Norwegian renewable energy developer Scatec has secured approximately €195 million in development-bank financing for a solar and battery project supplying renewable electricity to Egypt Aluminium. The project combines 569 MW of solar generation with 100 MWh of battery storage and is intended to support industrial decarbonisation and European metals trade. Its electricity will be sold under a 25-year power purchase agreement (PPA) backed by a sovereign guarantee.
Financing and project delivery
The financing package comes from the European Investment Bank, or 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 needed for the project’s first phase.
The EIB is providing up to €80.9 million, supported by an EU guarantee under the Global Gateway framework. Financing agreements have been signed, taking 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 start in the first half of 2028. Scatec expects the project to generate approximately 1.4 TWh of electricity each year and avoid more than 550,000 tonnes of carbon dioxide emissions annually.
Renewable electricity for industrial production
The project investment is significant for Egypt Aluminium, whose electricity use accounts for an important part of its industrial carbon footprint. Aluminium production requires substantial amounts of energy, making renewable electricity increasingly relevant to both operating costs and international competitiveness. The long-term supply agreement is intended to provide the producer with dedicated renewable power and reduce its reliance on higher-carbon electricity generation.
The project reflects the role of development-finance institutions in supporting industrial decarbonisation through energy infrastructure, rather than focusing solely on renewable generation for general electricity markets. For established industrial producers, access to renewable electricity can help address environmental requirements and the growing commercial importance of product-level emissions.
CBAM relevance for aluminium exports to the EU
An estimated 60% of Egypt Aluminium’s exports go to the European Union, giving the project relevance beyond Egypt. Aluminium is among the products covered by the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes carbon-related import requirements and increases the importance of measuring and managing production emissions.
Replacing higher-carbon electricity with solar power could improve the emissions profile of aluminium sold to European customers and potentially strengthen the producer’s competitive position in the EU market. The precise CBAM impact will depend on the applicable calculation methodology, independently verified emissions data and how the mechanism treats electricity-related emissions.
The projected environmental benefits should not, by themselves, be taken as evidence of a confirmed reduction in the carbon costs of Egypt Aluminium’s exports to Europe. Any commercial advantage will depend on how the renewable electricity is accounted for and reflected in verified industrial emissions.
Development finance and industrial supply chains
The financing structure shows how European and multilateral development institutions are connecting renewable energy investment with industrial competitiveness. European critical raw materials policy often focuses on mining and mineral extraction, but 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 production is particularly exposed to electricity costs and carbon intensity because of its high power requirements. Competitively priced renewable electricity can affect operating economics and producers’ ability to retain 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 PPA, backed by a sovereign guarantee, provides a long-term industrial customer and supports the investment’s revenue structure. Signing the financing agreements substantially reduces the project’s remaining funding uncertainty, although construction, capital deployment and eventual electricity delivery remain outstanding 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.