JORDAN: A Jordanian wind farm project is getting an Islamic finance touch, the latest combination of Shariah compliant and green financing packaged for the Kingdom as it scales up renewable energy production in a bid to power up its stagnating economy.
The Shobak Wind Farm project, undertaken by Dubai-based Alcazar Energy Partners in partnership with US developer Hecate Energy, will deploy 13 wind turbines to generate power to be sold to the Jordanian National Electricity Company (NEPCO) under a long-term power purchase agreement. Costing approximately US$104 million, the Islamic Corporation for the Development of the Private Sector (ICD) – a unit of the IDB – will extend US$26 million to part-fund the two-year construction of the 45 MW wind farm. The European Bank for Reconstruction and Development and Europe Arab Bank are funding the remaining cost.
“By early next year when Shobak construction starts, our portfolio will comprise seven projects in construction or operation in the region,” shared Daniel Calderon, co-founder and CEO of Alcazar Energy, adding that Shobak is the first project to receive Shariah compliant financing.
Jordan, devoid of natural resources, is highly reliant on foreign energy sources: the Kingdom imports 97% of its energy and fuel requirements, costing almost 20% of its GDP. To reduce dependence on foreign energy, the Kingdom embarked on a National Energy Strategy which includes developing renewable energy sources – the goal is to have 10% of its totally energy mix by 2020 generated from renewable sources.
This aggressive campaign for clean energy has in turn attracted Islamic investments: apart from the Shobak project, the IDB has also committed US$5 million to support a solar power plant project. NEPCO tapped the Sukuk market twice, the latest being in March.