German state development bank KfW and the Arab Republic of Egypt, represented by the Central Bank and the New and Renewable Energy Authority in Egypt (NREA) have signed a financing agreement for a loan in the amount of EUR 192 million. The loan is intended to finance the planned Gulf of el Zayt wind farm on the Red Sea, which has a capacity of 200 megawatt. It is the largest wind farm ever built in Africa in the framework of a single project.

Paul van Son, CEO of the Desertec Industrial Initiative Dii: "Desertec is step by step becoming reality. The el Zayt wind farm will play an important role for the domestic energy supply in Egypt, and it acts as an example for how our long-term vision will be realized."

The total project costs of the el Zayt wind farm are estimated at approx. EUR 340 million (EGP 2,720 million). Germany provides the lion's share of the financing with a loan of EUR 192 million. Also participating are the European Commission (with a grant of EUR 30 million) and the European Investment Bank (EIB) (with a EUR 50 million loan). The Egyptian Government contributes counterpart funds amounting of EUR 68.5 million (20%).

"The wind farm will enable an economically efficient and ecologically reasonable electricity production", said Dr Norbert Kloppenburg, Member of the Executive Board of KfW Bankengruppe. "Moreover, the project aims at meeting Egypt's growing power needs and thus making a substantial contribution to climate protection. At the same time the project is an important building block for the Desertec vision, which is the production of clean electricity from the desert, to become a reality."

The agreed location of the project is in an uninhabited desert and coastal region along the Red Sea between Hurghada and Zafarana, around 25 km north of Gabel el Zayt mountain range. Ornithological aspects were carefully considered and included in the planning process in order to keep the risk of negative environmental impacts as low as possible. 

While the Arab Republic of Egypt is the recipient of the loan, NREA is responsible for the project implementation. The Egyptian Electricity Transmission Company (EETC), which is the subsidiary of the Egyptian Electricity Holding Company (EEHC), is in charge of the grid network. The NREA and the EEHC report directly to the Ministry of Electricity and Energy (MoEE).

Find out more about KfW's contribution to renewable energy financing.