Foreign investors rush to take advantage of Egypt’s renewables boom

More than 4000 years after the pyramids took shape near the banks of the Nile, the deserts of Egypt are once again witnessing construction projects so large the results are visible from space. The 1.65 gigawatt (GW) Benban solar park near Aswan, completed in 2019, is the fourth-largest in the world; and a host of other solar and wind megaprojects are helping to reshape the place of Egypt and its north African neighbours in the global economy.

Foreign investors have been quick to recognise the opportunities to help develop renewable power in the country of 116 million people.

“Egypt is one of the largest economies in Africa,” notes Terje Pilskog, CEO of Scatec, a Norwegian renewable energy independent power producer. “It is a country that has a lot of land available. It has a power sector which has the capacity to take on quite a lot of renewables into the grid. And on top of this, it has significant electricity demand domestically.”

Other major players attracted to Egypt include a host of developers from Gulf states. UAE-based Masdar has invested in multiple projects in the country, both independently and in a joint venture with Egyptian company Infinity Energy. Saudi company ACWA Power, meanwhile, signed a power purchase agreement (PPA) for a $2.3bn wind farm in February.

Finding finance

Many early projects in the sector relied on financing from development finance institutions (DFIs) or multilateral development banks. The European Bank for Reconstruction and Development (EBRD), for example, has provided more than $1bn to help finance over 4GW of new renewables capacity in Egypt since 2012.

But the need for the EBRD and other development banks to provide concessional financing is abating, with projects increasingly able to attract debt on commercial terms.

“As the track record has been established from the times of Benban, and as the government stands behind the PPAs and the regulatory environment they created, the confidence among commercial banks and actual investors is growing,” says Aida Sitdikova, director for sustainable infrastructure in the Middle East and Africa at the EBRD.