The Red Sea Wind Energy, the consortium developing the 500-megawatt (MW) Gulf of Suez 2 wind farm project in Ras Ghareb, Egypt, announced that the Independent Power Producer (IPP) project has achieved financial close.

Red Sea Wind Energy S.A.E is owned by a consortium of Engie (35 percent), Orascom Construction (25 percent), Toyota Tsusho Corporation (20 percent) and Eurus Energy Holdings Corporation (20 percent). The ground-breaking took place in November 2022.

Consortium member Engie said in a press statement that the plant would be connected to the grid over two phases with full commercial operation planned in the third quarter of 2025.

The statement said consortium will operate and maintain the wind farm under a 25-year Power Purchase Agreement (PPA) with the Egyptian Electricity Transmission Company (EETC),

Orascom Construction will execute the construction of the civil and electrical works of the wind farm which is expected to comprise of 84 wind turbine stations of 6 MW capacity each.

Non-recourse project financing is provided by the Japan Bank for International Corporation (JBIC) in coordination with Sumitomo Mitsui Banking Corporation, the Norinchukin Bank, and Société Générale S.A. under a Nippon Export and Investment Insurance (NEXI) cover, and the European Bank for Reconstruction and Development (EBRD).

HSBC Bank Egypt is the working capital bank and Onshore Security Agent for the project.

While the Engie statement didn’t delve into loan amounts, the total project cost has been estimated at $660 million, according to statements posted by Toyota Tsusho Corporation and EBRD. The project’s debt component currently stands at $503 million based on the following:

  • Zawya Projects had reported in March 2023 that JBIC signed a loan agreement amounting to approximately $240 million with Red Sea Wind Energy for the project.
  • In March 2023, Nippon Export and Investment Insurance (NEXI) announced that it provided insurance for approximately $163 million loan extended by the commercial financial institutions - Sumitomo Mitsui Banking Corporation, Norinchukin Bank, Societe Generale (France) – for the project.
  • The European Bank for Reconstruction and Development had announced in February 2023 that it is providing a loan of $100 million ($50 million for its own account and up to $50 million for the account of the Green Climate Fund) for the project.

  • The Engie statement said the project marks the first co-financing between JBIC and the EBRD since the signing of an MOU in October 2022 to fortify cooperation between the two organisations, and the first joint project between NEXI and the EBRD since the signing of an MOU in October 2020.

    The new wind farm builds on the past success achieved by the consortium in developing Egypt's first wind energy IPP project - [Gulf of Suez 1 – Ras Ghareb Wind Farm] with a capacity of 262.5 MW.

The project falls under the energy pillar of the Nexus of Water-Food-Energy (NWFE) programme, an initiative the Government of Egypt presented at COP 27 in November 2022 that is expected to contribute toward the energy transition.

(Writing by SA Kader; Editing by Anoop Menon)

(anoop.menon@lseg.com)