Norwegian project developer Scatec Solar has signed a 25-year PPA for 400 MW of solar projects with the government of Egypt. The six projects, all of which are located in the Ben Ban area near Aswan in Upper Egypt, were selected by the country’s Ministry of Electricity and Renewable Energy in the 2 GW auction for large-scale solar projects held in 2015.
The projects’ aggregate investment is valued at $450 million, of which between $50 million and $70 million in equity will come from Scatec. The company is also partnering with unnamed local developers and with KLP Norfund Investments for further equity investments in the projects. Another $350 million is expected to be raised by a consortium of lenders led by the European Bank for Reconstruction and Development (EBRD). Scatec also stated that revenue from the projects over the 25-year contract period is estimated at $60 million.
In December 2015, the EBRD allocated $500 million in funding for Egypt‘s fledgling solar energy program, which is targeting the installation of 2 GW of PV capacity over the next few years. Scatec Solar launched its Egyptian solar activities in October 2015. At the time, the company said it was preparing the ground for the development of 250 MW of PV capacity under the Egyptian government‘s Renewable Energy program.
The 2 GW goal will be achieved via the development of 40 individual solar parks of around 50 MW each as Egypt aims to source 20% of its energy from renewables by 2020.
In September 2016, however, the Egyptian government announced an updated phase for its feed-in tariff (FIT) scheme, dramatically reducing the FIT rate for PV projects to US$8.4 cents and 7.8 cents/kWh. At the time, several developers said the new rates could bring into question the viability of several projects, although the new FIT level was more in line to what was seen in other regional markets.
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EBRD is raising 350 M€ finance for Norwegian SCATEC. Development Banks are taking country risks. Here it is Europe taking the Egyptian risk – which is fair for me and they exist therefore – but is Norway part of Europe ?