The African Development Bank Group has approved up to $184.1 million in financing for Egypt’s 1-gigawatt Obelisk solar plant project, set to become Africa’s largest solar power plant

[dropcap]E[/dropcap]gypt Solar Plant funding has received a major boost from the African Development Bank (AfDB) Group.

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The Board of Directors of the AfDB Group has approved a financing package of up to $184.1 million to support the development of the Obelisk 1-gigawatt solar photovoltaic project and 200MWh battery energy storage system in Egypt.

This ambitious project is set to become Africa’s largest solar power plant.

Located in Qena Governorate in southern Egypt, the project encompasses the design, construction, operation, and maintenance of a photovoltaic power plant with an integrated battery energy storage system.

The Egyptian Electricity Transmission Company will serve as the sole off taker, operating under a 25 year Power Purchase Agreement.

The total cost of the project is estimated to exceed $590 million. The Bank Group’s financing package includes $125.5 million from its ordinary resources, supplemented by concessional funding from Bank Group managed Special Funds: the Sustainable Energy Fund for Africa (SEFA) providing $20 million, and the Canada African Development Bank Climate Fund contributing $18.6 million through a partnership with the Government of Canada.

An additional $20 million will come from the Climate Investment Funds’ Clean Technology Fund, with further financing expected to be mobilised from a consortium of development finance institutions.

Under Egypt’s Nexus of Water, Food, and Energy (NWFE) platform, the Obelisk project has been granted a Golden License by the government.

This designation recognises it as a strategic initiative crucial for addressing Egypt’s energy constraints and advancing its energy transition goals.

Dr. Rania Al-Mashat, Egypt’s Minister of Planning, Economic Development and International Cooperation, highlighted the project’s significance.

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.

She added that the NWFE’s energy pillar aims 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.

The project, which is 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 for the national grid.

The integrated battery energy storage system will play a crucial role in meeting peak evening demand with renewable power while also mitigating the inherent variability of solar power generation.

This initiative is projected to reduce annual carbon dioxide (CO2) emissions by approximately one million tons.

Furthermore, it is expected to create around 4,000 jobs during the construction phase and 50 permanent jobs during operation, with a deliberate focus on employment opportunities for women and youth.

Kevin Kariuki, African Development Bank Vice President for Power, Energy, Climate, and Green Growth, stated, “Obelisk is another landmark development under NWFE that leverages on 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.”

He further noted that “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.”

Ulric Shannon, Ambassador of Canada to the Arab Republic of Egypt, expressed Canada’s pride in supporting solar energy development in Egypt.

He remarked, “This initiative is a meaningful step toward enhancing energy security and stability, with direct benefits for the Egyptian people. We are pleased to collaborate with the African Development Bank and other partners in supporting Egypt’s transition to a sustainable, low carbon economy.”

The Obelisk Solar Project aligns perfectly with the African Development Bank’s Ten Year Strategy, its New Deal on Energy for Africa, and its Country Strategy Paper for Egypt.

It also fits within SEFA’s strategic framework, which aims to accelerate African countries’ energy transition by increasing the share of renewables and catalysing commercial capital mobilisation in the power sector.

Moreover, the project significantly advances Egypt’s commitment to achieve 42 percent generation capacity from renewable energy sources by 2030.

“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.