Egypt to Reach Renewable Energy Targets through Corporate PPAs
- March 5, 2021
- Posted by: Invest in EMEA
- Category: Chemical and Energy
As the ongoing COVID-19 pandemic has negatively impacted countries worldwide, it is found that the outbreak had very little impact on the PPA market’s growth. Hence, encouraging corporate power purchase agreements (PPAs) can be an effective way out for Egypt to achieve its bold renewable energy and climate goals.
Industry experts define corporate PPAs as a long-term contract that enables businesses to buy electricity directly from an energy generator.
These agreements attract further investments, both foreign and local, into Egypt’s renewable energy industry. Therefore, corporate PPAs benefit many parties, including corporate buyers, developers, and the government.
How Corporate PPAs Can Help Realizing The Goals
The current capacity of Egypt’s renewable energy is around 5,878 megawatts (MW), containing 2,832 MW of hydropower, 1,671 MW of solar energy, and 1,375 MW of wind energy.
Egypt is committed to increase the overall share of renewable energy and decarbonize its economy; thus, the country targets a 20% production of electricity from renewable sources for 2022 and 42% production in the upcoming 15 years.
Beyond question, the country’s ambitious goals require massive efforts and large budgets. This is where corporate PPAs can address this challenge. Corporate PPAs, in fact, help to cut electricity costs and ensure the energy supply.
Corporate PPAs also help accelerate the implementation of renewable energy projects by securing the revenue source for generated electricity and making project financing more available.
Path to Green Recovery
With the dire need for green recovery, Egypt is supported by the European Bank for Reconstruction and Development (EBRD), the European Union (EU), and the Green Climate Fund (GCF) in supporting green finance and improving value chains. To be precise, there are two programs launched as an effort to green transition.
The first program is the Green Value Chain worth EUR 70 million that aims to encourage small and medium-sized enterprises (SMEs) in investing in integrated technologies, climate mitigation, and adaptation solutions. These are meant to improve overall competitiveness and promote further development of green value chains.
The second initiative will grant EUR 150 million as loans to foster green finance availability within SMEs across manufacturing, agricultural, industrial, and construction sectors.
SMEs can use the loans to invest in energy and resource-efficient manufacturing facilities, clean energy technologies, agricultural irrigation, and rainwater harvesting equipment, for example.
With the availability of renewable sources, good political conditions and currency stability, and a positive track record of ongoing projects, Egypt shows firm commitments and fundamentals to shift toward a green narrative. For so long, Egypt has recognized the opportunities available in going green and has demonstrated consistent effort in doing so.
All in all, Egypt’s future in renewable transition through corporate PPAs seems promising as the government enacts diversification of the country’s energy mix and commits to reduce its dependence on a single energy source.