Anticipated amendment to Waste to Energy Feed-in-Tariff

In brief

In light of recent developments in the Egyptian market, particularly following the COVID-19 pandemic and the devaluation of the Egyptian pound against the US Dollar and a growing interest by prospective investors, the Egyptian government is discussing an amendment to the established FiT rate for waste to energy (WtE) projects in Egypt to attract more investments for these projects.

Such development would be significant for both prospective and potential project sponsors and financiers when assessing the feasibility and bankability of WtE projects in Egypt.

In depth

• As part of its environmental strategy and efforts to promote reliance on green energy sources, the Cabinet of Ministers issued Decree No. 41 of 2019 (“Decree“), establishing the regulatory framework for WtE projects in Egypt.
• The Decree set a FiT rate of EGP 1.4 per kilowatt per hour in relation to energy generated from municipal solid waste and biogas extracted from safe sanitary landfills, and a FiT rate of EGP 1.03 per kilowatt per hour in relation to energy generated from sludge from sewage treatment plants.
• For each WtE project, a power purchase agreement (PPA) would be entered into between the relevant governorate under the jurisdiction of which the power plant will be located (“Governorate“) and the owner of such power plant (“Owner“) for a period of 25 years. The Governorate shall supply the Owner with the volume of waste required to generate the agreed amount of energy at no expense on the Owner.
• Electricity generated from the power plant will be supplied by the Owner to the relevant electricity distribution company. The FiT rate shall be paid in Egyptian pounds by the Governorate to the Owner based on the equation annexed to the Decree.
• Land rights over the land required for the establishment of the WtE project are to be granted by way of a usufruct agreement, to be entered into between the Governorate and the Owner for an equivalent term as that of the PPA.
• The permitted project capacity is a minimum of 500 kilowatts and a maximum of 20 megawatts to allow for connection to the grid. The Decree specifies that the FiT shall be reevaluated after an aggregate production capacity of 300 megawatts over all greenlit projects has been reached.

We will keep you posted on upcoming updates.

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