The European Bank for Reconstruction and Development (EBRD) has announced that it has provided an initial $4.2 million loan to TAQA PV for Solar Energy, TAQA Arabia’s renewable energy subsidiary.
On a statement released Thursday, the EBRD said the loan will promote the expansion of renewable energy in Egypt by supporting one of the first green private-to-private projects in the country.
The loan is part of a financing package of up to $10 million to expand TAQA Arabia’s private-to-private renewable energy business, according to the statement.
The funds will finance the construction and operation of a 6 MW solar photovoltaic power plant located at Dina Farms in Beheira governorate, 80 kilometres from the Egyptian capital Cairo, which will enable Dina Farms, the largest dairy farm in Africa, to cover part of its energy consumption with clean energy.
TAQA PV for Solar Energy will sell all of its generated energy to Dina Farms under a 25-year power purchase agreement (PPA), according to the ERBD statement.
The plant is the first private-to-private renewable energy project financed by the EBRD in Egypt involving direct electricity supply from a privately owned generator to a private off-taker through a corporate PPA.
The fund also came in light of the Egyptian government’s target of achieving 20 percent of the country’s electricity generation capacity from renewable sources by 2022, and 42 percent by 2035.
“The government has pursued energy diversification and liberalisation by facilitating a market for private renewable energy development in recent years. The price of electricity produced by renewable projects in the country has been steadily decreasing to become more competitive to energy produced using conventional fossil fuel sources. This has created strong demand in Egypt from heavy consumers of electricity in the commercial and industrial sectors, seeking access to electricity from private renewable energy producers,” read the statement.
“Private energy solution providers such as TAQA Arabia have a key role to play in supporting Egypt's ongoing energy sector transition and liberalisation,” according to Heike Harmgart, EBRD managing director for the Southern and Eastern Mediterranean (SEMED) region.
TAQA PV for Solar Energy is a project company incorporated in Egypt for the purposes of developing the private-to-private renewable energy business of TAQA Arabia SAE, an Egyptian joint stock company.
TAQA Arabia and Dina Farms are part of the core subsidiaries of Qalaa Holdings, which builds responsible and sustainable businesses that create social and economic value, and operates in sectors such as energy, cement production, agrifoods, transport and logistics, mining, printing and packaging.
This is also the EBRD’s first project in Egypt under the Southern and Eastern Mediterranean Private Renewable Energy Framework (SPREF), which supports the development and financing of innovative business models and to mobilise private finance for renewable energy projects in the SEMED region.
The framework is supported by the Global Environment Facility and the Clean Technology Fund, according to the bank.
To date, the EBRD has invested more than €7 billion in 125 projects in Egypt, where the bank’s areas of investment include the financial sector, agribusiness, manufacturing and services, as well as infrastructure projects such as the power sector, municipal water and wastewater services and transport, according to the EBRD.