Economic and Social Impacts of “Benban” Solar Park

Egypt is located in the heart of the global solar belt between latitudes 22 and 31.5 north geographically, and therefore it is one of the richest countries in the world in solar energy.

In the village of Benban in Aswan, the largest solar energy station in Africa and the Middle East was established to generate the equivalent of 90% of the energy produced from the High Dam, within the framework of the strategy developed by the New and Renewable Energy Authority, which aims to increase the supply of electricity generated from renewable sources to 42% by Year 2035.

The solar energy project in Benban is one of the largest clean energy projects in the world to confront the electrical energy deficit after the events of January 2011. It was started in 2014 to address the then energy crisis and support the national electricity grid.

In this context, the Strategic Forum for Public Policy and Development Studies “Draya” issues a research paper that sheds light on the Benban solar energy project and its economic and social impacts, in addition to clarifying the funding agencies and those in charge of the project, and how the project contributes to achieving the 2030 sustainable development goals.

The most important results of the paper were as follows:

-The station consists of 32 individual stations, each producing 20-50 MW, and four substations, generating approximately 1.5 GW of power, to support Egypt’s goal of meeting more than a third of its energy needs by 2035 through renewable energies.

-Increasing Egypt’s share of renewable energy sources to reach 20% of the electricity produced in 2022 and 42% by 2035.

-The Benban project enabled Egypt to attract investments worth 146 million US dollars to support this project alone.

-Egypt was able to attract investments amounting to $653 million to support and develop clean energy projects.

-Aswan Governorate witnessed an alliance of 40 international companies to create the largest complex for generating electricity from solar energy, which contributes to enhancing sustainability and generating clean energy. The project received 85% financing from the Bavarian Bank of the United States.

First: Benban station and the reasons for choosing its location

The Benban plant is the fourth largest solar power plant in the world, and was implemented in cooperation with the European Bank for Reconstruction and Development and the International Authority for Effective Finance. It contains 32 power generation stations built on an area of 8,843.3 acres on the Aswan-Cairo desert road in front of the village of Benban, with a capacity of 1,465 megawatts.

The Benban Solar Park was developed, and the area was divided into 41 plots of different sizes. The plots were allocated to about 30 developers who installed solar panels, inverters and other devices, and the state-owned Egyptian Electricity Holding Company built roads and infrastructure, including connections to the electricity grid. . Completely insulated GIS-type stations were constructed for the first time in Egypt, and the construction of the Benban solar power station was completed in 2019.

The New and Renewable Energy Authority selected 39 companies specialized in energy production according to international standards, including 9 international and Arab companies and 30 Egyptian companies out of a total of 200 companies that applied to implement this huge project.

It is worth noting that each of the 32 individual stations produces 20-50 megawatts, and four substations, generating approximately 1.5 gigawatts of energy, with the aim of supporting Egypt’s vision of meeting more than a third of its energy needs by 2035 through renewable energies. .
Reasons for choosing Aswan governorate:

– Availability of solar energy: Aswan has high solar radiation, which means that it receives a large amount of sunlight throughout the year, and this makes it an ideal location for a solar power plant.

– Availability of land: the Egyptian government has provided a large area of land (37.2 square kilometers) in Benban, allowing the development of a large-scale solar park. The availability of such vast territories is necessary to accommodate numerous solar power plants and infrastructure.

– Government support: the Egyptian government supports the development of renewable energy projects, including solar energy. This support includes the provision of land, facilitating permits and providing incentives to attract investment in the renewable energy sector.

– Strategic location: Aswan’s location in Upper Egypt makes it a strategic location for solar energy projects that can contribute significantly to the national energy grid, it allows the generation of clean energy that can be distributed efficiently throughout the country. Aswan is considered the future of the south according to the southern Egypt Development Studies.

Second: the economic and social effects of the solar power plant

Economic effects

Reducing greenhouse gas emissions:

Solar power generation of electricity without releasing greenhouse gases such as carbon dioxide, methane or other atmospheric pollutants, reduces the total carbon footprint and protects the environment for future generations, making it an ideal option for a sustainable future.

A source of renewable energy and promoting green energy:

The Benban project is considered an important example of the development of green energy, as it takes advantage of the power of the sun as a sustainable and renewable source, without depleting the limited fossil fuel reserves. This is in line with the global shift towards cleaner and more sustainable energy sources.

Less water consumption:

Unlike some conventional power plants that rely on water for cooling, solar photovoltaic (PV) systems require less water consumption, which contributes to water conservation.

Reducing air and water pollution:

Solar energy production does not generate air or water pollution during operation, which contributes to improved air and water quality

Enhancing energy security

Investing in renewable energy projects such as the Benban project enhances energy security by diversifying energy sources and providing green energy sources, such as solar energy, which provide a reliable and distributed energy supply, reducing dependence on fossil fuel imports. Egypt’s share of renewable energy sources has increased to 20% of the electricity produced in 2022, and it is expected to reach 42% by 2035.

Social effects

Improving the standard of living:

The expansion of employment opportunities and economic development associated with the Benban project can lead to an improvement in the standard of living in local communities, as increasing employment opportunities leads to an increase in income levels and access to basic amenities, which has a great impact on improving the quality of life of citizens.

Community Development:

The project can contribute to the overall development of the local communities surrounding the Benban solar plant, as infrastructure improvements, educational initiatives and social programs are often implemented as part of the corporate social responsibility efforts associated with such projects.

Environmental benefits:

While the impact is primarily economic and energy-related, the transition to renewable energy, as the Benban project contributes to, carries positive impacts on the environment, as reducing dependence on fossil fuels reduces air and water pollution, contributing to the fight against climate change, and enhancing the health and well-being of the public in general.

Skills development:

The implementation of renewable energy projects often includes training programs for local residents, which helps in developing skills and providing work experience to the growing renewable energy workforce, and promotes long-term sustainability.

Third: financing, partnerships and project managers

-The project was established in partnership with the private sector and specialized international expertise, with a total cost of about 4 billion dollars, none of which was borne by the state treasury, according to the Ministry of electricity.

-Aswan governorate witnessed the alliance of 40 international companies to create the largest solar power generation complex, which contributes to promoting sustainability and generating clean energy.

-The project has received 85% financing from the Bavarian Bank of the USA for the project and shows strong financial support from international financial bodies.

– The Bavarian bank provided the United States with a large percentage of debt, while the Arab African International Bank provided 15% of the remaining debt, providing a variety of sources of financing.

-The World Bank’s IFC led an alliance of the African Development Bank, the Asian Infrastructure Investment Bank, the Bahrain Arab Bank, the CDC Group, the Arab European bank, the green for Growth Fund, finfund, the industrial and Commercial Bank of China and the Austrian Development Bank by pledging USD 653 million to finance the construction and operation of 13 plants by six groups of private energy companies.

-The Multilateral Investment Guarantee Agency (Miga), a member of the World Bank Group, recently approved the provision of USD 210 million in political risk insurance for 13 projects in Benban.

-The EBRD is also involved in financing 16 projects with a total capacity of 750 MW, under a USD 500 million agreement to finance renewable energy in Egypt.

-The alliance also includes the United Nations Green Climate Fund (GCF), the Dutch Development Bank, the FMO Foundation, the Islamic Development Bank (IsDB) and the Islamic Foundation for the development of the private sector (ICD).

Fourth: the role of the station in achieving the Sustainable Development Goals 2030

– Economic development: the Benban solar park contributes to the economic development in the region by providing jobs and attracting investments.large-scale renewable energy projects often have positive economic impacts on local communities, as they are expected to achieve the highest economic growth rate in the south and represent the largest share of the population attraction in the southern Egypt development plan as a development resource.

The seventh goal: clean and affordable energy

The Benban solar power plant is directly in line with Goal 7 which aims to ensure access to modern, reliable, sustainable and up-to-date energy for all. By harnessing solar energy, the plant contributes to the generation of clean and renewable energy, reducing dependence on traditional fossil fuels, as the total solar power capacity increased by more than 9 times between 2018 and 2019, from 172 MW at the beginning of 2018 to 1,597 MW by the end of 2019.

Eighth goal: decent work and economic growth

The development and operation of the Benban solar park contributes to the creation of jobs and economic growth in the region. Large-scale renewable energy projects often require a workforce for construction, maintenance and operation, which provides jobs and supports economic development, as the project provided about 20 thousand jobs during the four-year construction period, and 6,000 permanent jobs necessary for the operation of the plant. This project has helped build solar energy expertise within local communities that will be able to benefit from this experience in upcoming projects in Kom Ombo, which is located close to Benban.

Finally, the Benban solar plant is an important step in Egypt’s use of solar energy, as it is one of the most important national projects in Egypt, which represents a milestone in the country’s march towards reliance on renewable energy, and a role model in the field of renewable energy that confirms Egypt’s commitment to transition towards a more sustainable future.. We expect that the project will bring more economic, environmental and social benefits to the Egyptian state in the near term