Egyptian solar set to expand beyond the massive 1.8 GW Benban PV project – pv magazine International

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Egypt was one of the first African countries to develop large scale renewable energy projects and had 555 MW of wind power generation capacity by 2012. That was the result of donor support, however, rather than a push by the Egyptian government to tap its plentiful renewable energy resources. The world’s three biggest combined cycle gas-fired power plants were completed by Siemens, in 2018, for Egyptian Electricity Holding Company (EEHC). They have a combined capacity of 14.4 GW, underlining Cairo’s commitment to natural gas.

The Russian invasion of Ukraine has driven up gas prices and prompted European markets to replace Russian fuel with alternative sources. Egypt shipped 80% of its liquefied natural gas to Europe last year. The resulting revenue, combined with falling PV component costs has changed the landscape of Egyptian energy economics.

The latest figures published by Egypt’s New and Renewable Energy Authority (NREA) indicate the country’s power generation mix is currently 80% thermal, 12% wind, 6% hydro, and 2% solar. The government aims to achieve 42% renewables in the mix, including 22% solar, by 2030. It has estimated that this will require 31 GW of solar, up from just 1.77 GW at present, making for an incredibly ambitious target. A goal of 60% renewables by 2040 has also been set.

NREA figures show that at the end of 2023 there was 1.5 GW of solar capacity at Benban and 26 MW at Kom Ombo, with both located near Aswan, plus 50 MW at the Belectric-CCC joint venture’s Zafarana project on the Red Sea coast. There was also 97 MW of rooftop and 30 MW of standalone solar capacity and the remaining 102 MW of solar arrays included commercial and industrial (C&I) installations and other smaller arrays.

Benban project

Utility-scale PV development has, thus far, clustered around Aswan in the south of the country, where solar resources are strongest and there is plenty of land for development.

The biggest chunk of Egyptian solar capacity is provided by the Benban project, which lies 50 km from Aswan and is one of the world’s biggest PV sites. Official figures on its capacity vary from 1.4 GW up to 1.8 GW, with the confusion apparently centering on the scope for expansion of some individual elements.

It is actually a complex of 41 separate projects covering 37 km², with operators including Voltalia, Infinity Solar, SP Energy, Acciona Energía, Horus Solar Energy, and Scatec Solar. It cost a total of $4 billion to develop, some of which was provided by the World Bank’s International Finance Corp. (IFC), the African Development Bank (AfDB), and the European Bank for Reconstruction and Development (EBRD), with most phases completed in 2018-19.

Feed-in tariffs (FITs) give the operators guaranteed prices for 25 years and are the only private FITs in the country, a spokesperson for Voltalia told pv magazine. Sources within the country suggest that 6,000 management and maintenance jobs have been created at Benban, which will provide a pool of skilled workers and expertise that could be tapped on for future projects.

Voltalia developed its 32 MW RA project at Benban using Suntech 330 W panels, with all the power generated sold under a 25-year power purchase agreement (PPA) with Egyptian Electricity Transmission Co. (EETC) at a rate of $0.084/kWh under Egypt’s feed-in tariff program. The incentives are actually paid for in Egyptian pounds, however.

Saudi Arabia’s ACWA Power expects to complete its 200 MW Kom Ombo plant, just 20 km from Benban, in April 2024. Some of the financing for the $182 million project was provided by the EBRD, the OPEC Fund for International Development, and the AfDB.

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Other installations

In December 2023, ACWA Power signed a framework agreement with Egyptian partners to develop a $4 billion green hydrogen project – probably in the Suez Canal Economic Zone – with an annual production capacity of 600,000 tons, from phase one, rising to 2 million tons per year. That is set to be powered by PV and wind capacity and ACWA Power said it already has an Egyptian PV and wind development pipeline of 1.4 GW. The hydrogen plant will connect to the grid via the same 220 kV transmission line as Benban, with all power sold under a 25-year PPA to the EEHC. Globeleq and Masdar also both signed framework agreements in late 2022 to develop green hydrogen facilities in the Suez Canal Economic Zone. Empower New Energy already operates five 500 kW C&I projects in Egypt for offtakers InterCairo Aluminum, related business InterCairo Extrusion, Cairo Metals, Smart Paper, and medical supplies company AMECO. Empower is currently preparing three solar investments with multinationals operating in Egypt “that are seeking to decarbonize their operations while at the same time securing a competitive electricity tariff over time,” said Empower Chief Executive Officer Terje Osmundsen. Other C&I projects in the country include 467 kW and 374 kW arrays in Sharm El Sheikh, to supply the tourism sector, a 450 kW rooftop project on a Luxor hospital, and a 500 kW rooftop installation on a Giza industrial plant.

NREA figures show that 700 MW of solar capacity is currently under construction: the 500 MW Abydos project and another 200 MW at Kom Ombo. Dubai’s AMEA Power expects to complete Abydos, again located near Aswan, by the end of March 2025, with financing provided by an IFC-led consortium and a PPA in place with the EETC.

In December 2023, Scatec – which already operates 380 MW at Benban – signed a cooperation agreement with the EEHC for the development of a 1 GW solar and 200 MWh battery project, which will be the first utility scale hybrid project in the country. A preliminary financing agreement has already been concluded with the AfDB. The company is now working with the government on the details of the agreement, according to a Scatec spokesperson.

Challenges remain

Osmundsen said that Egypt is fundamentally an attractive PV market but the country’s current economic crisis, including a severe currency depreciation, is making foreign investment difficult. The dramatic fall in the value of the Egyptian pound makes the grid tariff paid by electricity consumers “artificially low and heavily subsidized,” he said, while difficulties converting currency have held back investment in the C&I sector.

Egypt has plenty of land and high solar yields, “making renewables highly competitive against other sources of energy,” the Scatec spokesperson said. But the main limiting factor is the high cost of financing as a result of rising global interest rates, they added.

In addition, although the government has pledged to phase out fossil fuel subsidies, it continues to encourage thermal power generation. The key to boosting renewable energy installation rates is ending power subsidies, a Voltalia spokesperson said. Voltalia expects the Egyptian PV market to open up very soon, however, because there was power rationing for two hours per day during the winter, due to a lack of natural gas feedstock for thermal power plants and a lack of foreign currency to buy gas, the Scatec representative said.

Outlook for the sector is positive, particularly as 1.7% annual population growth is driving up demand for electricity. Most renewable energy capacity will be provided by PV and wind, backed up with a limited amount of battery storage, the Voltalia spokesperson said. Concentrated solar power “is not expected to form a significant share of the future renewable capacity,” the Scatec spokesperson said. In the longer term, developers may also have the option to export solar power from Egypt to European markets via planned interconnectors between the nation and Crete, and then on to mainland Greece.

By Neil Ford

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