Egypt Close to Deals on 1GW of Solar and Wind Projects

Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm at the desert road of Suez outside of Cairo, Egypt September 1, 2020. Picture taken September 1, 2020. (Reuters)
Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm at the desert road of Suez outside of Cairo, Egypt September 1, 2020. Picture taken September 1, 2020. (Reuters)
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Egypt Close to Deals on 1GW of Solar and Wind Projects

Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm at the desert road of Suez outside of Cairo, Egypt September 1, 2020. Picture taken September 1, 2020. (Reuters)
Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm at the desert road of Suez outside of Cairo, Egypt September 1, 2020. Picture taken September 1, 2020. (Reuters)

COP27 host Egypt is close to signing final agreements to build two wind and solar projects with combined capacity of a gigawatt (GW) to boost the country's lagging renewable power development. 

High levels of solar irradiation, strong winds and expanses of desert in which to construct plants mean Egypt has vast renewable potential, industry players say. 

The government has brought forward a goal of producing 42% of its power generation from renewables to 2030 from 2035, but missed a target of 20% for this year. 

The two new projects, with a combined cost of over $1 billion, are both backed by the International Finance Corporation (IFC), which approved them at board level last week, Vivek Pathak, IFC's head of climate business, said. 

They are under negotiation and should be finalized soon, though the exact date was unclear, he said in an interview on the sidelines of COP27 in Sharm el-Sheikh. 

One is for a 500 megawatt (MW) solar plant near the southern Egyptian city of Aswan, an area already home to one of the world's largest solar parks, to be developed by Dubai-based AMEA Power, according to a disclosure on the IFC website. 

The other is a 500MW wind plant to be built by a consortium owned by AMEA Power and Japan's Sumitomo Corporation near Ras Ghareb on the Red Sea coast of the Gulf of Suez. 

In the run up to COP27 and during the summit, Egypt has announced renewable energy deals, including memoranda of understanding with Emirati firm Masdar and Egypt's Infinity for a 10GW wind plant, and with Saudi Arabia's ACWA power for another 10GW plant. 

It has also signed framework agreements for nine green hydrogen projects in the Suez Canal Economic Zone. 

Egypt has 6.8GW of installed wind, solar and hydro power, and aims to raise renewables capacity to 10GW by the end of 2023, said Ahmed Mohamed Mohina, a senior official at Egypt's electricity and renewable energy ministry. 

The country had spent $7 billion adapting its grid in the last seven years and was studying a "green corridor" of power lines to transmit renewable energy, he said. 

However, the share of non-hydro renewable power in Egypt's total energy mix was just 5% 2021, well below potential, the World Bank said in a report published this month. 

Renewable energy generation had been hampered by price distortions after Egypt doubled its installed power capacity to nearly 59GW between 2014 and 2021, creating a surplus mainly through the installation of giant gas-powered plants, the report said. 

One of the obstacles was that even after power purchasing agreements were agreed, negotiations over tariffs in Egypt could delay projects, said Chris Antonopoulos, CEO of Lekela, which operates the West Bakr wind farm on the Red Sea coast. 

"Everyone knows that the natural resources there are so great in Egypt that there is much more competition than in other places," he said, adding that wind speeds of 9-11 meters per second in the Gulf of Suez were exceptionally high. 

Earlier this year, the government introduced grid integration fees for solar plants producing more than 500KW of power. Despite pushing the limit to 1MW a few months later, some in the industry said the fees posed a major challenge to large-scale projects. 

Mohina said the fees were needed to help adapt the grid to be able to absorb more renewable power. 



S&P Reaffirms Sultanate of Oman’s Sovereign Credit Rating at ‘BBB-’

S&P reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ Asharq Al-Awsat
S&P reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ Asharq Al-Awsat
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S&P Reaffirms Sultanate of Oman’s Sovereign Credit Rating at ‘BBB-’

S&P reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ Asharq Al-Awsat
S&P reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ Asharq Al-Awsat

Standard & Poor’s Global Ratings (S&P) has reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ with a Stable Outlook, citing the government’s ongoing efforts to reduce public debt and the continued improvement in the State’s fiscal performance.

Last September, S&P had upgraded the country’s long-term foreign and local currency sovereign credit ratings from 'BB+' to 'BBB-'.

The agency confirmed that the Sultanate’s credit rating may witness further improvement over the next two years if the government continues to manage the country’s public finances as planned, including increasing non-oil revenues and improving the efficiency of public spending.

It noted that these measures are expected to continue to boost GDP growth, supported by continued growth in non-oil GDP, in addition to continuing measures aimed at promoting the establishment and growth of companies and projects that support economic diversification activities and operations, in addition to initiatives to develop the capital market sector.

The agency noted in its report that the Sultanate has made significant progress in recent years in addressing the structural challenges it faced, including the large deficit in the state’s general budget and balance of payments.

It expected Oman’s real GDP to grow by 2% in the next three years (2025-2028), while the net public debt is expected to decrease to an average of GDP by 1.5% between 2025-2028.

This is attributed, according to the agency, to the assumption that the average price of Brent crude will reach $70 per barrel over the next two years, compared to $81 per barrel in 2024, in addition to a decline in oil production due to the Sultanate of Oman’s commitment to voluntary cuts under the OPEC+ agreement.

The agency also expects the current account to record a financial surplus averaging 1.3% of GDP during the period 2025-2028, noting that Oman has been able to cover the large deficits.

Standard & Poor’s expected inflation rates to remain at moderate levels, averaging about 1.5% annually during the period 2025-2028, after reaching about 1% in 2024.

The agency said the success of the Sultanate’s efforts to reduce total public debt from 68% of GDP in 2020 to 36% in 2024.

It also expects highly liquid assets to remain close to 40% of GDP during the period 2025-2028.

Also, the agency commended the efforts made to develop the hydrogen production sector, in light of Oman’s intention to achieve carbon neutrality by 2050, which will enable the country to become one of the leading hydrogen exporters by 2030.