EBRD Commits US$500 Million Support for Egypt’s Solar Target

The European Bank for Reconstruction and Development has earmarked up to US$500 million for 2016 to support Egypt’s new solar energy programme, which aims to construct up to 2,000 megawatts of utility-scale solar generating capacity as part of an ambitious target to secure 20% of electricity from renewable sources.

The 2,000MW capacity is expected to be delivered through around 40 projects of approximately 50MW each as part of a strategy to increase renewable power generation in Egypt by mobilising private sector investors. Many of these projects will be located on a planned 1.8-gigawatt site near Benban in Upper Egypt, which on completion will be the largest solar park in the world.

The EBRD 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,” saidPhilip 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,” said Nandita Parshad, EBRD Director for Power and Energy.

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