Despite the recent crises plaguing Egyptian investments, the New and Renewable Energy Authority (NREA) is now finalising a tender for the development of a 20-MW photovoltaic (PV) solar power plant.
The PV project would be built on the site of the Hurghada wind farm in the Red Sea Governorate, as part of the country’s efforts to add 1.3 GW of solar capacity by 2020.
A top official at the Ministry of Electricity told Daily News Egypt on Monday that NREA was preparing the tender for the power plant, while at the same time seeking the approval of Egypt’s House of Representatives for an offer by Japan International Co-operation Agency (JICA) to finance the project.
JICA financed the feasibility study on the solar PV plant earlier, which was carried by Japanese firms Tokyo Electric Power Service and Shikoku Electric Power.
The Harghada PV plant will occupy 50 hectares, of which 35.4 will be occupied by PV panels and the rest by transformers and control rooms, buildings and road infrastructure, according to an earlier project brief.
The US$91 million loan offer by JICA was made in March together with an additional US$235 million for Egypt’s Electricity Distribution System Improvement Project, a programme aimed at reducing electricity distribution losses and increasing the efficiency and reliability of the country’s electricity supply.
Hurghada is one of the projects Egypt is banking on to achieve its ambitious 4.3 GW of clean energy capacity, as set out under its 2015 FiT scheme. Solar and wind projects will account for 1.3 GW and 2 GW of the renewables capacity respectively.
NREA had indicated that by the first quarter of 2015 more than 67 solar energy developers had been approved to take part in the development of the 1.3-GW solar capacity development.
The Ministry of Electricity and Renewable Energy hopes to provide up to 20% of Egypt’s total energy mix from renewable energy sources, 12% of which will be generated by wind.
The government is also attempting to grapple with ongoing energy subsidy reform, with the aim of gradually increasing electricity tariffs and reducing subsidised inputs for electricity producers. Fine-tuning of the 2013 net metering rates and the aforementioned FiTs are some of the government initiatives that independent power producers are relying on when they invest in Egypt’s renewable energy market.
NREA has also been allocated more than 7,600 square kilometres of desert land to dish out to potential renewable energy developers while President Abdel Fattah El Sisi’s government is finalising the establishment of a renewable energy fund to finance clean energy generation projects.
However, much hard work may yet be undone by the poor state of the country’s finances. Renewable developers have since struggled to garner investment because of Egypt’s shortage of US dollars and Cairo’s inability to reach a compromise with international aid financiers.
On May 25, the EETC admitted some of the 39 developers tasked with wind and solar projects might struggle to reach financial close.
As a result, it may be that Egypt now needs finance from organisations like JICA even more than it did before the FiTs were unveiled, if it is even to begin developing new capacity.