Scatec ASA Secures Financing for Hybrid Solar Project in Egypt
Norway-based renewable energy firm Scatec ASA has officially announced financial closure for its groundbreaking hybrid solar and battery energy storage system (BESS) project in Egypt. This achievement marks a significant step forward in the country’s efforts to enhance its clean energy capabilities.
Project Financing Details
In a recent press release, Scatec disclosed that the non-recourse project financing totals $479.1 million. This funding has been secured from prominent financial institutions, including the European Bank for Reconstruction and Development (EBRD), the African Development Bank (AfDB), and British International Investment (BII). Notably, this amount represents roughly 80% of the estimated total capital expenditure (capex) for the project, which stands at about $590 million.
Commitment to Clean Energy
Scatec’s CEO, Terje Pilskog, emphasized the company’s dedication to supporting Egypt’s clean energy initiatives. “We are proud to partner with leading development finance institutions to support Egypt’s clean energy ambitions, and we look forward to delivering this important project together with our partners,” he stated.
The project commenced construction last month, positioning it as Egypt’s first large-scale hybrid solar and BESS facility. This initiative is expected to significantly contribute to the country’s renewable energy landscape.
Phased Development Approach
The development of the project will occur in two distinct phases. The first phase will involve the installation of 561 MW of solar capacity along with 100 MW/200 MWh of battery storage, slated to achieve commercial operation by the first half of 2026. Following this, the second phase aims to add another 564 MW of solar energy, expected to come online in the latter half of 2026.
This structured approach not only maximizes efficiency but also aligns with the broader goals of sustainable energy deployment in the region.
Power Purchase Agreement
The energy generated from this project will be sold under a 25-year Power Purchase Agreement (PPA) with the Egyptian Electricity Transmission Company (EETC). This deal is USD-denominated and comes with backing from a sovereign guarantee, ensuring a stable revenue stream for the project.
Equity Loans and Partnerships
In addition to the financing from development banks, Scatec previously secured equity bridge loans of $120 million for the project. This strategic decision allows the company to defer equity injections until the construction period concludes. Moreover, Scatec is in advanced discussions with potential equity partners, with expectations of finalizing agreements in the near term.
Comprehensive Project Management
As part of this endeavor, Scatec will be responsible for Engineering, Procurement, and Construction (EPC), as well as Asset Management (AM) and Operations & Maintenance (O&M) services for the project. Notably, the EPC segment accounts for around 70% of the project’s total capital expenditure, reflecting Scatec’s commitment to delivering high-quality engineering solutions.
Industry Developments
The Egyptian renewable energy sector continues to grow, with recent reports indicating that UAE-based AMEA Power has signed Capacity Purchase Agreements (CPAs) for the development of standalone BESS stations in the country. This illustrates a rising trend in renewable energy investments and infrastructure development in the region.
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By fostering partnerships with leading financial institutions and committing to innovative renewable energy solutions, Scatec ASA is paving the way for a more sustainable energy future in Egypt.
