Egypt’s Orascom Investment Holding set to invest in renewables + trading in Africa

Good morning, wonderful people, and happy Thursday. We’ve reached the halfway point in Ramadan and are looking forward to a restful week, but first…

THE BIG CLIMATE STORY- Orascom Investment Holding’s board of directors approved investments in EVs and a trading platform to boost intra-Africa trading and logistics services in Egypt this week, and over in Iraq it appears France’s TotalEnergies and the Iraqi government have finally struck an agreement on the long-delayed USD 27 bn cluster of energy projects in the country. We have the details on these stories and more in the news well, below.

ALSO- We have more details on the financiers of Egypt’s 500 MW Gulf of Suez wind farm: The European Bank for Reconstruction and Development (EBRD) and the UN’s Green Climate Fund will each extend credit lines totalling USD 50 mn to finance the 500 MW Gulf of Suez wind farm in Ras Ghareb, contributing a fifth of the USD 501 mn syndicated loans that will fund the project, the lender said in a statement yesterday. The credit lines extended to project developer Red Sea Wind Energy (RSWE) — a JV comprising Orascom Construction, Japan’s Toyota Tsusho Corporation, Eurus Energy Holdings Corporation, and France’s Engie — are co-financed by the Japan Bank for International Cooperation (JBIC), Sumitomo Mitsui Banking Corporation, the Norinchukin Bank, and Société Générale, who collectively will provide green loans adding up to USD 401 mn for the project, with JBIC contributing USD 240 mn alone. The wind farm — which achieved financial close earlier this week — is being developed under the energy pillar of the Egyptian government’s Nexus on Water, Food and Energy (NWFE) program, with the EBRD serving as the lead developing partner.

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THE BIG CLIMATE STORY OUTSIDE THE REGION- It was relatively quiet on the global climate news front yesterday, but Zurich Ins. Group’s exit from the Net Zero Ins. Alliance got coverage from Reuters and Bloomberg. Zurich’s departure marks the second withdrawal from the subunit of the Glasgow Financial Alliance for Net Zero after German insurer Munich RE announced it would quit the group over the weekend. The exits are drawing skepticism among industry leaders on the utility and efficiency of voluntary industry associations aiming to push down carbon output, the business news service notes.

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WATCH THIS SPACE #1- Industry giants issue their own corporate carbon credits: A host of industry leaders — including British pharma giant GSK and energy titan Shell, Danish renewables developer Orsted, France’s TotalEnergies, and German automaker Volkswagen — are bankrolling nature-based carbon sinks to offset the emissions generated from their operations, issue carbon removal credits, and meet mid and long-term climate action targets, Bloomberg writes. TotalEnergies is earmarking some USD 100 mn annually for carbon mitigation projects in a bid to up its carbon offsetting capacity to 5 mn tons of CO2 equivalent per annum by 2030. Shell and Orsted are both funding nature-based carbon mitigation projects in various parts of the world, and VW plans to issue some 40 mn carbon credits by the end of the decade to help it reach its 2050 net-zero target.

WATCH THIS SPACE #2- This could be a gamechanger: New silicon-based electrodes could help usher in a fresh line-up of longer driving and faster charging EV batteries by mid-decade, Reuters reports. The new silicon electrodes, which are considered an ideal substitute or supplement for graphite in battery anodes, are being developed by startups Group 14 Technologies and Sila Nanotechnologies. They both have plants opening up next year, and their automotive customers include Porsche and Mercedes-Benz. But even with the plants coming online in 2024, demand is set to exceed capacity, Group14’s CEO and co-founder Rick Luebbe said. The shift to silicon-rich anodes would still take time, with Sila Nano CEO and co-founder Gene Berdichevsky saying it would take more than 10 years for silicon to replace graphite in battery anodes.

WATCH THIS SPACE #3- ExxonMobil is quite optimistic about its energy transition plans: ExxonMobil’s low-carbon business could eventually outperform the leading US oil producer’s traditional fossil fuel production, CEO Darren Woods told investors, according to the Financial Times. The decarbonization business could be worth “hundreds of bns of USD” and emerge to be “larger than ExxonMobil’s base business is today as the world approaches net zero,” Woods said. Achieving this target depends on finding ways to reduce the costs of hydrogen fuel and carbon capture and on government incentives, he said. Woods’ statements come months after Exxon said it plans to pour some USD 17 bn in lower-emission initiatives by the end of 2027, which is equivalent to 10% of investments allocated for its fossil fuel projects over the same period.

WATCH THIS SPACE #4- Japan is spearheading calls to accelerate decarbonization ahead of the upcoming G7 meeting, Reuters reports. The two-day meeting will kick off on 15 April in Japan and will focus on climate, energy, and environment. The topic of energy security will be high on the meeting’s agenda, and a discussion on how to phase out natural gas within 10 to 15 years will be brought forward, as the country seeks to reduce its dependence on Russian gas imports, Japanese minister of economy, trade, and industry Yasutoshi Nishimura told Reuters. Nishimura visited Saudi Arabia, the UAE, and Oman last year as part of a regional tour aimed at finding ways to diversify the country’s energy sources. The G7 group comprises Canada, France, Germany, Italy, Japan, the UK, and the US.

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CIRCLE YOUR CALENDAR-

The UAE is hosting the International Conference on Green Energy and Environmental Technology (ICGEET) on 18 and 19 April in Dubai. The event will bring together stakeholders from academia, the healthcare industry, and the private sector to discuss energy conservation among other topics.

Turkey is hosting the International 100% Renewable Energy Conference from 4-6 May in Istanbul. The event will bring together experts to discuss the integration of renewables, renewable energy technologies and applications, and the Roadmap to 2050.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until 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, national holidays and news triggers.

OIH sees potential in Africa’s renewables: Orascom Investment Holding’s (OIH) board of directors approved investments in EVs and a trading platform to boost intra-Africa trading and logistics services this week, according to the board’s minutes (pdf). OIH did not disclose the size of investments.

The details: The investment in the electric mobility sector will provide for two and three-wheeler EVs and will launch in Egypt before expanding later in Africa, OIH CEO Marwan Hussein told Enterprise. He said the project was a JV with an unnamed company operating in the country without providing further details. It would launch in 2H 2023, he added.

We knew this was coming: The announcement comes months after OIH Executive Chairman Naguib Sawiris expressed his company’s interest in investing in renewables in Africa and EV charging stations. The Egyptian business mogul showed particular interest in Morocco’s green sub-sectors including EV charging stations and solar plants, saying that OIH is ready to invest up to USD 100 mn over “the coming years.”

REMEMBER- Morocco — which is already a regional automotive powerhouse — has a thriving EV assembly industry with plans to make it bigger. Several global manufacturers produce hundreds of thousands of EVs at assembly facilities in the country. Morocco is targeting the production of around 1 mn EVs in the next three to four years, according to statements by officials last year.

PROJECT UPDATE- France’s TotalEnergies and the Iraqi government struck an agreement on the delayed USD 27 bn cluster of energy projects in the country, according to a statement. The accord, which comes after more than a year of stalled talks between the two sides on the back of changes to the government, revives hopes of luring back foreign investments to the energy-rich country.

The details: Per the agreement, Iraq’s state-owned Basrah Oil Company (BOC) will hold a 30% stake in the Gas Growth Integrated Project (GGIP). The stake announced by TotalEnergies is lower than the 40% initially demanded by Iraq. QatarEnergy will grab a 25% stake in the GGIP per an invitation by TotalEnergies, which will own a 45% stake.

About the GGIP: The energy projects cluster aims to boost Iraq’s natural resources to enhance electrical supply through a USD 10 bn investment plan by all parties, the TotalEnergies statement said. The funds would be invested to recover flared gas on three oil fields to supply gas to power generation plants and build a seawater treatment plant to provide water injection for pressure maintenance to raise regional oil production.

And that’s not all: TotalEnergies will develop a 1 GW solar power plant to supply the Basrah regional grid, according to the statement. The French company will invite Saudi Arabia’s utility Acwa Power to take part in the project.

Iraq wants to ramp up its solar energy generation: Iraq wants to produce 5 GW of solar power in 2023. The country signed solar power agreements over the past two years with several companies, lining up a total generation capacity of 7.5 GW.

Egypt puts pen to paper on its Abu Rawash WtE project: The Egyptian government has inked a USD 120 mn agreement with a consortium led by Renergy Egypt to design, build, own, and operate its new waste-to-energy factory in Abu Rawash city, according to a statement released this week.

The players: Joining Renergy in the project are Egypt’s National Organization of Military Production, waste management firm Green Tech Egypt and Bahrain-headquartered Oak Group Holdings.

About the project: The plant will convert some 1.2k tons of municipal solid waste per day to 30 MWh of electricity. The consortium will handle the entire project for a 25-year period before transferring ownership to the country’s Giza governorate.

The plant is being fast tracked: The project is expected to receive a golden license — a single approval covering everything from project establishment, including land allocation and building licensing, through to project operation and management. No timeline was given for when the facility is expected to come online.

Waste generates 13% of the country’s carbon output: Egypt produces up to 5 mn tons of municipal solid waste a year, the country’s Environment Minister Yasmine Fouad noted in the statement. Waste is the second largest source of greenhouse gas emissions in the country, generating some 13% of Egypt’s total greenhouse gas emissions, she added.

More to come: Egypt has eight waste-to-energy projects worth EGP 10 bn in the pipeline, Finance Minister Mohamed Maait said. The projects will be located in Alexandria, Fayoum, Giza, Gharbia, Beheira, Damietta, Menoufia, and Sharqiya and will be carried out by eight local companies.

Coffee With: Ramez El-Serafy (LinkedIn), CEO, Flat6Labs: Ramez El-Serafy has served as Flat6Labs’ CEO for 12 years. Before that, he was responsible for building and managing Sarmady’s mobile apps unit.

In March, Flat6Labs launched the Africa Seed Fund (ASF) — a USD 95 mn fund targeting greentech, agritech, smart city, and climate tech startups based in Africa — with the aim of investing in over 160 startups in North, West, and East Africa, according to a statement (pdf). We spoke to El-Serafy about Flat6Labs’ previous investments in climate and cleantech, as well as the challenges, outlook, and opportunities for investing in the sector.

Enterprise: A report by the Clean Energy Business Council (pdf) last year found that MENA is falling behind on climate tech funding. How is that changing and what is causing the change? Are you seeing an increased appetite for climate tech investing in the region?

Ramez El-Serafy: Climate tech includes a lot of sustainability-related businesses like renewable energy and greentech solutions. I think hosting two consecutive COPs in the region is creating more interest in the sector, but it’s also becoming a hot topic regionally and globally. Up until a few years ago, fintech drew a lot of interest, but a lot of global impact-driven capital is being directed to climate and greentech solutions now.

We’re also seeing some regional investors enter this space. One of our startups, Nadeera, which is a waste management solution based in Abu Dhabi, just raised a round from a couple of angel investors in the UAE and they are closing with a major group in the UAE. Another example is Bekia, which raised funds from Oman Technology Fund (OTF) and from the Catalyst Fund. This is really good because it’s not just impact investments or investors from outside of the region — there are regional investors and commercial entities that believe in it.

E: Are you seeing increasing interest from investors in climate tech?

RS: We’ve invested around USD 1 mn in greentech in total, and our companies have raised USD 5 mn, so that’s almost four times what we’ve invested. This is above the average follow-on funding that we see in other sectors and most of that funding is from regional investors.

We know that we cannot be the first or the last check startups receive — a big part of our offering is connecting them with other potential investors and giving them access to new markets. Seeing more capital being driven into this space is really important.

E: What does the pipeline look like? Are there more startups working in clean and climate tech?

RS: There has definitely been an uptick in the pipeline in the past couple of years, which I would say is driven by the amount of capital that is being pooled into the sector.

From what I can see, the innovation system around solar isn’t as robust compared to 2015, maybe because the market has stabilized around requirements for solar energy, and also because governments are investing heavily in this space. But other sectors are drawing interest, so we have a lot of startups working in water in Tunisia and waste management in Egypt. I think it also has to do with how easy it is for startups that aren’t asset-heavy to build their products and innovations and deploy them in the market.

E: How is investing in climate and cleantech different from investing in other sectors?

RS: There are definitely more challenges because it’s a new sector. I think that, once we start seeing successful examples of exits and companies raising large rounds in this space, more founders will be motivated to enter it. So far, most of the region’s success stories have been in e-commerce and fintech. In the past, greentech has been more impact-driven than commercially-driven, with government and international or development organizations interfering. We need to reach the point where it’s commercially viable and startups see the whole process from start to finish so that it becomes a self-sustainable ecosystem.

The other challenge is regulation. It takes a little longer for greentech companies to get things from product development to market because they need more licenses and certifications from different entities.

Also, the path to market is a little longer for greentech companies, and the local investment appetite for the sector still doesn’t compare to something like fintech, for example.

E: How do you assess potential investments?

RS: There are a lot of economic factors. We are a very early stage investor, so the potential for businesses to secure follow-on funding is one of the factors that we look at because there’s a limit to how much we can invest and how long we can support our startups. Where other VCs are investing and the route to exit both impact our strategy.

The market is very relevant as well. Lebanon and Tunisia are amazing markets, but they’re very limited, so we need to see the potential for regional scalability.

E: Your recently announced the Africa Seed Fund (ASF) will cover North, East, and West Africa. Do you see synergies across Africa that will allow startups to operate across borders more easily?

RS: Absolutely — the main thesis of our funding is that there are a lot of synergies between African markets, and that’s why we launched the fund. We see a lot of potential and innovation in Africa and we believe that it’s undercapitalized because it is so big and very fragmented. Whenever there’s limited or lacking resources, you will also have innovation to try and overcome the challenges. Greentech sometimes sounds like a luxury, especially in Africa, but when you get down to it, there are many places where basic resources and services are lagging behind or don’t exist. So creating innovative ways for people in Africa to access clean water, clean air, and clean energy is key.

We still don’t know where the big innovations will come from. We’ve learned that when you do multi-country funds, you cannot limit yourself to specific markets because the fund will invest over 5-6 years. For now, we know that we will have focal points in Kenya in the east and Nigeria in the west.

E: Are you seeing increased collaboration between Africa-based VCs?

RS: There is definitely increased collaboration between VCs in East, West and North Africa. For almost every startup that raises a round in our Egypt and Tunisia portfolios, there is always one local check, one from the Middle East (KSA, UAE, Lebanon, Bahrain, and Jordan), and one from an Africa-based VC. We’re definitely seeing more Africa-based VCs investing in our portfolios in Egypt and Tunisia. Two-thirds (around 67%) of our portfolio’s total USD value of funding comes from within Africa, followed by 22% from the Middle East and the rest comes from other geographical regions

Once-threatened sea turtles are increasing in number due to warmer waters and protection initiatives: Mediterranean Loggerhead sea turtles may be one of the few species thriving under climate change, as rising ocean temperatures are helping the threatened species expand its habitat to western Mediterranean beaches, Reuters reports, citing a study. The world's largest hard-shelled turtle has been part of protection programs in a number of countries including Spain and Cape Verde, which has also contributed to increasing the number of nests and eggs on beaches in the western Mediterranean.

Nest numbers have increased dramatically: The most recent data shows that the number of nests in 2020 reached 84 in France, Italy, Spain, and Tunisia, compared to an average of less than 3 nests per year between 1990-2012, Reuters writes, citing a paper from the scientific journal Global Ecology and Conservation.

Conservationists need to keep a watchful eye on how things pan out long-term: Given that their lifespan reaches 100 years, the full impact of warming waters is still unknown, making it important to observe any potential changes in the turtle’s behavior, Reuters quotes a biologist as saying. The Mediterranean Sea became 1.3 °C warmer between 1982 and 2019.

Two unnamed Russian and US companies are looking to develop small nuclear reactors to produce as much as 300 MW of energy in Egypt, with the companies planning to submit offers to Egyptian authorities soon, Asharq Business reports, citing sources it says have knowledge of the matter. The companies had already negotiated the project — which will be financed through facilitated bank loans — with the Nuclear Power Plants Authority, the sources say.

Congo’s Nuru is getting some love: Congo-based solar mini-grid company Nuru, which aims to supply power to five mn people in a country where access to electricity is largely lacking, is close to finalizing a USD 60 mn series B funding round, and another USD 90 mn round is set to follow in the coming months, Bloomberg reports. The International Finance Corporation and the UK government-funded Renewable Energy Performance Platform are among the investors participating in the series B round. The funds will go towards adding three additional facilities to Nuru’s portfolio, allowing the company to generate a combined 13.7 MW from its plants, growing tenfold. This would raise the number of people that Nuru serves to 500k from a current 50k.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Bangladesh would require USD 1.71 bn annually to have 40% of its electricity generated from renewable sources by 2040. The country has increased the subsidies allocated to conventional power sources by nearly 152% in 2021, reaching USD 2.8 bn, which is higher than the investment that would be required to enhance the renewable energy capacity. Currently, less than 5% of the country’s energy comes from renewable sources. (Bloomberg)

Clock is ticking for ice memory: Scientists in the Arctic are on a mission to better understand the phenomenon of “Arctic amplification,” which is causing the Arctic to warm faster than the rest of the planet, the mission organizers said in a statement. The team aims to achieve this by preserving samples of ancient ice in an area that is at risk of disappearing due to climate change. Norway’s Svalbard Archipelago is disappearing four times faster than the global average, they said, with temperatures rising four to five degrees celsius in recent decades.

What for: The team’s research aims to scientifically understand the role of sea ice, bromine, and mercury in the Arctic amplification phenomenon. “We aim at determining the role of sea ice in Arctic amplification and its impact on the atmosphere, in particular on the chemical processes of bromine and mercury,” said Svalbard expedition leader Andrea Spolaor.

And clinging to ice memory: The expedition, in collaboration with the Ice Memory Foundation, aims to collect an ice core that will be preserved at a planned Ice Memory Sanctuary in Antarctica. A dedicated snow cave will be accessible to future scientists with new technologies and ideas after the glaciers disappear. The collected samples will allow them to continue research on the environment and global climate.