With major solar development and deployment getting underway in the country, Egypt is ramping up to full-speed-ahead. The swell of international finance, development, and construction firms inundating the nation is riding on a high tide of good will and warm welcome. One such international firm enjoying the warm welcome is FAS Energy, the renewable energy arm of Saudi mega-conglomerate Fawaz Alhokair Group.
Successfully negotiating solar utility-scale PV projects at Egypt’s premier Economic Development Conference last March 13-15, FAS Energy is ramping up to full-speed-ahead, as well. With the FAS Energy solar development deals in place, Fawaz Alhokair Group plans to invest $3.5 billion to develop 2 GW of solar power capacity across the country.
Egypt’s Attractive Investment Atmosphere
Eng. Sabri Asfour, CEO of FAS Energy LLC, recently announced the signing of the MOU for 2 GW solar development projects with the Egyptian government, Egyptian Electricity Transmission Company (EETC), the Holding Company, and Egypt’s New and Renewable Energy Authority (NREA) at Egypt’s historic Economic Development Conference in Sharm al Sheikh.
“We believe that the investment atmosphere in Egypt now is very attractive and we believe that the leaders in Egypt are working very hard to improve this investment atmosphere,” said FAS Energy CEO Sabri Asfour.
Asfour announced that the benefits from the FAS Energy 2 GW solar projects will not only be solar electricity generation. He pointed out that additional benefits include job creation, building a new pv manufacturing facility, building R&D capacity, cutting the costs of fuel for electricity production, reducing carbon emissions, importing green technology, and localizing it in Egypt.
Ramping Up Egypt’s Renewable Energy Capacity
Although Egypt’s installed renewable energy capacity accounted for just 1% as of 2013, the country has an average solar radiation of between 2,000 and 3,000 kilowatt-hours per square meter. Additionally, Egypt has famously excellent wind conditions and high potential for hydropower generation.
Setting an ambitious goal to install 4.3 GW of wind and solar power by 2017, Egypt’s immediate solar development plans include 2 GW of wind, and 2 GW of large-scale solar projects, with an additional 300 MW of small-scale solar development projects under 500 kW. Feed-in tariff structures are in place, with installations between 500 kW and 20 MW at $0.136 per kilowatt-hour, and for plants between 20–50 MW, it is $0.143 per kilowatt-hour.
“The government has and continues to put solid policies to help make solar energy a true alternate large-scale source of Egypt’s energy mix, with 2.3 GW of power to be generated by solar photovoltaic energy in the next couple of years,” says Egypt-Solar Industry Association Executive Director Alan Elyousfi.
Solar Development Under the FiT
Along with Fawaz Alhokair Group subsidiary FAS Energy’s 2 GW deal, FAS Energy will also build a 50 MW PV plant under the country’s feed-in tariff (FiT) scheme. The firm has likewise signed a land accessibility deal with the EETC and the NREA for this project.
In its recently released report, Egypt’s Solar Energy Market: FiT Program and Beyond 2015, the Egypt-SIA notes that the country’s New and Renewable Energy Authority (NREA) selected 69 large-scale projects of more than 20 MW last year as part of an initial renewable energy tender for 2 GW of large-scale solar capacity.
Offering 36 ready parcels of land to qualified bidders for large-scale solar development projects, the NREA wants to incentivize investors and developers. The plots of land will be reserved for 20–25 years, and allocated to private company on a first come, first served basis.
According to Mohamed Nabil, senior associate of Cairo-based law firm Sharkawy & Sarhan, some sites have been selected by the NREA with specific capacities and were subdivided into smaller plots for each project. In an effort to assist investors and developers, the plots will be fully permitted, and all government approvals for solar development projects will be granted ahead. “Offering fully permitted land through allocations should save investors a lot of hassle,” Nabil pointed out.
Surveying Egypt’s FiT Solar Project Land Allocations
Two areas have been assigned for hosting all of the approved FiT projects, including Ben Ban and Zafaran. FAS Energy CEO Sabri Asfour noted that “Ben Ban enjoys some of the highest levels of solar radiation in Egypt, however the average temperatures in the region are quite moderate, enhancing the overall performance of PV technology.” Incorporating projects from 20–50 MW, the lands have been laid out by NREA into clusters of projects, each cluster sharing the same evacuation point or substation.
The second region is Zafarana. Six land parcels for solar development projects have been designated by Egypt’s NREA in Zafaran. Asfour pointed out that this region is widely known for the wind projects already in operation. “As in Ben Ban,” said Asfour, “the location is one of the best areas for setting PV plants because of excellent Solar radiation levels and moderate average temperatures.”
Following the Financiers into Egypt
Initially led by international financial institutions and multilateral development banks, project financing in Egypt is being put in place by firms such as the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), according to Marc Norman, a Dubai-based associate at international legal firm Chadbourne & Parke. Norman also noted that the IFC and EBRD are assisting the Egyptian government with drafting the power purchase agreement (PPA).
While the government’s FiT scheme is capped at 50 MW, Norman pointed out that developers can still participate in the wider solar market with larger projects. “If you do a project outside the FiT program, then you have the possibility of working on a much larger scale project because you won’t be constrained by the capacity cap,” said Norman.
The Chadbourne & Parke associate also said that there may be scope to negotiate directly with the Ministry of Electricity to develop larger scale projects — and perhaps propose a tariff that is more competitive than the FiT — but in exchange for larger capacity levels.
Egypt is “Engaged and Paying Close Attention”
With major solar development and deployment activities ramping up in Egypt between electricity entities, developers, and financiers, NREA Chairman Mohamed El Sobky noted that the NREA is engaged and paying close attention. “There is an open communication channel with all the developers,” said El Sobky, “and it’s helping us in understanding the various points of view and developing the related documents.”
Final agreements covering PPAs, usufruct, land, and cost sharing will likely be completed in April, stated NREA Chairman Mohamed El Sobky.
(Picture credits: Top – FAS Energy CEO Sabri Asfour addresses Egypt Economic Development Conference, via fasenergy.org
Bottom – Ben Ban Fit Solar Development project land allocation diagram, via fasenergy.org)