World Bank approves $660 million fund for 500 MW of projects at Benban solar complex in Egypt

The International Finance Corporation (IFC), a member of the World Bank Group, has approved a $660 million financing for the construction of 500 MW of solar power plants at the 1.8 GW Benban solar complex in Aswan, southern Egypt.

According to a statement from Egypt’s State Information Service, the funds will be used to build 11 solar power plants with a combined capacity of 500 MW at the complex. These projects, the government said, will be built at a cost of $730 million, without providing additional details.

After two years of stalling, Egypt’s FIT program seems now to have finally relaunched, as several projects are reaching financial close. In early June, the European Bank for Reconstruction and Development (EBRD) announced that its board of directors has approved a $500 million credit facility to finance 13 large-scale PV projects in the Benban complex. A week later, the African Development Bank (ADF) said it was considering investing $18 million in a 50 MW solar facility at the complex. Furthermore, Norwegian developer Scatec Solar signed a 25-year PPA for six solar projects totaling 400 MW in the Benban area.

The 1.8 GW Benban solar complex represents the larger portion of the 2 GW of PV capacity allocated by the Egyptian government through its FIT scheme for solar.

Development of the program was slowed by a dispute that emerged in March 2016 between the Egyptian Electricity Transmission Company and international lenders and developers over the arbitration venue for the projects. One of the key issues brought up for discussion during the amendments was the location of the arbitration venue, as the majority of lenders and developers were international companies, so asserted that the seat of arbitration be in a neutral country, while the original agreements had allocated the Cairo International Arbitration Centre as the arbitration venue. In September, however, a new revised phase for the program was announced, which slashed FIT rates and cleared up the arbitration dispute. The Egyptian government, in fact, had agreed, among other things, that the seat of arbitration be offshore, outside Egyptian borders.

The 2 GW target is expected to be achieved via the development of 40 individual solar parks of around 50 MW each as Egypt aims to source 20% of its energy from renewables by 2020.