EBRD, IFC help channel funds into giant Benban solar
park
So far, 27 solar projects have reached financial close
Egypt’s fledgling solar industry
attracted $1.8 billion of investment, largely from the European Bank of
Reconstruction and Development and the World Bank’s International Finance Corp
The EBRD is backing 16 photovoltaic
projects, and the IFC is financing 13 in the sunny North African nation with a
combined capacity of 1.4 gigawatts. They are writing loans for $380 million and
$203 million, respectively, and have mobilized the rest from co-investors.
“These are the first private
renewable energy projects in Egypt, and it’s not an easy macroeconomic or
geopolitical situation,” Harry Boyd-Carpenter, head of power and energy
utilities at the London-based development bank, said in a phone interview. “Yet
because it’s got the right regulatory framework in place, Egypt has been able
to attract all of these different investors and should comfortably get more
than a gigawatt of capacity financed this year”
Egypt is targeting to generate 20
percent of its electricity from clean sources by 2022. It currently gets more
than 90 percent of its power from oil and gas, according to data from Bloomberg
New Energy Finance
The solar projects that got funding
are being developed in the Benban solar park in Egypt’s Aswan province in the
southeast. The site is expected to have a capacity of 1.8 gigawatts and cost
$2.8 billion by the time it’s complete in the first half of 2019
They are being built by
international developers such as Scatec Solar ASA of Norway, Saudi Arabia-based
ACWA Power and Al Fanar Co., French firms EDF Energies
Nouvelles SA and Eren Renewable
Energy SA and Access Power MEA in Dubai.
The loans are part of a program
that the EBRD began in 2015 to invest as much as $500 million in solar in Egypt. The
plan was delayed due to the devaluation of the Egyptian pound and the fact that
the government initially didn’t allow international arbitration for renewable
energy contracts. A $12 billion aid package from the International
Monetary Fundlast November alleviated some of those concerns
The EBRD is co-investing with
Proparco, the Islamic Development Bank and the Green
Climate Fund, according to Boyd-Carpenter. The IFC is working with the African
Development Bank, Finnfund, China’s Asian
Infrastructure Investment Bank, among others, spokeswoman Riham
Mustafa said by email. The Washington-based bank has lined up loan deals for
all of its projects except two, which is expects to sign this week, she said.
“Local Egyptian banks have problems
financing these projects because the tariff is paid in Egyptian pounds but the
debt is raised in dollars so that creates issues for that,” Boyd-Carpenter
said, referring to the volatility of the local currency
Egypt currently has a feed-in
tariff program, locking in long-term prices for the electricity generated by
the solar projects. Authorities are likely to switch to a competitive auction system next year,
according to the EBRD, which is advising the Ministry of Energy
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