Enerray’s expanding business in MENA

Antonio Capua is very excited by the opportunities presented by the MENAT region. Enerray S.p.A. is one of the global leaders in the design, construction and management of PV power plants, and its clients include some of the best-known brands in solar. For example, multinationals such as Ferrari, Max Mara, ENI, Auchan, Leroy Merlin and many others. It has installed over two million solar panels in about 240 projects worldwide amounting to over 800 MW of PV capacity. Moreover, the company is the leading O&M operator in Italy and one of the leaders globally with a managed portfolio of over 800 MWp.

Its foray into the Middle East began with projects in Jordan, which early on seized on PV technology to reduce its dependence on foreign energy imports. Projects in Jordan total 33 MWp and involve two PV power plants: one is based in the port city of Aqaba (10 MWp) and the other in Ma’an (23 MWp).

In both cases Enerray served as the EPC, which has been its core business since the company was established in 2007. (In Ma’an, Enerray also acted as sponsor, developer and investor.) The design and construction of utility-scale solar farms has been the bread and butter of the company since the beginning, reflecting the strong position of its parent Maccaferri in the construction sector. In addition to EPC services, Enerray also has a long track record both at home and in overseas markets in O&M, again in the utility-scale market segment.

From its foundation in 2007, Enerray has been very strong in the roof-top C&I market segment, having constructed over 80 MWp for a total over around 150 PV plants.

The company has ventured into the market with an expanded business portfolio, not only as EPC and O&M operator, but also as a solar developer and investor. This expanded portfolio is made possible by the strong balance sheet and global network of Maccaferri Industrial Group, and allows Enerray to diversify its PV business to not depend entirely on the large-scale EPC and O&M markets. Both have seen significant capex and opex declines in the past several years, which on the one hand has boosted PV’s competitiveness in many countries while on the other hand reducing prices and margins for suppliers in these markets.

These developments apply especially to MENA markets, which have yielded some of the lowest solar PV auction prices in 2017 and again last year. Low auction prices demand low capex and opex costs to generate a sufficient return for both investors and lenders. How far capex costs have declined in just the past several years is made clear by Capua’s comparison of the two Jordan plants with more recent projects in Egypt. While for example 23 MWp in Jordan (Ma’an) amounted to an investment of $50 million three and a half years ago, one (25 MWp) of the three ongoing projects in Egypt with a combined capacity of 116 MWp involves an investment of $29 million!

These 116 MWp cover three soon-to-be-built solar farms in the Benban Solar Park, which will encompass 1.8 GWp overall, making it Egypt’s biggest PV undertaking. Enerray’s 116 MWp slice involves two 25 MWp plants and one 66.7 MWp installation. Financing was recently secured for these three plants from the International Finance Corporation (IFC), part of the World Bank Group. Benban is the most prominent example of Enerray’s newly expanded role, with the company not only acting as EPC, but also as equity investor in all three cases. On both fronts, Enerray has teamed up with a local partner to provide EPC services and also part of the equity.

While capex prices for utility-scale PV are among the lowest in MENA, opex prices remain relatively high on account of the extra O&M work required in these harsh environments. For example, more frequent cleaning of the solar panels is required to deal with the abundance of sand in MENA’s desert environments.

We can expect Enerray to handle O & M work at Benban once the 116 MWp are built and connected to the grid this year. The same will probably happen at the 10 MWp Tozeur solar plant in Tunisia, where Enerray has been engaged as the EPC to construct this power station for the national utility Société Tunisienne de l’Electricité et du Gaz (STEG).

Moreover, Enerray in partnership with IRESEN (Institut de Recherche en Energie Solaire et en Energies Nouvelles), has built a CSP (Concentrated Solar Power) plant of 1 MWe with ORC (Organic Rankine Cycle) solution in Benguerir, Morocco. The commissioning is expected within the first half of 2019. An additional 500 kWe pilot project (ORC-PLUS) is currently being completed, and this project is coordinated by ENEA, the Italian National Agency for New Technologies, Energy and Sustainable Economic Development, as well as other European research centers. This project will be connected to the first and will feature an innovative Thermal Energy Storage system (TES).

While Capua is excited by the potential offered by utility-scale PV in MENA, he also likes the potential on the C&I roof-top front. This is a fairly new market for Enerray in the Region, even though the company already has a track record in its home market, where high electricity rates make roof-top PV attractive for corporates, even without a very generous PV subsidy regime. Capua points to the newly established Enerray Gulf Solar Energy Systems, which has been setup in Dubai to tap into the roof-top C&I market in the United Arab Emirates (UAE) and neighboring countries.

Enerray Gulf Solar Energy Systems has already secured a 1 MWp rooftop project in Fujairah, an emirate on the east coast of the UAE. And in Dubai the company can tap into the Shams Dubai program, established in 2015 to support roof-top PV in the UAE’s largest city. Shams Dubai is essentially a net metering program and to date Dubai’s utility Dubai Electricity and Water Authority (DEWA) has installed 1,177 roof-top PV systems to its grid, amounting to 54.7 MW in overall capacity. Shams Dubai forms an important part of the emirate’s broader goal of sourcing 75% of its energy from clean energy sources by 2050.

Of course, countries like UAE are also among the world’s largest oil and gas producers, but with growing populations and with it a rising demand for energy, these countries are keen to move away from fossil fuels, at least when it comes to powering its leading cities. E-mobility will surely impact this development as well and in addition to the EV driver, rising fossil fuel prices provide an incentive to export such energy, while utilizing abundant (and increasingly low cost) renewables at home. So Enerray’s establishment of its Gulf subsidiary seems very well timed and we can expect an increasingly varied mix of projects to be announced by Enerray in the MENA region in the coming years.

By Eckhart Gouras