Multiplier effects on socioeconomic development from investment in renewable energy projects in Egypt: Desertec versus energy for local consumption scenarios

Abstract

Egypt is considering initiatives to deploy renewable energies, such as solar and wind; these would be financed through national and international public funds and private investment. Direct and induced impacts of investments could be significant drivers of socioeconomic development in Egypt, which currently has high level of poverty and unemployment plus volatile economic growth due to recent political upheaval. The initiatives would have two goals: i) export of electricity from renewable sources to Europe; and ii) generation of electricity to satisfy Egypt's growing energy needs. We thus posed two research questions: i) what are possible effects of investment in concentrating solar power (CSP), at a scale that would attract national and international policy incentives; and ii) what are effects of investment in CSP compared with the effects of a) the business-as-usual scenario, b) the DESERTEC investment plan, which foresees a large share of electricity being exported to Europe, and c) the national energy targets, under which CSP will be deployed to satisfy local energy demand. Our method is Social Accounting Matrix (SAM) of Egypt and the Leontief Input-Output model. Our results show that even though impacts from investments foreseen by the DESERTEC scenario will be highest in terms of GDP, output will be higher in the case of the scenario aiming to secure local demand of electricity from CSP. However, under this scenario, the income multiplier impacts will be the lowest, compared with the DESERTEC and business-as-usual scenarios.