Loans For Rooftop Solar Are Heating Up In Egypt

Two Egyptian banks are moving into green lending with an initiative to finance rooftop solar power systems for residential consumers. National Bank of Egypt and Banque Misr are offering loans within specific areas of Cairo, with plans to expand into Egypt's other governorates. How will that work in a mostly Muslim country, where interest payments are forbidden by Islamic law?

Energy Committee Head Magid Eldeen Almanzlaoy said the loans are a product of a tripartite contract between private banks, state-owned electricity companies and the Egyptian Businessmen's Association (EBA). Interest rates will range from 4% to 8%, depending on the size of the systems installed.

The program emerged in part due to an EBA study assessing the feasibility of rooftop solar energy generation in Egypt. With an incessantly sunny climate and some of the world's highest insolation levels, Egypt is a solar-power-generating Nirvana. The country - which is the most populous Arab nation - is rolling out an ambitious renewable energy program for meeting surging domestic energy demand while curbing reliance on fossil fuel imports. Egypt aspires to obtain 20% of its energy from renewables by 2020.

Egypt subsidizes domestic energy and has committed to continuing to do so for at least another five years. Encouraging domestic production of home energy is a practical approach to wean the nation off increasingly expensive gas-dependent electricity. Rooftop solar units for energy and water heating are mature and affordable; the obstacles to the scheme lie beyond economics and technology.

Citizen participants who repay their loans will be able to sell excess electricity produced from their solar units back to the national grid. Simple enough, and a standard feature of most programs that encourage distributed energy production. But most Egyptians have never paid interest on a loan before.

Aisha Abdelhamid, a writer with blog CleanTechnica, voiced healthy cynicism that the scheme will succeed. She wrote that 'interest' is "just another form of 'rashwah' in just about any intelligent Egyptian's opinion." She explained, "'Rashwah' is the Arabic word for Egypt's corrupt system of paying for favors for common, everyday services like getting the light bulb changed on the state-owned electric pole on a street corner."

And how does this jibe with a longstanding culture of civilian distrust of government? It doesn't deter Almanzlaoy's optimism that the plan will succeed. "The initiative will be implemented during the first quarter of the current year, particularly as the legislative structure of the new tariff for renewable energy put Egypt on the map of countries producing electricity from renewable sources," he said.

Back to Ms. Abdelhamid who writes, "'Legislative'? 'Structure'? We don't even have a Parliament right now!"

Egypt's plans for residential solar power generation are definitely heating up.