Egypt has witnessed an acute electricity shortage since 2013, which caused an emerging use of renewable resources such as solar power. Yet, the first official permission to sell electricity generated from solar plants was brand new.
KarmSolar received the first licence to sell electricity from solar plants mid-December, in partnership with a company operating under Juhayna.
“We have always wanted to invest in power stations and sell electricity from it,” KarmSolar CEO Ahmed Zahran told Daily News Egypt.
Negotiations have been ongoing with the company for about two years and process of issuing the license took only six months. Zahran said that, surprisingly, the Ministry of Electricity handled the process cooperatively and avoided any type of bureaucracy.
Zahran described the licence as an important step for KarmSolar’s growth. The company leased a piece of land from the partner company where they installed solar plants and shared profit from electricity being sold to off-grid locations.
The company was founded in October 2011, not only for profit purpose but also with the main aim of providing electricity for residents who are living in off-grid locations with no access to electricity.
After many years of work experience in energy companies, the KarmSolar founders risked a career shift to set up their own business in 2011, the year following political uprising and lack of foreign investments. “Security unrest made us very determined to grow,” Zahran said.
Located in the middle of the Western Desert, near the Bahariya Oasis, the KarmSolar compound can be seen lit up in the night, using only solar energy. The compound where KarmSolar employees are based is built from earth materials – reducing 40% of conventional building costs – and is located right next to their solar plants field.
The reason behind choosing the Bahariya Oasis as their location, according to the KarmSolar team, was for the need for electricity in such a remote location and to cover unreachable areas by the government.
The KarmSolar team started with four people and has now reached an average of 30 people dedicated to creating a sustainable community of solar power using their own business model and not relying on any grants. Unlike other energy corporations, the multi-disciplinary team develops solar plants in Egypt and does not outsource people for operation.
KarmSolar won several international awards, including the Wharton award in Pennsylvania in 2012 as the best business idea for the Arab region. The company was also the finalist in a competition organised by Google. The co-founders went to Silicon Valley mid-2014.
Egypt has a natural advantage due to its location on the solar belt, at which the intensity of sun rays is 440 Watt/sqm, compared to the worldwide average of 270 Watt/sqm. However, a World Bank study in 2015 stated 90% of the country’s power is generated from fossil fuels, whilst only 8% of electricity is generated from hydro-power.
Amid environmental concerns in April, then prime minister Ibrahim Mehleb officially outlined the import of coal and regulations as an alternative for energy to offset the natural gas shortage. The decision was an attempt to resolve the power shortage and revamp the industrial sector in general. However, many industrial facilities had already started using coal under then-former minister Hisham Kandil’s government in early 2013.
Solar power domination in Egypt’s energy sector remains an uphill battle for KarmSolar. “The team struggled a lot whilst building this place; people slept in tents, others in the oasis 30 km away, but we always thought of the impact 15 years ahead; to make this start up as big as multinationals,” Zahran said.