The Egyptian Electricity Market: Designing a Prudent Peak Load Pricing Model

Electricity prices in Egypt have been set significantly lower than the real economic cost of its production and supply. These subsidies encourage the waste of energy and increase the fluctuation in demand, triggering a huge need of additional power generation capacity in Egypt. This dialectical paper addresses this problem by first theoretically analyzing the Egyptian electricity market and then discussing a possible peak load pricing system. According to the results, especially low income households will shift their demand from the peak period to the off peak period. A properly implemented peak load pricing system could reduce the need for power capacity expansion by significant 2000-3000 MW, accompanied by additional savings in the network transmission capacity.