Consortium of Development Banks to Provide $479.1m in Financing for Egypt's Largest Solar and Battery Project

The consortium of development banks, including British International Investment (BII), the African Development Bank (AfDB) and the European Bank for Reconstruction and Development (EBRD), is paving the way for Egypt's sustainable energy future with a $479.1m financing package for a 1.1 gigawatt (GW) solar power plant integrated with a 200 megawatt-hour (MWh) battery storage system. This landmark project, developed by Norwegian renewable energy developer Scatec ASA, will enhance grid stability, manage peak electricity demand, and support Egypt's goal to have renewables constitute 42% of its power mix by 2030. The facility will be built in two phases, with the first phase scheduled to begin operations in the first half of 2026, generating around 3,000 GWh of clean energy annually and avoiding up to 1.4 million metric tonnes of carbon dioxide emissions per year.

Key Takeaways:

• The project is expected to reduce the country's reliance on expensive fossil fuels, addressing the growing demand for electricity, and supporting Egypt's goal to increase renewable energy share in the power mix.
• The financing package combines loans, concessional funding, and grants from the three development finance institutions, with the AfDB contributing $184.1m, the EBRD providing up to $173.5m, and BII contributing a concessional loan of $100m and a returnable grant of $15m.
• The project is expected to create economic benefits, including job creation and economic growth, at the heart of communities through the sale of clean energy to local businesses under a 25-year power purchase agreement with the Egyptian Electricity Transmission Company.
• The African Development Bank's (AfDB) Director of Energy Financial Solutions, Policy and Regulations, Wale Shonibare, highlighted the project's potential for replication and demonstration across the African continent.
• The European Bank for Reconstruction and Development's (EBRD) Managing Director for Sustainable Infrastructure, Harry Boyd-Carpenter, stated that the project takes Egypt's green energy transition to the next level, combining solar and battery storage to provide continuous clean energy.
• Scatec CEO, Terje Pilskog, emphasized the importance of the project in supporting Egypt's clean energy ambitions and showcased the company's ability to deliver large-scale hybrid projects.
• The European Union (EU) launched the EU-Egypt Investment Guarantee for Development Mechanism, a strategic platform designed to fast-track investment projects in Egypt, with this project serving as a concrete example of collaboration between the EU and the EBRD for supporting the country's green transition.

Statistics:

• The project has a total estimated capital expenditure of $590m, with the blended financing package covering approximately 80% of the cost.
• The facility will generate around 3,000 GWh of clean energy annually.
• The project is expected to avoid up to 1.4 million metric tonnes of carbon dioxide emissions per year.
• The financing package includes a mix of loans, concessional funding, and grants from the three development finance institutions.
• The AfDB's financing package totals $184.1m, including $125.5m of ordinary resources, $20m in concessional funding from the Sustainable Energy Fund for Africa, and $18.6m from the Canada-African Development Bank Climate Fund.
• The EBRD's financing package totals up to $173.5m, supported by a European Fund for Sustainable Development (EFSD+) first-loss cover guarantee for the initial 18 years.
• BII's contribution includes a $100m concessional loan and a $15m returnable grant.

Sources:

• British International Investment (BII)
• African Development Bank (AfDB)
• European Bank for Reconstruction and Development (EBRD)
• Scatec ASA
• Dailynewsegypt
• European Union (EU)