Infinity Solar is a renewable energy project developer, providing full system integration, EPC (Engineering, Procurement, Construction) and O&M (Operation and Maintenance) services for utility-scale projects as well as commercial projects of renewable energy systems in Egypt. In this interview, Mohamed Mansour discusses the opportunities in the renewable energy sector in the country, as well as some of the company’s projects.
From your point of view, what has been the impact of the economic reform in Egypt so far, and what do you hope to see in terms of further structural reforms?
I think the reform has been very positive for the country for sure. Basically, what happened was we were managing the economy in a very unsustainable way for 30 years. So, you had Egyptians paying for basic commodities like gas, electricity, etc, subsidized, and there was a big divergence between that and the market price of these products. What the current government did, which was very brave on their part, was that they didn’t go on with the unsustainable way of managing the economy. They decided to take the hit today. Two years later, you will see the benefits of these policies put in place coming back to the Egyptian economy. It’s starting first on the infrastructure side, because that’s what you need to build in the beginning to be able to have a sustainable economy going forward. So, the benefits were felt first on the infrastructure industries like electricity and construction. Going forward one should see the benefits filtering down to the other
So in terms of the private sector involvement in the economy, we’ve seen so many structural reforms. How would you assess the success in the energy sector in terms of production increase and the inclusion of the new born energy into the sector?
At the time that they started the feed-in tariffs, there were electricity shortages. At that time, we actually got in business with solar. We gave solutions to households with PVs and batteries because then in 2012-2014 we had both electricity and gasoline shortages. Having said that, being able to liberate the electricity market in Egypt is a big disruption for the Egyptian economy. That’s where developers like ourselves and others that are active in the economy today through the feed-in tariff program got started, and now other schemes are going forward. That fundamental change in the government mindset is what enabled companies like Infinity Solar today to be active in a market like this.
And in terms of the potential of the renewable energy sector?
It’s huge. We are fortunate enough in Egypt to have one of the best solar and wind resources in the world. So, Egypt is very fortunate in that sense. They can really implement these projects like wind solar storage. Being able to use of all those free inputs makes us fortunate in that sense.
How do you see the evolution of the renewable energy sector?
That’s going to play a bigger part of the energy mix going forward. Right now, we’re in a transition phase. We’ve been living on fossil fuels for 100+ years. Now due to technology, there’s disruption happening in all sectors of the economies in the world. In energy, for example, there’s a shift from fossil fuels to renewables. To give you other examples, and I will quote Steve Easterbrook here, “The biggest taxi company in the world does not own a car and the biggest hotel company in the world does not own a room.” So, everything is changing. People have to be pragmatic on how they deal with it and how they capitalize on it.
What kind of appetite do you have to develop your projects in Egypt?
We have a huge appetite. We currently have six projects under the feed-in tariff program, 2 connected under Swede and tariff one, one megawatt 6th of October, Sheikh Zayed city, and the 50 megawatt in Benban. In round 2, we’re developing four more projects: three in the Benban complex, and one next to Benban village, which is small, only three megawatts. Going forward, the tenders are obviously going to be important because they come with sovereign guarantees and it’s a bit of a hedge to the devaluation scenario that you sometimes get in the economy. I think the major opportunity is being an independent power producer where you develop these plants and sell them directly to commercial customers, while paying a wheeling charge to the transmission company. I think the target for Egypt is 42% renewable energy by 2035. If I’m not mistaken, the target could go up every year between the lines, but let’s say that’s the target. We’re talking about generation capacities of around 25-26 gigawatts of wind, and another 35-40 gigawatts of solar. So, it’s a huge market. We have lots of empty land, lots of demand for electricity.
How does it feel about being in business that not only profitable but has a major contribution to the sustainability of the country?
It’s part of our DNA. We got into the solar business particularly for that reason. We don’t want to just make money, but also help our country in a positive way. With this business, basically you’re reducing your carbon, employing and educating people because our plants are not in the middle of the city. They are in the middle of the desert, where there are very poor villages and living conditions that we see the effect immediately. When we went to Benban, there was no one there but us. There were people from the village, the head of the village, and the people with them. We sat down and talked. We told them we were there to help them and ourselves as well. They said they need liver, dialysis machines for their health center in the village, and we were very happy to bring that to them. We told them that we won’t get anyone from outside the area to work there on the construction. So, we actually took them by the hand and put everyone in charge to go get the equipment needed at the agreed price. We contract them for that, and that’s how I think we built an economy in Benban.
What are you looking for in the future in terms of production objectives and diversification?
We obviously want to diversify because that helps the company’s valuation going forward. We look at diversified territory and technology. We’re looking to get into wind projects, and hopefully we’ll do that next year. We’re also looking to diversify where our plants are and look to buy plants in the U.S and Europe. We are looking to develop further plants in Africa through our network. Our target is to, hopefully, reach 10 gigawatts of generation by 2030. That’s a bit of a stretch, but if we do half of that, it’s an achievement. We are looking to do that, not just in Egypt specifically, well mainly Egypt and Africa, but we want to have some plants in more developed countries as well.
To reach that capacity, you need solid and strategic partners. Some people can bring technology or knowledge on board, others can help you with the financial needs required. We, of course, need banks to finance these projects. It’s a total 360-degree collaboration between stakeholders.
If you were to receive a friend form the U.S. who hasn’t been to Egypt, what do you believe are the most important factors, either social, political, or economical, that he should be aware of?
I think that I would highlight that there has been a lot of work done during recent years. Structurally, there’s been a revolution, so to speak, to the mindset and the way people or government are approaching and trying to enable and encourage private sector participation in the economy. Just like any country in crisis, and I think that is played in a bad way in the press, but looking at the history of any country that has been through crisis like Germany, Europe, Post WWII, and the U.S. after the depression, the entity that stepped in the beginning was either the government or the army. If you look at post WWII, the government built the infrastructure so that the economy can start to function properly. This is exactly what’s happening here. If you look at Egypt, for the past 4 years all they did was build power stations and roads, more or less, plus of course the Suez Canal and some mega project that only the government could do at the time. So, I think the ground work is being laid, the security issue is not yet being 100 % solved, but it’s going in that direction. That’s not just for Egypt specifically, that’s a worldwide phenomenon that we’re seeing. You get that all over the world; however, unfortunately when it happens here, you get a lot of focus. Egypt is no different than anywhere else in the world. The good thing about Egypt is that we learn from our mistakes, so to speak, and we try to do it in a proper way going forward. We are in a better place than many other countries are today. There’s a lot of money to be made in Egypt; I mean you have a population of 100 million, so you have a very dynamic market.