A 37-square-kilometer plot near the southern city of Aswan in Egypt is being built into the worlds largest solar installation. The Benban solar park will help provide Egypt, a country of over 90 million people, with clean energy and drive economic growth.
For years, Egypt has relied on fossil fuels for power generation due to the high cost of solar plants. Fossil fuel accounts for about 90% of the country’s power generation. But that is about to change as Egyptian officials think the nation can generate 20% of its power from renewable sources by 2022.
The Benban solar park project with $4 billion funding from thirty international infrastructure developers, is a rare sight to behold in Africa. Among the financiers of the projects are Africa50, established by the African Development Bank, and the International Finance Corporation (IFC).
IFC and a consortium of other lenders pledged $653 million in 2017 to support the project. The financing will help 13 private companies build and operate power plants at the site.
Africa50 joined investors Norfund and Scatec Solar in 2017 to reach financial close for six of the 32 utility scale solar power plants in the complex, totaling 390 MW.
Africa50 is one of the largest contributors to the Benban park. With a 25% stake, the investment platform contributed equity to fund construction, alongside Scatec Solar and Norfund, which helped leverage total funding of around $450 million from the European Bank for Reconstruction and Development (EBRD), the Dutch Development Bank FMO, the Green Climate Fund, the Islamic Development Bank, and the Islamic Corporation for the Development of the Private Sector.
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Africa50’s six plants alone created about 1,000 construction jobs (out of 4,500 total jobs) and a quarter of the 250 permanent operations positions.
Solar energy’s potential in Egypt, a country with spots known for year-round sunny days, has long intrigued investors and officials.
Benban solar park is becoming a reality due to the falling prices of solar components, thus allowing competition with oil- and gas-fired power plants.
The Benban project is equipped with bi-facial solar modules. It captures sunlight from both sides of the panel to increase the clean energy generation.
The solar park is so large that it can be seen from space, with over seven million photovoltaic panels. Benban has far-reaching potential to increase Egypt’s energy generation capacity. It has capacity to produce 1,650 megawatts with annual production of about 3.8TWh.
The plants are supported by 25-year power purchase agreements with the Egyptian Electricity Transmission Company (EETC) under Egypt’s Feed-in Tariff program, backstopped by a sovereign guarantee.
Benban project developers collectively funded the access roads and interconnection facilities under a cost-sharing agreement with EETC and the New and Renewable Energy Agency.
“In 2019, when the 6 plants were operational, they started producing about 870 GW hours of power annually, providing clean energy for over 400,000 households and avoiding 350,000 tons of CO₂ emissions that would have been produced from non-renewable sources,” according to African Development Bank.
“Benban is a good example of how we use early stage project development expertise and financing to rapidly bring projects to financial close and then add equity to encourage broader financing,” said Alain Ebobissé, Africa50 CEO.
“Benban is also the first of our dozen active projects to become fully operational and is now delivering clean energy to Egyptian people and businesses,” he added.