Scatec ASA, a Norwegian provider of renewable energy solutions, announced the signing of a 25-year Power Purchase Agreement (PPA) with Egypt Aluminium, the largest aluminium producer in Egypt. The agreement covers the construction and operation of a 1.1 gigawatt (GW) solar photovoltaic plant, combined with a 100 megawatt (MW)/200 megawatt-hour (MWh) battery energy storage system (BESS), backed by a sovereign guarantee.
Project Objectives
The project aims to support Egypt Aluminium in its efforts to decarbonise its aluminium production in response to the European Union’s Carbon Border Adjustment Mechanism (CBAM) requirements, which will come into force in 2026. Currently, Egypt Aluminium exports about 60% of its production to Europe, making compliance with European environmental regulations essential for maintaining its competitiveness on the international market.
Next Steps and Financing
The next steps for the project include working with the relevant authorities to allocate land, finalise grid connection, and secure financing. Scatec aims to reach financial close and begin construction within the next 12 months. The total investment is estimated at approximately USD 650 million, with 80% of the funding coming from non-recourse project debt and the remainder from equity provided by Scatec and its partners.
Scatec’s Role and Implications for the Industrial Sector
Scatec, which currently owns 100% of the project, plans to reduce its long-term economic interest by inviting additional financial partners. The company will be responsible for engineering, procurement, and construction (EPC), covering about 90% of the total capital expenditure, as well as asset management (AM) and operations and maintenance (O&M) services. This project marks a significant milestone in Egypt, being the first industrial-scale PPA with an industrial offtaker, reflecting the growing trend of businesses integrating renewable energy sources into their operations to meet regulatory requirements and market expectations.
