Getting FiTter and faster

Developers under Egypt’s Feed-in-Tariff (FiT) Round 2 programme are racing to close financings with DFIs and other lenders to make the scheme's 28 October deadline.

A majority of developers have secured commitments for financing for the solar power concessions they won under Egypt’s Feed-in-Tariff (FiT) Round 2 programme, according to the Egyptian Electricity Transmission Company (EETC). However, only 20 developers have signed PPAs thus far with EETC, and with ‘most’ expected to reach financial close by the 28 October deadline, there are still 16 developers without PPAs. 

Lamiaa Youssef, head of private sector projects at EETC, tells TXF: “With the international arbitration that was missing from Round 1 now on offer, and a more attractive Round 2 tariff, 36 developers have successfully signed commitment letters with lenders.”

The IFC, EBRD, Proparco, Islamic Development Bank (IDB) and Asian Infrastructure Investment Bank (AIIB) are expected to finance a large portion of the projects, alongside commercial and local banks. DFI backing eluded Round 1, and while Euler Hermes support was a feature, TXF understands under Round 2 there will be no ECA involvement.

Although only three project sponsors - Elf Energy, FAS Energy and Infinity Solar - achieved financial close in the first phase, 10 developers signed PPAs with EETC in October 2016. The seven that failed to reach financial close in Round 1 - Arinna, CTIP Oil & Gas, Desert Technology, MAG, Scatec Solar, Wadi Degla, Winergy-Schneider – were automatically transferred to Round 2 at a lower tariff.

So far 20 developers have signed 25-year PPAs with EETC meaning there is still a long way to ensure every developer is successful under the second phase. The applicable tariff for solar projects with capacity of more than 20MW and up to 50MW is USD 8.4 cents/kWh compared to USD14.34 cents/kWh in Round 1.

EDF Energies Nouvelles signed a PPA for its 50MW $72 million EDF EN Benban PV plant, with the EBRD considering $27 million in debt alongside a $23.4 million loan from Proparco, and $21.6 million from local Egyptian banks.

Shapoorji signed the PPA for its SP Energy project on 11 May 2017. The plant will cost $76 million with the IFC providing an A loan of $19 million, the AIIB is considering up to $19 million, and another $22 million will be syndicated debt with the remainder covered by equity.

El Sewedy Electric’s $72million 50MW PV project is expected to be financed with a $27 million loan from the EBRD as well as commercial debt.

Access Power and Eren have also signed PPAs for two 50MW projects totalling $154.6 million- Access/EREN Benban PV I and II. The EBRD and Proparco have committed $58 million each for the two projects.

Infinity/ib vogt is expected to finance its two 30MW projects totalling $105.2 million with a $43.4 million loan from the EBRD, while Alpha Solar’s $74 million 50MW project is rumoured to be financed by the EBRD with a $29 million loan.

Al Fanar signed a PPA for its Alfa Solar Binban PV project. Set to cost $74 million, the project is under consideration for $28.5 million of debt from the EBRD and a $28.5 million shariah-compliant tranche from the Islamic Corporation for the Development of the Private Sector.

Scatec signed PPAs for six projects in April this year, each costing around $78.5 million. They are titled Scatec Benban I to Scatec Benban VI. The EBRD is leading a consortium of banks to lend $350 million to the projects, while the Islamic Development Bank will lend to one project.

Desert Technology’s subsidiary IRC will finance its 50MW project with a $100 million loan from the IFC.

And, on 7 August, Acwa Power signed PPAs for three projects that will total $187.7 million, with the EBRD providing a $70 million loan alongside one other commercial bank.

Youssef concludes: “There are still some PPA issues outstanding for developers and lenders, so I’m not sure how many will reach financial close - but we think most of them will.”

Sign in to post a comment. If you don't have an account register here.

X

According to TXF Data, the Middle East was the only global region to show substantial year on year growth in export finance deal volumes. Find out why at TXF MENA...

TXF MENA 2017