European Bank for Reconstruction and Development (EBRD) has allocated up to $500m in funds for solar power developments in Egypt next year.
The country intends to derive 20% of its power mix from renewable sources and has initiated a new solar power programme for the purpose.
EBRD Egypt country director Philip ter Woort said: "Egypt currently relies to a large extent on traditional power generation fuelled by costly hydrocarbon imports, however the government has an ambitious strategy to obtain 20% of the country’s electricity from renewable sources by 2020.
"Egypt is well placed to do so as it has world-class solar resources and in some places, especially in the Gulf of Suez, great potential for wind power."
The solar energy programme, which is aimed at the development of up to 2GW of utility-scale solar generating capacity, will involve development of around 40 projects, each having a capacity for approximately 50MW.
Egypt will be involving private sector investors for the solar power programme.
Many of the projects under the programme will be developed on a 1.8GW site near Benban in Upper Egypt. Once completed, the site will represent the largest solar park in the world.
The EBRD funds will be used to support multiple of such solar energy projects, which are expected to involve a cumulative investment of $4bn.
EBRD intends to mobilise up to $1.5bn in debt and equity from other financiers for the proposed ventures.
The global financial body has co-ordinated with the country authorities to offer technical cooperation while developing the legal and regulatory framework for renewable energy, specifically related to contractual agreements, the solar grid code and environmental and social due diligence.
EBRD Power and Energy director Nandita Parshad said: "Successfully implementing the feed-in tariff programme will unlock Egypt’s potential by providing a regulatory framework that can attract private capital.
"… once the country has an established model for private investment in renewables, there will be huge potential for widespread, rapid deployment, thanks to Egypt’s fantastic resources and the falling cost of renewable generation."
EBRD has recently granted a $250m credit facility to support private sector renewable energy projects in Egypt, Morocco, Jordan and Tunisia, which along with the new allocation, raises its renewable investments in Egypt to over $5bn.
Image: Egypt and EBRd will be involving private sector investors for the solar power programme. Photo: courtesy of European Bank for Reconstruction and Development.