EgyptERA Issues Final Guidelines for the Renewable FiT Program
Egypt’s Egyptian Electric Utility and Consumer Protection Regulatory Agency – EgyptERA – has issued its long-awaited guidelines on special purpose vehicle incorporation. These guidelines are identical to the draft guidelines on which we reported on 24 March.
As expected, the guidelines permit a prequalified developer to hold equity sufficient to build up to 100MW per substation and in each of the solar and wind programmes. It is understood that there will be four separate solar project substations and five separate wind project substations. Therefore, a single qualified developer could theoretically hold up to 400MW worth of solar projects and up to 500MW of wind projects in the programme.
Each project (whether wind or solar) is capped at a capacity of no more than 50MW. Each prequalified consortium is required to hold at least 51% of the equity of the project for which they were prequalified for at least 2 years following commercial operations. Within that consortium, the lead member is required to hold at least 25% of the equity of the project for at least 2 years following commercial operations. The remaining 49% can be held by other investors, including investors who individually hold a greater percentage than the lead developer. If another investor within the 49% is another qualified investor, that qualified investor will be subject to the 100MW per programme, per substation location cap.
The way the guidelines work will require developers seeking to maximise their participation in the program to act quickly. If not, a developer could be caught by some practical constraints:
First of course will be the willingness of other prequalified developers to partner up. The rules generally do not allow projects to be sold or transferred entirely, so developers will need to enter into more complex joint venture negotiations.
The second constraint is the availability of enough land allocated at a given substation locality. Developers could find themselves in the unhappy situation of hammering out a deal to share a project only to find out that one of them is barred because of a land location that puts them in the position of having more than 100MW of a given technology at that substation location. With so many prequalified bidders clamoring for the same allocations, this could be a practical obstacle.
Therefore, the race is on for developers looking to maximize their participation in the Egypt renewable FiT to partner up and to obtain land allocations.