Norfund’s Feed-in-Tariff Program projects in Egypt

Project Description

This summary covers an application made by KLP Norfund Investments AS (“KNI AS”)  to cover its equity investment totaling up to US$27 million in six solar PV projects with a capacity of 65MW each (“the Projects”), namely Aswan PV Power S.A.E, Daraw Solar Power S.A.E, Kom Ombo for Renewable Energy S.A.E, Red Sea Solar Power S.A.E, Upper Egypt Solar Power S.A.E, and Zafarana Solar Power S.A.E, developed under the Feed-In Tariff Scheme in the Arab Republic of Egypt. MIGA coverage is being requested against the risks of Transfer Restriction and Inconvertibility for a tenure of up to 15 years.

The Project was awarded under the second round of Egypt’s Feed-In Tariff Program and consists of the development, design, construction, operation and maintenance of the abovementioned six power plants. The Projects are currently operational and are located in the Benban Solar Park in the Aswan Governorate, in the Upper Egypt Region. The Projects represent a total investment of around US$ 446 million and were funded mainly by three sponsors, i.e. Scatec Solar ASA, Africa 50 and KLP Norfund Investments and by four International Finance Institutions, i.e. the European Bank for Reconstruction and Development, the Islamic Development Bank, the Islamic Corporation for the Development of the Private Sector and the Green Climate Fund.

Environmental Categorization

The six projects collectively are classified as Category B Projects under MIGA’s Policy on Environmental and Social Sustainability (2013) as the E&S impacts associated with the Projects are limited, generally project-specific and can be addressed through the implementation of good international industry practices and mitigation measures. Click here for the project’s Environmental and Social Review Summary.

Development Impact

The Projects have the potential to expand Egypt’s installed solar generation capacity by 390 MW in the context of an ongoing World Bank Group-supported programmatic approach to liberalize Egypt’s power sector and attract foreign direct investment. Along with other renewable energy plants in Egypt, they should enable the eventual replacement of ageing thermal generation plants in line with the Egyptian government’s goal of increasing the renewables share of total electricity generation capacity to 42% by 2035 and meeting its national greenhouse gas emissions reduction targets. Moving forward, investments in renewable energy generation capacity may also enhance Egypt’s ability to export surplus power to neighboring countries.