Egypt had originally announced that it would tender 10 projects totaling 20 megawatts each for the Kom Ombo solar photovoltaic scheme in Upper Egypt.
Renewable energy developers edged out in Egypt’s Kom Ombo solar project
Renewable energy developers are being squeezed out of the Egyptian market in the wake of the government’s strategy shift.
Egypt had originally announced that it would tender 10 projects totaling 20 megawatts each for the Kom Ombo solar photovoltaic (PV) scheme in Upper Egypt. It has now opted to consolidate those into one utility-scale project totalling 200MW, the government-owned Egyptian Electricity Transmission Company told The National.
This change, which only allows one winner, is hurting the country’s renewable energy market, according to Italy’s Building Energy. “This changes a lot in the market in the region in general,” said Matteo Brambilla, the managing director of Africa and the Middle East for Building Energy. “The real market is struggling to happen.”
Building Energy was pursuing two of the 20MW solar offers but, now that the total has changed to one lump sum, the company and its consortium partners are re-evaluating.
This could pose problems for companies that signed bilateral agreements with the Egyptian government last year, meaning that a standard tendering process was avoided by striking a direct deal with the authorities.
“These deals won’t be feasible if the Egyptian government starts tendering out so many projects on the side,” said one regional developer involved in the North African country, asking not to be named. “These scattered developments are frustrating investors.”
The local solar developer Solar Shams said the process was presented to all 15 prequalified candidates. Faisal Eissa, the chief operating officer of Solar Shams, said the government had found it difficult to evaluate the offers based on prices and realised that it would be complicated for multiple, smaller projects. “They looked at [those prequalified] and saw it was the same firms that had signed on for the 50MW tenders,” said Mr Eissa. “So why make it smaller if those companies are all capable of completing 200MW?”
But some of those firms are not capable, including Building Energy. The company decreased its stake in its two 50MW projects in Benban and Dubai’s Access Power has stepped on board to help these projects reach completion.
While Building Energy declined to comment, Access said it was always “evaluating potential renewable energy projects that fall in line with our growth strategy in Africa and Asia”.
Mr Eissa said this is not the first project change. “Some companies that entered qualifications and couldn’t continue on their own, so they began approaching others to help with the development,” he said, adding that it has happened “a few times”.
“The Egyptian market is on a steep learning curve but we need to see a universal agenda,” said Hadi Tahboub, vice president of the Middle East Solar Industry Association.
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