The European Bank for Reconstruction and Development (EBRD) is earmarking up to US$500 million for 2016 to support Egypt’s new solar energy programme, the bank announced Monday.
Egypt aims to construct up to 2,000 MW of utility-scale solar generating capacity as part of an ambitious target to secure 20 per cent of electricity from renewable sources.
“That 2,000 MW capacity is expected to be delivered through around 40 projects of approximately 50 MW each as part of a strategy to increase renewable power generation in Egypt by mobilising private sector investors.” EBRD said in a Monday statement.
“Many of these projects will be located on a planned 1.8 GW site near Benban in Upper Egypt, which on completion will be the largest solar park in the world.”
The EBRD said it expects to finance several such plants up to US$500 million and to mobilise up to US$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 US$4 billion.
“Egypt currently relies to a large extent on traditional power generation fuelled by costly hydrocarbon imports, however the government has an ambitious strategy to obtain 20 per cent of the country’s electricity from renewable sources by 2020. Egypt is well placed to do so as it has world-class solar resources and in some places, especially in the Gulf of Suez, great potential for wind power,” says Philip ter Woort, EBRD Country Director for Egypt.
The solar projects, which will be constructed entirely by private firms, have been made possible by recent reforms. The EBRD has worked closely with the Egyptian authorities to provide technical cooperation during the development of the legal and regulatory framework for renewable energy, specifically on issues such as contractual agreements, the solar grid code and environmental and social due diligence.
“Successfully implementing the feed-in tariff programme will unlock Egypt’s potential by providing a regulatory framework that can attract private capital. This initial programme is significant in itself. But the really exciting element is that once the country has an established model for private investment in renewables, there will be huge potential for widespread, rapid deployment, thanks to Egypt’s fantastic resources and the falling cost of renewable generation,” comments Nandita Parshad, EBRD Director for Power and Energy.
The EBRD now invests more in renewable energy than in traditional power generation and is the largest renewables investor in its region. The announcement of the US$ 500 million financing envelope for Egyptian solar generation comes shortly after the EBRD approved a US$ 250 million credit facility for private sector renewable energy projects in Egypt, Morocco, Jordan and Tunisia. When these two programmes have been implemented, the total EBRD investment in renewables throughout all its countries will top US$ 5 billion.
Ahead of the climate talks in Paris, the Bank adopted a target to double its sustainable energy and resource financing, to 40 per cent of its annual volume by 2020 billion.
