Energy boost for a cleaner future

The OPEC Fund has teamed up with ACWA Power to boost power generation in partner counties Egypt and Uzbekistan, providing a total of US$68 million in financing to help reduce greenhouse gas emissions and promote energy efficiency.

Promoting renewable energy in Egypt

The OPEC Fund extended a US$18 million loan to ACWA to help construct the Kom Ombo solar plant – the largest of its kind in Egypt.  The development of the plant will add 200 MW of energy capacity, increasing the share of renewable energy in Egypt’s energy mix and further promoting private sector participation in the Egyptian power sector. The plant will be located less than 20 km from Africa’s biggest solar park, the 1.8 GW Benban complex. Once operational, the new utility-scale plant will serve 130,000 households. 

The total US$114 million financing package with ACWA Power comprises the OPEC Fund’s contribution, loans of up to US$36 million from the European Bank for Reconstruction and Development (EBRD); US$17.8 million from the African Development Bank (AfDB); US$  23.8 million from the Green Climate Fund (GCF) and US$18 million from Arab Bank. This is in addition to equity bridge loans of up to US$14 million from EBRD and US$33.5 million from Arab Petroleum Investments Corporation (APICORP).

ACWA Power submitted the lowest tariff in what was the first solar photovoltaic (PV) tender in Egypt. The provision of solar energy through a public tendering process aims to achieve a competitive tariff and promote the growth of solar energy as an affordable alternative to conventional energy sources. Private sector participation in the Kom Ombo project is the result of successful policy dialogue with the  Ministry of Electricity and Renewable Energy and the Egyptian Electricity Transmission Company (EETC), as well as a US$3.6 million technical assistance program, co-funded by the EBRD and the GCF, to support the EETC in administering competitive renewable energy tenders.

In addition, the project has also benefitted from broader energy sector reforms supported by the AfDB in recent years to scale up the involvement of the private sector. The Kom Ombo plant will contribute to the Egyptian government’s target to generate 42 percent of the country’s electricity from renewable energy sources by 2035 – while delivering one of the lowest generation tariffs on the continent.

EBRD President Odile Renaud Basso said: “Increasing the production of clean energy is an important step to reducing carbon emissions and addressing climate change. This is in line with the EBRD’s strategy to become a majority green bank by 2025. This project also marks the EBRD’s first co-financing project with the AfDB and the OPEC Fund in Egypt and we look forward to future joint investment opportunities for our institutions across Africa.”

OPEC Fund Director-General Abdulhamid Alkhalifa said: “We are pleased to contribute to Egypt’s efforts and strategy to expand its generation capacity in the renewable energy space. We have been at the forefront of advocating for access to affordable clean energy for many years. Kom Ombo will be our third project with ACWA Power and it exemplifies great cooperation between government,  development finance and private sector actors.”

Paddy Padmanathan, President and Chief Executive Officer of ACWA Power, said: “ACWA Power is privileged and proud to lead the realization of the Kom Ombo PV project. The financing package signed today brings us closer to not only the people and the government of Egypt, but also to our finance partners, the EBRD, AfDB, the OPEC Fund, the GCF and Arab Bank and APICORP, reflecting our shared objective of supporting the energy transition to address the threat of climate change.”

Helping Uzbekistan reduce GHG emissions

The OPEC Fund’s US$50 million term loan to ACWA Power will support the construction and operation of a 1.5 GW combined cycle gas-turbine power plant in Sirdarya, Uzbekistan.

The new plant, located near the border with Tajikistan, will replace an ageing, less efficient thermal power facility, resulting in lower operating costs and a significant reduction in greenhouse gas (GHG) emissions.

Although Uzbekistan is well electrified and electricity demand is increasing, the efficiency of its power plants is low due to outdated infrastructure and technologies. The country experiences regular power outages, which undermine the productivity of businesses and the delivery of energy to households. The new Sirdarya plant is projected to boost generation efficiency and reduce GHG emissions by a minimum of 2.2 million tons each year. Upon completion, the plant is expected to meet 15 percent of power demand in Uzbekistan and comprise eight percent of all installed power capacity. The adoption of modern technologies will provide a reliable, more consistent delivery of energy.

The Uzbek government is committed to modernizing and strengthening its electricity generation base across the country and has initiated a number of reforms that lay the foundation for encouraging private sector investment. The upgrading of the Sirdarya power plant represents the largest single private sector-led project in Uzbekistan’s energy sector to date, with a total project cost of about US$1 billion. The European Bank for Reconstruction and Development (EBRD), the Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) and commercial banks led by Standard Chartered Bank are also participating in the project. The commercial bank tranches will benefit from a political insurance cover provided by the Multilateral Investment Agency (MIGA) of the World Bank Group. 

OPEC Fund Director-General Abdulhamid Alkhalifa said: “We are pleased to contribute to Uzbekistan’s massive efforts to upgrade and modernize the country’s power generation capacity with reliable and efficient infrastructure. Private sector participation in the energy sector will expedite this process and landmark projects such as Sirdarya will pave the way, setting examples of great cooperation among governments, development finance institutions and the private sector.”

About ACWA Power

ACWA Power is a developer,  investor and operator of power generation and desalinated water production plants. Registered and established in 2004 in Riyadh, Saudi Arabia, ACWA Power is currently present in 13 countries in the Middle East, Africa, Central Asia and south-east Asia. ACWA Power’s mission is to reliably deliver electricity and desalinated water at a low cost, thereby making an effective contribution to the sustainable, social and economic development of communities and countries.