European photovoltaic (PV) specialist Scatec Solar has announced that it has secured financing of $335-million to fund its portion of the development of six 400 MW utility-scale PV power plants, which will be located in the Benban solar park, in the City of Aswan, in Egypt.
The company secured funding from a consortium comprising the European Bank for Reconstruction and Development, the United Nations’ Green Climate Fund, Dutch development bank FMO, the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector.
Scatec’s project is being developed with African infrastructure development fund Africa50 and private-equity company Norfund, in accordance with their previously established joint development agreement (JDA).
The three entities signed long-term financing documentation for the project, which was developed under the second round of the Egyptian Feed-In Tariff Programme and reached financial close on October 27.
With a 25% stake, Africa50 is contributing equity to fund construction together with Scatec Solar and Norfund, leveraging total funding of around $450-million.
The six plants are supported by 25-year power purchase agreements with the State-owned Egyptian Electricity Transmission Company (EETC), backstopped by a sovereign guarantee.
Access roads and interconnection facilities such as substations and a 12 km high-voltage line have already been funded collectively by the Benban solar project developers under a cost sharing agreement with the EETC and the New and Renewable Energy Agency.
The plants will benefit from Egypt’s strong and consistent irradiation.
The investment supports Egypt’s ongoing reform of the power sector, which focuses on cost effectiveness, expanded and diversified generation, and increased private-sector participation.
At present, Egypt’s generation capacity is still more than 90% thermal. The six plants will generate around 870 Gwh of clean PV electricity yearly, avoiding emissions of more than 350 000 t of carbon dioxide.
Additionally, the partners are committed to training and using local workers for plant construction and operation as far as possible.
African Development Bank (AfDB) president and Africa50 chairperson Akinwumi Adesina said: “This is an important milestone for Africa50.”
He explained that the project is the fund’s first early-stage investment through its Project Development arm to be converted into a long-term equity investment made by its Project Financing arm.
Further, the investment contributes significantly to the AfDB’s core priority of increasing access to power in Africa and “demonstrates how Africa50 can use its capital to leverage substantial resources from other partners to fund much-needed infrastructure.”
Africa50 CEO Alain Ebobisse added: “This project is a good example of how Africa50, working with effective partners such as Scatec and Norfund, as well as the Egyptian authorities, can facilitate infrastructure project development in Africa. We are pleased to help Egypt, an important shareholder, diversify its power generation mix while lowering greenhouse gas emissions.”
Africa50, Norfund and Scatec have also signed a JDA for the development of a 100 MW solar power plant in Jigawa, Nigeria. Total project cost will be about $150-million, with financial close expected later this year.