KSA’s Acwa Power secures land for its 10 GW wind farm in West Sohag

Good morning, friends. It’s another busy morning of climate news across the region, with the news cycle showing no sign of slowing down.

BESIDES ALL THE NEWS, one of this morning’s must-reads is our explainer on El Niño and what the extreme weather pattern means for our neck of the woods.

THE BIG CLIMATE STORY- Renewables giant Acwa Power inked an agreement with Egypt’s New and Renewable Energy Authority to allocate 3k sqm of land in Sohag for its 10 GW wind project.

^^ We have more details on this story and much more in the news well, below.

HAPPENING TODAY- Egypt is kicking off the Egypt Mining Forum today in Cairo. The event — organized by the country’s Oil Ministry — will gather regional players as well as global mining firms in a bid to attract regional and foreign direct investments in the country’s mining industry.

THE BIG CLIMATE STORY OUTSIDE THE REGION- Another week, another scorching heatwave: The world continues to reel from extreme high temperatures engulfing the Mediterranean, with scientists indicating that the 1.5°C global warming threshold is moving beyond reach. As a heatwave persists in North Africa, temperatures in Europe are expected to come close to or even surpass the continent’s record high temperature of 48.8°C recorded in 2021, the European Space Agency has warned. Italy, Spain and Greece have been hit with soaring temperatures for days, while a Chinese township in the northwest recorded temperatures of over 52°C as a record heatwave persists in the coming days.

Extreme weather will continue to rewrite records in the coming days: The World Meteorological Organization (WMO) has warned that soaring temperatures affecting the Mediterranean would intensify on Wednesday and would continue in some regions in Europe next month. “A further continuation into August is likely,” WMO said, stressing the necessity of climate action.

The persisting heatwave grabbed headlines all over the international press: Reuters | Bloomberg | The Associated Press | CNN | BBC | The Guardian

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MARK YOUR CALENDARS- The Enterprise Finance Forum is taking place on 18-19 September at the St. Regis Hotel in Cairo. This flagship forum is the latest in our must-attend series of invitation-only, C-suite-level gatherings that allow senior members of our community to openly and frankly discuss critical issues in key sectors of the economy.

Day one is our Banking Forum, where we’ll dive deep into topics of interest to commercial and investment bankers, from an outlook on the 12 months to come in M&A, IPO, and debt capital markets to the national, regional, and global trends that are (re)shaping our industry.

Day two is all about Fintech and Non-Banking Financial Services. We’ll take a deep dive into everything from the magic of client acquisition to the prospects of consolidation and the coming of challenger banks.

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WANT TO LISTEN? Head to: Apple Podcast | Spotify | Google Podcast | Anghami. We release a new episode every Sunday morning.

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WATCH THIS SPACE- Tunisia secures EU financing for its green transition: The EU signed a preliminary economic cooperation agreement with Tunisia to offer “budget support” for the country’s green energy transition, according to a statement. While the value of the financial support to Tunisia is yet to be announced, EU Commission President Ursula von der Leyen said in June that the Commission was considering up to EUR 900 mn in macro-financial aid, plus “up to EUR 150 mn in budget support” directly, according to Politico. The agreement is yet to be ratified by the European Commission, which is scheduled to happen before the end of this year, according to Tunis Africa Press Agency.

Tunisia has been on a fundraising spree: The USAID-backed Tunisian Private Sector Energy Transition Support Program (Power Tunisia) signed an agreement last week to offer subsidies and technical assistance to private companies in the country to help back their green transition. Last month, the World Bank Group signed off on a USD 268.4 mn loan to help Tunisia finance its planned electrical interconnection project with Italy, and a EUR 113.6 mn loan agreement to back the country’s Sanitation Public-Private Partnership (PPP) Support project. The Global Environment Fund is also providing Tunisia with USD 13 mn to increase the country’s EV charging points.

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CIRCLE YOUR CALENDAR-

The UAE will host the International Conference on Solar Power Technology from Saturday, 22 July to Sunday, 23 July in Dubai. The conference will bring together industry leaders as well as academics and researchers to discuss trends and innovations in the solar energy production sector.

The UK will host the London Hydrogen-Africa Green H2 Investment Forum from Tuesday, 25 July to Wednesday 26 July in London. The event will gather green hydrogen developers, investors, and policy makers to discuss challenges, regulatory frameworks, and investments in Africa’s green hydrogen market.

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

Egypt assigns land plot for Acwa’s 10 GW mega wind project: Saudi renewable energy firm Acwa Power yesterday signed a land allocation agreement with Egypt’s Electricity Ministry for its planned 10 GW wind farm, Acwa and the Egyptian cabinet said in separate statements. The Saudi developer will receive a 3k sq-km plot of land in Sohag in Upper Egypt. Acwa inked an initial MoU for the project with Egypt’s New and Renewable Energy Authority and the Egyptian Electricity Transmission Company (EETC) on the sidelines of the COP27 summit in November.

The project in numbers: The wind farm will be one of the largest in the world when it’s operational, coming second only to China’s planned 20 GW Gansu project. The Acwa project will eliminate some 25.5 mn tons of emissions a year and provide electricity to some 11 mn households, creating 120k jobs, according to the statement. The estimated cost of the project was not disclosed.

Nothing is set in stone: ACWA will conduct feasibility studies for the project ahead of signing the final contracts.

Acwa already has a significant presence in Egypt’s renewable sector, including through its 200 MW Kom Ombo solar power plant, which last April got USD 114 mn in backing from a consortium of international lenders led by the European Bank for Reconstruction and Development. The company has minority stakes in three plants in Benban and an upcoming project with the Egyptian Electricity Transmission Company to convert an electricity plant in Luxor to renewable energy, and has reportedly expressed interest in Egypt’s investment in desalination infrastructure.

Egypt has set itself an ambitious renewable energy target: Egypt is aiming to produce 42% of its energy from renewable sources by 2030 and 60% by 2040.

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IN OTHER ACWA NEWS- Acwa Power inks agreement with Japan’s Toray Industries to enhance energy efficiency of desalination plants: Saudi Arabian renewables developer Acwa Power and Japanese technologies provider Toray Industries will cooperate on increasing energy efficiency across Acwa Power’s desalination facilities, according to a statement. Under the scope of the agreement, Toray will conduct analysis on Acwa Power’s reverse osmosis desalination membranes to determine how to push down energy consumption. Acwa will provide Toray with the operational details of its plants to help the Japanese firm prepare commercially viable solutions to enhance energy efficiency.

We finally have a timeline for Vestas’ wind farm in the Gulf of Suez: An international consortium led by Denmark’s wind turbine maker Vestas is set to begin operations at its 250 MW wind farm in Egypt’s Gulf of Suez by early 2024, Al Mal quotes unnamed sources at the country’s Electricity Ministry as saying.

What we know: The project — owned by Egypt’s New and Renewable Energy Authority (NREA) — is being implemented by an Italian-French-Chilean alliance led by Vestas, the sources said. The project’s investment cost is estimated at EUR 228 mn, which will be funded through an earlier agreement between Egypt and European partners, including the French Development Agency, the EU, the European Investment Bank, and the KfW Development Bank.

This has been in the works since 2020: Egypt’s NREA signed a EGP 4.3 bn agreement with the Vestas-led consortium to construct the wind project in August 2020. The plant will have an annual energy output of 840 GWh once fully operational, the Egyptian Cabinet said at the time. The project was set to be implemented within 35 months, according to officials, although the reason behind its delay remains unclear. Equipment to connect the wind farm to the national grid is set to be supplied by Hitachi Energy, the company said last year. Vestas was awarded the tender in early 2020 after both Siemens Gamesa and Germany’s Senvion retracted their bids late in 2019.

Vestas ♥️ Egypt’s wind potential: Vestas was named recently among companies planning to bid for a five-to-seven year operation and maintenance contract for the 120 MW Gabal El Zeit 3 plant in Egypt.

All under Egypt’s ambitious renewable targets: Egypt wants renewable energy to contribute 42% of the country’s total energy mix by 2030 and 60% by 2040. It signed earlier this month a land allocation agreement with Norway’s Scatec for a planned 5 GW wind farm in Sohag, advancing one of the MoUs on wind energy signed during COP27. A similar land agreement was signed last month with the Masdar-Infinity Power-Hassan Allam Utilities consortium for a 10 GW wind plant, advancing another MoU inked at the climate summit.

GREGY: Who’s paying? Egyptian authorities are in talks with the Greek government about how to fund the planned 3-GW Egypt-Greece Interconnector (GREGY), a source from Egypt’s Electricity Ministry told Enterprise. The initial investment required for the project stands at around EUR 4 bn, according to our source, who said that there are currently three options on the table.

Refresher: The planned electricity link will run almost 1.5k km from Egypt’s Wadi El Natroun directly across the Mediterranean to mainland Greece. It will have a maximum capacity of 3 GW and transmit only renewable energy generated in Egypt.

Scenario #1- The EU could cover some of the cost via a long-term soft loan: One of the options being considered is a EUR 1.5 bn long-term low-interest development loan from the EU, the source told us. The loan value is an initial estimation and could end up being higher or lower.

Scenario #2- Greece could stump up the full cost — on one condition: Another option on the table would see Greece fund the entire cost of the interconnector in exchange for power at a lower price point, according to the source.

Scenario #3- Turning to the private sector: The last option is to secure the funding from Egyptian and Greek private-sector sources in exchange for a portion of the returns on the exported electricity, the source told us.

The EastMed pivot: The EU has been searching for new sources of energy to replace Russian oil and gas supplies, which have been all but cut off by Moscow in its sanctions war with the West. The Eastern Mediterranean has emerged as a key area for the bloc, which is looking to import greater quantities of Egyptian and Israeli gas, and access power generated by solar plants and wind farms in Egypt. GREGY is one of five proposed Egypt-Europe interconnectors currently being discussed.

The UAE’s state-owned renewables developer Masdar has hired banks for its debut green bonds issuance, Reuters reports, citing a bank document it has seen. A 10-year benchmark-sized issuance — usually set at a minimum USD 500 mn — will follow, subject to market conditions, according to the newswire.

Advisors: The document showed that Citi and First Abu Dhabi Bank were hired as joint global coordinators, while BNP Paribas, HSBC, SMBC Nikko, Societe Generale and Standard Chartered have been tapped as joint lead managers and joint bookrunners. They have been asked to start holding investor calls yesterday ahead of the green bond sale.

We knew this was coming: The planned issuance comes nearly a month after Masdar’s CEO Mohamed Al Ramahi told Bloomberg that Masdar is looking to issue a USD 500-700 mn maiden green bond.

It’s been an eventful summer for Masdar: Masdar signed a roadmap agreement last month with Kazakhstan to develop a wind farm in the southern part of the country with a potential production volume of 1 GW with a battery energy storage systems (BESS) facility. It also submitted with Saudi renewables giant Acwa Power bids to develop the 1.8 GW sixth phase of Dubai’s mega scale Mohammed bin Rashid Al Maktoum Solar Park.

REMEMBER– Interest in green and sustainable finance issuance has been on the rise in the region in recent months ahead of COP28 in the UAE. The MENA region reported a 532% y-o-y rise in green and sustainable finance to USD 24.55 bn in 2021, up from USD 3.8 bn a year earlier, according to a report by consultancy Arthur D Little. The UAE saw a 32% y-o-y increase in its green and sustainable finance issuance last year.

KSA’s Neom is looking to raise SAR 10 bn to fund The Line: Saudi Arabia’s Neom is reportedly looking to secure loans totalling SAR 10 bn (USD 2.7 bn) to finance the early stages of its net-zero city The Line, Bloomberg reports, citing people with knowledge of the matter. Negotiations on the terms of the debt agreements could be finalized and the loans doled out in the coming months.

The project: Spanning 170 km and 100% powered by renewables, The Line is the first construction project of the USD 500 bn Neom business zone and is designed to have no roads, cars, or carbon emissions. The smart city will eventually accommodate 9 mn residents when fully built.

Neom has been pushing the project forward: In May, Neom awarded a USD 2 bn contract for a rail project linking its floating industrial complex Oxagon to The Line. The rail project will extend south from The Line to Neom City station, passing through Neom Bay Mansions and Neom Bay Airport, all the way to Oxagon.

The Japanese are all in for the Gulf’s clean energy potential: Japan’s Prime Minister Fumio Kishida held talks with Saudi Arabia and UAE officials aimed at strengthening ties in the fields of clean energy, energy supply and other priority sectors. Kishida’s GCC tour — which includes a visit to Qatar today — comes as Japan seeks to secure energy supplies and offer the Japanese know-how for green tech, according to Reuters.

An ambitious tie-up with Saudi Arabia: Saudi Arabia and Japan signed 26 MoUs and investment agreements in several priority sectors including green and traditional energy, environment, technology and others, SPA reports. The MoUs were signed in Jeddah during the Saudi-Japanese roundtable meeting attended by Kishida and Saudi Investment Minister Khalid bin Abdulaziz Al Falih and representatives of 44 Japanese companies. The meeting reviewed and explored potential investments in several sectors, including clean energy, clean chemicals, mining, healthcare, and digital technologies, according to SPA.

Decarbonization on the table: Saudi Crown Prince Mohammed bin Salman and Kishida agreed in a meeting to cooperate in sharing technology to help in the decarbonization and economic diversification of the Gulf country, according to The Japan Times. “We are shifting away from the existing relationship of an oil importer and an exporter and will deepen a new global partnership for the decarbonization era,” Kishida said following the meeting with the Saudi leader.

And that’s not all: The Saudi Energy Ministry affirmed an ongoing joint cooperation between the two countries in clean hydrogen under two MoUs on developing clean hydrogen, ammonia and its derivatives and recycled carbon fuel in Japan, according to a ministry statement on Saturday.

An initiative for all is happening: Kishida and the Saudi crown prince agreed to establish the KSA-Japan Lighthouse Initiative for clean energy cooperation, according to a Saudi Energy Ministry statement. The initiative will “serve as a beacon for other countries and regions as they develop their strategies and roadmaps toward their net zero ambitions,” the statement said. The initiative will focus on clean energy transition projects, including hydrogen, ammonia, e-fuel, circular carbon economy and carbon recycling, critical minerals and other areas of partnership.

Promising steps forward with the UAE: UAE President Sheikh Mohammed bin Zayed Al Nahyan and Kishida also inked agreements and a joint statement on climate action, Wam reports. The MoUs include a joint declaration of intent between the UAE Industry and Advanced Technology Ministry and Japan’s Economy, Trade, and Industry Ministry to establish an Energy Security and Industry Accelerator. Both leaders also discussed the comprehensive strategic partnership between the two countries in the fields of the economy, trade, technology, energy, space, and education, according to Wam.

Enterprise Explains: The why and when of El Niño: One of the most closely studied weather phenomena around the world today, El Niño is a cyclical naturally occuring weather phenomenon affecting different regions around the world due to the unusual warming of the sea surface temperature in the eastern Pacific Ocean every two to seven years. Recent research has shown that its impacts are likely to hit harder and more frequently as the planet continues to heat up and global surface temperatures will rise by about 0.1 °C during the years the phenomenon occurs, with some scientists warning global average temperatures could tip off the 1.5 °C limit.

As the effects of El Niño become more severe and far reaching for mns of people and various ecosystems, interest in understanding how it affects food availability, fisheries, wildfires, coral bleaching, extreme rainfall, and other components of the climate system has grown. Countries are looking for ways to adapt and build resilience to mitigate the impacts on those occurrences. In part one of this two-part explainer, we discuss with experts what to expect in terms of weather-induced changes in our region.

We’re experiencing El Niño after a four-year absence: “Strong anomalies in the central and eastern Pacific regions have already been identified, and they are becoming stronger every day,” climate researcher at the International Centre for Theoretical Physics Muhammad Abid told Enterprise Climate, adding that its cascading effects usually peak in the winter months. Climate scientist and head of the Environmental and Geophysical Sciences Lab at Dubai’s Khalifa University Diana Francis told us this will be a strong El Niño year, pointing out that last month was already recognized as the warmest June on record, “even before the impacts of El Niño start to be felt worldwide.”

So how exactly does El Niño occur? In normal years, the permanent winds moving from east-to-west around the Earth’s equatorial region — called trade winds — push warm surface waters in the eastern Pacific westwards, away from Central and South America and towards South East Asia and Australia, Abid explains. This makes surface water temperatures in the west relatively warmer than in the east. However, when the trade winds become weaker than normal, warm waters accumulate in the east and “create a patch of warmth over the tropical Pacific,” Francis explains. This breaks the neutral cycle in the Pacific and triggers El Niño. With the cycle reversed, the warm air initially accumulating near Asia and Australia, shifts towards Central and South America, making the former wetter than usual, and the latter dryer than usual.

It’s part of a larger phenomenon: While El Niño often steals the spotlight given its role in exacerbating global warming, it is considered the “warm phase” of the bigger El Niño-Southern Oscillation (ENSO) atmospheric occurrence. The “cool phase” is represented by the La Niña phenomenon, when “strong trade winds are present which causes warm waters at the surface to be displaced westward and replaced by cooler waters from the bottom” causing the east “acific water temperatures to become cooler than the average. The world has been in the La Niña phase for the last three years, according to Abid.

Despite being largely understudied in MENA, it impacts our region: El Niño has affected 71% of drought years in the southern and southwestern parts of the Arabian Peninsula, and La Niña was linked to 38% of this area’s flood years, a study (pdf) by Abid and other researchers from King AbdulAziz University’s (KAU) Center of Excellence for Climate Change Research (CECCR) found. “Although it is not surprising that ENSO affects precipitation over the Arabian Peninsula, its apparently strong effect is,” co-author and climate and earth modeling expert Georgiy Stenchikov told Nature.

MENA and GCC will see shifting weather patterns soon: Intensifying El Niño conditions may bring heavy and more frequent rainfalls over the Gulf countries during the upcoming winter season, Abid told us. Nile Basin countries, including Egypt, will experience more droughts. “During El Niño years there is an increase in wind speed, coupled with dry and warm wind coming from the desert area of the Arabian Peninsula, blowing toward Egypt,” Canada-based climate researcher and water resources consultant Shereif Mahmoud tells Enterprise Climate. This wind moves the moist air away and replaces it with dry hot air, which increases the rate of evaporation over the Nile basin countries leading to a climate favorable for increasing drought, he added. The increase in air temperature and surface humidity in turn increases human thermal comfort indices, which poses a high health risk including difficulty breathing, he said.

Existing drought conditions will be exacerbated during El Niño years: One study (pdf) published in 2016 found that ENSO had some impacts on the 2015–2016 droughts in Morocco, which could increase in the coming years as Morocco faces tougher conditions that have led it and its neighboring countries to ration the nation’s water consumption. According to the researchers at World Weather Attribution, Morocco and Algeria are expected to hit record temperatures this summer.

The world’s top fertilizer producer wants to sell carbon-guzzling soybeans: The world’s largest fertilizer producer Nutrien will begin selling a genetically modified variation of soybeans that soaks up more carbon dioxide than natural counterparts while producing more oils and proteins for biofuel production, Bloomberg writes. The US market will be the first to receive the offering in time for the 2024 season.

How it works: The alternative soybeans — produced by US-based startup ZeaKal Inc — essentially “trick” crops to think they need more nutrients, effectively prolonging photosynthesis and enabling them to store more carbon than traditional counterparts.

REMEMBER- Tweaking agricultural practices could help store some 31 gigatons of greenhouse gasses per year and avoid surpassing the 1.5°C warming threshold. Increasing agricultural soil carbon-storage capacities by just 1% across half of global farming soils could help plug the 32 gigaton emissions gap between current CO2 slashing targets and the carbon volumes that must be cut by 2030 to remain within the 1.5°C warming limit.

It’s a thumbs up for MENA’s first plastic waste-to-feedstock process: Saudi oil giant Aramco, petrochemicals firm Saudi Basic Industries Corp (Sabic), and France’s TotalEnergies have succeeded in converting oil derived from plastic waste into certified circular polymers for the first time in the MENA region, according to a statement. The plastic waste derived oil (PDO) was processed at Aramco-TotalEnergies JV SATORP refinery in Jubail. The PDO was used later as a feedstock by Sabic affiliate Petrokemya for the production of certified circular polymers.

Why this matters: The process would pave the way for the use of non-sorted plastics — which are often complex to recycle mechanically — to solve the dilemma of end-of-life plastics, the statement notes. It will also help establish a domestic value chain for the advanced plastic recycling to circular polymers in the country.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Abu Dhabi-based sovereign wealth fund Mubadala and UAE renewables company Masdar signed an agreement to jointly explore decarbonisation and energy transition projects in MENA and Southeast Asia. (The National)

Japan’s Toshiba is looking to establish a local supply chain for offshore wind power equipment with help from General Electric (GE), Reuters reports. The supply chain would involve 100 small and medium sized businesses serving Japan’s growing wind energy sector, which aims to install 10 GW of wind power by 2030 and 45 GW by 2045. Last month Japan increased its target for wind power generation from 5 GW currently to 140 GW by 2050. Toshiba, which in 2021 entered into a partnership with GE to localize manufacturing of the latter’s Haliade-X offshore wind turbines, says it will begin production of its units in 2026.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The US and India are looking to establish an investment platform that aims to boost private investments for green projects by working on lowering the cost of capital. (Reuters)
• 710 tons of agricultural pesticides make their way to global waterways annually affecting 13k km of riverways before making their way into oceans. The rivers most affected by this are in the US, Argentina, India, and China. (The Guardian)

Bee farmers that once used to operate in central Iraq are now heading to the mountains of Kurdistan to escape extreme heat and an ongoing drought, AFP writes. Beehives thrive in temperatures between 34.5-35.5 °C, and temperatures of c. 50°C in Basra and Baghdad are no longer suitable for honey farming. High temperatures affect the lifespan of bees, decreasing it by two thirds in some cases, bee farmer Mohamed Aliawi told AFP.

Affecting honey production: Bees normally cover hundreds of meters to forage for nectar and pollen necessary for honey production, but extreme heat and ongoing drought are driving bees in central Iraq to travel longer distances — up to 5 km— to pollinate, AFP notes. In spite of a growth in honey production last year in Baghdad and in Kurdistan, production volumes are below those bee farmers used to record earlier in the 2000s. In the early 2000s, each beehive would produce between 20-25 kg of honey, Aliawi notes. Drought and extreme heat are currently driving down production to just 5 kg, he says. Climate change is severely impacting global bee populations because it destroys their habitats and food sources, and changes their seasonal routines.

Bee populations are declining at an unprecedented rate globally: Bee species have dropped 25% between 2006-2015 globally compared to population sizes recorded before 1990 partly owing to climate-driven shifts in weather patterns. In our neck of the woods, climate change has been weighing on Egypt’s honey industry, with industry players attributing the decline of honey production to climate-induced shifts in weather delaying harvest seasons, which is ultimately reducing bee population sizes.

Why should we care? Some 3%-5% of fruit, vegetable, and nut production is lost due to inadequate pollination, according to a study in Environmental Health Perspectives, which has led to an estimated 427k excess deaths a year from lost healthy food consumption and associated diseases. Treatments for diseases and conditions like multiple sclerosis, osteoarthritis, and chronic fatigue syndrome also rely on bee venom.