Scatec, a leading renewable energy company, has signed a 25-year corporate Power Purchase Agreement (PPA) with Egypt Aluminium for the development of a 1,100 MW solar photovoltaic (PV) project and a 100 MW / 200 MWh battery energy storage system (BESS). The combined solar and storage project, located in Egypt, represents an estimated capital expenditure of approximately $650 million.
Egypt Aluminium, the country's largest aluminium producer and industrial electricity consumer, intends for the project to play a pivotal role in its decarbonization strategy. As a major exporter of around 60% of its production to Europe, the company is aiming to meet the European Union's Carbon Border Adjustment Mechanism (CBAM) requirements, which will come into effect in 2026.
Scatec's Chief Executive Officer, Terje Pilskog, emphasized the significance of the deal, stating, “This is another testament to Scatec's position as one of the leading renewables companies in Egypt. It is a groundbreaking project as it is the first utility-scale PPA in the country with an industrial offtaker.”
The project will proceed with the next steps involving collaboration with relevant authorities to allocate land, finalize grid connection arrangements, and secure financing. Construction is anticipated to begin within the next 12 months.
“The capital of $650 million will be funded by approximately 80% non-recourse project debt, with the remainder coming from equity contributions by Scatec and its partners,” Scatec outlined. While the company will retain full ownership of the project, it plans to reduce its long-term economic interest by inviting additional equity partners.
Scatec is also designated as the Engineering, Procurement, and Construction (EPC) service provider for the project, handling approximately 90% of the total capital expenditure. In addition, Scatec will manage the asset and provide ongoing operations and maintenance (O&M) services for the facility.
This agreement marks a significant milestone for both Scatec and Egypt Aluminium as they work towards more sustainable and efficient energy solutions in the region.
