AfDB approves $55 million loan for three solar projects in Egypt
African Development Bank (AfDB) Group has approved three senior loans for a total amount of $55 million to finance three solar PV Projects under the second Round of the Feed-in-Tariff (FiT) Program in Egypt.
Alcazar Energy Egypt Solar 1 (Alcazar I), Delta for Renewable Energy (Delta) and Shapoorji Pallonji Energy Egypt (SP), are the three Independent Power Producers benefiting from the loans for a tenor of eighteen years. Alcazar I and Delta will be extended a loan of US$ 18 million each.
The US$ 19 million loan to SPEE also includes a US$7-million concessional financing from the Global Environment Fund (GEF).
The GEF financing is mobilized within the framework of the "AfDB-PPP Public-Private Partnership Program," which was approved by the GEF for implementation by the AfDB to promote the scaling up of renewable energy technologies and contribute to the delivery of universal power supply in Africa.
The Project is aligned with the GEF6 climate change mitigation focal area – promote innovation, technology transfer, and supportive policies and strategies. It is estimated that the GEF investment will enable the reduction of 61,000 tons of CO2 per year.
Egypt has one of the best solar resources in the world, with daily sunshine averaging 9-11 hours, low humidity, and global horizontal irradiation of around 2230-2330 kilowatt-hour (“kWh”)/m2 per year. In order to meet the increasing energy demand, diversify the energy mix, and improve the environmental and climate footprint of the power sector, Egypt has developed an overarching regulatory framework for the development of renewable energy capacity with the aim of securing 20% of its energy generation from renewable sources by 2022. In September 2014, Egypt launched a FiT Program for a total of 4,300MW including 2,300MW of solar PV.
Under the aegis of the New Deal on Energy and in line with its key High 5s on Power & Light Up Africa, the AfDB Board approved the financing of three projects with a total installed capacity of 150MW being developed by two sponsors, Alcazar Energy Partners (2x50MW) and Shapoorji Pallonji (50MW).
All three projects are located at the same site, on unoccupied desert land in Benban, 40 km north of Aswan. They will utilize a common grid connection funded jointly with other developers under a Cost Sharing Agreement with the Egyptian Electricity Transmission Company (EETC). With a financial close expected by 28 October 2017, the plants shall be operational by the end of 2018.
Commenting on the project, Vice President for Power, Energy, Climate Change and Green Growth Complex (PEVP) Amadou Hott said: “The three Projects will increase Egypt’s power generation capacity, diversify its energy mix, enable significant fuel savings and reduce carbon emissions to the tune of 4.8 million metric tons over the PPA’s 25-year term. Moreover, the generation capacity of the three new solar plants will be enough to serve about 100,000 households.”
By approving these 3 Projects on Monday, 4 September 2017, the AfDB supports the first large scale renewable energy program in the private sector sphere in Egypt. This is expected to have a strong positive demonstration effect, with the potential to build a domestic solar industry in the country.