- Egypts New & Renewable Energy Authority (NREA) has assigned 39 land plots to developers on its renewable energy feed-in tariff scheme
- Thirteen other developers are waiting for plots to be allocated
- Developers now expect revised documents, including power purchase agreements, to be issued in August
Egypts New & Renewable Energy Authority (NREA) has allocated 39 plots of land for developers to carry out renewables projects under its feed-in tariff (FiT) programme.
Thirty-one plots in Benban and Zafarana are for solar photovoltaic projects, representing 1,220MW of capacity.
Another eight plots in the Gulf of Suez are for wind projects with a total capacity of 400MW.
Other project companies have signed memorandums of understanding to be assigned land plots soon. Eleven developers were waiting for solar plots and two for wind projects in early July.
The developers which have secured their land allocations were the fastest to form and capitalise special project vehicles.
NREA may release more plots of land, allowing more cautious developers to carry out projects. However, it is not clear if this will be part of the first feed-in tariff round, after which prices are expected change.
Developers are now waiting for NREA and the Electricity & Renewable Energy Ministry to issue revised project documents, including power purchase agreements.
Developers gave feedback on the documents in April, and the revised versions were scheduled to be issued at the end of June. They are now expected this month.
They were good starting point, a solid 8 out of 10, though a number of key matters like the absence of guarantees on currency conversion and transferability and dispute resolution under international arbitration may cause bankability concerns for some, says Clint Steyn, a partner at Texas-based legal firm Bracewell & Giuliani. But the timing of their initial release exceeded expectations.
Developers and lenders are already discussing financing, despite the lack of information on the final terms of their contracts.
The Washington-based International Finance Corporation (IFC), part of the World Bank, and the European Bank for Reconstruction and Development (EBRD) are taking active roles in pushing for bankable project documents and creating groups of developers to make financing simpler.
It would of course be a significant resource challenge to negotiate 30 or so FiT financings in parallel , says Steyn. But if the lenders do multiple projects, as they did recently in Jordan, they could homogenise the documents. If they take that approach it will be easier and less costly to reach a financial close.
The development banks will also be the most important lenders on the projects. The IFC especially has concerns over currency risk, but is reportedly becoming more comfortable.
In Jordan, the IFC arranged financing for seven FiT solar projects.
Reaching a financial close under Jordan scheme still took more than a year for some projects. Land regimes and permitting were major obstacles in Jordan. They could also delay the Egyptian scheme, which involves many more projects.