14

-

115.14 33.24

99 13,593.90

-

115.14 33.61

100 13,743.03

-

115.14 33.98

101 13,892.53

-

115.14 34.36

102 14,042.40

-

115.14 34.73

103 14,192.65

-

115.14 35.11

104 14,343.28

-

115.14 35.48

105 14,494.28

-

115.14 35.86

106 14,645.66

-

115.14 36.24

107 14,797.42

-

115.14 36.61

108 14,949.55

-

115.14 36.99

15,064.70


Annex E: Estimated CO2 and Energy Savings

There are 2 main elements related to the direct emissions reductions: Technical Assistance (TA) for System Optimization projects and and INV projects installing solar energy for provision of industrial heat and steam. These 2 elements will also have a replication effect assumed as a multiplier of 1.5 (Source: GEF GHG emission reduction manual). That is for every kWh of energy saved directly by the project an additional 1.5 kWh will be saved indirectly by replication.

The project focuses on three industrial sectors where the potential for the utilization of solar energy for process heat is the highest in Egypt, food, chemicals and textiles. Over the 5 years of the project 100 enterprises will receive TA to implement SO measures and define the techno-economic feasibility for installing solar technologies and INV cost to finance the installation of solar thermal technologies to provide hot water and steam.

Energy Savings from EE measures

Experience from developed countries and from the implementation of projects within the UNIDO EnMS and SO programme shows that savings of 10% will be achieved from system optimization measures to be implemented in these sectors for a lifetime of 10 years.

Breakdown of the energy consumption for steam/hot water generation

Savings/yearGJ/year

10% annual savings

Number of pilots

Total Savings GJ/year15%

electricityGJ

85% fuel Total Energy

consumed in GJ

42.5% NG(l)

42.5% gasoline

(l)15.66 1167.50 34.20 1,217.36 121.7 50 6,085

78.3 5837.55 170.87 6,086.72 608.6 24 14,606.4

156.6 11675.10 341.74 12,173.44 1,217.3 16 19,476.8

475.2 35427.90 1037.00 36,940.1 3,694 5 18,470

783 58375.50 1708.70 60,867.2 6,086.72 5 30,433.6

89,071.8

Energy Savings from Solar thermal applications

In addition, through the installation of solar thermal systems, additional energy savings will be made.

Capacity of the

demonstration project

Breakdown of the energy consumption Fuel substitution per year

15% electricity

GJ

85% fuel Total Energy

Consumed

Number of pilots

Total Savings GJ/year

42.5% NG(l)

42.5% gasoline

(l)1 m3 15.66 1167.50 34.20 1,217.36 1095.66 50 54,783

5 m3 78.3 5837.55 170.87 6,086.72 5478.12 24 131,474.9

10 m3 156.6 11675.10 341.74 12,173.44 10956.1 16 175,297.6

30 m3 475.2 35427.90 1037.00 36,940.1 33246.1 5 166,230.5

50 m3 783 58375.50 1708.70 60,867.2 54780.5 5 273,902.5


801,688.5

Total Energy savings from EE and solar thermal over a lifetime of 10 years is 8,907,603.

Conversion Factors Emission Factors

1MWh = 0.28 GJ 0.5437 t CO2/MWh

1 GJ = 26137 l Natural gas 0.0561 t CO2/GJ

1 l diesel = 38.68 GJ 0.0741 t CO2/GJ

Using the GEF/STAP GHG emission methodology spreadsheet, the project will contribute to an emission reduction of 722,028 tCO2 during a life-time of the project, 656,392 tCO2 from installation of solar thermal technologies and 65,636 tCO2 from energy efficiency measures.

There are a total of around 11,648 companies operating in the three selected sectors distributed as follows: 4,848 companies in the food sector, 2,336 companies in the chemicals sector and 4,500 in the textile sector.

Considering a moderate replication factor of 40%, the indirect bottom-up emission savings can be estimated at 288,811 t CO2.

Assuming a modest causality factor of 3 means a top down indirect emission reduction estimate of 2,166,085 t CO2.


Annex F:Project Budget BreakdownGEF Budget Breakdown by component

Component Based Budget for the GEF Grant

GEF Grant Budget Component 1

Component 1 Type of ExpenseYr1 Yr 2 Yr 3 Yr 4 Yr 5 Output

Total

International Expertise

50,000 50,000 50,000 150,000

Local Travel 5,000 5,000 10,000

National Expertise 30,000 30,000 30,000 90,000

Contractual Arrangement

10,000 10,000 20,000

Training/Workshops 15,000 15,000 30,000

TOTAL Component 1 85,000 110,000 105,000 300,000



Total


50,000 50,000 25,000 25,000 150,000

Local Travel

National Expertise 20,000 20,000 20,000 20,000 20,000 100,000


2,000,000 50,000 2,050,000

Training/Workshops 20,000 20,000 20,000 20,000 20,000 100,000

TOTAL Component 2 2,090,000 140,000 65,000 65,000 40,000 2,400,000



Total


50,000 50,000 50,000 50,000 50,000 250,000


Local Travel



600,000 600,000 600,000 1,800,000

Training/Workshops 50,000 50,000 50,000 50,000 50,000 250,000

International Meetings/Workshops

100,000 100,000

Miscellaneous 10,000 10,000 10,000 10,000 10,000 50,000

TOTAL Component 3 185,000 785,000 885,000 785,000 160,000 2,800,000



Total


50,000 50,000 50,000 50,000 200,000

Local Travel

National Expertise 20,000 20,000 20,000 60,000


100,000 100,000 50,000 250,000

Training/Workshops 25,000 25,000 25,000 15,000 90,000

TOTAL Component4 70,000 195,000 195,000 125,000 15,000 600,000

GEF Grant Budget MNE

MNE Type of ExpenseYr1 Yr 2 Yr 3 Yr 4 Yr 5 Output

Total



25,000 25,000 50,000

TOTAL Component MNE 10,000 10,000 35,000 10,000 35,000 100,000

GEF Grant Budget Project Management

Project Management Type of Expense

Yr1 Yr 2 Yr 3 Yr 4 Yr 5 Output Total



Miscellaneous 5,000 5,000 5,000 5,000 5,000 25,000

TOTAL Component Project Management

60,000 60,000 60,000 60,000 60,000 300,000

Project Management Unit Consultant costs – GEF grant

Position / title $ / person week Estimated person weeks Total ($) Tasks

National Project Manager 700 250 175,000

Under the supervision of the UNIDO Project Manager, the NPC will be responsible for the day-to-day management of the implementation of the project including all programme and administrative matters, and also the Project Management Unit (PMU), to ensure that the project is effectively and smoothly implemented as described in the project document, and that proper and effective communication with all the stakeholders is carried out.

Administration Assistant 400 250 100,000

Under the supervision of the National Project Manager, the Administrative and Finance Project Assistant will be responsible for the provision of the administrative, financial and clerical assistance to the Project Management Unit.

Total 275,000

National Consultants – GEF grant

Position / title $ / person weekEstimated person weeks Total ($) Tasks

Policy expert 1,000 50 50,000Assist state organisations in assessing the potential in the 3 industrial sectors and preparing the roadmaps for solar thermal in the 3 sectors

Standards expert 1,000 50 50,000 Assist state organizations in the development and adoption of the required quality standards

Conformity assessment expert

1,000 50 50,000 Support the development of testing protocols, quality procedures and the related manual

Finance Practitioners 1,000 50 50,000 Advise on the establishment of the revolving

fund and assist with financial evaluation of GEF5 CEO Endorsement Template-February 2013.doc

70

investment projects; provide corresponding training

SO Practitioners 1,000 50 50,000

Provide support to the design of SO demo projects and provide training on SO; Monitor, report and organise training and guidance to the local stakeholders on SO; capture lessons learned and best practices for dissemination; Organise and conduct workshops on SO including for suppliers

Solar thermal experts 1,000 50 50,000

Support the development of training material for various target groups and the delivery of the training. In addition provide technical support to assisted enterprises as required.

Strategy consultant 1,000 100 100,000 Support the creation of platform and its structure.

Communication /PR expert 1,000 100 100,000

Support the development of a plan for media and outreach programme as per the annual work plan of the project; develop outreach material and outreach programme to disseminate project objectives, programmes and learning/best practicesOrganise information and awareness stimulation activities; capture lessons learned and best practices and assist in their dissemination; Support development of awards scheme

MNE experts 1,000 30 30,000Monitoring of the project activities against the GEF tracking tool and providing inputs to the terminal evaluation.

Local Evaluator 1,000 20 20,000 Support the evaluation of the project at mid-term and at the project end.

Total 550,000

International Consultants – GEF grant

Position / title $ / person week

Estimated person weeks Total ($) Tasks

Policy 2500 50 125,000 Lead the development of the roadmaps for the 3 sectors

Standards 2500 50 125,000the development and adoption of the required quality standards based on international standards

SO 2500 50 125,000 Provide support to the design of SO demo GEF5 CEO Endorsement Template-February 2013.doc

71

Practitioners

projects and provide training on SO (steam, pumping, motor/fan, compressed air, industrial processes); Monitor, report and organise training and guidance to the local stakeholders on SO; capture lessons learned and best practices for dissemination; Organise and conduct workshops on SO including for suppliers

Solar thermal experts 2500 50 125,000

Develop training material for various target groups and the delivery of the training. In addition provide technical support to assisted enterprises as required.

Conformity assessment expert

2500 50 125,000Develop testing protocols, quality procedures and the related manual according to international best practices

Finance 2500 50 125,000Advise on development of the revolving fund; develop and deliver training on financing to the banking sector

Evaluator 2500 20 50,000 Evaluation of the project at mid-term and at the project end.

Total 800,000


Annex G – Egypt Energy Data

Table (5): Egypt – Balances for 2011 (IEA, 2012)

Coal and peat

Crude oil

Oil Products

Natural Gas

Nuclear

Hydro

Geothermal, solar, etc..

Biofuels and waste

Electricity

Heat

Total*

Production 0 35421 0 49890 0 1112 168 1617 0 0 88209

Imports 1454

2160 9089 0 0 0 0 1 1 0 12704

Exports -415 -9048 -5061 -7571 0 0 0 -24 -139 0 22258

International marine bunkers**

0 0 -378 0 0 0 0 0 0 0 -378

International aviation bunkers**

0 0 -821 0 0 0 0 0 0 0 -821

Stock changes

0 0 193 0 0 0 0 0 0 0 193

TPES 1039

285333

3021 42319 0 112 168 1594 -138 0 77649

Transfers 0 -1499 1666 0 0 0 0 0 0 0 168

Statistical differences

0 0 0 0 0 0 0 0 0 0 0

Electricity plants

0 0 -4447 -24545 0 -1112 -168 0 13466 0 16807

CHP plants 0 0 0 0 0 0 0 0 0 0 0

Heat Plants 0 0 0 0 0 0 0 0 0 0 0

Gas works -11 0 0 0 0 0 0 0 0 0 -11

Oil Refineries

0 -27035 26491 0 0 0 0 0 0 0 -544

Coal transformation

-558 0 0 0 0 0 0 0 0 0 -558


Liquefaction plants

0 0 0 0 0 0 0 0 0 0

Other transformation

0 0 0 0 0 0 0 0 0 0

Energy industry own use

0 0 -843 -5079 0 0 0 0 -379 0 -6300

Losses 0 0 0 0 0 0 0 0 -1428 0 -1428

Total final consumption

470 25888 12696 11521 52169

* Totals may not add up due to rounding** International marine and aviation bunkers are included in transport for world totals

Table (6) – Egypt CO2 emission trends 1990-2011 (IEA, 2011)

1990 1995 2000 2005 2011

Population (million) 56.84 62.06 67.65 74.2 82.54

GDP (2000 $ billion using PPP) 184.02 217.47 280.15 333.22 457.79

TPES (Mtoe) 32.33 35.27 40.66 62.74 77.65

CO2 emissions per capita (Mg) 1.38 1.34 1.50 2.43 2.28

CO2 emissions per GDP unit (kg per 1000 $ using PPP) 0.43 0.38 0.36 0.46 0.41

Table (7) – Egypt Energy Consumption by Sector, 2011 (IEA, 2012)

Coal and peat

Crude oil

Oil Products

Natural Gas

Nuclear

Hydro

Geothermal, solar, etc..

Biofuels and waste

Electricity

Heat

Total*

Industry 460 0 4190 6258 0 0 0 813 3620 0 15342

Transport 0 0 13115 386 0 0 0 0 0 0 13501

Other 10 0 7245 884 0 0 0 780 7901 0 16820

Residential 10 0 4968 884 0 0 0 780 4873 0 11515

Commercial and public

0 0 0 0 0 0 0 0 1466 0 1466


Services

Agriculture and forestry

0 0 2278 0 0 0 0 0 451 0 2728

Fishing 0 0 0 0 0 0 0 0 0 0 0

Non-specified

0 0 0 0 0 0 0 0 1111 0 1111

Non-energy use

0 0 1339 5167 0 0 0 0 0 0 6506

-of which petrochemical feedstock

0 0 0 5167 0 0 0 0 0 0 5167

* Totals may not add up due to rounding


Annex H– Project 5 year timetable

Outcome Output ActivityYear 1 Year 2 Year 3 Year 4 Year 5

Q1 Q2

Q3 Q4 Q1 Q2 Q3

Q4 Q1 Q2 Q3 Q4 Q1

Q2 Q3 Q4 Q1 Q2

Q3 Q4

Outcome 1.1:Policy instruments promoting the use of solar energy for industrial process heat 1. 1.1 A roadmap and

implementation plan for dissemination of solar energy for industrial heat in the 3 selected sectors formulated

1.1. 1.1 Perform a detailed assessment of the potential for EE improvements and introduction of solar energy in the three selected sectors1.1. 1.2 Develop the roadmaps and implementation plan1.1. 1.3 Conduct stakeholder consultations to ensure public acceptance of the suggested roadmaps & plans

1. 1.2 Instruments to control the quality of solar components, companies and personnel performing installation and maintenance of solar energy systems

1. 1.2.1 Develop standards for minimum required quality of solar components1. 1.2.2 Develop a framework for the certification of personnel working in the installation and maintenance of solar energy systems1. 1.2.3 Define lists of approved solar collectors and other component manufacturers and lists of approved installers

Outcome 2.1:Solar thermal technologies for industrial heat in selected sectors deployed

2. 1.1 Revolving Fund to facilitate financing of solar thermal technologies is set up

2. 1.1.1 Set-up a revolving fund to finance investment projects2. 1.1.2 Train staff of local banks on identification, development and evaluation of demonstration projects2. 1.1.3 Establish links with banks offering RE loans.

2. 1.2 Solar thermal technologies installed in selected facilities

2. 1.2.1. Select companies where pilot projects will be


implemented2. 1.2.2 Prepare feasibility studies for 100 pilot projects2. 1.2.3 Sign loan agreements with 100 enterprises2. 1.2.4 Procure and install solar thermal equipment for 100 pilots2. 1.2.5 Monitor, verify and report the performance of the installed systems

2. 1.3.Technical capacity of staff of local banks on the assessment of projects enhanced

2. 1.3.1. Organize 5 introductory workshops for 150 bank staff2. 1.3.2. Organize 3 expert training workshops for 60 bank staff2. 1.3.3. Provide personal coaching for 20 bank staff

2. 1.4 Awareness campaign on solar thermal technologies for industrial process heat implemented

2. 1.4.1 Organize 20 workshops over the project lifetime2. 1.4.2 Develop and distribute leaflets2. 1.4.3 Prepare and disseminate press releases via various media sources2. 1.4.4 Document and disseminate good practice case studies of demonstration projects implemented through the project2. 1.4.5 Organize technical tours to installed sites

Outcome 3.1:

Improve the manufacture, supply and distribution of solar energy components and systems

3. 1.1. Laboratory facility for testing quality of the locally manufacturers and imported products accredited

3.1.1.1. Perform an assessment and mapping of the existing and planned laboratory facilities and capacities in the country. Provide advisory support and agree on the scope of the tests to be accredited3.1.12. Develop the quality management


system of the target laboratory following international accreditation standards for the target tests3.1.1.3. Develop the related testing procedures, sampling techniques, verification and validation protocols needed for the target scope3.1.1.4. Conduct at least one cycle of inter-laboratory comparison and proficiency testing scheme as part of the accreditation process3.1. 1.5. Apply and go through accreditation process

3.1.2. Capacity of the testing laboratory staff on testing protocols and procedures developed.

3.1.2.1. Develop training material on testing protocols and procedures for quality testing of products and components3.1.2.2. Organize an expert group meeting with experts from various centers of excellence to share and exchange knowledge & lessons learned on quality testing of solar components and products

3.1.2.3 Train 20 experts from NREA and EOS

3.1.2.4 Conduct on the job coaching and monitoring of the staff practices

3.1.3. Basic tools and training required for improving the quality of locally manufactured

3.1.3.1. Select 40 companies to be assisted in upgrading their practices to ensure quality manufacturing of


components provided

components

3.1.3.2. Identify and procure tools and sets of equipment required to ensure better quality manufacturing of components3.1.3.3. Develop a manual on best practices in the manufacture of solar energy components and systems3.1.3.4 Train 40 companies on the use of the tools and equipment and the improvements required for their components/products3.1.3.5. Create linkages between the supply and demand side to stimulate the market3.1.3.6. Technical assistance for start-ups and solar energy entrepreneurs

3.1.4. Training programme on best practices of solar energy components and systems conducted d systems conducted

3.1.4.1.Prepare a manual on best practices in the manufacture of solar energy components and systems3.1.4.2. Identify 100 companies to receive the training3.1.4.3. Organize workshops to train at least 200 technicians from selected companies

3.1.5. A platform to enhance information exchange, cooperation and partnerships between local industries, international centers of excellence and technology suppliers created

3.1.5.1 Design the framework of the platform: Partners, scope, objectives, means for attracting investments in the sector, etc.3.1.5.2 Launch and operate the platform3.1.5.3 Monitor the results of the platform and feed-in opportunities for improvement

Outcome 4.1: 4. 1.1. Training 4. 1.1.1 Adapt the UNIDO SO library for


Build the capacity of technical staff designing, developing and servicing solar systems

programme on energy savings based on process heat optimization for experts, facility managers and service providers is conducted

process heat to the selected sectors4. 1.1.2 Measurement equipment available for SO implementation and verification4. 1.1.3 Awareness program for SO expert training4. 1.1.4 Training of 20 SO experts delivered over 18 months4. 1.1.5 Ongoing support to national trainees for duration of project4. 1.1.6 (1/2) day course delivered to 50 vendor companies4. 1.1.7 (2) day user training delivered to 100 engineers working in selected industrial sectors

4. 1.2. Training programme on system design for experts, facility managers and service providers is conducted

4. 1.2.1 Develop training material on the design for solar thermal systems for industrial purposes4. 1.2.2 Training of 20 experts delivered over 12 months4. 1.2.3 Ongoing support to national trainees for duration of project4. 1.2.4 (1/2) day course delivered to 50 vendor companies4. 1.2.5 Integrate the training into ongoing curricula of the vocational training schools and relevant universities

4. 1.3. Training programme on solar thermal equipment installation and servicing for technicians, installers and service providers established.

4. 1.3.1 Develop training material on the design for solar thermal systems for industrial purposes4. 1.3.2 Training of 200 technicians4. 1.3.3 Integrate the training into ongoing curricula of the vocational training schools


4. 1.4. Training programme on business development for solar energy businesses developed

4. 1.4.1 Develop training material on business development and entrepreneurship for the solar energy businesses4. 1.4.2 Training of 100 small enterprises4. 1.4.3 Integrate the training into ongoing curricula of the vocational training schools


Annex I– Analysis of Potential Financing Packages by Financial Institutions

The following is an analysis of the potential financing mechanisms that may be offered by two types of financial institutions, namely commercial banks and the credit guarantee companies.

The evaluation is based on the availability of a fund amounting to USD 1.83 million that will be used as a trust or revolving fund by the fund manager to trigger the investment of industrial facilities in solar thermal technologies. The evaluation shows the difference between the two potential mechanisms using the various elements that will influence the firm’s decision to seek financing.

Financing Element Credit Guarantee Bank

1. Type of fund Trust Fund Revolving Fund

2. Loans extended by Banks Bank

3. Customer own equity Negotiation with customer Could be 10% or more

4. Interest Commercial (13 – 14%) Incentivized (6.5 – 8.5%)

5. Administration costs for customer 2% (guarantee premium) -

6. Investment of fund Avg. 1% 2 – 3%

7. No. of loans during project 100 100

8. Loan guarantee Up to 75% of loan 100% of loan

The credit guarantee mechanism proved really well in cases requiring small scale investments and entailing a higher risk, such as the energy efficient lighting. In the present case, the investment cost is higher and using the credit guarantee mechanism would add to the interest rate to be paid by the companies therefore the revolving fund was selected.

During the PPG phase, two of the leading banks on environmental financing were approached regarding the operation of the fund, namely the National Bank of Egypt and the Commercial International Bank (CIB). CIB will cooperate by extending loans at commercial rates to the project beneficiaries, whereas NBE will act as the fund manager and extend loans at a incentivized rate to the beneficiaries.


About the National Bank of Egypt

NBE is the largest Egyptian bank, with a 27% share of the market for deposits and 21% of the loans market.

It is the leading Egyptian bank in development/ environment financing. It is managing the largest environmental fund of EPAP II which amounts to a total of 160 million USD funded by the World Bank, EIB, AFD and JICA.

In addition, NBE has managed other development related mechanisms of which the UNIDO/EEAA chillers replacement fund is one. NBE is co-financing for the replacement of 20 CFC based chillers operating at commercial, industrial and Governmental sites in Egypt.

NBE's network of branches around the country (338 branches and offices) and its correspondent banks will ensure a greater outreach of the project.

Standard and Poor's rating:

S&P upgraded long-term credit rating on National Bank of Egypt (NBE), BanqueMisr (BM) and Commercial International Bank (CIB) to B- from CCC+. At the same time, it affirmed the short-term credit rating on NBE, BM and CIB at C.

The ratings actions follow the upgrade of Egypt’s long and short-term foreign and local currency sovereign credit rating to B- from CCC+ on Friday, July 11, 2014.


Annex J– Co-financing letters

List of co-financing letters


request for ceo endorsement · web viewthe main change introduced to the project is a change in...

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