Scatec Benban III (Sun Infinite Project)

Location:

Egypt

Project number:

47974

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Approval date:

07 Jun 2017

Status:

Disbursing

PSD disclosed:

03 May 2017

Translated version of this PSD: Arabic

Project Description

Provision of long-term senior debt financing of up to USD 40.5 million (EUR 37.9 million equivalent) to finance the construction of 50 MW solar photovoltaic plant located in the proposed 1.8 GW Benban solar complex in the Aswan province of Egypt (the "Project"). The Project will be one of the first utility scale solar plants in Egypt and will support the country in increasing its renewable energy capacity. The Project is part of a larger portfolio totalling six 50 MW plants developed in Benban by the same group of lead sponsors.

Project Objectives

The Project will be developed under the programme implemented by the Egyptian government offering feed-in tariffs to projects of up to 50 MW capacity to stimulate private investment in over 4 GW of wind and solar power. 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.

Transition Impact

Setting environmental standards: the Project 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 As the Project would avoid the need for new thermal generation, it is expected to achieve sizeable
environmental benefits, with an expected reduction in annual CO2 emissions of 60,000-70,000 tonnes.

Demonstration of new replicable behaviour and activities: The Project will be among the first utility scale solar and first private renewable projects to be implemented in Egypt and thus set an important precedent for further development, unlocking the country's substantial renewable energy potential.

More widespread private ownership: The Project 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

SCATEC SOLAR AS

The Borrower will be a special purpose vehicle incorporated in Egypt for the sole purpose of developing, constructing and operating the Project. The Borrower will be beneficially owned by two main sponsor entities: (i) Scatec Solar ASA incorporated in Norway, and (ii) Norfund, incorporated in Norway.

EBRD Finance Summary

USD 20,000,000.00

A senior secured A/B loan of up to USD 40.5 million (up to EUR 37.9 million equivalent) co-financed with other parties.

Total Project Cost

USD 78,500,000.00

USD 78.5 million (EUR 73.5 million equivalent)

Environmental and Social Summary

The Project has been Categorised B in accordance with the EBRD's Environmental and Social Policy (2014) whereby Environmental and Social (E&S) risks and impacts are site specific, readily identifiable, and can be assessed and mitigated.

Independent Environmental and Social Due Diligence (ESDD) has been undertaken on the Project and the cumulative impacts associated with the wider Benban development and an Environmental and Social Action Plan (ESAP) has been agreed with the Client.

The E&S risks and impacts associated with the development of several adjacent 50MW solar photovoltaic projects will be limited in extent and nature. ESDD concluded that the Project is structured to comply with the Bank's Performance Requirements and that the Client has the institutional capacity to implement the Bank's PRs. ESDD also confirmed that the Sun Infinite Binban SAE project within the wider Benban complex present no specific E&S sensitivities thereby confirming project categorisation.

ESDD has focused on the Sponsor's ability to construct and operate the Project in accordance with the Bank's Performance Requirements, particularly with regard to having sufficient E&S capacity in place and the proposed measures for contractor management and project implementation.

The wider Benban complex comprises a 37 km2 area allocated to Egypt's New and Renewable Energy Agency (NREA). This area has been sub-divided into plots each allowing for a plant of 20 MW or 50 MW with a total capacity for the entire site of up to 1,800 MW. The Bank's ESDD considered the larger development of a number of similar projects within this area, which can give rise to potential cumulative impacts such as: workforce sourcing; resource needs; logistical arrangements; and the requirement for associated facilities including grid connection(s), even though the impacts of each individual project are not anticipated to be significant.

In order to assess the cumulative impacts the Bank has supported NREA to undertake a Strategic Environmental and Social Assessment (a SESA) of cumulative issues. This is outlined in the Egypt - Renewable Energy Framework (DTM 48213) PSD. As part of the due diligence and the SESA, the Bank has engaged with its clients and also worked with other IFIs and the Egyptian authorities to develop a master plan for managing E&S issues by the authorities and developers at the Benban site. EBRD continues to be closely involved in oversight of the implementation of the SESA requirements and will continue to monitor progress throughout project implementation.

Through the Bank's relationship with the individual sponsors, mitigation of the cumulative risks will be incumbent on all of the developers working in collaboration. The project specific ESAP commits Scatec Solar ASA to actively contribute to this initiative to ensure that Project benefits are realised and that E&S risks are adequately managed.

The Project will be monitored alongside other Benban sub-projects by EBRD and an independent Lenders' E&S Consultant.

Technical Cooperation

This Project, as part of several solar photovoltaic projects financed by EBRD in Egypt, is 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 NREA in preparing the SESA for the Benban solar site in Egypt. EBRD stressed the importance of the evaluation and mitigation of the cumulative and aggregated E&S aspects of those projects and to have a coordinated risk management approach for the entire Benban site. 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

Claus-Henning Schmidt
Claus-Henning.Schmidt@scatecsolar.com
+ 47 90 11 09 29
http://www.scatecsolar.com
Karenslyst Allé 49, 0279 Oslo, Norway

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