Japan’s Nippon Export and Investment Insurance (Nexi) has agreed to provide insurance for loans extended by commercial financial institutions for the expansion of the Gulf of Suez Wind Farm 2 project in Egypt.

This development coincides with the signing of the deal to expand the capacity of the under-construction wind farm project, which a senior executive at the European Bank for Reconstruction & Development (EBRD) confirmed on 19 November.

The wind farm will be built, owned and operated by Red Sea Wind Energy, a consortium of France’s Engie with a 35% stake, the local Orascom Construction, which holds 25%, Japan’s Toyota Tsusho Corporation with 20% and Eurus Energy Holdings Corporation with 20%.

The original capacity of the project, which reached financial close in early 2023, has been expanded from 500MW to 650MW, making it the largest such project in the North African state.

According to Nexi, it will provide cover for an approximately $35m loan extended by the commercial banks, as well as for the interest rate swap agreement guaranteed by Sumitomo Mitsui Banking Corporation (SMBC).

In addition to SMBC, other lenders for the original 500MW project include EBRD, Japan Bank for International Cooperation (Jbic), Societe Generale Tokyo Branch and The Norinchukin Bank.

The project company has been developing the 500MW onshore wind farm, located in the Ras Ghareb region facing the Red Sea, approximately 200 kilometres southeast of the capital, Cairo. It consists of 84 wind turbine generators.

The 150MW expansion of the project entails the addition of a further 20 wind turbine generators, according to Nexi.

MEED reported in September that the Egyptian cabinet had approved Red Sea Wind Energy’s request to increase the capacity of the project.

At the time, a source told MEED that the required additional investment of roughly $127m was still under negotiation.

The expanded project is expected to be completed by mid-2025.

The consortium will operate and maintain the plant under a 25-year power-purchase agreement (PPA) with Egyptian Electricity Transmission Company (EETC). Egypt’s Ministry of Finance is backing EETC’s obligations under the PPA.

Orascom Construction will execute the construction of the civil and electrical works for the wind farm.

HSBC Bank Egypt acted as the working capital bank and onshore security agent for the transaction, which closed in 2023.

This project marked the first cofinancing between Jbic and EBRD since the signing of a memorandum of understanding (MoU) in October 2022 and the first joint project between Nexi and EBRD since an MoU in October 2020.

MEED reported in March 2023 that Jbic had signed a loan agreement to finance up to $240m of the project.