Benban Solar Park: a success story by public, private sectors

A hundred companies contributed to project with total investments of $2bn, to output 1.4GW of solar energy

It took Egypt five years to become the favourite destination of investment in renewable energy. Arab and foreign companies are now racing to establish solar power plants and wind farms, and are always on the lookout for an opportunity to pump further investments in the renewable energy sector.
The Benban Solar Park in Aswan can be seen as a success story by the government and the private sector. It became a model for many foreign companies that intend to invest in Egypt. The giant project involved a hundred Egyptian companies, and created about 640 permanent jobs besides 18,000 temporary ones.
The Banban project is not just a project in Egypt, but an interdependent government venture which received support from the ministries of electricity and investment, as well as international financing institutions. It also delivered a positive image about Egypt and its support of investors.
Recently, companies willing to invest in renewable energy have asked for land from the New and Renewable Energy Authority (NREA) to set up projects worth $3bn. Other investors are discussing with existing companies in Benban to acquire their projects.
The total capacity of solar power projects in Benban reached about 1,465MW. Thirty-two companies established energy projects in the solar park with total investments of about $2bn.
Lessons learned from Benban project, and steps to follow
Hafez Salmawy, professor of energy engineering, Zagazig University, and former head of the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA), said the feed-in tariff projects in Benban constituted about 15% of investment flows into Egypt, and proved the attractiveness of investment in the energy sector. It also showed that investment exists when clear rules and regulations are set.
He added that the business community responded quickly, and formed partnerships and alliances with international companies to compete for the implementation of renewable energy projects in Egypt. “Renewable energy can beat the petroleum sector and attract Arab and international companies to invest in Egypt,” Salmawy said.
He pointed out that the Benban project created a new market as it encouraged several factories to establish production or assembly lines of solar cells in Egypt. This will enhance Egypt's competitiveness and enable Egyptian factories to export to African markets.
Salmawy noted that Egypt managed to end the long-time crisis of power shortage and shifted from depending on a single source to producing electricity to an energy mix.
"We need, in the coming period, to continue attracting foreign companies to implement projects in the energy sector in Egypt. The government should define a clear plan every three or four years on the opportunities and projects to be implemented," he urged.
Investors should also engage in the preparation of such plans so that they can be achievable, in addition to updating the regulatory and legal system to cope with global developments, Salmawy stressed.
Moreover, Mohamed Salah El-Sobky, former head of the NREA, said the future of solar energy is promising and there are many opportunities for investment, but it requires clear rules to regulate the process.
He described the Benban project as an achievement and partial recovery of the sector, as it still requires the full activation of the Electricity Law. “Current rules are not clear enough, and should be put into effect,” he added.
El-Sobky further added that contractual relations in Benban have been of great benefit for all parties, as they witnessed technical, financial, and legal improvements. The coming period will see better contracts and agreements based on the experience gained from the feed-in tariff projects.
Meanwhile, Hossam Allam, CEO of Hassan Allam Services, said the Benban solar complex gave his company a great experience in managing services, security, safety, and occupational safety procedures, as well as setting rules and regulations governing work inside solar projects.
He stressed that the Benban complex is a great success story that we need to repeat in similar projects.
Allam noted that his company met with more than 23 families and tribes from Aswan, and explained to them the importance of the project and its economic impact on the governorate, adding that they were indeed an element of success.
Investors await new regulations of electricity direct selling by private sector
The most important part of the success story of Benban is the ability of Arab and foreign companies to invest in Egypt and the government's commitment to buy electricity produced from these projects for 25 years, which gained the confidence of international financing institutions and international companies.
Hassan Amin, country director of Acwa Power Egypt, said the solar complex in Benban provided many jobs and contributed to the preparation of Egyptian engineers and technicians to efficiently work in the field of solar energy.
He added that Acwa Power has implemented three solar stations with a total capacity of 120MW within the feed-in tariff programme. The company is also awaiting the contract for the construction of a solar plant in Kom Ombo with a capacity of 200MW.
He pointed out that Egypt's political and economic stability helped improve the investment climate and reassured investors, stressing that many companies seek to implement renewable energy projects in Egypt. Amin noted that opening the market for the private sector decreased energy sale prices. He stressed that the serious steps taken by the state in the framework of economic reform, including the liberalisation of the exchange rate and the restructuring of subsidies, contributed to improving the investment and legislative environment. In addition, the New Investment Law granted many benefits to investors represented in some tax exemptions.
Hisham El-Gamal, head of public relations and communications at Infinity Solar, said after the issuance of the Renewable Energy Law and the feed-in tariff programme, the company became confident in the government's vision and willingness to implement renewable energy projects. Hence, Infinity was the first company to implement a solar plant in the programme's first phase.
He added that the company will continue to invest in the renewable energy sector in Egypt, however it needs more acceleration of procedures, offering of more lands, and issuing clear regulations governing the establishment of renewable energy plants and the direct selling of electricity by the private sector under the IPP scheme.
“Infinity Solar aims to set up a plant with a capacity of 100MW and investments of up to $100m in its first phase, and then bring up the total capacity to 300MW. But we are waiting for the executive regulations of direct selling of electricity by the private sector,” El-Gamal said.
He explained that the company plans to expand in the construction of renewable power plants under the IPP scheme next year, with financing from the international banks which previously financed the company's projects in the feed-in tariff programme.
Finally, Al-Fanar CEO, Gamal Wady, revealed that his company aims to launch a wind power plant with up to $200m investments. The financing will be arranged after reaching an agreement with the Egyptian Electricity Transmission Company to implement the project.
“The company aims to implement projects under the IPP scheme to sell electricity directly and pay fees for using the national grid. When the legislations and rules are completed, the company will invest in several projects, given that Saudi Arabia has many projects working under this scheme,” Wady said.