A consortium of international Development Finance Institutions is providing a non-recourse project finance of $335 million, accounting for 75 percent of the capex. The consortium consists of EBRD, the United Nations' Green Climate Fund (GCF), the Dutch development bank, FMO, the Islamic Development Bank (IsDB) and the Islamic Corporation for the Development of the Private Sector (ICD). This is the consortium's first joint projects in Egypt's renewable energy sector.
"With this programme, the government of Egypt is making important steps towards accessing clean and low-cost electricity to drive development and economic prosperity" said Raymond Carlsen, CEO of Scatec Solar. "Scatec Solar and partners are making significant investments and a long-term commitment to Egypt".
The six projects involving a total investment of $450 million are located in the Benban solar park in Aswan in Upper Egypt. Upon completion, Benban will be the largest solar installation in the world with a planned total capacity of 1.8 GW.
The Green Climate Fund's contribution of $48 million is the highest it has disbursed to a single recipient and the first under its April 2017 co-operation agreement with EBRD. The annual 870 GWh of electricity produced from the 400 MW solar plants will displace about 350,000 tons of CO2 emissions per year, supporting Egypt's emission reduction targets under the Paris Climate Agreement. Egypt has committed to increase the share of renewables in the country's power mix to 37 percent by 2035. The 25 percent equity will be provided by the three sponsors of the projects, Scatec Solar, Norfund and Africa50, the Infrastructure Fund for Africa.
Last April, Scatec Solar and partners signed 25-year Power Purchase Agreements (PPAs) with the Egyptian Electricity Transmission Company and yesterday delivered the required condition precedents for the PPA to become effective. Construction is scheduled to commence in early 2018, upon customary governmental conditions under the renewables program being met. Scatec Solar will be the turn-key EPC provider for the projects and provide Operation & Maintenance as well as Asset Management services to the power plants.
When the new power plants are in operation Scatec Solar will hold a profitable and diversified portfolio with a capacity of more than 1,100 MW. This power plant portfolio will generate stable cash flows over the next 20-25 years and beyond.
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