Norwegian renewable energy developer Scatec has secured approximately €195 million in development-bank financing for a solar and battery project in Egypt. The project will supply renewable electricity to Egypt Aluminium under a 25-year power purchase agreement (PPA) backed by a sovereign guarantee. Its first phase combines 569 MW of solar generation with 100 MWh of battery storage.
Financing Agreements Signed for First Phase
The financing package is provided by the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the African Development Bank (AfDB). It will cover approximately 80% of the estimated €243 million investment required for the project’s first phase. The financing agreements have been signed, moving the project from preliminary development and lender interest to contracted financing.
The EIB is contributing up to €80.9 million, supported by an EU guarantee under the Global Gateway framework. The announcement does not confirm that the full financing package has been disbursed. Construction is moving forward, and commercial operations are expected to begin in the first half of 2028.
Renewable Electricity for Aluminium Production
Scatec expects the project to generate approximately 1.4 TWh of electricity annually and prevent more than 550,000 tonnes of carbon dioxide emissions each year. For Egypt Aluminium, electricity consumption represents an important part of its industrial carbon footprint. Aluminium production requires substantial amounts of energy, making access to renewable power increasingly relevant to operating costs and international competitiveness.
The long-term supply agreement is intended to give the producer a dedicated source of renewable electricity and reduce its reliance on higher-carbon generation. The project also illustrates how development-finance institutions are supporting industrial decarbonisation through energy infrastructure, rather than focusing exclusively on renewable generation for general electricity markets. For established industrial producers, renewable electricity can help address environmental requirements and the growing commercial importance of product-level emissions.
CBAM and Egypt Aluminium’s European Exports
Approximately 60% of Egypt Aluminium’s exports are estimated to go to the European Union. Aluminium is among the products covered by the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes carbon-related import requirements and increases the importance of measuring and managing production emissions. Replacing higher-carbon electricity with solar power could improve the emissions profile of aluminium supplied to European customers and potentially strengthen the producer’s competitive position in the EU market.
The precise CBAM impact will depend on the applicable calculation methodology, independently verified emissions data and how the mechanism treats electricity-related emissions. The project’s projected environmental benefits therefore should not automatically be taken as an established reduction in the carbon costs of Egypt Aluminium’s European exports. Any commercial advantage will depend on how the renewable electricity is accounted for and reflected in verified industrial emissions.
Development Finance and Industrial Energy Transition
The investment underscores the role of European and multilateral development institutions in connecting renewable energy projects with industrial competitiveness. European critical raw materials policy often focuses on mining and mineral extraction, but the continent’s industrial supply chains also rely on energy-intensive processing facilities, including smelters and refineries able to meet increasingly demanding environmental standards. Aluminium production is particularly exposed to electricity costs and carbon intensity because of its substantial power requirements.
Access to competitively priced renewable electricity can affect producers’ operating economics and their ability to maintain access to European markets. For Egypt Aluminium, the project offers the prospect of a more sustainable electricity supply and a stronger position in export markets where embedded emissions are becoming an increasingly important commercial consideration. For Scatec, the 25-year, sovereign-guaranteed PPA provides a long-term industrial customer and supports the renewable energy investment’s revenue structure.
The signed financing agreements substantially reduce the project’s remaining funding uncertainty, although construction, capital deployment and eventual electricity delivery remain important milestones. The project’s eventual effect on European aluminium trade will depend on the delivery of renewable electricity and independently verified emissions performance.