Egypt has been steadily increasing its renewable energy capacity in recent years in a bid to enhance its energy security. By 2024, Egypt had a total installed capacity of renewable energy of almost 7.8 GW. While its hydropower segment has remained stable at around 2.8 GW since 2018, it has significantly expanded its wind and solar energy sectors. Egypt’s solar energy capacity increased from 35 MW in 2012 to almost 2.6 GW in 2024, with several more large-scale solar projects currently under development. The North African country has also invested significantly in enhancing energy access in rural areas by expanding its off-grid renewable capacity.
Egypt has contended with severe energy shortages in recent years, as it has fallen short on its natural gas production targets, particularly at its giant Zohr offshore gas field, which has hit its economy hard. This has led the government to pursue a more diversified energy mix to boost the country’s energy security. To do this, Egypt has opened its doors to international investment in the energy sector.
Egypt’s government aims to mobilise more than $10 billion in private investment for renewable energy, including wind and solar power production, to source 42 percent of the country’s energy from renewables by 2030. However, it is currently a long way from achieving this target, having attracted a reported $4 billion in investment to date. To encourage greater investment in its green energy sector, the government is now offering tax breaks, free land, cash rebates, and other incentives to investors. However, greater efforts to improve the country’s investment and energy policies could spur investment in the sector.
In May, Egypt’s Ministry of Electricity and Renewable Energy selected four companies to operate under the country’s newly adopted private-to-private (P2P) power agreement model. This will allow private energy producers to generate and sell electricity directly to industrial consumers. The selected projects have a combined power capacity of 400 MW and an investment total of $388 million.
Each company will now be permitted to construct its own green energy power plant to supply industry with power, while paying a transmission fee to the Egyptian Electricity Transmission Company (EETC). The awardees are Neptune Energy, AMEA Power, TAQA PV and ENARA. Egypt’s Energy Minister Mahmoud Esmat said the move aligns with the government’s Electricity Law, which aims to open the market to competition, enhance efficiency, and attract private investment.
Also in May, Egypt and Germany signed a $138.7 million financial cooperation agreement to boost wind energy development and inclusive technical education. The deal includes $101 million for the interconnection of the ACWA Power 1 and 2 wind farms and $37.6 million in grants to establish 25 training centres across Egypt. ACWA Power 1 and 2 are expected to produce 1.1 GW of clean electricity as part of Egypt’s Noufi green investment initiative, while the education centres will provide training to improve workforce skills in line with the government’s economic priorities.
Then, in July, the U.K. development bank British International Investment (BII) announced an investment of more than $300 million to support the development of two renewable energy projects in Egypt – a new 1.1 GW Gulf of Suez Wind Farm and the 1.1 GW Obelisk integrated solar and battery storage project with Scatec. The $1.2 billion Gulf of Suez Wind Farm is Africa’s biggest onshore wind development to date, and is expected to generate 4,500 GWh of clean power annually, helping to reduce carbon emissions by 2.5 million metric tonnes a year. Egypt has agreed on a total of $704 million in debt financing with a consortium of development finance institutions to fund the project.
Meanwhile, Obelisk, Egypt’s first integrated solar PV and battery energy storage system, which is expected to cost $479.1 million, will receive financial support from Norway’s Scatec, the European Bank for Reconstruction and Development (EBRD), and the African Development Bank (AfDB). It is expected to produce 1.1 GW of solar power and be fitted with 200 MWh of battery storage once complete.
Egypt’s Minister of Planning, Economic Development and International Cooperation, Rania Al-Mashat, said, “the Obelisk solar project is another important milestone for Egypt under the energy pillar of the Nexus of Water, Food, and Energy programme, which has since its launch in November 2022 at COP27 in Sharm El Sheikh delivered 4.2 GW of privately financed renewable energy investments, worth about $4 billion.” Al-Mashat added, “The goal of NWFE’s energy pillar is to add 10 GW of renewable energy capacity with investments of approximately $10 billion, and phase out 5 GW of fossil fuel power generation by 2030.”
After several years of severe energy shortages, Egypt is working with private and international partners to develop a strong renewable energy sector that will boost the North African country’s energy security for years to come. New solar and wind capacity, as well as its well-established hydropower sector, will help Egypt to transition away from a reliance on fossil fuels to move to green alternatives, as well as expand energy access across the country.
Credit: Oilprice.com
