The chairperson of the New and Renewable Energy Authority (NREA) Mohamed Salah El-Sobky spoke about the authority’s strategy to attract investments worth 12bn euros to establish renewable energy projects with a capacity of 9,520 MW over the next seven years through tenders, direct contracts, or the feed-in tariff.
What are the projects that NREA plans to put forward in the coming period?
The planned projects to be established through feed-in-tariff will produce 4,300 MW and are expected to launch in 2017 – 2018. New wind farms with a capacity of 500 MW will be established through a build–own–operate (BOO) system and are expected to start in 2018-2019. In addition, new solar plants will be established through tenders and BOO with a capacity of 1,150 MW and are expected to start in 2017 – 2020.
A number of the private sector’s new projects that will have a capacity of 1,150 MW are underway. The NREA’s projects that have a capacity of 1,150 MW are expected to be implemented between 2017 until 2020.
Can the Ministry of Electricity link the new projects to the national grid?
The Electricity Ministry is ready to add the produced energy from new solar energy projects by the end of next December. The other energy projects will begin production in the first quarter (Q1) of 2017.
What are the latest updates with the feed-in tariff projects in Aswan?
He added that the NREA is cooperating with the Aswan governorate, solar energy investors, and the residents of Banban area to facilitate the implementation of logistic and infrastructure projects.
He continued that the investors in solar energy and the residents of Banban area have formed a formal association to begin the procedures for implementing the necessary services in the project’s site. This association holds a weekly meeting to follow up on the developments of the work in the projects, and resolve any obstacles facing them.
Will NREA offer new tenders for wind farms and solar energy projects this year?
The authority studies are putting out to tender new solar plants and wind farms in West Nile with a capacity of 500 MW by the end of 2016. The NREA is currently checking the electrical network capacity and the expected growth.
Did investors receive the latest version of the solar power purchasing agreement?
The solar power purchasing agreement was sent to investors in its final form, and includes all the rights and duties between the investor and the Egyptian Electricity Transmission Company, affirming that the real guarantee for implementation of new and renewable energy projects will be achieved through financial closure.
The Electricity Ministry has responded to investors’ requests to amend a number of items in the agreement. About 136 companies and alliances, 10 international finance institutions, the Egyptian Electricity Transmission Company, and the Egyptian Electric Utility and Consumer Protection Regulatory Agency are working to reach the best formulation. All these procedures were conducted in full transparency between all parties.
Can solar energy companies complete the financial closure of projects by October?
He predicted that all companies will achieve the financial closure of solar energy projects next October, especially as the Investors will sign an agreement that ensures the purchase of produced electricity from the new plants for 25 years. In return, the investors will pay their dues in Egyptian pounds and bear the risk of the foreign currency exchange rate.
The financial closure of the projects means that the investor can obtain the first batch of financing from banks that ensures the government that the investor has the necessary funding. The negotiations between the international financial institutions and investors have reached its final stages.
Could the grace period for the financial closure be extended?
According to the feed-in- tariff law approved by the cabinet in September 2014, the companies should achieve financial closure for the new projects in October 2016. This law stipulates that the feed-in-tariff projects will be evaluated either through reconsidering, increasing, or keeping them.
A number of qualified companies seek to extend their financial closure period due to the delay in the power purchasing agreement, as well as the 12 months period that wind farms use to conduct studies and measurements.
The law determines the financial closure for the qualified companies, noting that there are two companies that have already finished their studies and measurements of the wind farms with no delay in implementing the projects.
Was the power purchasing agreement from wind farms finalised?
The wind power purchasing agreement is available to the investors and they are much similar to the solar power purchasing agreement but with small differences.
The feed-in tariff projects will keep the internal return rate, while the state is committed to issuing tariffs and bears the risk of the foreign exchange rate. These procedures encourage investment in Egypt, not only in the renewable energy sector but in all other projects.
Despite the decline in the prices of energy machinery and equipment abroad, the state is committed to the cabinet’s decision, and the investor will purchase the equipment in US dollars and the internal return rate will not change when converting the currency.
What are the latest updates with Siemens’s wind farms of 2,000 MW?
The NREA is negotiating with local and international institutions to secure necessary financing for the wind farms projects implemented by the German company Siemens with the capacity of 2,000 MW and investment of 2bn euros.
Negotiations between the NREA and an alliance of three local banks are underway to secure the necessary funds for the project, and the authority, being the owner of the project, will repay the loan but did not disclose the required funds.
The wind farms will be established in West and East Nile regions and in the Suez Gulf area over the next five years.
Siemens will establish a station with a capacity of 300 MW, followed by stations with capacities of 400 MW and 500 MW, to reach a total capacity of 2,000 MW.
Siemens will also establish a factory for the production of wind turbine blades with self-financed investments of 100m Euros. The factory will produce 300 blades annually for 100 wind turbines that will each have an annual capacity of 340 MW.