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020318_Hurghada SECAP_FINAL

6. Assumptions and risks

6. Assumptions and risks - The key challenge will be to organise a proper maintenance system in order to ensure adequate electricity production, yields securing an attractive enough Return on Investment (R.O.I), - As renewable electricity production is growing in Egypt, the grid should be maintained and upgraded to support integration of local production in varying intensity and quantity. This might be a challenge in the southern part of the Governorate of Red Sea. Grid upgrade and proper network management will become extremely important, - The relatively low purchase price (FiT) set by EETC. - Beyond promoting new sustainable services and/or new green infrastructures, reducing energy demands from non-clean energy sources is dependent on public mobilization. 7. Key success factors • The development of renewable energy (RE) is an expansion of the existing 13.25 MW solar power capacities, meaning the Governorate already has robust experience in solar energy production. • Cost of new Electricity Tariff and energy means that any saving will be a significant value and an incentive, • The action plan is divided in 2 phases to make the investment visible, • Municipality determination to act in a comprehensive way on the issue of Sustainable energy mainly RE, • Determination of the Governor of the Red Sea, to seriously act on the energy issue, is obviously an important element to the success of this action, • The Governor’s vision and backing of expanding the current solar PV power plants, reduce energy consumption and mitigate GHG emission is of a vital success factor, • Availability of Funds to prepare and to execute the planned action, and • Raised capacity of Governorate staff for implementation. 8. Cost estimates Initial and start-up expenses: technical investigation 30,000 € Approximate operational Costs (Setting up a Solar PV maintenance unit) 80,000€/y in routine Funding through a loan at 3% annual rate over 15 years) 30,000,000 € investment 28,435,500 for solar PV + additional equipment and administration set up. Profitability calculated based on feed-in-tariffs at 40 € per MWh. 168

Draft calculation of the NPV and return of Investment (IRR). 15 years (see table page 5) 9. Available and foreseen sources of funding to be developed Local authority's own resources: International Financial Institutions 66 : - The World Bank (WB), - United Nations Development Program (UNDP), - European Commission (EC), - European Investment Banks (EIB), - European Bank for Reconstruction Development a (EBRD), - French Development Agency (AFD), - United States Agency for International Development (USAID), - Kreditanstalt fur Wiederaufbau (KFW), - German Technical Cooperation (GIZ), - Japan International Cooperation Agency (JICA), National Funds and Programs IFCs including EU Funds, Programs, financial tools and other external funds 66 The Ministry of Investment and International Cooperation, MoIIC – Available at: http://www.miic.gov.eg/Front/Cooperation/DevPartnerList.aspx/ (Accessed on: 14.08.2017) 169

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