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Abu Dhabi, UAETuesday 11 December 2018

Exclusive: Dubai’s Phanes targets $200m worth of projects as it eyes Egypt, Saudi

The Middle East’s green pivot could open doors for smaller off-grid renewables players

Phanes Group chief executive Martin Haupts says there is an opening window of opportunity for off-grid players in the Middle East. Victor Besa / The National
Phanes Group chief executive Martin Haupts says there is an opening window of opportunity for off-grid players in the Middle East. Victor Besa / The National

Dubai-based small-scale utilities developer Phanes Group is eyeing US$200m worth of projects with a collective capacity of 150MW as it targets new markets such as Egypt, its chief executive said.

“We’re looking at Egypt from two perspectives - one is we have a number of deals that are advancing in the pipeline and the second round of programmes could be interesting once we see how the first phase pans out,” Martin Haupts said in an interview with The National.

Phanes Group, a partner with Dubai-based port operator DP World on one of the largest solar rooftop projects in the Middle East, has positioned itself to grow as a big player in the energy-poor off-grid segments of sub-Saharan Africa, schemes it develops in partnership with development finance. Much of sub-Saharan Africa remains in the dark, with an estimated 632 million people living without access to electricity. This is a segment that the former Barack Obama administration sought to electrify through the $7 billion Power Africa scheme, which aims to deploy 30GW of electricity by an undefined timeline.

Phanes Group, a partner in the US government scheme, is looking to bridge the gap in places such as Egypt, the Arab world’s most populous state which is looking to generate 20 per cent of its energy needs from renewable sources by 2022.

“You have a lot of industry in Egypt, which is good. So we’re looking at the CNI segment. It's interesting and feasible in the country. The larger scale ground-based systems are reserved for tender,” said Mr Haupts.

CNI or critical national infrastructure refers to those assets whose loss would lead to severe economic or social consequence and in the case of energy can be typically plugged by off-grid solutions.

Phanes, which normally develops 10MW to 100MW schemes, is also looking to capitalise on the huge volume of renewables projects in the pipeline in the Middle East, where it hopes that more work would translate into a more competitive space for smaller players.

Saudi Arabia, which is looking to tender 3.25GW of solar projects as well as 800MW of wind capacity this year, was “too early” to penetrate last year.

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The nascent nature of the industry and the government’s priority on pushing through tender-based programmes meant companies like Phanes that are targeting a growing demand for energy efficiency through off-grid schemes found themselves biding their time.

Saudi Arabia, this year however, is targeting energy savings of around 40GW hours through the first phase of its efficiency programme that has whet the appetite of several and international and local players looking to gain entry into one of the largest markets in the region.

“You have a lot of industry in Saudi Arabia, which is cut off the grid, which is completely dependent on thermal production like diesel gen sets and I believe this is a very interesting market,” said Mr Haupts.

The firm is also watching renewables targets being rolled out in the UAE’s small emirate of Ras Al Khaimah, home to several energy-intensive industries, such as cement and one of the world’s largest facilities for production of ceramics.

Phanes, which typically funds its various solar schemes through 30 per cent equity with the remainder backed by developing finance institutions, is looking to grow its footprint in the Mena region as well as in Pakistan and Central Asia over the next five years.

But for now, the firm is betting on sub-Saharan Africa’s growth potential and is looking at newer models of developing energy schemes.

“We’re one of the more active medium-sized players already now so we want to build up an IPP [independent power producer] portfolio on the back of that we also want to be part of the solution as far as off-grid is concerned,” said Mr Haupts.