The consortium will sell the output to the Egyptian Electricity Transmission Company under a 20-year PPA at $38.2/MWh. The government said it wants future wind power projects to match this price.
The competitive price is partly explained by what Engie described as "an optimal site with more than 60% of gross capacity factor". In addition, "we are able to manage the best siting plan for the turbines in order to maximise power generation and are able to save costs due to the past experience of all parties", a Eurus spokesperson said.
The Gulf of Suez project — the first renewable-energy independent power producer project of any significant size awarded in Egypt — dates back to a tender launched in 2009 as part of the government's plan to boost private-sector investment.
International Power (later bought by Engie) was shortlisted in partnership with Orascom, and Toyota Tsusho with developer Eurus Energy. The two groups then decided to join forces, with Engie and Toyota Tsusho-Eurus holding 40% each and Orascom Construction 20%.
"We were convinced that each party has strengths in different fields and is able to be a strong partner," Eurus explained. The strategy paid off when the consortium was named as preferred bidder in late 2015.
The project, estimated to be worth around $400 million, represents the companies' first foray into the Egyptian wind market.
For Engie, the drivers include expected strong growth in power demand and the opportunity to become "an important player in Egypt's ongoing renewable-energy transition", said Bruno Bensasson, CEO of Engie Africa. "The project is an opportunity to scale up our presence in a strategic country with a long-term contracted asset guaranteed by the government," he added.
Osama Bishai, CEO of Orascom, said the project underscores the strategy to pursue "new construction opportunities ... and expands our growing presence in the power market to the renewable-energy sector".
While Toyota Tsusho has been active in the Egyptian power sector since 1983, this is its first renewable-energy project, and the first project of any sort in the country for developer Eurus, in which Toyota Tsusho holds a 60% stake. Toyota Tsusho counts renewables as one of its special focus areas, and regards Africa, including Egypt, as "a strategically important market".
The consortium expects to reach financial close by the end of the year. Financing will be provided by the Japanese Bank for International Corporation in coordination with commercial lenders Sumitomo Mitsui Banking Corporation and Societe Generale. Construction will start soon after and take 24 months. They plan to use Siemens Gamesa's 2.1MW turbines.
Egypt is targeting 7GW of wind energy in 2022, while installed capacity currently stands at 750MW.