Europe backs Egypt’s renewable energy projects
Beirut - Several major Egyptian renewable industry projects have received significant European financing. Egypt set very ambitious goals in September 2014 to renewable energy development, including the installation of 2,300 megawatts (MW) of solar photovoltaic energy by 2018 under the Feed-in-Tariff (FiT) programme.
This was in addition to a solar photovoltaic (PV) tender under the country’s build, own, operate scheme.
Egypt had 31.45 gigawatts (GW) of power capacity at end of 2014. Plans are under way to reduce dependency on natural gas by diversifying the power-fuel mix. Renewable energy is to account for 12 GW — 31% — of the capacity for which preliminary agreements have been linked.
EBRD lead financier of Benban solar energy farm
The European Bank for Reconstruction and Development (EBRD) has allocated up to $500 million for 2016 to finance Egypt’s solar energy programme, which aims to build 2 GW of utility-scale solar power generation capacity. The privately financed projects are estimated to cost around $4 billion and are part of a scheme to secure around 20% of the country’s power from renewable resources by 2020.
The plan is to be generated by approximately 40 projects, with approximately 50 MW each. It is part of a strategy to increase the country’s renewable capacity by “mobilising private sector investors”.
Many of the solar projects will be on a planned 1.8GW site near Benban province, 800 km south of Cairo, in Aswan Governorate. “The EBRD expects to finance several such plants up to $500 million and to mobilise up to $1.5 billion in debt and equity from other financiers for these ventures. The total project cost is expected to be in the region of $4 billion,” the bank said.
Solar projects to attract private capital
Egypt’s recent economic reforms provide for the development of privately financed solar plants. EBRD has agreed to work with Egyptian authorities to provide technical cooperation during the drawing up of the legal and regulatory framework for renewable energy.
The bank has advised on contractual terms of the solar-grid code and environmental and social due diligence. According to EBRD, “Successfully implementing the feed-in tariff programme will unlock Egypt’s potential by providing a regulatory framework that can attract private capital.”
By means of a 25-year Power Purchase Agreement (PPA), the plants will be connected to 220 kilovolt (kV) high-voltage lines linking Aswan to Cairo and satisfying the energy needs of 50,000 families. The project will create more than 1,000 jobs during construction and a further 70-80 long-term jobs during operation.
European and Egyptian specialised firms have expressed interest in building renewable energy capacity in Benban.
Construction by Egyptian and European companies
The Italian independent power producer (IPP) Building Energy signed, on June 29th, a Memorandum of Understanding (MoU) with Egypt’s New and Renewable Energy Authority (NREA) for two solar PV plants in Benban.
The $200 million PV project, consisting of two 50 MW PV plants, was awarded by the Ministry of Electricity and Renewable Energy through NERA. Each PV plant is expected to generate around 143 gigawatt hours (GWh) of solar power annually.
Construction is to start in summer 2016. Building Energy has teamed with a local Egyptian partner, SolarShams, a renewable energy system integrator and local project developer.
Egyptian cable producer Elsewedy Electric has started developing a 50 MW PV power plant at Benban on land allocated to the New and Renewable Energy Authority. The agreement is part of Egypt’s FiT programme for solar and wind energy projects.
Under the FiT scheme, the New and Renewable Energy Authority will grant usufruct to the project company where the energy generated from the project is sold to the Egyptian Electricity Transmission Company (EETC) for $0.1434 per kilowatt hour under a 25-year power purchase agreement generated by a Direct PPA Deed with Egypt’s Ministry of Finance.
Inauguration of Africa’s largest wind farm
Egypt’s New and Renewable Energy Authority (NERA) has also pursued development of wind energy. NERA inaugurated, in late 2015, a 200 MW wind farm at Gebel El Zeit on the Gulf of Suez, the largest of its kind in Africa.
It was financed by a $207 million loan provided by the German Development Bank to NERA. The Europe Investment Bank lent a further euro $54 million and the European Commission $32 million. The total cost of the project is approximately $367 million.
NERA has awarded a $237 million turnkey project for another Gebel El Zeit wind farm. The 220 MW project is to be built by Spain’s Gamesa for start up in the second half of 2017. The Egyptian Electricity Transmission Company has a preliminary deal with London-based joint venture Lekela Power for a 250 MW wind farm in the Gulf of Suez area.