The New and Renewable Energy Authority (NREA) plans to finish negotiations with 10 local and international financial institutions by February to provide €180m in financing for the first phase of the construction of wind fields.
The project is to be implemented by the German company Siemens and will add a capacity factor of 2000megawatts (MW) of wind energy by 2022. Siemens will build up to 12 wind farms in Egypt, totaling up to 600 turbines.
Chairman of the NREA Mohamed Salah El Sobky said that the authority plans to secure €180m for the first phase of the project in the coming days. The project’s first phase is estimated to cost €2bn and will add a capacity factor of 180MW.
Sobky added that the authority is negotiating with the National Bank of Egypt (NBE), the Commercial International Bank (CIB), Banque Misr, Audi, Emirates NBD, International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the German Development Bank (KfW), and the African Development Bank (AfDB).
El Sobky explained that the NREA seeks to obtain financing for 60% of total project costs from international financing institutions, while the remaining 30% will be provided by domestic banks. There was an initial agreement with three local banks that included NBE, Banque Misr, and CIB in order to provide needed financing for the project.
Siemens will establish a factory to manufacture wind turbine blades through self-financing with investments worth €100m. The factory will annually produce 300 blades per year for 100 turbines that will have a capacity factor of 340MW.
El Sobky said that Siemens has already begun work on the first phase of the project. Technical and financial negotiations are expected to be finished within a few weeks.
After obtaining loans from banks, the NREA will present the contracts to buy the renewable energy produced from the project to Siemens for approval, according to El Sobky.
Negotiations are focused on specifying the selling price per kilowatt produced from the station as well as choosing financing parties for the project.
The NREA has cooperated with Siemens to carry out studies and measurements of the intensity and direction of wind, as well as topographic land studies to accelerate the project’s implementation.
According to the agreement between the Ministry of Electricity and the NREA, a wind field with a capacity factor of 300MW will be established, followed by stations with capacity factors of 400MW and 500MW.
Siemens will implement the project using the APC+ Finance system, which requires that the German company must provide necessary financing, while the NREA, as the project’s owner, must repay the value of the loans through which financing occurs.