Egypt: AfDB Commits $184.1 Mn For Solar & BESS Project

African Development Bank Group’s board of directors approved a financing package of up to $184.1 million to support the development of the Obelisk 1-GW solar photovoltaic project and 200MWh battery energy storage system (BESS) in Egypt. This is expected to be Africa’s one of the largest solar power plants.

Located in Qena Governorate in southern Egypt, the project entails the design, construction, operation, and maintenance of a photovoltaic power plant with an integrated battery energy storage system (BESS). The Egyptian Electricity Transmission Company will be the sole off-taker under a 25-year Power Purchase Agreement.

The Obelisk Solar Project aligns with the African Development Bank’s Ten-Year Strategy, its New Deal on Energy for Africa, and its Country Strategy Paper for Egypt as well as SEFA’s framework to accelerate African country’s energy transition by increasing the share of renewables and catalyzing commercial capital mobilization in the power sector. The project also advances Egypt’s commitment to achieve 42 percent generation capacity from renewable energy sources by 2030.

Bank Group’s Financing Package

The project’s total cost is estimated at more than $590 million. The Bank Group’s financing package includes $125.5 million of ordinary resources, as well as concessional funding from Bank Group-managed Special Funds the Sustainable Energy Fund for Africa  (SEFA) worth $20 million, and the Canada-African Development Bank Climate Fund ($18.6 million), a partnership of the Bank Group and the Government of Canada.

A further $20 million will come from the Climate Investment Fund’s Clean Technology Fund, with additional financing to be mobilized from a consortium of development finance institutions. Under Egypt’s Nexus of Water, Food, and Energy (NWFE) platform, Obelisk has been granted a Golden License by the government, that will contribute to addressing Egypt’s energy constraints and advancing its energy transition.

The project, expected to be fully operational by the third quarter of 2026, will generate an estimated 2,772 gigawatt-hours of clean, reliable, and affordable energy annually to the national grid. The battery energy storage system will help meet peak evening demand with renewable power while also mitigating the variability of solar power generation. The project is expected to create about 4,000 jobs during construction and 50 permanent jobs during operation, with a special focus on women and youth employment.

Leadership Views

Rania Al-Mashat, Egypt’s Minister of Planning, Economic Development and International Cooperation, said “The Obelisk solar project is another important milestone for Egypt under the energy pillar of the NWFE program which has since its launch in November 2022 at COP27 in Sharm El Sheikh delivered 4.2 GW of privately financed renewable energy investments, worth about $4 billion, with the support of partners such as the Africa Development Bank.  The goal of NWFE’s energy pillar is to add 10 GW of renewable energy capacity with investments of approximately $10 billion, and phase out 5 GW of fossil fuel power generation by 2030.”

“Obelisk is another landmark development under NWFE that leverages Egypt’s and the African Development Bank’s leadership as well as commitment to harnessing the country’s renewable energy to enhance the resilience of the country’s energy supply to meet its fast-growing energy demand sustainably,” said Kevin Kariuki, African Development Bank Vice President for Power, Energy, Climate, and Green Growth.  “This project also contributes to Egypt’s ambition of producing 42 percent of its power generation capacity from renewable energy sources by 2030 while spurring economic growth and reducing greenhouse gas emissions,”

“This project exploits the abundant renewable energy potential in Africa and demonstrates how strong partnerships and innovative solutions contribute to balancing three core objectives in the energy sector, namely energy security, affordability, and sustainable economic development,” said Wale Shonibare, Director of Energy Financial Solutions, Policy, and Regulation at the African Development Bank. “It has high potential for replicability across the continent.”