The European Bank for Reconstruction and Development (EBRD) is set to finance up to US$500mn and raise up to US$1.5bn from other funders for solar projects in Egypt in 2016.

The deal will support the country’s solar energy programme, which targets up to 2,000MW of new solar capacity and source 20% of its electricity needs from renewable sources.

The new capacity is expected to be created through about 40 projects of 50MW each, most of which will be located on a 1.8GW solar park planned near Benban in the east of the country – set to become the largest in the world.

The total project costs is estimated around US$4bn and the EBRD expected to raise US$1.5bn in both debt and equity.

“Egypt currently relies to a large extent on traditional power generation fuelled by costly hydrocarbon imports, however the government has an ambitious strategy to obtain 20% of the country’s electricity from renewable sources by 2020. Egypt is well placed to do so as it has world-class solar resources and in some places, especially in the Gulf of Suez, great potential for wind power,” says Philip ter Woort, EBRD country director for Egypt.

The bank adds that the projects have been made possible by recent regulatory reforms around renewable energy, for which it provided technical co-operation to the government.

“Successfully implementing the feed-in tariff programme will unlock Egypt’s potential by providing a regulatory framework that can attract private capital. This initial programme is significant in itself. But the really exciting element is that once the country has an established model for private investment in renewables, there will be huge potential for widespread, rapid deployment, thanks to Egypt’s fantastic resources and the falling cost of renewable generation,” says Nandita Parshad, EBRD director for power and energy.

The EBRD now invests more in renewable energy than in traditional power generation, with funding set to top US$5bn once all recent projects have been implemented. The bank has adopted a target to double its sustainable energy and resource financing to reach 40% of its annual volume by 2020.