In brief: renewable energy projects in Egypt

Projects

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Electricity generation projects, including from renewable sources, must be established in the form of an Egyptian joint stock company, to be authorised by the General Authority for Investment and Free Zones, affiliated to the Ministry of Investment and International cooperation. The companies must then obtain a licence from the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) for power generation. The transfer of renewable energy projects requires an assignment of the generation licence issued by EgyptERA, in accordance with the route traced by the Electricity Law and its Executive Regulations to this effect.

The engineering, procurement and construction contractors of renewables plants are typically required to register with the Egyptian Federation for Construction and Building Contractors under the relevant work categories.

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

The Egyptian Electricity Transmission Company (EETC) is the typical offtaker for utility-scale renewable energy projects in Egypt. Given that its credit rating is not positive, lenders usually require a sovereign guarantee to be issued by the Egyptian Ministry of Finance to guarantee the payment obligations of the EETC under the power purchase agreements it enters into as offtaker.

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

Unsolicited bids are currently not formalised in the renewable energy sector in Egypt, but the Ministry of Electricity and Renewable Energy has been announcing a number of offers received for various renewables projects to be developed by the private sector. Competitive tenders and auctions are from time to time launched by the New and Renewable Energy Authority (NREA) or EETC for the development of electricity generation projects from renewable sources. There is also a feed-in tariff programme currently in place since 2014.

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

The project companies must then obtain a licence from EgyptERA for power generation, and a building permit for the construction of any concrete or fixed installations. An environmental impact assessment, approved by the Egyptian Environmental Affairs Agency (EEAA), is also required. The generation licence and approval of the EEAA must be maintained valid and effective for the entire duration of the project.

The operation and maintenance contractors of renewables plants are typically required to register with the Egyptian Federation for Construction and Building Contractors under the relevant work category.

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

The obligation to decommission renewable energy projects is essentially contractual. The model power purchase agreements developed by EETC and typically used thereby in the projects where it acts as the offtaker, as well as usufruct agreements whereby NREA acts as lessor of land for renewable energy projects, contain decommissioning requirements.