In Egypt, World’s Largest Solar Park Nears Completion
The world’s largest solar power park is set to be completed by the end of 2019. Located near the village of Benban in Aswan governorate, Upper Egypt, the park has a planned capacity of around 1.46 gigawatts (GW) and consists of 32 smaller power plants, of which the majority is already operational.
In August, the three latest plants, developed by Egypt’s Elsewedy Electric and Norway’s Scatec Solar and each 65 megawatts (MW), became fully operational. In June, the three plants developed by German company IB Vogt came online. Other developers with projects at Benban include ACWA Power (Saudi Arabia) and Alcazar Energy (United Arab Emirates).
The Benban solar park is a major project for Egypt and is often mentioned in the same breath as megaprojects such as the new capital, the Suez Canal extension and the 1.5 million feddan agricultural reclamation project. Special edition Egyptian pound coins have been released featuring nine of these projects, of which Benban is one.
Funding for the Benban plants came from large international lenders, among them the International Finance Corporation, European Bank for Reconstruction and Development, African Development Bank, Asian Infrastructure Investment Bank and the Dutch Development Bank.
The government has set a target of generating 20 per cent of its power from renewable sources by 2022, in line with the 2016 Paris Agreement, of which Egypt is a signatory.
After the completion of the Benban complex, around 11 per cent of Egypt’s power generation capacity will be from renewable resources, according to figures from the US Energy Information Administration.
With over 4,000 hours of sunshine a year and vast empty deserts, few countries have a better profile for solar energy than Egypt. Moreover, demand is high. The country faced regular power blackouts due to electricity shortages as recently as 2016.
However, the completion of Benban has not been without obstacles. A large solar feed-in tariff scheme, which entailed a fixed price the government would pay for its electricity, collapsed when the government inserted a new clause into the scheme’s power purchase agreement, insisting on local arbitration only in the event of disputes. International lenders pulled out, forcing most companies to withdraw.
The clause was apparently in response to the government rethinking the high feed-in tariff it had offered, especially as the immediate power shortage had been solved by three new gas-fired power plants built by Siemens. Only two out of almost 40 projects, one by the Egyptian company Infinity Solar and one by Saudi Arabia’s FAS Energy, went through.
Under the second-round feed-in tariff scheme, 30 projects were announced in Benban, and in 2018, the first projects started operation.
Benban is Egypt’s first large-scale solar park, increasing the current solar capacity almost tenfold. Aside from smaller non-grid solar projects, Egypt’s renewable capacity relies on hydropower, notably from the Aswan High Dam (2.1GW), and some wind farms.
In addition to securing its own energy supply, Egypt aims to become a major electricity exporter in the region. Small-grid connections are already in place with Libya and Jordan, and a grid connection with Sudan is under construction. The Sudan connection was due to start trial runs this year, but these have been postponed repeatedly due to the political unrest in that country. There are further plans for grid connections with Saudi Arabia and Cyprus as well as an extension of the connection with Jordan, but these are too are in the preparatory phases.
In the meantime, Egypt has announced a tender for a second large (600MW) solar project west of the Nile Delta. No company has been awarded the contract yet. Local media reported in August that a tender for a new project at the Benban site was also being prepared, but it unclear when this will materialize.
Currently, there is no urgency to pursue more power projects, as Egypt has a surplus of power generation capacity of around 15 per cent. Together, Benban and the Siemens gas-fired plants generate more than enough energy to meet domestic demand, and grid connections with other countries are needed before Egypt can start exporting electricity on a large scale. The construction of a coal-fired power plant was also postponed because of this surplus.
“I don’t think we will see large-scale solar projects soon; Egypt doesn’t really need them,” Menna Samir, research analyst at Egypt Energy Monitor, told Fanack. Hence, the growth potential for solar power in the short term lies in smaller scale off-grid projects.
“Small-scale solar projects are going to increase, for instance for industries and factories. With the electricity prices going up [due to recent subsidy cuts], a solar system saves them money,” Samir said.
Among the companies to have already embraced off-grid solar installations are Coca-Cola and dairy producer Juhayna. Others interested in solar energy are real estate developers looking to power their compounds, resorts or hotels at a lower cost.
In July 2019, the Mountain View compound in the capital Cairo signed a deal with SolarizEgypt to establish its own solar plant to meet the needs of the compound’s residences.
For some of these companies, going solar is used as a marketing tool to appeal to the upper classes, Samir said.
For beach resorts located far away from the national grid, solar panels can provide a power source not dependent on the government to connect these resorts to the grid.
While the existing off-grid projects are small, ranging from around 30 kilowatts to 20MW, they indicate that momentum for solar development is growing. If grid connections to Sudan, Jordan, Cyprus and Saudi Arabia become a reality in the midterm, the path would be clear for a possible successor to Benban.
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