Egypt to build world’s largest solar park: What role will the private sector play?

Some 10,000 people will work during the phase of construction, in addition to 4,000 people once the solar installation begins operating (Photo courtesy of Juhayna / KarmSolar)

The construction of the soon-to-be world’s largest solar park is currently in progress near Egypt’s southern city of Aswan. It is slated to be powered up by mid-2019 to increase the country’s renewable energy generation capacity.

The power generation process consists of three main phases: producing the electricity, then transmitting it across governorates and countries via specialized companies, and then distributing it to consumers through companies that lower the voltages.

The specs of the Benban solar park
The total production of the new solar park is set between 1.6-2 gigawatts (GW), according to news outlet Electrek. The Benban solar power complex was named after a nearby Nile River village. Citing the International Finance Corporation (IFC) a sister organization of the World Bank – some 10,000 people will work during the phase of construction, in addition to 4,000 people once the solar installation begins operating.

The Benban solar park will include 32 power plants, with a production capacity of about 50 megawatts (MW) each. In October 2017, the IFC, along with a consortium of nine other banks, invested $653 million in 13 of the 32 power plants, according to Forbes Middle East. The consortium’s financing will help 13 private companies build and operate solar plants at the site. The European Bank for Reconstruction and Development (EBRD) additionally invested in 16 photovoltaic projects, mounting the investments in 29 power plants in the solar park to $1.8 billion.

“With over $2.2 billion of financing, the [park] is considered the largest foreign direct investment in Egypt in recent years,” law firm Zulficar and Partners, advisor to the Egyptian Electricity Transmission Company (EETC), states in a press release.

Benban solar park will include 32 power plants, with a production of about 50 MW each

Allocated by the Egyptian government to the New and Renewable Energy Authority (NREA), the Benban solar power complex is being built on 37 square kilometers.

The private sector’s take on the park
CEO and cofounder of solar technology and integration company KarmSolar Ahmed Zahran tells Business Forward that the new solar park will increase the solar component in Egypt’s energy mix.

“Today, Egypt’s energy mix consists of more than 60 percent gas and only 6-7 percent renewable energy,” Zahran explains, adding that upon the completion of Benban solar park, solar energy in Egypt will undoubtedly strengthen.

Egypt’s feed-in-tariff program aims to involve the private sector to achieve Egypt’s plan to produce 20 percent of its energy through renewable sources by 2022. So far, the output of the Benban solar park is set to be sold to the government.

However, Zahran believes that it is more efficient for the private sector companies working on the project to sell their output directly to other private firms for the transmission process because “they have more potential”.

Benban comes with a 25-year contract to sell its output to the state-owned EETC, according to Energy Egypt.

In a press release, CEO of the IFC Philippe Le Houérou states that the reforms implemented by Egypt are giving a sizeable leeway to private sector investments. He further continued that the reforms have attracted financiers and investors for the first time in the country. Accordingly, this will create new jobs in Egypt and will provide clean energy for people across the North African, sunny country.

Egypt’s energy mix consists of more than 60 percent gas and 6-7 percent renewable energy

The government’s take on the process
Minister of Investment and International Cooperation Sahar Nasr says in an interview with the IFC that the ultimate objective of the project is to provide people in Upper Egypt and poverty-stricken regions with the energy and utilities they have been lacking. One key pillar to Egypt’s economic reform program is promoting the private sector’s participation along with the energy sector. The Benban solar park is packed not only with funds from the IFC, but also with technical assistance and international experience, according to Nasr.

Spokesperson of the Ministry of Electricity Ayman Abdel Aziz tells Business Forward that transmitting solar energy has multiple mechanisms. One of these mechanisms enables the private sector to sell and transmit the electricity by the terms of the new Electricity Law approved in 2015.

“[This mechanism] is implemented in other projects, but not in Benban solar park,” Abdel Aziz says, stressing that the private sector is not forced to choose a particular transmission mechanism.

The feasibility of renewable energy in Egypt
Egypt possesses the needed resources that qualify its location to be ideal for renewable energy, including lands, sunny weather and high wind speeds, according to market intelligence portal Export.gov.

In 2011, Egypt built its first solar thermal power plant at Kuraymat with a total installed capacity of 140 MW. Kuraymat solar plant is funded by the Global Environment Facility (GEF) and the  Japan International Cooperation Agency (JICA). Another power plant has been operating in the western desert city of Siwa since 2015 with a total capacity of 10 MW.

Earlier this month, Benban solar park won the Thomson Reuters Project Finance International Award for “Global Multilateral Deal of the Year”, according to Zulficar and Partners law firm. It is considered to be the largest Egyptian project to receive foreign direct investments in recent years. The plants are also predicted to reduce Egypt’s carbon dioxide emissions by 90,000 tons per year.

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