Saudi Arabian energy company Acwa Power said on Tuesday that it will develop three solar power projects in Egypt at cost of US$190 million, with multi-lateral banks chipping in as the North African country continues to attract investments into its energy sector.
Acwa with its Egyptian partners Tawakol and Hassan Allam Holding will build the solar photovoltaic plants totalling 165.5 megawatts in the Benban area in Aswan as part of the government's second round of the feed-in tariff (FIT) programme. Half of the $190m investment will come from the European Bank for Reconstruction and Development (ERBD) and the remainder from the International and Commercial Bank of China (ICBC) and the Multilateral Investment Guarantee Agency (Miga).
Financial close is expected by the end of next month with around 80,000 homes will be powered by solar energy next year.
ACWA Power awarded three #Solar PV projects under Round 2 of #Egypt FiT program II https://t.co/5UKX1sBbZY pic.twitter.com/wnBhsJgUfb
— ACWA Power-Accelerating Energy Transition Globally (@ACWAPower) August 8, 2017
Other developers that have signed in the second round include Dubai-based Access Power, Norway’s Scatec, Alfanar of Saudi Arabia, Sharpoorj Paloonji of India and France’s EDF. Others that are expected to sign include Dubai firms, Alcazar and Desert Technologies; Egyptian companies, El Sewedy and Infinity as well as Jordanian company, Enara, with Spanish partner Acciona.
This is the first investment from Acwa Power in Egypt, though the company has been present inside the country since 2009."The first bid in Egypt was the Dairut power plant, but we have not signed the power purchase agreement though we look forward to it," Acwa chief executive Paddy Padmanathan told The National.
He said that Acwa Power is also keen on Egypt's wind sector to build a "meaningful portfolio of power generation assets" in Egypt. "We believe Egypt will end up procuring significant amounts of renewable energy in due course given the quality of the resources in the country and the price levels that are now being achieved in the industry," Mr Padmanathan said.
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The North African country has long held ambitions of diversifying its power generation mix, but the 20 per cent of renewables by 2020 was pushed back to 2022. This includes 2,000 megawatts of solar and wind energy each, with the government implementing a feed-in tariff (FIT) programme to entice investors.
The FIT’s first round had major problems that hindered participation such as a 15 per cent of the payment converted at a fixed rate of 7.15 Egyptian pounds to the dollar while the remaining 85 per cent would be paid at the prevailing market rate.
The government has tweaked this for the second round solar photovoltaic projects with 30 per cent of payments made at 8.88 pounds to the dollar and 70 per cent at the market rate on the due date.
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But many international companies have lost their appetite for the country's renewables sector leaving the door open to regional and local players with Acwa Power kicking off the projects. The awarding of contracts comes on the heels of the IFC committing an investment of $635m to help build and operate up to 11 solar power plants in Egypt, marking one of the largest private foreign direct investments in the country's power sector.
“This landmark investment demonstrates that when you have the right reform policies, and a government willing to allow greater involvement by the private sector, you can attract investors in every sector, including infrastructure,” said IFC Mena director, Mouayed Makhlouf. “Investments like these are the nucleus for economic growth, which is needed in Egypt.”
The IFC investment in addition to other development institutions are expected to funnel $2 billion into Egypt’s solar sector.
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