Scatec Says Solar Project Can Save Egypt $400MM from LNG

Scatec ASA’s Obelisk solar and battery storage project in Egypt can save the country as much as $400 million a year in liquefied natural gas imports, according to Chief Executive Officer Terje Pilskog.

The Norwegian developer’s roughly $600 million project is expected to become Africa’s largest hybrid solar and battery installation when completed in the middle of this year. The 1.1-gigawatt solar and 200 megawatt-hour storage facility will supply the Egyptian Electricity Transmission Company. 

This year’s surge in oil and gas prices during the Iran war highlighted the exposure of developing economies to commodity markets in terms of both cost and supply. Egypt became a net gas importer before the war following a surge in demand, with its LNG purchases increasing while it continues to be dependent on pipeline shipments from Israel. Egypt generates most of its power from gas.

Obelisk “shows the massive positive impact that renewables can have on the power sector in Africa,” Pilskog said in an interview on the sidelines of a Cape Town conference this week, adding that fossil fuel subsidies on the continent cost tens of billions of dollars annually. “It’s the most sustainable way to support Africa in terms of strengthening their economies.”

Egypt will save up to $400 million a year generating from Obelisk when comparing with an LNG price of roughly $20 per million British thermal units, Pilskog said. Benchmark European gas prices exceeded that level in the early weeks of the Iran war, but have since fallen to about $14 per million British thermal units.

Scatec also signed a power-purchase agreement last year with Egypt Aluminium, the nation’s top aluminum producer and industrial power user, for a project with the same solar and storage capacity as Obelisk.

“It will enable these industrial activities to also meet future demand when it comes to carbon intensity of their product,” and meet requirements in Europe, Pilskog said. 

The European Union’s Carbon Border Adjustment Mechanism forces importers to pay the cost of emissions embedded in manufacturing the goods, in a bid to level the playing field for EU producers against those in places with looser environmental rules.

Pilskog said that across Africa, only South Africa and a few other nations currently have the need to build a plant of Obelisk’s scale, though Scatec’s much smaller hybrid projects in Cameroon are still saving money when compared with using diesel generators.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.