Page 5 - AfrElec Week 26
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AfrElec COMMENTARY AfrElec
climate faltered. Indeed, in 2016, private inves- tors withdrew when the government cut the tari .
The second round from 2016 to 2018 saw the FIT cut to $0.084 per kWh, with the added incentive of access to international arbitration and partial dollar-denomination. This led to renewed interest, with many of the investors in current projects coming online in 2019 making successful bids.
Project details
e second tender round saw global solar players making bids backed by institutional and MDM lenders for projects that are being completed throughout 2019.
For example, Norway’s Scatec Solar is devel- oping 400 MW at Benban, and in June connected its third, 65MW stage to the Egyptian grid.
Scatec Solar and its partners KLP Norfund and Africa 50 have a 25-year power purchase agreement (PPA) with EETC for their six solar plants at Benban. Producing an estimated 870 GWh per year, the 400-MW from the plants will avoid 350,000 tpy of CO2 emissions.
Scatec uses pioneering bi-facial solar panels, which capture the sun from both their sides to increase total clean energy generation. Another 150 MW is being built by ACCIONA and Saudi Arabia’s Enara Bahrain Spv Wll at a cost of $180mn.
Again, the developers have signed a 25-year PPA with EETC, with nance coming from the IFC and the Chinese-backed Asian Infrastruc- ture Investment Bank (AIIB).ACCIONA won the three 50-MW projects in the second tender- ing round with a tari of $0.084 per kWh.
Looking ahead
Yetthegovernmenthasnowchangeditsstrategy again and launched a series of reverse auctions for new solar capacity. is has seen bids falling
to as low as $0.03 per kWh. In August 2018, Saudi Arabia’s ACWA Power bid $0.03 per kWh to instal 200 MW of solar at Kom Ombo.
Egypt also aims to build 600 MW in the West Nile Province, and has set a maximum tari of $0.025 per kWh in light of ACWA’s $0.03 bid for Kom Ombo.
is is the amount that state-run transmitter EETC will pay renewable energy providers for electricity from solar projects. It essentially rep- resents a huge fall in state subsidies to the solar sector, something that the government is trying to do, as the now discontinued FIT system at Benban was seen as too expensive.
Indeed, it is this low tari of $0.03 that is cre- ating global waves, as these are some of the low- est tari s ever seen in the solar sector.
Wider energy policy
For Egypt, renewables form only one part of its power sector. It has ambitions to build a 2,400- MW nuclear power plant (NPP), and in 2015 agreed to borrow $10bn from Russia to build the rst 1,200-MW Russian-designed reactor at El Daba, e ectively locking in the country to Rus- sian debt for years to come.
In the thermal sector, Egypt has recently brought online 14.4 GW of gas- red Siemens generating units at Beni Suef, Burullus and the New National Capital complex.
Yet with Egypt committed to reducing CO2 emissions and boosting renewables, solar, and also wind, plays a crucial role that is ampli ed by investors such ACWA Power’s willingness to make record low-tari bids.
Benban and the latest generation of low-tari projects have been developed with support from MDMs that have a high appetite for the invest- ment risk that still exists in Egypt. Cairo will now want to reduce this investment risk further and to attract more funding from commercial banks if it is to meet its green commitments.
In the thermal sector, Egypt has recently brought online 14.4GW of gas- red Siemens generating units
Week 26 03•July•2019 w w w . N E W S B A S E . c o m
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