Egypt Wires Solar Plant Straight Into Aluminium Smelter; Indian Smelters Still Lean on Coal

Norway’s Scatec has signed $217 million in non-recourse loans for the first phase of Dandara, a 569 MW solar plant with a 100 MWh battery in Egypt’s Qena Governorate. The only customer is Egypt Aluminium, the country’s largest aluminium producer, under a 25-year power purchase agreement backed by a sovereign guarantee. The EBRD, African Development Bank and European Investment Bank are lending about 80 percent of the $271 million capital cost, and the National Bank of Egypt is taking a 20 percent stake, leaving Scatec with 56 percent. Construction has started, with commercial operation targeted for the first half of 2028.

A smelter, not a grid, is the buyer

Aluminium is among the most electricity-hungry industrial products, so its carbon footprint is largely its power supply. Dandara sends daytime solar to one large industrial load instead of selling into a wholesale market. That structure is easier to finance: the offtaker is an established producer, the contract is long and government-backed, and the lenders are public institutions. The African Development Bank’s contribution of up to $66 million includes $20 million of concessional money from the Climate Investment Funds’ Clean Technology Fund, and the EIB is lending up to $90 million. Egyptian officials framed the project as cutting emissions and strengthening the competitiveness of national industry. For an aluminium exporter, a power contract is now also a carbon contract.

The clock is Europe’s carbon border levy

Since 1 January 2026 the EU’s Carbon Border Adjustment Mechanism has been in its definitive period. EU importers are building a liability on covered goods, certificates for 2026 imports go on sale from 1 February 2027, and the 2026 declaration is due by 30 September 2027. Aluminium is among the covered products.

A caution on the engineering: 569 MW of solar and a 100 MWh battery is a modest buffer for a smelter that runs around the clock. The sources do not say what share of the smelter’s demand the plant will meet. NALCO’s chairman made the wider point earlier this year, saying aluminium needs affordable, uninterrupted power and that adding storage raises the cost.

India’s exposure

The EU takes roughly 27 percent of India’s aluminium exports, according to alCircle. Indian unwrought aluminium shipments to the EU were down 41.7 percent in January 2026 against January 2025, a single-month comparison that should be read with care. Ember notes that Indian smelters rely heavily on captive coal plants, which count as direct emissions under the mechanism, and estimates that the levy could raise what European buyers pay by up to 30 percent.

Some Indian producers are moving. Vedanta’s Odisha expansion is described as clean-energy powered, while NALCO’s smelter expansion comes with its own 1,080 MW captive power plant. India’s carbon credit trading scheme is meant to give exporters a domestic carbon price that could offset part of the European charge, but the latest reports we found, from early October, said no certificate had yet traded.

The template and the dates

Dandara offers a template that Indian smelters and their financiers can examine: dedicated solar and storage, a long-dated contract, development-bank debt with a concessional layer, and a local bank as co-owner. Scatec has also set up an investment platform with the EBRD that targets 2.7 GW of solar, 900 MW of wind and 4.2 GWh of storage in Egypt, and it recently secured $479 million for its Obelisk solar-plus-storage project, covering about 80 percent of a $590 million cost.

Three dates frame the story: 1 February 2027, when CBAM certificates for 2026 imports go on sale; the first half of 2027, when Dandara’s second phase is due to enter construction; and the first half of 2028, when phase one is meant to deliver power. Indian aluminium makers will be paying for carbon long before Egypt’s smelter draws its first solar kilowatt-hour.