Gulf of Suez Wind II

Location:

Egypt

Project number:

51509

Business sector:

Energy

Notice type:

Private

Environmental category:

A

Approval date:

21 Oct 2020

Status:

Concept Reviewed

PSD disclosed:

07 Aug 2020

Project Description

Provision of long-term senior debt financing of up to USD 50 million (EUR 42 million equivalent) to finance the construction of a 500 MW wind power plant located in the Gulf of Suez, approximately 40 km North-West of Ras Ghareb in Egypt. The project will be one of the largest privately developed utility scale wind power plants in Egypt and will support the country in increasing its renewable energy capacity.

Project Objectives

Through delivery of clean power at one of the most competitive wind tariffs in the region and wider, the project will support Egypt's renewable transition and exploitation of the exceptional wind resources in the Gulf of Suez area.

The Project is expected to further improve the environmental characteristics of Egypt's power sector by reducing emissions of local pollutants and CO2, as well as water consumption.

Transition Impact

ETI score: 66

By adding 500 MW of renewable energy generation to Egypt energy mix, the Project will assist transition to a low-carbon economy in the country which has a high level of reliance on thermal power generation. The project will contribute to the goal of 20% of Egypt's power generation to be based on renewables by 2022, and 42% by 2035. The Project is expected to achieve sizeable environmental benefits, with expected annual avoided CO2 emissions of ca. 1,000,000 tonnes.

In addition, the project will allow for increased private participation in the renewable energy sector in the country.

Client Information

RED SEA WIND ENERGY SAE

Red Sea Wind Energy S.A.E. (the Borrower) is a special purpose vehicle to be incorporated in Egypt for the sole purpose of developing, constructing and operating the Project. The Borrower is fully owned by ENGIE Energie Services ("ENGIE" i 35%), Toyota Tsusho Corporation & Eurus Energy Holdings Corporation Consortium (holding collectively 40%) and Orascom Construction (25%).

EBRD Finance Summary

USD 50,000,000.00

A senior secured loan of up to USD 50 million (up to EUR 42 million equivalent) co-financed with other parties.

Total Project Cost

USD 560,000,000.00

The total project costs is approximately USD 560 million (EUR 474 million equivalent).

Additionality

Additionality sources

1 - Financing structure

- EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period than the market average, restricted foreign currency financing etc. Such financing is necessary to structure the project.

- EBRD offers a tenor above the market average, which is necessary to structure the project, and for the tariff to be economically viable

2 - Risk mitigation

- EBRD provides comfort to clients and investors by mitigating non-financial risks, such as country, regulatory, project, economic cycle, or political risks.

 

Environmental and Social Summary

Categorised A (2014 ESP).  The Project has been categorised A as it involves the development of a large greenfield wind power project on the edge of the Rift Valley/Red Sea bird migration flyway in the Gulf of Suez, which may present a significant collision risk for various migrating bird species. This risk is compounded through existing as well as planned state-owned and private sector windfarms in the wider area. The Project is the third private sector windfarm in the Gulf of Suez and is located to the north of the EBRD-financed West Bakr windfarm.  The Project has been subject to a local ESIA process and various supplementary studies to meet EBRD's E&S requirements.   These documents together form the Project ESIA, which was publically disclosed on 7 August 2020 following EBRD and independent consultant review.  The Regional Centre for Renewable Energy and Energy Efficiency (RCREEE) has, furthermore, conducted and disclosed a Strategic Environmental and Social Assessment (SESA) for the development of wind power resources in the wider area as well as a five year bird monitoring programme. The Project is expected to avoid approximately one million tonnes of CO2e annually.

The Project, to be located to the north west of the town of Ras Ghareb, involves the installation of 173 2.9MW turbines, and supporting infrastructure, over an area of around 70 kms, within a wider 284 kms area demarcated for private sector wind power projects. The Project will connect to the national grid through a 35 km 220 kV transmission line, which on its own would be categorised A requiring an ESIA.  This line will connect to an existing substation and in turn export electricity through a 500 kV line.  These transmission lines will be installed and operated by the Egyptian Electricity Transmission Company (EETC).  Multiple future wind farms will connect to the substation while the 220 kV line will be installed for the sole purpose of the Project and therefore is considered an associated facility.  The Project has developed an ESIA for the 220 kV line for the benefit of EETC taking into consideration EBRD's E&S requirements. The Project and transmission lines will be constructed on state-owned desert land, which is distant from any permanently inhabited areas. The closest settlement is Ras Ghareb, which is around 40 km from the Project site.

The Project ESIA has considered typical impacts associated with wind power projects but with a specific emphasis on ornithological impacts, particularly to migrating birds.  The Project ESIA has further considered potential cumulative effects of the Project together with other existing and future wind projects in the Gulf of Suez.  Considering the Project's location the most significant issue is the need to avoid, monitor and manage impacts to migratory soaring birds. In this respect, the Project ESIA and the E&S action plan define various measures to be implemented by the Project.  The Project will further be subject to measures defined by the SESA and measures to be implemented by the Egyptian authorities. The Project will develop an appropriate E&S management system, which will apply to all Project phases and to contractors.  This will include health and safety provisions for workers and off-site receptors. The Project will need to put in place the necessary resources to implement such measures.

The Project is located on the edge of an important migratory flyway (globally-important concentrations of 14 migratory bird species pass through the area during the spring and autumn) and 22 km from Gebel El Zeit Important Bird Area (IBA designated for migratory soaring birds) and therefore has been subject to a Critical Habitat Assessment (CHA), which draws on bird survey and other data gathered for the ESIA and the SESA.  The CHA has determined that the Project site is not located within critical habitat while the IBA has been assessed to be critical habitat.  The ESIA has assessed impacts of the turbines to birds and has concluded that the Project may present a significant collision risk to migratory soaring birds, and mitigation is required, but this risk may be compounded further with the development of numerous other wind farms in the wider area.  The Project has undertaken a Cumulative Effects Assessment (CEA) and identified the need for mitigation not just for by Project but by other wind farms.  Further, while the CHA has determined that the Project will not impact critical habitat it has concluded that considering the Project's location and presence of various species of migrating birds in globally-important concentrations, the Project should achieve a no net loss of biodiversity.   RCREEE, on behalf of the Project, will implement an active turbine management plan (ATMP) and shut down programme for the Project to avoid impacts to birds.  The ATMP is already being applied with much success at an existing project i Gulf of Suez 1 i with minimal bird collisions and less than 2% energy loss from shut down, and will also apply to the West Bakr windfarm when operational. The ATMP includes pre and post-construction bird monitoring including carcass surveys. 

The transmission line passes through the northern section of the IBA for a few hundred meters and will be located between two existing transmission lines at this point. This route could not be avoided for technical reasons. The IBA has been designated as Critical Habitat as noted.  The ESIA, however, has determined that the transmission line is not expected to impact the conservation objectives of the IBA or present a significant impact to migrating birds.  Bird diverters and carcass surveys will be implemented to avoid bird collisions and monitor their effectiveness. The Project will seek to liaise with the operator of existing lines within the IBA (EETC) to install bird diverters and conduct monitoring to reduce impacts to birds.  This will be coupled with Project support for the Migratory Soaring Bird Project.

The Project is expected to require approx. 1600 workers at the peak of construction and approx. 40 during operations.  Most workers will be recruited locally. No influx issues have been identified. The Project will implement appropriate labour requirements applicable to all workers in line with PR2 and this is described in the Project E&S Management System (ESMS) Manual. Noting the Project location, significant impacts to communities, such as shadow flicker, visual impacts, impacts on land use and air quality during construction, have not been identified.  The area is uninhabited and access is restricted by the authorities.  The Project will develop an appropriate security management plan.  The Project will engage with local communities, including Bedouin communities, which have affiliation with the wider area but do not use the Project area, in terms of Project benefits. No impacts to cultural heritage have been identified.

The Project has developed a Stakeholder Engagement Plan (SEP) and Non-Technical Summary (NTS).  The Project has undertaken various engagement activities, including a public hearing for the purposes of local permitting.  Disclosure of the Project ESIA will take into account COVID-19 risks and adopt alternative methods for further stakeholder engagement. Engagement to date has shown general support for the Project but has highlighted the need for the implementation of the proposed mitigation measures and the potential for employment.  A public grievance mechanism is in place and will be maintained. A draft E&S action plan is in place for the Project, has been disclosed and will be finalised before Board consideration.  The EBRD will monitor the Project together with independent advisors.

An Environmental and Social Impact Assessment (ESIA) is available for the Project.

Company Contact Information

Khaled El Degwy ; Jeroen Vergote
khaled.eldegwy@orascom.com ; jeroen.vergote@engie.com
http://www.rswe.co/
Sahara Building - Plot 185 2nd Sector, 5th Settlement 11835 New Cairo, Egypt

PSD last updated

10 Aug 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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