Provision of up to USD 80 million equity bridge loan (the "Loan") to Egypt Green Hydrogen S.A.E (the "Borrower"), an Egypt domiciled company established for the purpose of developing and operating the first green hydrogen production facility in Egypt.
The Loan will support funding the procurement and construction of a 100 MW electrolyser facility together with the related facilities and civil works needed for the completion of the project (the "Electrolyser" or the "Project"). The Electrolyser, which will be powered by renewable energy, will produce green hydrogen that will substitute some of the grey hydrogen (i.e. produced from gas) consumption used by the Egyptian Fertilizer Company (the Offtaker and a subsidiary of the regional fertiliser producer, Fertiglobe PLC) and will be used as input to produce green ammonia which will be exported to the international markets. Being the first project of its kind in Egypt, the Project will lead to a significant demonstration effects and will be an important milestone in the development of a green hydrogen and ammonia industry in Egypt which is a key step towards decarbonising several industries, particularly fertilisers - a main consuming industry for ammonia.
ETI score: 100
Primary Quality - Green:
Use of proceeds is 100% green as the Project will support the construction of the Electrolyser that will be powered by renewable energy. The project being innovative (first in Egypt and one of the few globally) will act as a proof of concept for green hydrogen projects in Egypt and the EBRD regions. The annual green hydrogen production from the Project will be up to 15,000 ton which will be sold to Fertiglobe's subsidiary in Egypt to produce green ammonia, corresponding to a total saving of CO2 of more than 130,000 ton per year. The Project is central to the Bank's wider ongoing policy dialogue initiatives which includes supporting Egypt in (i) drafting its national hydrogen strategy, and (ii) the development of a low carbon pathway for decarbonising the Ammonia sector in Egypt.
EGYPT GREEN HYDROGEN SAE
Egypt Green Hydrogen SAE SAE (the "Borrower") is an Egyptian company established in the Suez Canal Economic Zone for the purpose of the Project, and is owned by: (i) Scatec ASA the leading Norwegian renewable power producer listed on the Oslo Stock Exchange; (ii) Fertiglobe PLC, the largest nitrogen fertilizer producer in the MENA, based in Abu Dhabi and listed on the Abu Dhabi Securities Exchange; (iii) Orascom Construction PLC, one of the largest global contractors operating in the MENA region and the US with dual listing on NASDAQ Dubai and Egyptian stock exchange; and (iv) the Sovereign Fund of Egypt's ("SFE") (established in 2018) through its Infrastructure and Utilities Fund.
EBRD Finance Summary
Financing Structure Additionality: EBRD covers a funding gap through providing a large volume facility to fund an innovative project - the first green hydrogen project in Egypt and one of the few globally which will act as a proof of concept for the development of this new technology/sector in Egypt
Policy, sector, institutional, or regulatory change: The Project is connected to the Bank's policy initiatives related to (i) an ongoing Technical Cooperation to support the government in drafting its national hydrogen strategy and (ii), the Bank's Low-Carbon Ammonia Roadmap developed in conjunction with the International Energy Agency "IEA" and the Interconnexion France-Angleterre "IFA" to de-carbonise the ammonia sector.
Environmental and Social Summary
Environmental and Social Summary
- Categorised B (2019 ESP). The construction of the 100MW green hydrogen production facility, the first of its kind in Egypt and the region, will result in environmental and social (E&S) benefits, including GHG savings and the decarbonisation of the ammonia production industry. The construction and operation of the electrolyser and its associated facilities are associated with Environmental, Health and Safety and Social (EHSS) risks and impacts that can be readily addressed.
- Environmental and Social Due Diligence (ESDD) was conducted by an independent consultant and included an assessment of the Project site and its associated facilities; their impacts on the environment, communities and climate change; the development of a Stakeholder Engagement Plan (SEP), Non-Technical Summary (NTS) as well as an Environmental and Social Action Plan (ESAP) to structure the Project in line with the EBRD's E&S requirements.
- The findings of the ESDD show the following:
- The Project has received the national authorities approval on the Environmental and Social Impact Assessment (ESIA) undertaken, on the condition that the project shall submit a study for oxygen recovery
- The Project and its associated facilities are located within the industrial complex, on vacant land, with no surrounding social or biodiversity sensitivities.
- The Borrower has generic E&S documents that will be developed into Project-specific EHSS management Plans as part of the ESAP and their management system requirements.
- Local communities are not expected to be at risk during the construction of the Project facilities. During operation, a major accident at the electrolysis plant, such as an accidental hydrogen gas release and explosion, is not expected to affect communities as there are no nearby residential areas. Safety studies in alignment with international standards are ongoing for the electrolyser package. Consequence analysis of hydrogen venting and knock-on effects of a major accident at the electrolyser on the neighbouring ammonia production facilities, causing escalation, are currently being undertaken and are a CP to financial close.
- The neighbouring Fertiglobe facilities have a certified ISO45000 system in place for health and safety, and are required, as part of the ESAP, to enhance their system to align with the EU Seveso III Directive.
- The Project has conducted a screening of alternatives regarding cooling water, and an open circulating system with a cooling tower using treated groundwater has been selected. The water would be abstracted from a highly productive aquifer which is widely used by the neighbouring industries in the Suez Canal zone. An assessment of the impact of the combined water abstraction/brine injection by the Project and neighbouring industries indicate a lowering of the water level and an increase in the salinity by 0.5% as well as the potential for seawater ingress. Nevertheless, the Project constitutes only 3% of the total abstraction volume from the aquifer, and the independent E&S Due Diligence confirms that the contribution to the impacts from the Project on the aquifer and local population is minimal.
- The abstraction of groundwater and reinjection of RO concentrate into the underlying aquifer resulting in alteration to quantitative and chemical status of the groundwater does not align with the EU Water Framework Directive. However, the directive has previsions to allow exceptions, when the benefit of the project outweighs the impact, and when the aquifer is already heavily modified, both of which apply to the project.
- The RO plant has been designed taking into account the water salinity expected at the end of Project lifecycle.
- Average GHG emissions for the production of green ammonia produced using the project's green hydrogen (over the life of the Project) are estimated to be c.35,000 tonnes CO2e per annum, which represents a reduction of more than130,000 tonnes CO2e per annum.
All required E&S measures are included in ESAP, and specifically, the considerations to be made into the Project design have been included in the ESAP as CPs to financial close. The ESAP has been agreed by the SPV and a consultant is retained to monitor the Project and ensure the ESAP items have been implemented in a timely manner and in line with EBRD's requirements.
Technical Cooperation and Grant Financing
Low-carbon hydrogen TC: a technical, economic and regulatory feasibility study to assess the viability of a low-carbon hydrogen market in Egypt.
Egypt Hydrogen Strategy: Also, the Bank is supporting the Egyptian government in the drafting of the country's Hydrogen National Strategy. The strategy will support Egypt's long-term aims and ambition by setting out the approach to build a thriving low carbon hydrogen sector.
Decarbonisation of the Egyptian ammonia sector: EBRD is preparing a low carbon pathway roadmap for Egypt to decarbonise the nitrogen based fertilisers sector. Following the launch of the Global Ammonia Technology Roadmap at COP26, this vision is the first country level application of the global roadmap, and will provide a blueprint for other countries. This will be developed on the back of IEA's (International Energy Agency) recently published global Ammonia Technology Roadmap, which identified green hydrogen as key for decarbonisation of nitrogen fertiliser production
Company Contact Information
PSD last updated
15 Mar 2023
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