Egypt revising renewables power-purchase agreements

14 May 2015

Draft agreements were recently circulated to developers for feedback

  • Egypt’s utilities are aiming to have power-purchase agreements (PPAs) finalised by end of May
  • First wave of projects will include 200-400MW of renewables schemes

Egypt’s Electricity & Renewable Energy Ministry is revising the power-purchase agreements (PPAs) for the first phase of its 4,300MW feed-in tariff renewable energy programme.

Speaking to MEED on the sidelines of the Clean Energy Business Council (CEBC) event in Dubai, Lamya Abdel Hady, sector head of private projects and head of the central unit of the feed-in tariff programme, Egyptian Electricity Transmission Company (EETC), said the utility was hoping to finalise the revisions to the draft PPAs by the end of May.

MEED recently reported that Egypt’s Electricity & Renewable Energy Ministry had issued a draft PPA to developers to study and respond with feedback.

Consultations with international financial institutions, including the International Finance Corporation (IFC) and the European Bank for Reconstruction & Development (EBRD), took place in February for the initial part of the renewables programme.

Abdel Hady said 200-400MW of schemes would be approved during the first wave of projects under the renewables programme, with each one ranging in size from 20MW to 50MW. He said the first projects were planned to be started by the first quarter of 2016. Companies involved in the programme feel this target is unrealistic, however.

“There is still a long way to go before construction of the plants begins,” says a source at a firm involved in the programme. “The first priority is to get the PPAs ready – until this happens, nothing else can move forward.”

Some doubts remain over bankability, but the responsiveness of government agencies such as the New & Renewable Energy Authority (NREA) is encouraging.

“The number one bankability issue at the moment is the availability of hard currency, as tariffs are paid in Egyptian pounds, with a proportion indexed to the dollar,” Moritz Borgmann, partner at German consultancy Apricum, recently told MEED. “There is no solution yet, and developers are negotiating the level of guarantees with the government.”

Three developers have signed land allocation agreements for 50MW projects: Jordan’s Philadelphia Solar, Saudi Arabia’s FAS Energy and the local Orascom.

Sites have been put aside on the Gulf of Suez for wind projects, at Benban and Kom Ombo for solar projects, and along the Nile between Assiut and Beni Suef for both technologies.

The consultant for the programme is Germany’s Fichtner.

The ministry hopes to sign all the PPAs in the 4,300MW first round of feed-in tariff projects by the end of 2016. This comprises 2,000MW of wind projects, 2,000MW of solar photovoltaic (PV) projects and 300MW of rooftop solar PV projects. This implies the award of at least 80 large contracts and 600 rooftop contracts.

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