A new 500 MW Wind Farm project that will operate in the Gulf of Suez region, near Ras Ghareb, has achieved financial close which is a significant milestone for the project, as described by Orascom Construction PLC, one of the owners and operation partners of the project. Financial close is the point at the end of the procurement phase where the public–private partnership contract has been signed, any conditions precedent for financing are met and financing is in place so that the project company can commence construction.
The wind farm comes at USD680 million worth of investments, and will be built, owned and operated by Red Sea Wind Energy S.A.E., which is owned by a Consortium of ENGIE, Orascom Construction, Toyota Tsusho Corporation and Eurus Energy Holdings Corporation. Orascom Construction will execute the construction of the civil and electrical works of the wind farm.
The project is expected to deliver clean power to more than 800,000 Egyptian homes. It should also help accelerate Egypt’s transition to renewable power generation and will reduce CO2 emissions by approximately 1 million tons annually. The project falls under the energy pillar of the Nexus of Water-Food-Energy (NWFE) programme, an initiative that the government presented at COP 27 in November 2022, and which is expected to contribute towards energy transition. NWFE provides opportunities for mobilising climate finance and private investments to support Egypt’s green transition, reflecting the interlinkages and complementarity between climate action and development efforts.
To mark the important milestone, the financial close agreement was signed on 5 April, between Red Sea Wind Energy, the Japan International Cooperation Bank (JBIC), and the European Bank for Reconstruction and Development (EBRD) as representatives of the financing entities.
A high-level delegation from the Egyptian government attended the signing ceremony; at hand were Prime Minister Mostafa Madbouly, Minister of Electricity and Renewable Energy Mohamed Shaker and Minister of International Cooperation Rania al-Mashat. Japanese Ambassador to Cairo, Oka Hiroshi also attended the signing ceremony.
Khaled El Degwy, Orascom Construction Executive Director, signed on behalf of Red Sea Wind Energy; on behalf of JBIC its Regional Director, Kenichiro Kitamura; and on behalf of EBRD, Heike Harmgart. Managing Director, Southern and Eastern Mediterranean Region.
The consortium has already completed a project to develop Egypt’s first renewable energy Independent Power Producer, which helped triple the wind energy capacity in Egypt to 762.5 MW.
According to Minister of Electricity and Renewable Energy, Mohamed Shaker, Red Sea Wind Energy is to operate and maintain the wind farm under a 25-year Power Purchase Agreement (PPA), which it had signed with the Egyptian Electricity Transmission. He explained that the plant will be connected to the national grid in two phases, with full commercial operation planned for the third quarter of 2025. Mr Shaker pointed to the efforts that the Ministry has put into facilitating the investment procedures in the field of power generation and renewable energy, which he said has succeeded in boosting the private sector’s confidence in the electricity and renewable energy sector in Egypt, and attracted local and foreign investments.
Minister of International Cooperation, Rania al-Mashat said that the project is the first for the private sector to be funded within the NWFE platform. Dr Mashat explained that encouraging private sector investments through international cooperation aims to accelerate the pace of progress towards the transition to a green economy. She said that the ministry is working to achieve this through the linkage between water, food and energy projects, and cooperation with all development partners.
Orascom Construction’s Khaled El-Degwy said that this is the third private wind farm in Egypt, and is expected to be the largest in Africa. The new farm will help reduce CO2 emissions by about one million tons annually, Mr Degwy said.
According to EBRD’s Heike Harmgart who appeared obviously proud of the project as the bank’s first power project with NWFE. EBRD issued on 5 April a development financing of USD100 million for the new wind farm project. She said that the new farm will represent a fundamental transformation for Egypt on the way of reducing fossil fuels. The project will also help empower green businesses, provide job opportunities, reduce pollution and carbon dioxide emission.
6 April 2023
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