Egypt Aluminium is set to receive renewable electricity from a planned solar and battery project backed by approximately €195 million in financing. Norwegian renewable energy developer Scatec has signed financing agreements with development banks for the project’s first phase. The facility will supply the aluminium producer under a long-term power purchase agreement (PPA).
Financing and construction plans for the Egyptian project
The project will combine 569 MW of solar generation with 100 MWh of battery storage. Electricity will be supplied to Egypt Aluminium under a 25-year PPA backed by a sovereign guarantee. 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.
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 first phase. The EIB is contributing up to €80.9 million, supported by an EU guarantee under the Global Gateway framework.
The financing agreements have been signed, moving the project from preliminary development and lender interest to contracted financing. The announcement does not confirm that the full financing package has been disbursed. Construction is moving forward, with commercial operations expected to begin in the first half of 2028.
Renewable power and aluminium production
For Egypt Aluminium, electricity consumption is an important part of its industrial carbon footprint. Aluminium production requires substantial amounts of energy, making access to renewable electricity increasingly relevant to operating costs and international competitiveness. The long-term agreement is intended to provide a dedicated renewable power supply and reduce reliance on higher-carbon electricity generation.
The project investment 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 address environmental requirements as well as the growing commercial importance of product-level emissions.
EU CBAM and Egypt Aluminium’s exports
The project has implications for trade with the European Union: an estimated 60% of Egypt Aluminium’s exports are destined for the bloc. The EU’s Carbon Border Adjustment Mechanism (CBAM) includes aluminium among the goods subject to carbon-related import requirements, increasing the importance of measuring and managing production emissions. Replacing higher-carbon electricity with solar generation could improve the emissions profile of aluminium supplied to European customers and potentially strengthen the producer’s competitive position in that market.
The precise CBAM impact will depend on the applicable calculation methodology, independently verified emissions data and the mechanism’s treatment of electricity-related emissions. The project’s projected environmental benefits should therefore not automatically be treated as an established reduction in the carbon costs of Egypt Aluminium’s EU 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 supply
The financing structure reflects the role of European and multilateral development institutions in linking renewable energy investment with industrial competitiveness. European critical raw materials policy often focuses on mining and mineral extraction, while the continent’s industrial supply chains also rely on energy-intensive processing facilities, including smelters and refineries that can meet increasingly demanding environmental standards. Aluminium is particularly exposed to electricity costs and carbon intensity because its production process requires substantial power.
Access to competitively priced renewable electricity can influence 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 an increasingly important commercial consideration. For Scatec, the 25-year, sovereign-guaranteed PPA provides a long-term industrial customer and supports the revenue structure of the renewable energy investment.
The signed agreements substantially reduce the project’s remaining funding uncertainty, although construction, capital deployment and eventual electricity delivery remain important milestones. The project links renewable generation with industrial decarbonisation, while its eventual effect on European aluminium trade will depend on delivery of the renewable electricity and independently verified emissions performance.
