Saudi power developer ACWA Power has secured a US$114 million financing package for the construction of the largest private solar power plant in Egypt. The 200MW Kom Ombo plant will be located less than 20 kilometres from Africa’s biggest solar park, the 1,800MW Benban complex. The projects are around 600 kilometres south of Cairo.
The financing package comprises a US$36 million loan from the European Bank for Reconstruction and Development (EBRD), US$18 million from the OPEC Fund for International Development, US$17.8 million from the African Development Bank (AfDB), US$23.8 million from the Green Climate Fund (GCF), and US$18 million from Arab Bank. This is in addition to equity bridge loans of US$14 million from EBRD and US$33.5 million from Arab Petroleum Investments Corporation (APICORP).
ACWA Power orginally selected Mahindra Susten, a subsidiary of the Mahindra Group, as the engineering, procurement and construction (EPC) contractor for the project, but the company had to pull out because of difficulties related to the Covid-19 pandemic.
It subsequently awarded the US$127.5 million contract to another Mumbai-based company, Sterling & Wilson Solar. The two have already worked together on the Noor Midelt solar power project in Morocco, which involves two-sided solar panels that can capture the sun’s rays on both sides of the module.
ACWA Power submitted the lowest tariff in what was the first solar photovoltaic (PV) tender in Egypt. In addition to increasing the share of renewable energy in Egypt’s energy mix, the project is also promoting private-sector participation in the country's power sector.
“We are very happy to team up again with ACWA Power in Egypt, after our successful partnership in Benban, to promote renewable energy in Egypt. Increasing the production of clean energy is an important step to reducing carbon emissions and addressing climate change," says EBRD president Odile Renaud Basso. "This is in line with the EBRD’s strategy to become a majority green bank by 2025. This project also marks the EBRD’s first co-financing project with the AfDB and the OPEC Fund in Egypt, and we look forward to future joint investment opportunities for our institutions across Africa.”
Arab Bank chief executive officer Nemeh Sabbagh adds: “We are proud to capitalize on our long experience in this sector and partner again with EBRD to provide debt financing and related banking services to another renewable energy project in Egypt for our client ACWA. Green financing is one of our strategic focus areas and Egypt is a core market for Arab Bank Group."
The Kom Ombo plant will contribute to the Egyptian government’s target to generate 42% of the country’s electricity from renewable energy sources by 2035.
ACWA Power has signed a 25-year power purchase agreement with the Egyptian Electricity Transmission Company (EETC). Private-sector participation in the Kom Ombo project is the result of a policy dialogue with the Ministry of Electricity and Renewable Energy and the EETC, as well as a US$3.6 million technical assistance programme, co-funded by the EBRD and the GCF, to support the EETC in administering competitive renewable energy tenders. The project has also benefited from broader energy-sector reforms supported by the AfDB in recent years to scale up the involvement of the private sector.