Electricity Ministry proposes solution to wind farm tariff problem

Mohamed Farag
3 Min Read

Minister of Electricity and Renewable Energy Mohamed Shaker will present a memo next week to the cabinet on wind energy tariff projects, as well as the inability of investors to finance the projects due to the reluctance of foreign banks to finance the low cost of selling energy produced from stations.

A senior official at the Ministry of Electricity told Daily News Egypt that the memorandum includes a solution to the problem by amending the system of projects from feed-in tariff into a build, own, operate (BOO) one, based on the request of six of the nine companies that were planning to implement wind stations.

The official added that the companies spent up to $9m over 30 months to carry out the measurements and environmental and topography studies of the land obtained, and are now waiting for the green light to begin construction.

The official explained that the companies are ready to implement the stations and seek to inject direct investments to establish plants to generate electricity from wind farms, adding that they are keen to invest in Egypt.

He added that the memo will clarify investors’ problems and that they are collective; hence, it would be unreasonable to lose the investments of Arab and foreign companies.

The Egyptian Electricity Transmission Company (EETC) recently contracted with Toyota to build 500 MW wind farms and will buy production at 3.8 US cents per kW, which is the price being sought by the other companies.

He pointed out that the procedures following the completion of the feed-in tariff programme include the withdrawal of land allocated to projects from investors and the delivery of all studies and measurements conducted for the New and Renewable Energy Authority.

Work on the second phase of the feed-in tariff agreement started on 28 October 2016. Since the announcement of the price of purchasing energy, companies have objected to the low value, which they said would push funding institutions to refuse to finance projects.

According to the regulations for the implementation of the second phase of the feed-in tariff plan for renewable energy projects, an investor is obliged to achieve financial closure of the wind farms within 18 months from 28 October 2016 and to submit a letter of commitment from foreign financing entities within a period of 12 months.

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