Egypt is poised to enhance its energy security by committing to a substantial investment of $10 billion in renewable energy projects. As part of this initiative, the North African nation aims to diversify its energy mix and significantly increase its renewable energy capacity by 2030.
Recent years have seen a steady increase in Egypt’s renewable energy efforts. The country’s solar energy capacity skyrocketed from a mere 35 MW in 2012 to nearly 2.6 GW by 2024. This growth is accompanied by a stable hydropower production of approximately 2.8 GW, while wind energy is also on the rise. Significant investments are being made to boost energy access in rural areas, with off-grid renewable solutions being prioritized.
Egypt has faced severe energy shortages recently, particularly affecting its economy due to challenges at the Zohr offshore gas field. The government is actively seeking to remedy these issues by opening the energy sector to international investment. The ambitious target is to source 42 percent of the country’s energy from renewable resources by 2030.
In pursuit of this goal, the government is implementing a variety of incentives to attract investors. These include tax breaks, free land, and cash rebates aimed at enhancing the appeal of Egypt’s green energy sector. Despite these efforts, the country still has a considerable way to go in terms of attracting the necessary investment to meet its renewable energy targets.
In May 2023, Egypt’s Ministry of Electricity and Renewable Energy took a significant step by selecting four companies to operate under a newly adopted private-to-private (P2P) power agreement model. This allows private energy producers to generate and sell electricity directly to industrial consumers. The selected projects, which include Neptune Energy, AMEA Power, TAQA PV, and ENARA, have a combined capacity of 400 MW. Each company will build its own green energy power plant to supply power while paying a transmission fee to the Egyptian Electricity Transmission Company (EETC). According to Minister of Electricity and Renewable Energy, Mahmoud Esmat, this initiative aligns with the government’s Electricity Law, aiming to open the market to competition and attract private investment.
In addition to these measures, Egypt has entered into a partnership with Germany to enhance wind energy development and foster technical education. This agreement includes an investment of $101 million for interconnecting wind farms, along with $37.6 million in grants for establishing training centres across the country. The ACWA Power wind farms are projected to produce 1.1 GW of clean electricity, contributing significantly to Egypt’s green energy initiatives.
In July, the UK development bank, British International Investment (BII), announced an investment exceeding $300 million to support the development of two major renewable energy projects. This includes the construction of the 1.1 GW Gulf of Suez Wind Farm and the 1.1 GW Obelisk solar and battery storage project in collaboration with Scatec. The Gulf of Suez Wind Farm, valued at $1.2 billion, is set to be Africa’s largest onshore wind development, generating approximately 4,500 GWh of clean energy annually, thereby reducing carbon emissions by 2.5 million metric tonnes per year.
The Obelisk project, which will be Egypt’s first integrated solar PV and battery energy storage system, is expected to cost around $479.1 million. It will be supported by various financial institutions, including Norway’s Scatec and the European Bank for Reconstruction and Development (EBRD). This project is anticipated to produce 1.1 GW of solar power and will include 200 MWh of battery storage.
According to Rania Al-Mashat, Egypt’s Minister of Planning, Economic Development and International Cooperation, the Obelisk solar project represents a critical milestone in the energy sector. Under the energy pillar of the Nexus of Water, Food, and Energy (NWFE) programme, launched in November 2022 during COP27, Egypt has secured 4.2 GW of privately financed renewable energy investments, valued at approximately $4 billion. The goal of the energy pillar is to add 10 GW of renewable energy capacity with investments of about $10 billion, while phasing out 5 GW of fossil fuel power generation by 2030.
After enduring years of energy shortages, Egypt’s commitment to developing a robust renewable energy sector, in partnership with private and international stakeholders, is expected to bolster the nation’s energy security for the future. The expansion of solar and wind capacity, combined with the established hydropower sector, will facilitate Egypt’s transition from fossil fuel dependency to sustainable energy sources, while also improving energy access throughout the country.
