The African Development Bank’s (AfDB) board of directors approved on Wednesday a $27.2 million loan financing for the design, construction, and operation of a 200 MW photovoltaic solar power plant at Kom Ombo in Upper Egypt city of Aswan.
The project is expected to lower electricity costs for businesses and residences, as well as reducing greenhouse gas emissions and creating construction and other jobs, the AfDB said in a statement.
The total cost of the project is estimated at $156.4 million.
Besides AfDB’s financing, structured as a senior loan, other parties will contribute to the funding, namely the European Bank for Reconstruction and Development (EBRD), the Green Climate Fund (GCF), Arab Bank, and the OPEC Fund for International Development (OFID).
The plant, 800 km south of Cairo, is run by ACWA Power, a leading Saudi Arabian developer, investor and operator of power generation and desalinated-water plants worldwide.
“We are delighted to support this project that will deliver one of the lowest generation tariffs on the continent,” Kevin Kariuki, AfDB’s Vice President for, Power, Energy, Climate, and Green Growth, said in a statement.
Kariuki added: “the project supports Egypt’s energy transition and contributes towards the country’s achievement of its targeted 20 percent share of renewables by 2022.”
Egypt’s economy has continued to grow during the COVID-19 pandemic, and its electricity demands are increasing at an average annual rate of 7 percent, AfDB added.
By increasing Egypt’s installed power generation capacity from renewable sources, the plant is expected to reduce greenhouse gas emissions more than 7 million tCO2e equivalent over a 25-year period. During the construction phase, 800 jobs are set to be created.
Egypt’s electricity grid is linked to those of neighbours Libya and Sudan, and the plant has the potential to greatly contribute to energy trading and electricity access in the region, the AfDB said.
The project aligns with Egypt’s national Integrated Sustainable Energy Strategy and the AfDB’s New Deal on Energy for Africa, which aims to increase the share of renewable energy through innovative financing in Africa’s energy sector. The project also boosts the institution’s Light Up and Power Africa High-5 strategic priority.
The “newly approved transaction is a continuation of the Bank’s long-standing partnership with the Government of Egypt and its strong support for the country’s reform agenda.” Malinne Blomberg, AfDB’s Deputy Director General for North Africa, said.
In addition to advancing the country’s green development, “the Kom Ombo project is also contributing to the sustainability of a sector that is essential for Egypt’s competitiveness and industrial development. More immediately, the recovery from COVID-19 will benefit from an efficient and sustainable energy sector,” Blomberg added.
