Acwa Power, Alcazar Energy, and Infinity reportedly eyeing stakes in Egypt’s wind farms

Good morning, ladies and gents. The weekend is finally within arm’s reach, bringing a very busy week to a close, and the regional climate updates have not let up. Let’s jump right in, but first…

We’re only four days away from meeting with some of you at the Enterprise Exports and FDI Forum, taking place at the Four Seasons at the Nile Plaza on Monday, 15 May.

We’re proud to announce that our friend Cheick-Oumar Sylla, director for North Africa and the Horn of Africa at the IFC, is joining us for the forum. Are you? Cheick-Oumar Sylla will be speaking on why exports and FDI are the way forward. He is joined on stage for that discussion by Yasmine Khamis chair of The Orientals Group and Yassir Zouaoui partner at McKinsey, and who will speak on what lessons have worked from around the world.

The panel will be co-moderated by our friend Helmy Ghazi, deputy CEO of HSBC Egypt, the anchor of our most-read story ever (Five steps to build a new Egyptian economy).

Who else is speaking? Among the CEOs, top execs, bankers, and development finance folks speaking at the conference are (in no particular order): Tarek Kamel, CEO of Nestle Egypt; Omar Elsahy, General Manager of Amazon Egypt; Khaled Morsy, CEO of DB Schenker Egypt; Mark Wylie, CEO of Beyti; Mohamed Talaat Khalifa, CEO of Concrete; Kareem Abou Ghaly, chairman and CEO of Pasta Regina; Tarek Hosny, head of investments and projects at Fertiglobe; Nadia El Tawil, investment officer at AfricInvest; Shams Eweis, corporate affairs director, Egypt, North Africa and Levant at Mars; Mostafa Bedair, CEO of Giza Seeds and Herbs; Hassan Massoud, associate director and head of private equity (Southern Mediterranean), at the EBRD; Hossam Abou Moussa, partner at Apis; Shady William, managing director of IDG; Nada El Ahwal, CSO of Transmar; Mohamed El Gebely, team leader at USAID Trade; Hossam Sallab, CEO and vice-chairman, Sallab Group and Royal Ceramica; and Abdallah Sallam, CEO of Madinet Masr.

Topics and live interviews will include:

• How to attract foreign partners and figure out what they are looking for;
• What lessons can we draw from white goods, fertilizers, and garments exporters who have increased our exports;
• What are the fundamentals to creating an export and / or FDI strategy;
• What it takes to secure a place in a multinational’s supply chain.
• How industrial clusters could expedite exports, FDI and possibly be an avenue for SME development;
• How Egypt’s industries need to be open to evolution to become more competitive.

Tap or click here to explore the full agenda.

** Have you confirmed your attendance? Invitations have been sent out over the past few weeks. If you have yet to confirm your attendance and would still like to join us, please reply to the invitation with an RSVP.

---

THE BIG CLIMATE STORY- Saudi Arabia’s Acwa Power, the UAE’s Alcazar Energy and renewables firm Infinity are reportedly among seven companies looking to bid for a stake in two of Egypt’s largest wind farms. Meanwhile in the UAE, a consortium of OCI-Adnoc joint venture Fertiglobe, UAE renewables player Masdar, and French energy group Engie is considering a green hydrogen project in Abu Dhabi.

^^ We have the details on these stories and more in the news well, below.

---

THE BIG CLIMATE STORY OUTSIDE THE REGION- No single story is dominating international headlines on the climate news front, but the US government’s approval of a nuclear waste storage facility in New Mexico is making the rounds. The US Nuclear Regulatory Commission greenlit a license allowing nuclear reactor developer Holtec International to build and operate a USD multi-bn temporary nuclear waste storage facility for 40 years despite New Mexico legislation set to come into effect on 15 June prohibiting the storage of atomic waste until the federal government comes up with a permanent storage mechanism for the spent nuclear fuel. Holtec plans to store some 500 canisters holding nearly 8.7k tons of the depleted fuel over the 40-year life cycle of the project, with plans to up its storage capacity to 10k canisters in 19 additional phases.

The story got coverage in Reuters, the Associated Press, the Washington Post, and Bloomberg.

---

WATCH THIS SPACE #1- New UAE legislation for EV charging stations? The UAE’s Energy and Infrastructure Ministry is looking to introduce new legislation for EV charging stations that would ensure fast charge times at a reasonable price, Wam reported, citing statements by Minister Suhail Al Mazrouei. The minister did not provide further details about the proposed legislation, but said the UAE intends to increase the number of EV stations available nationwide to 800 locations — up from the some 500 stations currently available.

The UAE is on track: UAE fuel distribution company Adnoc Distribution partnered in January with Abu Dhabi National Energy Company (Taqa) to establish a joint venture called E2GO to build and operate EV infrastructure in Abu Dhabi and the wider UAE. The JV aims to build EV charging points across the UAE. Some 70k charging points with investments of up to USD 200 mn are needed in Abu Dhabi by 2030 to meet growing EV demand.

---

WATCH THIS SPACE #2- India is interested in Egypt’s EV market: Indian commercial vehicle maker Ashok Leyland is interested in cooperating with Egypt’s state-owned El Nasr Automotive Manufacturing Company to manufacture commercial EVs in Egypt, according to a statement. Amandeep Singh, who heads the Indian company’s International Operation, said Indian banks could provide the necessary funding for the potential JV with El Nasr.

WATCH THIS SPACE #3- No dice for Aramco’s blue hydrogen exports: Difficulties in identifying and securing blue hydrogen off-take agreements in markets like the EU, South Korea, and Japan will drive Saudi oil giant Aramco to throw its weight behind natural gas exports instead, Aramco CEO Amin Nasser said on an analyst call, according to Bloomberg. A lack of government incentives supporting the growth of blue hydrogen — even in developed countries — coupled with high production costs is making it difficult for markets like Japan and Korea to pursue low-carbon hydrogen, according to Nasser. Aramco will therefore not sanction investment decisions for blue hydrogen export projects until it secures a concrete off-take agreement, Nasser said.

REMEMBER- MENA has big blue hydrogen ambitions: Aramco and KSA’s SABIC Agri-Nutrients shipped in November 25k tons of blue ammonia to South Korea. Saudi mining company Ma’aden, which in March inked an MoU with Japanese industrial conglomerate Mitsui & Co. in March and another with the Taiwan Fertiliser Company that could see it become the first commercial supplier of blue ammonia to both Japan and Taiwan. Over in Qatar, state-owned QatarEnergy signed earlier in September agreements to build the world’s largest blue ammonia plant — worth USD 1 bn — which is set to produce 1.2 mn tons of the green fuel annually.

---

WATCH THIS SPACE #4- Taqa is on the hunt for more projects to invest in: Abu Dhabi National Energy Company (Taqa) is looking for more investment opportunities following a USD 31.1 mn investment in Xlinks’ Morocco-UK Power Project, The National reports. “We are actively looking at opportunities that actually fit us, within the UAE and outside the UAE,” Omar Al Hashimi, executive director of transmission and distribution at Taqa Group, told the newspaper.

WATCH THIS SPACE #5- UAE doubles down on targeting emissions, not fossil fuel production: Countries should be called upon to phase out fossil fuel emissions instead of cutting the production of oil, gas, and coal, UAE Climate Change and Environment Minister Mariam Almheiri told Reuters. Almheiri said that halting production would hurt countries that rely on fossil fuel revenue streams and lack appropriate alternatives, which necessitates balancing climate change commitments with economic realities. “The renewable space is advancing and accelerating extremely fast but we are nowhere near to be able to say that we can switch off fossil fuels and solely depend on clean and renewable energy,” Almheiri said.

More carbon capture, no fossil fuel phase outs: The UAE is calling for phasing out emissions by using carbon capture and storage technologies while simultaneously ramping up the development of renewable energy sources.

---

DATA POINT- Egypt’s renewables production capacity grew 12.5% y-o-y in 1Q 2023, according to a report by the country’s New and Renewable Energy Authority (NREA). The country increased its hydropower capacity 9% y-o-y, upped its solar and wind energy generation 12.5% y-o-y, and generated some 22 GW of clean electricity from biofuels during the same period, NREA notes.

Get Enterprise Climate

***
YOU’RE READING ENTERPRISE CLIMATE, the essential regional publication for senior execs who care about the world’s most important industry. Enterprise Climate covers everything from finance and tech to regulation, products and policy across the Middle East and North Africa. In a nod to the growing geographical ambitions of companies in our corner of the world, we also include an overview of the big trends and data points in nearby countries, including Africa and southern Europe.

Enterprise Climate is published by 5am CLT / 5am Riyadh / 6am UAE Monday through Thursday by Enterprise, the folks who bring you Enterprise Egypt, your essential 6am and 3pm read on business, finance, policy and economy in Egypt and emerging markets.

EXPLORE MORE OF ENTERPRISE ON THE WEB — tap or click here to read EnterpriseAM, EnterprisePM, and The Weekend Edition on our powerful new website packed with reader-friendly features.

Subscribe to Enterprise Climate here or reach out to us on climate@enterprisemea.com with comments, suggestions and story tips.
***

CIRCLE YOUR CALENDAR-

Japan will host the G7 Hiroshima Summit from 19 May to 21 May in Hiroshima. One of the key topics addressed at the summit will be ensuring energy security with the goal of achieving net zero by 2050 based on the Paris Agreement.

Oman will host the Power and Energy Conference from 22 May to 25 May in Muscat. The event will bring together local and global industry leaders to discuss global energy market policy updates, future demand and growth projections in the sector, integration and power grid obstacles, and growth potential associated with renewables and EV deployments.

Germany will host the second meeting of the COP27 Transitional Committee from 25 May to 27 of May in Bonn. The meeting will build on the loss and damage fund established during COP27 with the aim of establishing institutional mechanisms and governance structures for financing, and will bring together a host of international financial institutions to discuss pathways to increasing funding capacity for climate vulnerable countries.

The UAE will host the Electric Vehicle Innovation Summit from 29 May to 31 May in Abu Dhabi. The conference will bring together state representatives, industry players from the EV sector, as well as engineers and researchers to discuss policy trends and tech innovations in the industry and provide attendees with networking opportunities across value chains.

Qatar will host the Carbon Capture, Utilisation and Storage (CCUS) Forum from 29 May to 31 May in Lusail City. The event aims to spotlight MENA’s CCUS regulations and policies, map out paths and business models that would bring down CCUS project costs, promote regional and international cooperation to advance the international carbon capture sector, and discuss the role CCUS will play in helping Gulf countries meet their net zero targets.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until next Sunday, 30 April. The Dubai Electricity and Water Authority will be hosting the conference from 15 to 18 November, in conjunction with the Water, Energy, Technology, and Environment Exhibition and the Dubai Solar Show 2023. Researchers can submit their papers here.

Check out our full calendar on the web for a comprehensive listing of upcoming news events and news triggers.

Egypt’s wind farms may be getting some attention: Saudi Arabia’s Acwa Power, the UAE’s Alcazar Energy and renewables firm Infinity are reportedly among seven companies looking to bid for a stake in two of Egypt’s largest wind farms, Asharq Business reports, citing two anonymous sources it says are close to the matter. It is unclear who the other four bidders might be, and the size and value of the stake up for grabs was not revealed. A representative at Infinity declined to comment when Enterprise Climate reached out yesterday.

The details: The 580 MW Gabal El Zeit and 545 MW Zafarana wind farms are wholly owned by Egypt’s New and Renewable Energy Authority (NREA). The acquisitions are expected to be completed before the end of 2023, Asharq cites one of its sources as saying. The Egyptian cabinet has formed a committee to negotiate with potential investors and review offers for Gabal El Zeit, noting that it’s already received some offers for the wind farm, and is reviewing the expected timeline for the Zafarana wind farm, it said earlier this week.

Acwa Power, Alcazar, and Infinity already have vested interests in Egypt: All three companies signed multiple MoUs and agreements in the sector in the past year. Acwa signed an MoU in November last year with the NREA and Egyptian Electricity Transmission Company to build a 10 GW wind farm in Egypt and signed a 25-year power purchase agreement alongside Hassan Allam last June to develop a 1.1 GW wind farm in the Gulf of Suez. Infinity Power — a joint venture between Infinity and Masdar — is set to build a 10 GW onshore wind farm in Egypt, alongside Hassan Allam Utilities and Masdar. Alcazar signed an early agreement to build green fuel facilities in the Ain Sokhna Industrial Zone in August last year. The company also recently signed a partnership agreement with Egypt-based Madkour Group to work together on renewable energy projects in Egypt and Africa.

A new green hydrogen project in the UAE? A consortium of OCI-Adnoc joint venture Fertiglobe, UAE renewables player Masdar, and French energy group Engie is considering a green hydrogen project in Abu Dhabi, Asharq Business quotes Fertiglobe CEO Ahmed El Hoshy as saying. There are ongoing studies between the consortium for the 100-200 MW facility, he said.

Busy in the run up to COP28: The new green hydrogen project falls under several projects Fertiglobe plans to launch by the end of the year, El Hoshy said. He added that his company is considering other green hydrogen and blue ammonia projects in Abu Dhabi in the coming years.

We already had a clue this was in the works: The three renewables players signed an agreement last year to study co-developing a “globally cost-competitive” 200 MW green hydrogen facility in the UAE to back the production of green ammonia. They plan to have the facility operational in 2025, with Fertiglobe serving as the sole long term off-taker.

And there’s an update on Fertiglobe’s project in Egypt: The company will reveal a full investment decision regarding its 100 MW electrolyzer plant with Norway’s Scatec, Orascom Construction, and the Sovereign Fund of Egypt (SFE) in Ain Sokhna by the end of the year, El Hoshy said. Production capacity at the facility — which began commissioning in November — could reach 90k tons of green hydrogen per year when the next phases are completed, he added.

A good 1Q for Acwa Power: Saudi Arabia's renewable energy utility Acwa Power reported a 78% y-o-y rise in net income in 1Q 2023 to SAR 270 mn, a disclosure to Tadawul showed. Its revenues were up 16% y-o-y during the quarter to SAR 1.3 bn, it added.

A reason or two: The growth came mainly due to a higher operating income before impairment and other expenses on the back of a higher contribution from existing and new projects, Acwa said. “These were partially offset by lower contributions from development and construction management services fees earned for projects and higher general and administrative expenses in line with business growth,” it added. A lower zakat and tax charge also contributed to the growth after the recognition of a deterred tax credit on account of FX fluctuations in Morocco.

There was a bit of a downside: The increases in net income were somewhat offset by higher finance charges on the back of increased finance costs due to higher market interest rates and increased finance costs from additional debt related to the second tranche of sukuk issued by the company in February, it added.

Some progress during the quarter: Acwa Power said it “achieved significant milestones on the business development landscape during the first quarter of 2023,” according to an earnings release.Those include three power purchase agreements (PPA) with Uzbekistan for three solar PV plants with combined capacity of 1.4k megawatt alternating currency (MWAc) and battery energy storage systems with an overall capacity of 1.5k MWh. It also announced the signing of a water purchase agreement (WPA) with the Saudi Water Partnership Company for the development and operation of a water desalination plant using reverse osmosis technology with a capacity of up to 600k cbm/day at the south of Rabigh city.

Quite an eventful quarter: Two dry financial closes were also achieved during the quarter, including a SAR 24 bn financing for smart city NEOM’s green hydrogen project, which is set to be “the world’s largest at-scale green hydrogen production project.” Three other projects, including Jazan Integrated Gasification Combined Cycle project’s Group 2 assets, Noor Energy 1’s 300 MW two units, and Jazlah Independent Water Plant, also began commercial operations during the quarter.

Not the best quarter for Marafiq: The Saudi Public Investment Fund-backed Marafiq saw its net income fall 25.3% y-o-y in 1Q 2023 to SAR 106.7 mn on the back of higher financing costs, according to a disclosure to Tadawul. Revenues were up by a marginal c.1% y-o-y during the first three months of the year to report SAR 1.47 bn.

What they said: “The reason for the decrease in net income is due to increase in financing costs, despite the increase in the company's operating revenues as a result of the increase in the quantities sold in most of the company's main sectors,” Marafiq said.

What do they do? Marafiq has core businesses including water supply, sewage, and waste management and treatment.

Ferrari says its continued manufacturing of internal combustion engines using e-fuels won’t clash with its plans to become carbon neutral by 2030, Reuters quotes CEO Benedetto Vigna as saying. “The two (targets) are very much compatible,” Vigna said during a conference. He had previously hailed a decision by the EU to exempt cars running on e-fuels from its planned 2035 phaseout of new combustion engine cars deadline, or 2036 for small-scale manufacturers like Ferrari.

About e-fuels: E-fuels are a class of synthetic fuels that are manufactured using captured CO2 emissions and hydrogen extracted from renewables or zero carbon dioxide electricity, according to Reuters. It can have a role in decarbonization by slashing harmful emissions from traditional combustion engines, according to French power group Engie.

---

Researchers from the Swiss Federal Institute WSL are studying Alpine and Arctic microbes that have been observed to digest plastic materials at low temperatures, The Guardian writes, referencing research published in Frontiers in Microbial Biology. The microbes — which can dissolve plastic at temperatures as low as 15°C — offer the first potential alternative to microbial counterparts that can digest plastic only at above 30°C. The new discovery could pave the way for companies to dispose of their plastic waste without costly and carbon-intensive heating processes.

A breakthrough in microbial recycling: The Swiss-based scientists buried plastics in parts of Greenland, Svalbard, and Switzerland for a year while simultaneously growing 19 different bacterial groups and 15 fungi species in single-strain cultures in dark, laboratory settings at 15°C to see how the organisms would react with the materials. They found that while none of the groups were able to digest non-biodegradable polyethylene even after a prolonged, 126-day incubation stretch, two fungal species were capable of digesting all the other plastics thrown at them. 56% of all the studied groups were capable of dissolving polyester-polyurethane in the lab setting at 15°C, and a total of 14 fungi strains and three bacteria families proved effective in eating up polybutylene adipate terephthalate and polylactic acid mixtures.

New tech for SAF on the way: Honeywell International unveiled a new technology to manufacture lower-carbon aviation fuel from green hydrogen and CO2 captured from the aviation industry, according to a statement. The new technology will combine green hydrogen and carbon dioxide captured from industrial smokestacks to produce lower-carbon methanol, which can be turned into fuels, including sustainable aviation fuel (SAF). The new technology could help slash greenhouse gas emissions by 88% in comparison with conventional jet fuel, Honeywell said.

Customers are already lining up: Energy producer HIF global signed a commercial agreement for the production of eSAF, becoming the first customer to seek the new technology, according to the statement. It expects to deploy the technology at its second commercial-scale eFuels facility in the US which would recycle c. 2 mn tons of captured CO2 to produce c.11k barrels per day of eSAF by 2030.

REMEMBER- This is a perfect timing for this kind of tech: The EU agreed last month to set binding targets for the European aviation industry to boost its use of SAF in a bid to decarbonize the industry. The proposal aims to increase the use of SAF by ensuring fuel suppliers have 2% of the fuel accessible at EU airports as SAF in 2025, rising to 6% in 2030, 20% in 2035 and 70% in 2050. The EU carbon market is set to provide about EUR 2 bn to help airlines switch to SAF. Some 1.2% of fuels must also be synthetic fuels from 2030, rising to 35% in 2050. Aviation is a difficult sector to decarbonize and net zero aircrafts are not expected for another 10 years.

---

Toyota Tshusho on the lookout for green hydrogen potential in the region: Japan’s Toyota Tsusho Corp plans to discuss the possibility of investing in green hydrogen in MENA and Africa with the African Development Bank (AfDB), according to a statement. Executive VP Toshimitsu Imai said that his company is conducting studies for possible projects in South Africa, Kenya, and Egypt. Imai made the statements during a visit by an AfDB delegation to Japan to present investment opportunities in Africa.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• British renewables developer Octopus Energy Group will manage Masdar’s UK-based BESS facilities using its Kraken energy technology platform. (The National)
• Emirates Development Bank will add renewables to the sectors covered in its five-year plan to fund SMEs and large companies. (Zawya)
• PIF-backed EV maker Lucid Group has revised its annual production plan and will manufacture “over 1k” of its luxury EV sedans, down from a previous production plan forecast of up to 14k. (Bloomberg)

China has deemed a gene-edited soybean safe to consume marking the first time the country has approved the new technology in a crop, Reuters reported. The high oleic soybean — developed by private company Shandong Shunfeng Biotechnology — has been given a five-year safety certificate from the country’s Agriculture and Rural Affairs Ministry in late April. Despite the approval of the new soybean, farmers in the country will still need approval to use the seed varieties with the altered genes.

Gene-editing what? Gene editing is a new technique that allows for altering existing genomes without introducing foreign genes into a plant — unlike genetic modification, according to a Food and Agriculture Organization (FAO) report (pdf). The technology has the potential to improve food security, nutrition, and environmental sustainability, yet issues of safety must be assessed, FAO said. “The environment, biodiversity and human health could be negatively influenced by release of gene-edited products and therefore regulation must be enacted,” it added.

Expect more from the Chinese: Shandong Shunfeng is currently researching some 20 other gene-edited crops, including a higher yield rice, wheat and corn, herbicide-resistant rice, and soybeans, the newswire said, citing a company representative.

Not the first: The US approved its first gene-edited food in 2019 after it gave the green light to a high oleic soybean developed by US-based company Calyxt, according to Reuters. Japan has also approved several of the altered foods, including healthier tomatoes and fish whose genomes have been edited to increase the speed of growth. Revised legislation in England has paved the way for the commercial development of gene-edited foods, the BBC reported in March. More recently, Canada’s Agriculture and Agri-food Minister Marie-Claude Bibeau said the Canadian Food Inspection Agency would allow modified plants under new seed guidelines, CBC reported earlier this month.