Egypt Renewable Feed-In-Tariff Framework

Location:

Egypt

Project number:

48213

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

07 Jun 2017

Status:

Board Approved

PSD disclosed:

13 May 2016

Sub-projects signed under this framework

Translated version of this PSD: Arabic

Project Description

Loans to multiple private developers for a total amount of up to USD 500 million (EUR 463 million equivalent) to finance the construction and operation of renewable energy projects in Egypt under its feed-in-tariff programme (the "Subprojects"). The Subprojects currently proposed focus on the construction and operation of solar photovoltaic plants of 20-50 MW capacity.

Project Objectives

The Subprojects will be developed under the programme implemented by the Egyptian government's feed-in tariff programme aimed at stimulating private investment in over 4 GW of wind and solar power (the "FiT Scheme"). This scheme aims to support Egypt to move to a more environmentally sustainable and diverse electricity sector by exploiting the country's vast renewable energy potential.

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

The Subprojects will be among the first to be implemented under the FiT Scheme and will support Egypt in reaching its renewable energy targets and reducing its reliance on costly hydrocarbon imports.

Transition Impact

Setting environmental standards: All Subprojects will be 100% compliant with the Bank's Green Economy Transition Approach and will support the expansion of renewable energy generation to meet Egypt's targets in this area, including its Intended Nationally Determined Contribution, submitted to COP 21. The framework is expected to result in additional renewable capacity of more than 700 MW, a 90% increase in Egypt's existing non-hydro renewable capacity, and avoid more than 900,000 TCO2e annually.

Demonstration of new replicable behaviour and activities: The Subprojects will be among the first solar PV energy projects to be implemented in Egypt and thus set an important precedent for further development, unlocking Egypt's substantial renewable energy potential, promoting renewable energy development and demonstrating how the private sector can play a role in alleviating the country's continued power shortages.

More widespread private ownership: The Subprojects will increase the share of privately owned generation capacity in Egypt where nearly all domestic electricity consumption is currently generated in state owned facilities.

Client Information

The Borrowers will be special purpose vehicles incorporated in Egypt for the sole purpose of developing, constructing and operating their respective Subproject. The Borrowers will be owned by a number of private sponsors.

EBRD Finance Summary

USD 500,000,000.00

Secured project finance loans to multiple individual borrowers for a total amount of up to USD 500 million (up to EUR 463 million), co-financed with international financial institutions and other bilateral lenders.

Total Project Cost

USD 1,340,000,000.00

USD 1,340 million (EUR 1,241 million).

Environmental and Social Summary

In accordance with EBRD's 2014 Environmental & Social Policy, the framework itself will not be categorised and each Subproject will be subject to full project and sponsor-specific environmental and social due diligence. Each Subproject will be individually reviewed and categorised and due diligence will be undertaken accordingly.

The E&S risks and impacts associated with the development of an individual 50MW solar photovoltaic project in an area of low environmental and social sensitivity are likely to be readily identified, assessed and mitigated through the adoption of good E&S practice. In the absence of any site specific sensitivities or concerns associated with any one project it is anticipated that each Subproject will be categorised B, although this will be confirmed during project appraisal. Full details will be presented in the relevant PSDs for each Subproject.

The majority of the solar Subprojects are expected to be implemented on one specific 37 km2 plot allocated to New and Renewable Energy Authority ("NREA") for these purposes near Benban in Upper Egypt. This plot is divided into 41 subplots, each allowing for a plant of 20 MW or 50 MW, with a total capacity for the entire site of 1,800 MW. When complete, this site will be the largest solar complex in the world delivering significant environmental benefits to a country that is largely dependent on fossil fuels for energy production. However, the concurrent development of a large number of projects on such a site has the potential to give rise to significant cumulative risks and
impacts, such as workforce sourcing, resource needs and logistical arrangements, even though the impacts of each individual project are not anticipated to be significant.

Recognising this concern a Strategic Environmental and Social Assessment (a "SESA") has been developed by NREA, with IFI support, to ensure that these cumulative impacts have been sufficiently identified and managed. The Bank has engaged with EBRD's clients and also worked with other IFIs and the Egyptian authorities to ensure that developers on the Benban site cooperate in the management of these impacts. The SESA and its related Non-Technical Summary were disclosed by NREA and EBRD on 17th May 2016.

The Benban SESA presents an Environmental and Social Action Plan to address the cumulative  E&S impacts of the concurrent developments. This ESAP has been adopted by the overall Project Sponsor (NREA) and forms part of the Egyptian Environmental Affairs Agency (EEAA) permit conditions issued to NREA for the Benban site. The responsibilities for the implementation of this ESAP have been transferred by NREA and EEAA to the individual project developers, including those Subprojects being considered by EBRD. As a result the Benban Developers have formed an Association to manage and address the issues that are not incumbent upon any one developer but are cumulative in nature. EBRD is working closely with the Developers Association in the execution of the SESA ESAP to ensure that EBRD's requirements can be met by all the developpers working in collaboration.

At sites located outside the Benban complex where smaller (typically 1-8 projects) are planned at any one location a similar approach will be adopted although an assessment of cumulative impacts will be required to be completed by the project sponsors in the absence of an SESA applicable to those locations.

Each Subproject will be subject to E&S appraisal and disclosure requirements depending on categorisation and project specific E&S action plans ("ESAP") will be developed to ensure the objectives of the framework are met; that the outcomes of the SESA are duly considered and actioned; and that the delivery of each Subproject is undertaken in accordance with the PRs.

Technical Cooperation

These Subprojects, as part of several solar photovoltaic projects financed by EBRD in Egypt, are connected to two TC assignments:

1/ Solar Grid Code Preparation 
EBRD has mobilised TC funding from the SEMED Energy Efficiency Policy Dialogue Framework (funded by EU-NIF) in order to provide technical advice to the Egyptian authorities in the preparation and drafting of a Solar Grid Code.

2/ Strategic Environmental and Social Assessment
EBRD has mobilised TC funds under the Southern and Eastern Mediterranean Multi-Donor Account to support the New and Renewable Energy Authority NREA in preparing the Strategic Environmental and Social Assessment (SESA) for the Benban solar site in Egypt. The SESA will ensure that the large development planned in Benban is carried out in accordance with best international practice and in a manner which maximises the benefits for the local population and other stakeholders.

Company Contact Information

Nefesa Hassan

nefesa_hassan@hotmail.com
+20 (2) 2271 3174
www.nrea.gov.eg
New and Renewable Energy Authority Building, Abbas Al Akkad Street, Nasr City, Hay Al Zouhor Area, Cairo, Egypt
 

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